Consumer class action claims are often numerous, but low-value. Sales records may not contain much information about the actual consumer. Therefore, it can be challenging for plaintiffs to meet the “ascertainability” requirement for class action certification. Courts have split over whether this requirement means that plaintiffs simply need an objective definition to determine whether plaintiffs are in or out of the class, or whether plaintiffs must present a plan for identifying and contacting all, or most, of the class members.
July 01, 2020 Top Story
Appeals Court Re-inflates Kiddie Pool Class Action
Plaintiff-friendly approach to ascertainability lowers bar for certification
By Stephen Carr
A recent decision embraces a more liberal approach to the question and could provide new opportunities to pursue consumer class actions. ABA Section of Litigation leaders believe the decision will open the door to more consumer class actions.
Inflatable Pool Deflates Consumers
Noel v. Thrifty Payless, Inc. began with a claim under California unfair competition law, false advertising law, and the Consumers Legal Remedies Act. The named plaintiff alleged that thye drugstore chain Rite Aid misled consumers in advertising an inflatable children’s pool. The photograph on the front of the pool’s box showed several adults swimming comfortably in the pool, but when inflated, the actual product could hold only a few small children.
Discovery revealed that Rite Aid had sold more than 20,000 pools during the class period and collected revenue of just under a million dollars. But the plaintiffs did not determine whether sufficient records existed to provide notice to the relevant consumers.
The lower court ruled against certifying the class, barring the litigation from going forward except on an individual basis. The court found that the plaintiffs had “presented no evidence” as to whether members of the class could be identified through business practices or record keeping by Rite Aid. This information might have been necessary for providing notice to absent class members. The intermediate appellate court affirmed, but the California Supreme Court reversed on the ascertainability issue.
Divide Over Proper Certification Standard Deepens
The California Supreme Court’s opinion identified two views of ascertainability that lower courts have used in the past. The first, more relaxed standard “concentrates on the proposed class definition itself.” Under this view, it is sufficient that the class is described in the motion to certify “in terms of objective characteristics and common transactional facts” that make it possible to determine whether a person is a member of the class at a later stage.
The second, more stringent standard requires the plaintiff class to show, with specific evidence, that there is a mechanism “through which class members could be identified so as to be personally notified of the class proceeding.”
Jurisdictions across the country are split on which approach is more appropriate, explains Adam E. Polk, San Francisco, CA, cochair of the Section of Litigation’s Class Actions & Derivative Suits Committee. “Courts that embrace the relaxed approach focus on whether the class is objectively defined, and have found that concerns about the ability to identify class members are already addressed as part of the manageability analysis,” Polk says. “Courts taking the more stringent approach focus on the due process concerns that could arise if a class settles without an adequate method to provide notice to parties bound by the settlement.”
The different approaches are about more than just timing, according to Polk. “Courts following the more stringent approach may require litigators to create a detailed record that the court can scrutinize to determine the precise means of identifying class members,” he explains.
Consumer Class Actions Get New Life
The Noel court’s decision relied heavily on the U.S. Court of Appeals for the Seventh Circuit decision in Mullins v. Direct Digital LLC. In that case, the court reasoned that the more stringent ascertainability standard “effectively bars low-value consumer class actions, at least where plaintiffs do not have documentary proofs of purchases, and sometimes even when they do.”
Section leaders observed that the California court in Noel appeared especially concerned that in low-value consumer class actions, identifying business records for all consumers would be especially difficult, if not impossible. “The court’s approach to ascertainability will make it possible for more consumer class actions to get past certification,” reports Donald R. Pocock, Winston-Salem, NC, cochair of the Section’s Consumer Litigation Committee.
The Noel opinion emphasized that alternative methods of notice such as advertisement or publication can sometimes be used to notify absent plaintiffs. With this pragmatic approach in mind, the court determined that the issue of notice should be considered as part of the overall determination of the benefits and costs of proceeding as a class action—not as a one-size-fits all requirement that plaintiff show all members of the class can be identified.
Section leaders agreed, however, that that there are strong arguments on both sides of the issue. “In the court’s view, where class certification occurs before the need for notice to class members of a settlement or trial arises, an ascertainability requirement unfairly burdens class representatives who might otherwise develop adequate means of notice,” Pocock explains. “Some might be concerned that this will encourage claims of questionable merit, but one of the justifications for class actions is the power to vindicate small claims.”
Stephen Carr is an associate editor for Litigation News.
Hashtags: #classactions #consumerlaw
Related Resources
- Adam Polk, “California Supreme Court Adopts Relaxed Approach to Ascertainability Requirement in False Advertising Claim,” Class Actions & Derivative Suits (Aug. 27, 2019).
- Daniel S. Wittenberg, “Class Action Spending Reaches 10-Year High,” Litigation News (Sept. 26, 2019).
- Catherine M. Chiccine, “Ascertainability Not Required in 23(b)(2) Class Action, Says Court,” Litigation News (Jan. 20, 2017).
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