August 10, 2016 Articles

Ascertainability Requirement Leads to Inconsistency and Uncertainty in Class Actions

By Edward Soto and Erica Rutner

Independent from the explicit elements of Federal Rule of Civil Procedure 23 is an additional requirement to obtaining class certification: ascertainability. While Rule 23 does not expressly mention ascertainability, courts have imposed an ascertainability requirement in evaluating whether a class can be certified, describing it as an "implicit" requirement for class certification. In the past, however, ascertainability was often overlooked by courts and practitioners as a requirement that could be easily met. But the last decade has seen a growing attention to ascertainability in the class action jurisprudence, with many courts embracing an increasingly stringent application of the doctrine. However, the treatment of this concept has differed widely among the circuits, with some circuit courts vehemently resisting any expansion of the doctrine. As one party recently argued to the Supreme Court, there is "mass confusion in the class action bar concerning the proper standard." Brief for Petitioner, Direct Digital, LLC v. Mullins (Oct. 26, 2015) (No. 15-549), 2015 U.S. Briefs 549, cert. denied, 136 S. Ct. (2016). Given that the Supreme Court has declined to accept certiorari on the issue on two separate occasions, litigants face considerable uncertainty and unpredictability in assessing the likelihood of class certification. This article describes the circuit courts' various interpretations of the ascertainability requirement and suggests discovery strategies for practitioners currently involved in putative class action suits.

Various Applications of the Ascertainability Requirement
Because ascertainability is not an explicit element of Rule 23, there is no bright-line rule for courts to follow in determining whether a class is sufficiently ascertainable. Thus, courts have diverged on what the requirement means and how it should be applied. This divergence has increased considerably in the last few years, with the doctrine gaining considerable attention in virtually every circuit court.

Lack of "objective criteria" to define the class. The most traditional application of the ascertainability requirement focuses on whether the class definition contains "objective criteria" to identify who is in the class. This allows courts to determine the identity of the class based on a clearly defined set of characteristics. Thus, if the court must examine subjective criteria to identify class members, such as a putative class member's state of mind, the class will not be ascertainable. As one courtaptly explained, "[i]f a class definition includes a requirement that cannot be proven directly, and that depends instead upon each putative class member's feelings and beliefs, then there is no reliable way to ascertainable class membership." Xavier v. Philip Morris USA Inc., 787 F. Supp. 2d 1075, 1089 (N.D. Cal. 2011).

The seminal case on this issue is DeBremaecker v. Short, in which the Fifth Circuit upheld the denial of a class that was defined to include residents active in the "peace movement" as well as those who feared harassment and intimidation in exercising their First Amendment right when passing out leaflets. 433 F.2d 733, 734 (5th Cir. 1970). The first part of the class definition was not "clearly ascertainable" because of the "patent uncertainty of the meaning of 'peace movement.'" The second part of the class definition was also problematic because the court could not conclude with certainty that the activity complained of had a "chilling effect" on all state residents.

The class definition is imprecise and inadequate. Ascertainability has also been interpreted to mean that the class be precisely and adequately defined. Pursuant to this interpretation, several circuit courts have held that a class is not ascertainable where the definition is overbroad by virtue of including too many individuals who have no legitimate claim. For instance, in Messner v. Northshore University HealthSystem, the Seventh Circuit held that "[i]f [] a class is defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant's allegedly unlawful conduct, the class is defined too broadly to permit certification." 669 F.3d 802, 824 (7th Cir. 2012). Similar findings have also been made by the Sixth and Eleventh Circuits.

However, not all circuits agree. In In re Deepwater Horizon, the Fifth Circuit specifically rejected this principle, reasoning that "the possibility that some claimants may fail to prevail on their individual claims will not defeat class membership on the basis of the ascertainability requirement." 785 F.3d 1003, 1018 (5th Cir. 2015). And other circuits have qualified the principle, noting that a class may be certified even if it includes "a de minimis number of potentially uninjured parties." E.g., In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st Cir. 2015).

Another way in which ascertainability has been used to defeat certification stems from the prohibition against fail-safe classes, which are classes defined such that whether a person qualifies as a member depends on whether the person has a valid claim. Numerous circuits, including the First, Sixth, Seventh, and Ninth Circuits, have all held that this type of class definition is improper because a class member either wins or, by virtue of losing, is defined out of the class and is therefore not bound by the judgment. Again, however, not all circuits follow this principle. In In re Rodriguez, the Fifth Circuit rejected a rule against fail-safe classes and therefore would not reject a class definition that created a fail-safe class. 695 F.3d 360, 370 (5th Cir. 2012).

