Will Ascertainability Split Finally Be Resolved?

The Third Circuit has adopted a strict standard for analyzing when a proposed class is “ascertainable.” Class members must be identifiable by verifiable and administratively feasible means in addition to the requirement that the class be defined with reference to objective criteria. This law was settled in a trilogy of decisions — Marcus v. BMW of North America, 687 F.3d 583 (3d Cir. 2012), Hayes v. Wal-Mart Stores, 725 F.3d 349 (3d Cir. 2013), and Carrera.

Marcus, the first of the trilogy, reaffirmed that “an essential prerequisite of a class action…is that the class must be currently and readily ascertainable based on objective criteria,” and “[i]f class members are impossible to identify without extensive and individualized fact-finding or 'mini-trials,' then a class action is inappropriate.” 687 F.3d at 593. The mere “say so” of the class member is not enough to establish class membership. Id. at 594. Similarly, in Hayes, where the district court noted that defendant “had no method for determining how many of the 3,500 … transactions that took place during the class period” met the class definition, the Third Circuit remanded the case for plaintiff to “offer some reliable and administratively feasible alternative” for determination of class membership. 725 F.3d at 355.

On the heels of Marcus and Hayes, the Third Circuit decided Carrera, recognizing that the “plaintiff must demonstrate his purported method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence used to prove class membership.” 727 F.3d at 308. The court rejected plaintiffs' proposed use of third-party retailer records to identify class members because there was no evidence that “a single purchaser” could be identified by those records. Id. at 308-309. The court also rejected the plaintiffs' proposal to use affidavits of class members to establish class membership because “it does not address a core concern of ascertainability: that a defendant must be able to challenge class membership.” Id. at 309.

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 requirements if individualized fact-finding or mini-trials will be required to prove class membership. Id. at 307.

Since Carrera, courts in the Third Circuit have continued to apply a strict ascertainability standard. See, e.g., Mladenov v. Wegmans Food Markets, 124 F. Supp.3d 360 (D.N.J. 2015) (striking class allegations at the pleading stage because plaintiffs could not demonstrate any reliable way to determine who saw the allegedly deceptive signs at issue; “if the records plaintiffs rely upon are insufficient to identify those included within the specifically defined class, an ascertainability issue arises”); City Select Auto Sales v. BMW Bank of North America, 2015 WL 5769951 (D.N.J. Sept. 29, 2015) (finding records were insufficient to verify class membership).

Circuit Courts Following The Third Circuit Approach

The U.S. Courts of Appeal for the First, Second, Fourth and Eleventh Circuits have joined the Third Circuit in requiring that class members be identified by reliable and administratively feasible means. In Karhu v. Vital Pharmaceuticals, Inc., 621 Fed. Appx. 945 (11th Cir. 2015), the Eleventh Circuit rejected the plaintiffs' proposal that class members could be identified through “self-identification” via affidavit, affirming the denial of class certification because the proposed classes were not ascertainable. Id. at 949. Like the Third Circuit in Carrera, the court highlighted the potential due process implications of self-identification. Id. at 948-949. See also Bussey v. Macon County Greyhound Park, Inc., 562 Fed. Appx. 782, 787 (11th Cir. 2014) (recognizing that “the objective criteria [for identifying class members] should be administratively feasible” and that “[a]dministrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual inquiry”).

Similarly, in EQT Prod. Co. v. Adair, 764 F.3d 347 (4th Cir. 2014), the Fourth Circuit stressed that while “plaintiffs need not be able to identify every class member at the time of certification … [i]f class members are impossible to identify without extensive and individualized fact finding or 'mini-trials,' then a class action is inappropriate.” Id. at 358 (quoting Marcus, 687 F.3d at 593). The court reversed the grant of certification because, although some putative class members could be identified through defendants' records, others could not. Id. at 360.

The First and Second Circuits have also weighed in, employing the Carrera approach. See In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st Cir. 2015) (although citing Carrera, the court only required that “the definition of the class must be 'definite,' that is, the standards must allow the class members to be ascertainable,” deciding that a class action may be certified when it includes a de-minimis number of uninjured class members); and Brecher v. Republic of Argentina, 802 F.3d 303 (2d Cir. 2015) (holding that for a class to be ascertainable it must be defined by objective criteria, be administratively feasible, and not require mini-hearings to determine class membership).

