Application of Administrative Feasibility in the Third Circuit
The Third Circuit’s decisions in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), and Byrd v. Aaron’s Inc., 784 F.3d 154 (3d Cir. 2015), provide detailed explanations of the requirement for administrative feasibility at the class certification stage, and they are frequently cited by other courts addressing the standard. The requirement in the Third Circuit arises out of the implied requirement of ascertainability under Rule 23. According to the Third Circuit, “[a]scertainability functions as a necessary prerequisite (or implicit requirement) because it allows a trial court effectively to evaluate the explicit requirements of Rule 23. In other words, the independent ascertainability requirement ensures that a proposed class will actually function as a class.” Byrd, 784 F. 3d at 162. As part of the ascertainability inquiry, the Third Circuit explained why that necessarily includes a requirement of administrative feasibility:
The method of determining whether someone is in the class must be “administratively feasible.” A plaintiff does not satisfy the ascertainability requirement if individualized fact-finding or mini-trials will be required to prove class membership. “Administrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual factual inquiry.” William B. Rubenstein & Alba Conte, Newberg on Class Actions § 3:3 (5th ed. 2011); see also Bakalar v. Vavra, 237 F.R.D. 59, 64 (S.D.N.Y. 2006) (“Class membership must be readily identifiable such that a court can determine who is in the class and bound by its ruling without engaging in numerous fact-intensive inquiries.”).
Carrera, 727 F.3d at 308.
Applying this rationale, the Third Circuit in Byrd explained that the ascertainability inquiry requires a plaintiff to show that “(1) the class is ‘defined with reference to objective criteria,’ and (2) there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Id. at 163 (quoting Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 355 (3d Cir. 2013)).
Although the administrative feasibility requirement is generally considered to be a heightened standard under Rule 23, in Byrd the Third Circuit overturned the district court’s finding that certification was inappropriate because of a lack of ascertainability. Id. at 165 (noting that any challenge to ascertainability by defendants must be “exacting” and not confused with other class certification requirements).
In Byrd, a concurring opinion authored by Judge Rendell advocated that the court abandon the implied ascertainability requirement. The concurrence emphasized that the ascertainability inquiry was most common in “low-value consumer class actions,” in which “prospective class members are unlikely to have documentary proof of purchase,” and that administrative feasibility was used to defeat class certification in instances where consumer plaintiffs lacked receipts or proof of purchase to prove their membership in a class, thus rendering the membership determination infeasible. Id. at 172–73. Instead of imposing the ascertainability requirement, Judge Rendell emphasized the trial judge’s “province to determine what proof may be required at the claims submission and claims administration stage.” Id. at 174. This approach would require the trial judge to make the class administratively feasible on the back end, such as by requiring affidavit proof or testimony by family members to show proof of purchase. However, it is important to recognize that such an approach would be at odds with the Third Circuit’s admonition in Carrera that ascertainability cannot be satisfied if “individualized fact-finding or mini-trials will be required to prove class membership.” Carrera, 727 F.3d at 308.
Administrative Feasibility in the First and Fourth Circuits
The Fourth Circuit analyzed administrative feasibility based on the implicit requirement under Rule 23 that members of a proposed class can be ascertainable in EQT Production Co. v. Adair, 764 F.3d 347 (4th Cir. 2014). EQT involved five separate class actions seeking recovery of royalty payments for a form of natural gas. The district court granted class certification, but on appeal the Fourth Circuit found that the district court “failed to rigorously analyze whether the administrative burden of identifying class members . . . would render class proceedings too onerous.” Id. at 358. The Fourth Circuit bolstered its reasoning by citing precedent from the Third Circuit that the determination of class membership should not involve extensive fact-finding on the back end: “The plaintiffs need not be able to identify every class member at the time of certification. But, ‘[i]f class members are impossible to identify without extensive and individualized fact-finding or mini-trials, then a class action is inappropriate.’” Id. (quoting Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 593 (3d Cir. 2012)).