A More Rigorous Application of the Ascertainability Requirement: Identifying Class Membership in an Administratively Feasible Method

Evolution of the Third Circuit approach toward ascertainability. Beyond the applications discussed above, a far more rigorous construction of the ascertainability requirement has developed in just the last few years. As first discussed by the Third Circuit and later embraced by other courts around the country, the ascertainability requirement is now being read to also require an administratively feasible mechanism for identifying class members. The issue raised by this requirement is not that the class definition is built on inherently subjective factors but that the proposed means of determining membership involves subjective and unreliable evidence. As courts have emphasized, if class members are impossible to identify without extensive and individualized fact finding or "mini-trials," then a class action is inappropriate.

On the heels of two similar decisions, the Third Circuit cemented its commitment to this stringent interpretation of the ascertainability requirement in Carrera v. Bayer Corp., 727 F.3d 300, 307 (3d Cir. 2013). In Carrera, the Third Circuit decertified a class defined to include consumers who purchased Bayer's over-the-counter weight loss pill on the basis that identifying class members was not "administratively feasible." The court emphasized that a defendant in a class action case has "a due process right to raise individual challenges and defenses to claims," which includes the right to challenge the proof used to demonstrate class membership, and that a plaintiff does not satisfy ascertainability if individualized fact finding or mini-trials will be required to prove class membership. The court then found that there was no way for the defendant to challenge the evidence used to prove class membership in a manageable way because consumers were unlikely to have documentary proof of purchase, the defendant had no records of purchasers, and the model affidavits offered by the plaintiff were a deficient method of ascertainability.

Eleventh Circuit jurisprudence is also in accord. In Karhu v. Vital Pharmaceutical, Inc., 621 F. App'x 945 (11th Cir. 2015), the Eleventh Circuit recently affirmed the denial of class certification on the basis that the proposed classes, which consisted of purchasers of a particular diet pill, were not ascertainable. The court reasoned that the plaintiff had not established that the defendant's records were useful for identification purposes and that the plaintiff's proposed self-identification method was deficient. Like the Third Circuit, the Eleventh Circuit highlighted the potential due process implications of self-identification.

Although the Third and Eleventh Circuits have spoken most directly on this issue, other circuit courts have recently taken a related approach to ascertainability. For instance, in EQT Products Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014), the Fourth Circuit held the class at issue, which included owners of a gas estate, was not sufficiently ascertainable because complications in resolving ownership of a gas estate "pose a significant administrative barrier to ascertaining the ownership classes."

Rejections and qualifications of the Third Circuit approach. In contrast with the Third and Eleventh Circuits, at least four circuits have taken a decidedly less stringent approach toward ascertainability. Most notable are the recent decisions of the Seventh Circuit in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015), and the Sixth Circuit in Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015).

In Mullins, the Seventh Circuit unequivocally rejected Carrera and declined to require an administratively feasible method for identifying class members as part of the ascertainability inquiry. In so holding, the Seventh Circuit emphasized that this stringent version of ascertainability "effectively bars low-value consumer class actions" and "immunizes defendants from liability because they chose not to maintain records of the relevant transaction." The court ultimately concluded that certification should not be denied merely because the proposed method for identifying class members relies on affidavits.

Similarly, in Rikos, the Sixth Circuit held "we see no reason to follow Carrera, particularly given the strong criticism it has attracted from other courts." The court concluded that a class of probiotic supplement purchasers was ascertainable as it was defined by objective criteria—anyone who had purchased the supplement. The court further concluded that the classes "can be determined with reasonable—but not perfect accuracy," which could be accomplished through "substantial review [] of internal P&G data," as well as "through the use of receipts, affidavits, and a special master to review individual claims." Notably, while taking a less stringent approach as the Third Circuit, the Sixth Circuit does not appear to have gone as far as the Seventh Circuit in Mullins. In particular, despite the Sixth Circuit's rejection of Carrera, it appears that plaintiffs must nevertheless be capable of determining class membership with at least "reasonable" accuracy.