Circuit Courts Adopting a Less Stringent Approach

In contrast, at least four circuit courts of appeal have taken a distinctly less stringent and more consumer-friendly approach toward ascertainability. The U.S. Courts of Appeal for the Seventh Circuit, in Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015), cautioned that “district courts should continue to insist that the class definition satisfy the established meaning of ascertainability by defining classes clearly and with objective criteria. Id. at 672. “If a class is ascertainable in this sense, courts should not decline certification merely because the plaintiff's proposed method for identifying class members relies on affidavits.” Id. Calling the Third Circuit's approach the “high-water mark of its developing ascertainability doctrine,” id. at 662, the Seventh Circuit explained that the approach “goes much further than the established meaning of ascertainability and in our view misreads Rule 23.” Id. In affirming class certification, the Seventh Circuit focused on the class definition itself rather than on whether it would be difficult to identify certain members of the class, explaining that policy concerns regarding identification of class members could be adequately addressed by the Rule 23(b)(3) “superiority” requirement (i.e., that class treatment is “superior” to other methods of handling the case). Id. at 663-664.

Similarly, the U.S. Court of Appeals for the Fifth, Sixth and Eighth Circuits have either outright rejected Carrera or qualified its import. See Sandusky v. Wellness Ctr. LLC v. Medtox Scientific Inc., 821 F.3d 992 (8th Cir. 2016) (reversing the denial of class certification in a TCPA case and focusing on whether the class was adequately defined under Rule 23, rather than whether it would be difficult to identify individual class members of an adequately defined class); Frey v. First Nat'l Bank Southwest, 602 Fed. Appx. 164, 169 (5th Cir. 2015) (although not strongly repudiating Carrera, the court ruled that “some inquiries with banks or individual class members can be made” to identify class members and found that such fact investigation was not an impediment to certifying the class); Rikos v. Proctor & Gamble Co., 799 F.3d 497, 525, 526 (6th Cir. 2015) (“We see no reason to follow Carrera, particularly given the strong criticism it has attracted from other courts” and affirming certification even though identifying class members “would require substantial review, likely of internal [defendant] data” and “such review could be supplemented through the use of receipts, affidavits, and a special master to review individual claims.”).

Will the Ninth Circuit Be the Tipping Point For Supreme Court Review?

With divergent ascertainability standards among the circuit courts, it has come to the point where the same putative class could receive varying treatment depending on the circuit in which the case is filed. A Ninth Circuit decision regarding ascertainability in Briseno v. ConAgra, which was argued in September, or Jones v. ConAgra,could provide important guidance and arguably be the impetus for Supreme Court review.

In Briseno, the plaintiffs challenged ConAgra's “100% natural” oil on the basis that the product was allegedly derived from GMO ingredients. ConAgra appealed the district court's certification of the plaintiffs' proposed class, arguing, in part, that the court had found ascertainability (whether the individual simply purchased Wesson Oils during the class period) without evidence of administrative feasibility (such as a receipt). During oral argument, the court focused primarily on ascertainability, questioning whether consumers' self-identification through affidavits could sufficiently ascertain the class while protecting the defendant's due process rights.

It is unclear how the Ninth Circuit will come down, as other California district courts have disagreed with the ruling of the lower court in Briseno. For example, the Northern District of California, in Jones, denied class certification because there was “no objective, verifiable criteria for determining [class] membership,” explaining that it was impossible to tell who had purchased products with the labels at issue. Jones is also on appeal to the Ninth Circuit, but was recently stayed pending the Supreme Court's decision in Microsoft Corp. v. Baker.

Given the circuit split on the issue of ascertainability, the Ninth Circuit's decision in Briseno and/or Jones could be the impetus for the Supreme Court to take up the question and have the final say on the test for identification of class members, particularly in cases involving low-cost consumer products. Until then, however, parties and counsel involved in litigation on behalf of the food industry should continue to be aware of the developing case law.

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Vivian Quinn is a partner and Tracy Scarpello is a senior associate at Nixon Peabody LLP. They concentrate their practice on commercial and consumer product litigation, including work for the Food & Beverage Industry.

In the context of civil class action litigation, “ascertainability” includes the identification of individuals who qualify for class membership. Although not an explicit Rule 23 requirement, since the U.S. Court of Appeals for the Third Circuit's decision in Carrera v. Bayer Corporation, 727 F.3d 300 (3d Cir. 2013), federal appeals courts have been divided over the significance and scope of the ascertainability requirement, particularly in litigation involving low-cost consumer goods as consumers may not retain receipts for such items to document proof of purchase.