The court in EQT noted that class membership regarding the award of royalties for natural gas extraction would involve complicated factual questions about the ownership of gas rights based on land records for each class member. Id. at 359. These “heirship, intestacy, and title-defect issues plague many of the potential class members’ claims to the gas estate . . . [and] pose a significant administrative barrier to ascertaining the ownership classes.” Id. Based on these “administrative barriers,” the Fourth Circuit concluded that the identification of class members was not administratively feasible and reversed the district court’s decision.
The First Circuit applied administrative feasibility as part of the ascertainability requirement in In re Nexium Antitrust Litigation, 777 F.3d 9 (1st Cir. 2015). In In re Nexium, the plaintiffs brought antitrust claims based on reverse payment settlements between a branded drug manufacturer and potential generic manufacturers, claiming that the settlements, which kept generic version of the drug Nexium off the market, injured third party payors and consumers who would have purchased a generic version of the drug. Like the Fourth Circuit, the First Circuit bolstered its reasoning with citations to Third Circuit authority: “At the class certification stage, the court must be satisfied that, prior to judgment, it will be possible to establish a mechanism for distinguishing the injured from the uninjured class members. The court may proceed with certification so long as this mechanism will be ‘administratively feasible.’” Id. (citing Carrera 727 F.3d 300, 307 (3d Cir. 2013)).
The defendants contended that the plaintiffs could not identify “brand-loyal” consumers who would have continued to purchase the brand drug Nexium even if a generic were available and that this failure of administrative feasibility rendered certification inappropriate. Although the First Circuit recognized the requirement of administrative feasibility, it found that the district court could develop a mechanism for resolving the “brand loyalist” problem—including by establishing through testimony from the consumer that he or she would have purchased a generic version of the drug. Id. at 20. Class certification under such circumstances would seem to require intensive, individual fact-finding and mini-trials, rendering the result in In re Nexium somewhat inconsistent with the rationale applied by the Third Circuit in Carrera and Byrd. But that result is consistent with the Third Circuit’s caution that challenges by defendants to the ascertainability requirement must be “exacting” and not confused with other Rule 23 criteria. See Byrd, 784 F.3d at 165.
The Sixth Circuit—Less Rigorous Administrative Feasibility
In Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015), the Sixth Circuit declined to adopt the Third Circuit’s strict approach to determining administrative feasibility, and it noted mounting criticism by other courts against Carrera. See Mullins v. Direct Dig., LLC, 795 F.3d 654 (7th Cir. 2015); In re ConAgra Foods, Inc., 302 F.R.D. 537, 566 (C.D. Cal. 2014). But the Sixth Circuit proceeded to hold that, even if the administrative feasibility requirement under Carrera applied, class certification would still be appropriate. Moreover, the court in Rikos recognized that the ascertainability standard within the Sixth Circuit is controlled by Young v. Nationwide Mutual Insurance Co., 693 F.3d 532 (6th Cir. 2012), and Young expressly includes an administrative feasibility component: “Before a court may certify a class pursuant to Rule 23, ‘the class definition must be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class.’” Id. at 537–38 (quoting 5 James W. Moore et al., Moore’s Federal Practice § 23.21 (Matthew Bender 3d ed. 1997)).
Thus, although the Sixth Circuit declined to follow the strict reasoning in Carrera, it recognized the existing precedent under Young that administrative feasibility is part of the ascertainability inquiry. That, along with the court’s analysis determining that it would have been administratively feasible to identify class members, suggests that the administrative feasibility inquiry is at least relevant (if not necessary) to the class certification decision in the Sixth Circuit—although at some lower threshold than set forth by the Third Circuit in Carrera.