The other circuits that have addressed the issue have not rejected Carrera outright, yet they have applied the requirement in more qualified ways. For instance, in In re Nexium Antitrust Litigation, the First Circuit agreed that a mechanism for distinguishing the injured from uninjured class members must be "administratively feasible," but the court held that testimony by the consumer "in the form of an affidavit or declaration would be sufficient." Similarly, in Frey v. First National Bank Southwest, 602 F. App'x 164, 168 (5th Cir. 2015), the Fifth Circuit upheld the finding that a putative class satisfied the ascertainability requirement despite the fact that the class definition required the court to conduct individualized inquiries to determine whether accounts were established primarily for personal or commercial purposes.

In circuits where the appellate court has not yet definitively spoken, district courts have also battled over ascertainability issues. For instance, even after an unpublished Ninth Circuit decision rejecting the use of affidavits for class member identification, several California district courts have expressed their vehement opposition to Carrera, holding that it "is not currently the law in the Ninth Circuit" and that "[a]dopting the Carrera approach would have significant negative ramifications for the ability to obtain redress for consumer injuries [because] few people retain receipts for low-priced goods." Lilly v. Jamba Juice Co., 2014 WL 4652283, *4 (N.D. Cal. Sept. 18, 2014). Other California district courts, however, have taken the exact opposite approach, embracing the principles espoused in Carrera in analyzing the issue of ascertainability.

The same disagreement is apparent within the Southern District of New York. In Ebin v. Kangadis Food, Inc., 297 F.R.D. 561, 567 (S.D.N.Y. 2014), the court acknowledged that the defendant did not have any records to determine class membership and the only way to identify class members was through uncorroborated self-identification. Nevertheless, the court held that denying a class on this basis "would render class actions against producers almost impossible to bring"; therefore, "the ascertainability difficulties, while formidable, should not be made into a device for defeating the class action." In contrast, a New York federal court reached the opposite conclusion in Brown v. Sega Amusements, U.S.A., Inc., 2015 WL 1062409, at *3 (S.D.N.Y. Mar. 9, 2015)

Where Will Ascertainability Go from Here?
Given the unsettled state of the law, depending on the jurisdiction and court in which an action is brought, the issue of ascertainability may be fatal to a class action, or it may have no impact at all. Indeed, the current patchwork of approaches on the issue could very well lead to inconsistent results in similar class actions filed in multiple district courts and may encourage forum shopping by the plaintiffs' bar. Moreover, given that a number of circuit courts have not yet addressed the issue—two of which have clear splits among their district courts—it is difficult for parties to predict how the requirement will be interpreted by a particular court. This means considerable uncertainty for parties seeking to evaluate the likelihood of class certification. Even in some circuits that have addressed the issue, there remains uncertainty, and thus how a district court might choose to interpret and apply the words of the appellate court in a particular context is unclear. This ambiguity is further compounded by the fact that the Advisory Committee's Rule 23 Subcommittee recently omitted ascertainability from its draft concept amendments for the class action reforms, as well as the fact that the Supreme Court denied certiorari in both Mullins and Rikos, two cases that could have led to a uniform approach on the issue. Regardless of the reasons why the issue was not addressed in either of these contexts, the result is the same: continued uncertainty regarding the meaning and treatment of the ascertainability requirement. And that means considerable uncertainty for parties seeking to evaluate the likelihood of class certification, particularly in small-dollar consumer product cases.

Given the current state of flux surrounding the ascertainability requirement, parties involved in a putative class action in any jurisdiction should be keenly aware of the developing jurisprudence. They should also plan to pursue discovery that can support ascertainability arguments under any of the existing interpretations, in anticipation of a potentially altered landscape. In particular, discovery should be obtained with respect to what records do—and do not—exist regarding the identity of class members. And when dealing with product liability cases, such discovery should be sought at all levels of the distribution chain. Evidence demonstrating whether (and the extent to which) distributors maintain sales records may prove to be highly relevant. Moreover, discovery bearing on the verifiability of consumer affidavits should also be obtained, something which may be highly relevant to the question of ascertainability even under the current interpretations espoused by the Sixth and Seventh Circuits. Given that uniform clarity from the Supreme Court is not expected in the near future, parties should acknowledge the uncertainty they face and act accordingly.

Keywords: litigation, products liability, ascertainability, class action, discovery


Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).