Despite requests for change, the Judicial Conference Advisory Committee on Civil Rules declined to include ascertainability in its proposed changes to Rule 23. See “Proposed Amendments to the Federal Rules of Appellate, Bankruptcy, Civil, and Criminal Procedure” (Aug. 12, 2016). In addition, the U.S. Supreme Court recently rejected two petitions for certiorari earlier this year that would have addressed ascertainability. See Mullins v. Direct Digital, LLC , 136 S. Ct. 1161 (Feb. 29, 2016) and Rikos v. Procter & Gamble Co. , 136 S. Ct. 1493 (Mar. 28, 2016). Food labeling cases pending before the U.S. Court of Appeals for the Ninth Circuit, however, could potentially provide the Supreme Court with another opportunity to settle the circuit split.

Third Circuit's Stringent Interpretation of Ascertainability

The Third Circuit has adopted a strict standard for analyzing when a proposed class is “ascertainable.” Class members must be identifiable by verifiable and administratively feasible means in addition to the requirement that the class be defined with reference to objective criteria. This law was settled in a trilogy of decisions — Marcus v. BMW of North America , 687 F.3d 583 (3d Cir. 2012), Hayes v. Wal-Mart Stores , 725 F.3d 349 (3d Cir. 2013), and Carrera .

Marcus, the first of the trilogy, reaffirmed that “an essential prerequisite of a class action…is that the class must be currently and readily ascertainable based on objective criteria,” and “[i]f class members are impossible to identify without extensive and individualized fact-finding or 'mini-trials,' then a class action is inappropriate.” 687 F.3d at 593. The mere “say so” of the class member is not enough to establish class membership. Id. at 594. Similarly, in Hayes, where the district court noted that defendant “had no method for determining how many of the 3,500 … transactions that took place during the class period” met the class definition, the Third Circuit remanded the case for plaintiff to “offer some reliable and administratively feasible alternative” for determination of class membership. 725 F.3d at 355.

On the heels of Marcus and Hayes, the Third Circuit decided Carrera, recognizing that the “plaintiff must demonstrate his purported method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence used to prove class membership.” 727 F.3d at 308. The court rejected plaintiffs' proposed use of third-party retailer records to identify class members because there was no evidence that “a single purchaser” could be identified by those records. Id. at 308-309. The court also rejected the plaintiffs' proposal to use affidavits of class members to establish class membership because “it does not address a core concern of ascertainability: that a defendant must be able to challenge class membership.” Id. at 309.

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 requirements if individualized fact-finding or mini-trials will be required to prove class membership. Id. at 307.

Since Carrera, courts in the Third Circuit have continued to apply a strict ascertainability standard. See, e.g., Mladenov v. Wegmans Food Markets , 124 F. Supp.3d 360 (D.N.J. 2015) (striking class allegations at the pleading stage because plaintiffs could not demonstrate any reliable way to determine who saw the allegedly deceptive signs at issue; “if the records plaintiffs rely upon are insufficient to identify those included within the specifically defined class, an ascertainability issue arises”); City Select Auto Sales v. BMW Bank of North America, 2015 WL 5769951 (D.N.J. Sept. 29, 2015) (finding records were insufficient to verify class membership).

Circuit Courts Following The Third Circuit Approach

The U.S. Courts of Appeal for the First, Second, Fourth and Eleventh Circuits have joined the Third Circuit in requiring that class members be identified by reliable and administratively feasible means. In Karhu v. Vital Pharmaceuticals, Inc. , 621 Fed. Appx. 945 (11th Cir. 2015), the Eleventh Circuit rejected the plaintiffs' proposal that class members could be identified through “self-identification” via affidavit, affirming the denial of class certification because the proposed classes were not ascertainable. Id. at 949. Like the Third Circuit in Carrera, the court highlighted the potential due process implications of self-identification. Id. at 948-949. See also Bussey v. Macon County Greyhound Park, Inc. , 562 Fed. Appx. 782, 787 (11th Cir. 2014) (recognizing that “the objective criteria [for identifying class members] should be administratively feasible” and that “[a]dministrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual inquiry”).

Similarly, in EQT Prod. Co. v. Adair , 764 F.3d 347 (4th Cir. 2014), the Fourth Circuit stressed that while “plaintiffs need not be able to identify every class member at the time of certification … [i]f class members are impossible to identify without extensive and individualized fact finding or 'mini-trials,' then a class action is inappropriate.” Id . at 358 (quoting Marcus , 687 F.3d at 593). The court reversed the grant of certification because, although some putative class members could be identified through defendants' records, others could not. Id. at 360.