The Seventh Circuit—Explicit Rejection of Administrative Feasibility
In Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015), the Seventh Circuit accepted an interlocutory appeal following the district court’s grant of certification to address whether Rule 23 imposed a heightened “ascertainability” standard. The Seventh Circuit recognized that some courts imposed a requirement that “plaintiffs prove at the certification stage that there is a ‘reliable and administratively feasible’ way to identify all who fall within the class definition” and that this “heightened requirement” had been used to defeat certification in consumer class actions. Id. at 657. In rejecting the imposition of an administrative feasibility component to ascertainability, the court reasoned as follows:
The policy concerns motivating the heightened ascertainability requirement are better addressed by applying carefully the explicit requirements of Rule 23(a) and especially (b)(3). These existing requirements already address the balance of interests that Rule 23 is designed to protect. A court must consider “the likely difficulties in managing a class action,” but in doing so it must balance the countervailing interests to decide whether a class action “is superior to other available methods for fairly and efficiently adjudicating the controversy.”
The heightened ascertainability requirement upsets this balance. In effect, it gives one factor in the balance absolute priority, with the effect of barring class actions where class treatment is most often needed: in cases involving relatively low-cost goods or services, where consumers are unlikely to have documentary proof of purchase.
Id. at 658.
Ultimately, the Seventh Circuit’s decision appears driven by the concern that the administrative feasibility requirement would upset the balancing expressly imposed pursuant to Rule 23(b)(3)—which is often the vehicle for certification of consumer classes.
The Second, Eighth, and Ninth Circuits
The Second Circuit initially seemed to require a showing of administrative feasibility as part of the ascertainability requirement. In Brecher v. Republic of Argentina, the court explained the ascertainability requirement as follows:
[T]he touchstone of ascertainability is whether the class is sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member. A class is ascertainable when defined by objective criteria that are administratively feasible and when identifying its members would not require a mini-hearing on the merits of each case.
806 F.3d 22, 24–25 (2d Cir. 2015) (internal quotations and citations omitted).
Despite this adherence to the Third Circuit’s approach in Carrera and Byrd, the court retreated from any strict requirement of administrative feasibility in In re Petrobras Securities, 862 F.3d 250 (2d Cir. 2017). There, the court concluded that
a freestanding administrative feasibility requirement is neither compelled by precedent nor consistent with Rule 23, joining four of our sister circuits in declining to adopt such a requirement. The ascertainability doctrine that governs in this Circuit requires only that a class be defined using objective criteria that establish a membership with definite boundaries.
Id. at 264.
In rejecting a “freestanding” administrative feasibility requirement, the Second Circuit explained that the language in Brecher “about ‘administrative feasibility’ and ‘mini-hearings’ was not strictly part of the holding, and was not intended to create an independent element of the ascertainability test.” In re Petrobras Securities at 266. Rather, the court intended that language to convey the “purpose underlying the operative requirements of definiteness and objectivity.” Id. Applying this reasoning, the court explained that any strict requirement of an administrative feasibility standard would contradict the balancing test set forth in Rule 23(b)(3), which compares the manageability of a class action against the availability of other methods for adjudicating the controversy:
Whereas ascertainability is an absolute standard, manageability is a component of the superiority analysis, which is explicitly comparative in nature: courts must ask whether “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3) (emphasis added). We share the concern voiced by our sister circuits that heightened ascertainability and superiority could push in opposite directions. Though a court may not ignore concerns about the manageability of a putative class action, it may be that challenges of administrative feasibility are most prevalent in cases “in which there may be no realistic alternative to class treatment,” Briseno, 844 F.3d at 1128 (agreeing with Mullins, 795 F.3d at 663–64), underscoring the importance of a comparative inquiry. This concern is particularly acute in light of our admonition that “failure to certify an action under Rule 23(b)(3) on the sole ground that it would be unmanageable is disfavored and should be the exception rather than the rule.” In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 140 (2d Cir. 2001).
Id. at 268.
Like the Seventh Circuit, the Second Circuit therefore currently adheres to the balancing required for Rule 23(b)(3) classes, rather than applying any strict requirement for administrative feasibility as a stand-alone factor.
