Third Circuit rules that Rule 23 ascertainability element requires proof and rigorous analysis


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Courts frequently say that ascertainability is an implied prerequisite to class certification. Yet this requirement rarely receives much judicial attention. Courts are typically drawn to the more familiar — and related — elements of Federal Rule 23. But, a recent decision from the Third Circuit in a consumer class action breathes new life into this lonely element, creating important tactical opportunities in the process. Indeed, ascertainability may be the first, last and only stop for many putative classes. Here's what happened.

Carrera v. Bayer Healthcare Corp.

In Carrera v. Bayer Healthcare Corp., 727 F.3d 300 (3rd Cir. 2013), the plaintiffs complained that Bayer falsely advertised that its One-A-Day WeightSmart product enhanced metabolism by inclusion of a green tea extract when, if fact, it didn't. They sought to certify a class of aggrieved consumers, but had difficulty identifying them. Unlike other cases where the defendant's own records could be used to figure out who is in the class, this case was different because Bayer didn't sell the product directly to consumers — drug stores like CVS and Walgreens did. As a result, Bayer didn't have any records of consumer purchases.

Carrera argued — and the trial court agreed — that class members could be determined by retailer records of online sales and sales made with loyalty or rewards cards. In the alternative, Carrera argued that affidavits of class members could be used to identify the class. There was little risk of fraud. Who would lie about such a paltry sum? Besides, it would make no difference since Bayer's damages would never exceed the total sales of the product. So a few unreliable affidavits would have no impact on Bayer's damages. Id. at 304.

Bayer filed for discretionary review under Rule 23(f), and the Third Circuit took the case. The sole issue was whether class members were ascertainable. Id. at 303.

Relying on its recent decision in Marcus v. BMW of North America, LLC, 687 F.3d 583 (3rd Cir. 2012), the court reaffirmed how critical ascertainability is: "If class members are impossible to identify without extensive and individualized fact-finding or 'mini-trials,' then a class action is inappropriate." Id. at 303-304 (quoting Marcus, 687 F.3d at 593).

The reasoning is just as important as the rule:

  1. It allows class members to identify themselves for purpose of opting out;
  2. It protects defendants' due process rights under Rule 23 to ensure that they retain all their defenses and that all class members are bound by the judgment; and
  3. It enables the parties to "identify class members in a manner consistent with the efficiencies of a class action."

Id. at 307.

But the court elaborated on the ascertainability requirement in some very helpful ways. First, the court made clear that "'[T]here is 'no reason to doubt' that the 'rigorous analysis' requirement 'applies with equal force to all Rule 23 requirements. '" Accordingly, a plaintiff "must show, by a preponderance of the evidence, that the class is 'currently and readily ascertainable based on objective criteria,'" and "a trial court must undertake a rigorous analysis of the evidence to determine if the standard is met." Id. at 306 (citations omitted).

Second, the rigorous analysis must occur at the outset of the action "because of the key roles it plays as part of a Rule 23(b)(3) class action lawsuit." Id. at 307.

Third, and perhaps most important, a truly "manageable process [is one] that does not require much, if any, individualized factual inquiry." Id. at 307. Think about this: Most courts say that "mini-trials" and individualized determinations cut against ascertainability. But few have quantified just how much individualized evidence will render a class unascertainable. In the Third Circuit, the answer is clear: "not much, if any."


Proof, Not Promises

Here, the court had little trouble reversing class certification. The court first addressed — and rejected — the argument that loyalty cards and records of online purchases could provide evidence to support ascertainability. There was "no evidence that any retailer of WeightSmart has membership cards," id. at 308, or that "retailers even have records for the relevant period." Id. at 309. Nor could the plaintiffs rely on the use of such records in the context of a voluntary settlement with the Federal Trade Commission since "[s]ettlement classes raise different certification issues than litigation classes." Id. at 308, n. 4.

Due Process and Procedural Efficiency

Next, the court rejected the argument that affidavits from aggrieved class members could satisfy the ascertainability requirement. The plaintiffs argued that the low value of potential claims would be a hedge against fraud and, besides, Bayer's liability wouldn't change since it was liable for disgorging 100 percent of its sales whether or not there were fraudulent claims. The risk of fraud might dilute recovery for class members, but that shouldn't get Bayer off the hook. Id. at 309-310.

But ascertainability protects class members from just such an erosion of their claims. It is "unfair to absent class members if there is a significant likelihood their recovery will be diluted by fraudulent or inaccurate claims" Id. at 310. Plus, the evident certainty of such claims created serious questions about the adequacy of class representation, which, in the end, could mean that class members would not be bound by the judgment. They could sue Bayer again, which would be both unfair to Bayer and inefficient for the court. Id.

The ascertainability requirement also ensures that a defendant can challenge class membership. Id. at 309. The inherent risk of faulty memories as well as the burden of cross examining each affiant rendered this proposal unworkable.

More fundamentally, the court was concerned the plaintiffs' proposals were sheer speculation since they had performed no discovery to support any of the theories they advanced. "Assurances that a party 'intends or plans to meet the requirements' are insufficient to satisfy Rule 23." Id. at 311 (quoting In re Hydrogen Peroxide Antitrust Lit., 552 F.3d 305, 318 (3rd Cir. 2008); Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1434, 185 L.Ed.2d 515 (2013)).

The Takeaways

Here are the takeaways from Carrera.

First, the ascertainability requirement is subject to the same evidentiary requirements — and the same rigorous analysis — as each of the elements of Rule 23. Promises and assurances are not enough. And courts should apply the "not much, if any" rule when examining whether individual inquiries are required to satisfy this element.

Second, the ascertainability requirement protects plaintiffs, defendants and the court. Plaintiffs have a right to know whether they are class members so they can opt out, and, for those who remain, that their claims will be protected. Defendants have the right to challenge class membership, and courts have the right to ensure that the efficiencies of class certification will be achieved.

Finally, in cases where defendants do not have records to establish class membership, there should be heightened scrutiny on the plaintiffs' proof of this critical element at the very outset of the proceedings.

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