The First and Second Circuits have also weighed in, employing the Carrera approach. See In re Nexium Antitrust Litig. , 777 F.3d 9, 19 (1st Cir. 2015) (although citing Carrera , the court only required that “the definition of the class must be 'definite,' that is, the standards must allow the class members to be ascertainable,” deciding that a class action may be certified when it includes a de-minimis number of uninjured class members); and Brecher v. Republic of Argentina , 802 F.3d 303 (2d Cir. 2015) (holding that for a class to be ascertainable it must be defined by objective criteria, be administratively feasible, and not require mini-hearings to determine class membership).

Circuit Courts Adopting a Less Stringent Approach

In contrast, at least four circuit courts of appeal have taken a distinctly less stringent and more consumer-friendly approach toward ascertainability. The U.S. Courts of Appeal for the Seventh Circuit, in Mullins v. Direct Digital, LLC , 795 F.3d 654 (7th Cir. 2015), cautioned that “district courts should continue to insist that the class definition satisfy the established meaning of ascertainability by defining classes clearly and with objective criteria. Id. at 672. “If a class is ascertainable in this sense, courts should not decline certification merely because the plaintiff's proposed method for identifying class members relies on affidavits.” Id. Calling the Third Circuit's approach the “high-water mark of its developing ascertainability doctrine,” id. at 662, the Seventh Circuit explained that the approach “goes much further than the established meaning of ascertainability and in our view misreads Rule 23.” Id. In affirming class certification, the Seventh Circuit focused on the class definition itself rather than on whether it would be difficult to identify certain members of the class, explaining that policy concerns regarding identification of class members could be adequately addressed by the Rule 23(b)(3) “superiority” requirement (i.e., that class treatment is “superior” to other methods of handling the case). Id. at 663-664.

Similarly, the U.S. Court of Appeals for the Fifth, Sixth and Eighth Circuits have either outright rejected Carrera or qualified its import. See Sandusky v. Wellness Ctr. LLC v. Medtox Scientific Inc. , 821 F.3d 992 (8th Cir. 2016) (reversing the denial of class certification in a TCPA case and focusing on whether the class was adequately defined under Rule 23, rather than whether it would be difficult to identify individual class members of an adequately defined class); Frey v. First Nat'l Bank Southwest , 602 Fed. Appx. 164, 169 (5th Cir. 2015) (although not strongly repudiating Carrera , the court ruled that “some inquiries with banks or individual class members can be made” to identify class members and found that such fact investigation was not an impediment to certifying the class); Rikos v. Proctor & Gamble Co. , 799 F.3d 497, 525, 526 (6th Cir. 2015) (“We see no reason to follow Carrera , particularly given the strong criticism it has attracted from other courts” and affirming certification even though identifying class members “would require substantial review, likely of internal [defendant] data” and “such review could be supplemented through the use of receipts, affidavits, and a special master to review individual claims.”).

Will the Ninth Circuit Be the Tipping Point For Supreme Court Review?

With divergent ascertainability standards among the circuit courts, it has come to the point where the same putative class could receive varying treatment depending on the circuit in which the case is filed. A Ninth Circuit decision regarding ascertainability in Briseno v. ConAgra, which was argued in September, or Jones v. ConAgra,could provide important guidance and arguably be the impetus for Supreme Court review.

In Briseno, the plaintiffs challenged ConAgra's “100% natural” oil on the basis that the product was allegedly derived from GMO ingredients. ConAgra appealed the district court's certification of the plaintiffs' proposed class, arguing, in part, that the court had found ascertainability (whether the individual simply purchased Wesson Oils during the class period) without evidence of administrative feasibility (such as a receipt). During oral argument, the court focused primarily on ascertainability, questioning whether consumers' self-identification through affidavits could sufficiently ascertain the class while protecting the defendant's due process rights.

It is unclear how the Ninth Circuit will come down, as other California district courts have disagreed with the ruling of the lower court in Briseno. For example, the Northern District of California, in Jones, denied class certification because there was “no objective, verifiable criteria for determining [class] membership,” explaining that it was impossible to tell who had purchased products with the labels at issue. Jones is also on appeal to the Ninth Circuit, but was recently stayed pending the Supreme Court's decision in Microsoft Corp. v. Baker.

Given the circuit split on the issue of ascertainability, the Ninth Circuit's decision in Briseno and/or Jones could be the impetus for the Supreme Court to take up the question and have the final say on the test for identification of class members, particularly in cases involving low-cost consumer products. Until then, however, parties and counsel involved in litigation on behalf of the food industry should continue to be aware of the developing case law.

*****
Vivian Quinn is a partner and Tracy Scarpello is a senior associate at Nixon Peabody LLP. They concentrate their practice on commercial and consumer product litigation, including work for the Food & Beverage Industry.