While recognizing the different approaches in the Third and Seventh Circuits in Carrera and Mullins, the Eighth Circuit gave the application of an administrative feasibility standard little consideration in Sandusky Wellness Center, LLC v. Medtox Scientific, Inc., 821 F.3d 992 (8th Cir. 2016). Instead, it emphasized that the Eighth Circuit “adheres to a rigorous analysis of the Rule 23 requirements, which includes that a class ‘must be adequately defined and clearly ascertainable.’” Id. at 996. It does not apply any standard of “administrative feasibility” to the class certification decision.
Finally, in Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017), the Ninth Circuit expressly considered whether to adopt a heightened administrative feasibility standard as part of the ascertainability inquiry and declined to do so. Generally, the Ninth Circuit followed the reasoning of the Seventh Circuit in Mullins and found that the specific requirements of Rule 23 adequately addressed the concerns raised by “administrative feasibility.” Id. at 1127. Like the Seventh Circuit, the Ninth Circuit expressed concern that strict application of an administrative feasibility requirement would upset the balancing required under Rule 23(b)(3):
A separate administrative feasibility prerequisite to class certification is not compatible with the language of Rule 23. Further, Rule 23’s enumerated criteria already address the policy concerns that have motivated some courts to adopt a separate administrative feasibility requirement, and do so without undermining the balance of interests struck by the Supreme Court, Congress, and the other contributors to the Rule.
Id. at 1126.
The Eleventh Circuit and Dometic
Against this backdrop the Eleventh Circuit in Dometic declined to adopt an administrative feasibility requirement—even though two of its unpublished opinions previously applied the standard. After discussing the circuit split and rationale for and against an administrative feasibility standard, the court flatly rejected application of the standard to the Rule 23(a) requirements for a class but found it relevant to the inquiry under Rule 23(b)(3). This approach strikes somewhat of a middle ground between the Seventh Circuit’s rejection of the requirement in Mullins and the Third Circuit’s strict adherence to it in Carrera.
With respect to the prerequisites for certification under Rule 23(a), the Eleventh Circuit found that ascertainability is not part of that inquiry and that administrative feasibility therefore has no application. For Rule 23(b) (types of class actions), the court found that administrative feasibility is relevant for the balancing required under Rule 23(b)(3), but that it is not determinative:
To be sure, administrative feasibility has relevance for Rule 23(b)(3) classes, in the light of the manageability criterion of Rule 23(b)(3)(D). Rule 23(b)(3)(D) instructs the district court, in deciding whether a class action would be superior to other applicable methods for fairly and efficiently adjudicating the controversy, to consider the likely difficulties in managing a class action. A difficulty in identifying a class member is a difficulty in managing a class action. But because Rule 23(b)(3) requires a balancing test, it does not permit district courts to make administrative feasibility a requirement.
Id. at 1303–4 (internal citations omitted).
Although it recognized the relevance of administrative feasibility to the balancing required under Rule 23(b)(3), it also emphasized that “manageability problems” revealed as a result of the inquiry will “rarely, if ever, be in [themselves] sufficient to prevent certification.” Id. at 1304 (citing Klay v. Humana, Inc., 382 F.3d 1241, 1272 (11th Cir. 2004)). Thus, it seems unlikely that the impact of administrative feasibility on identifying class members alone would be enough to defeat class certification in the Eleventh Circuit.
The current weight of the circuit split is against the application of administrative feasibility, but the rationale employed by the First, Third, and Fourth Circuits is well grounded. Those circuits’ use of administrative feasibility is particularly compelling in cases in which plaintiffs seek certification under more than one subpart of Rule 23(b), such that the rationale employed by the Seventh Circuit under Rule 23(b)(3) regarding the balancing of interests is not as compelling. Even in the circuits that reject a strict application of administrative feasibility, there is a general acceptance that such an inquiry is relevant to the balancing required under Rule 23(b)(3), and that should present opportunities for parties to advocate the impact of the criteria on the class certification decision.