News Room

Ascertainability Relaxed: The New Wave Of Rulings

Law360, New York
October 19, 2015

When ascertainability emerged as a new hurdle for plaintiffs attorneys in class certification in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), courts initially took a strict stance in their analysis. However, the tide is turning and the barrier that Carrera’s standard presented for establishing class certification is eroding. Plaintiffs attorneys breathed a sigh of relief when Byrd v. Aaron’s Inc., 784 F.3d 154, 172 (3d Cir. April 16, 2015) clarified that ascertainability is a consideration distinct from the Rule 23 analysis.

Further, several courts across the nation have refused to follow Carrera, forging new territory. The New Jersey Appellate Court in Daniels v. Hollister Co., 113 A.3d 796 (N.J. App. 2015) ruled that the Third Circuit adopted an unduly rigorous ascertainability standard, and decided it would not follow it. Instead, Daniels looked to the policies surrounding the creation of class actions in deciding how to apply its analysis to ascertainability. These cases have made state court, once again, a more favorable venue for plaintiffs attorneys seeking to certify classes.

The rigorous ascertainability standard was introduced in Carrera v. Bayer Corp, supra, where the plaintiffs alleged that Bayer engaged in false advertising of its product, One-a-Day WeightSmart multivitamin. The court held that to meet the ascertainability standard, the plaintiffs must show that, based on “objective criteria”, the class can be ascertained, and the “method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence used to prove class membership.” Carrera v. Bayer Corp., 727 F.3d at 306-308 (citing Marcus v. BMW of N. Am. LLC, 687 F.3d 583, 593 (3d Cir. 2012).The Carrera court decided that neither “retailer records” nor customer affidavits attesting to purchasing the product, along with the price paid, was enough to overcome the ascertainability standard for a class action.

But since then, state and federal courts seem to be riding a new wave: finding a way around the strict standard of Carrera. In the Ninth Circuit, where there remains a split in whether Carrera will be applied, there is erosion of this standard. In McCrary v. Elations Co. LLC at 1 (C.D. Cal. Jan. 13, 2014), the plaintiff alleged false advertising of a product which was represented as having a “clinically proven formula.” Id. at 2. The defendant attempted to rely on Carrera to oppose “self-identification” by class remembers by arguing it would “be deprived of its due process right to defend against claims of class membership, such as by challenging a class member’s actual purchase of the product, or their failure to remember the Elations’ label.” Id. at 8. However, U.S. District Judge Jesus Bernal, stated in regards to Carrera: “While this now may be the law in the Third Circuit, it is not currently the law in the Ninth Circuit.” Id. Judge Bernal went on to explain one emerging ascertainability standard in the Ninth Circuit. He stated, “In this circuit, it is enough that the class definition describes ‘a set of a common characteristics sufficient to allow’ a prospective plaintiff to ‘identify himself or herself as having a right to recover based on the description.’ Id. (citing Moreno v. AutoZone Inc., 251 F.R.D. 417, 421 (N.D.Cal.2008). Judge Bernal explained that the class definition provided enough information for the class to understand whether they met the criteria to be class members. Id. The class definition provided a “description” of the product at issue and the dates in which customers would have had to purchase the product to qualify as members of the class. Id. So class members could be ascertained by self-certification.

In his opinion in McCrary, Judge Bernal cites to several cases in support of his stance with regard to ascertainability, which also shows the strong foundation for a relaxed ascertainability standard built in California. McCrary and the cases cited therein show promise of a relaxed standard continuing in the Ninth Circuit.

Even a state court in the Third Circuit, where Carrera was decided, shows promise of a relaxed ascertainability standard. The New Jersey Appellate Court in Daniels v. Hollister, supra, declined to enforce the rigorous standard enunciated in Carrera, despite the fact that the action involved a consumer item of low value, as was at issue in Carrera. In a bold move, Daniels also clarified that ascertainability is a consideration which should be analyzed distinctly from the Rule 23 factors.

Daniels v. Hollister, supra, ultimately held that the trial court adequately conducted the ascertainability analysis, and that class certification was proper, after much criticism of the Carrera standard. Daniels involved $25 gift cards that customers received after purchasing items totaling $75 or more. Hollister stopped honoring the $25 dollar gift cards, even unused cards, after Jan. 30, 2010, and Daniels subsequently sued. Daniels alleged the gift card stated there was “no expiration date.” Daniels v. Hollister Co., 113 A.3d at 797.

Daniels pointed out the inherent inconsistencies in the federal court’s ascertainability standard. It discussed the duality in Carrera and a subsequent Third Circuit case, Marcus v. BMW of N. Am. LLC, 687 F.3d 583 (3d Cir. 2012). The Carrera court was concerned with eliminating its “administrative burdens” by requiring readily identifiable class members, thus essentially finding the ascertainability standard to be part of the Rule 23 factors. Daniels also noted that the Third Circuit later backpedaled in Marcus, reasoning that the ascertainability analysis should be conducted separately from the Rule 23 requirement of “whether the class was properly defined.” Daniels v. Hollister Co., 113 A.3d at 799 (citing Shelton v. Bledsoe, 775 F.3d 554, 560 (3d Cir.2015)).

Daniels also pointed to further inconsistencies in the Third Circuit’s stance on ascertainability and acknowledged that the Third Circuit’s ascertainability standard is far from resolved. Daniels noted that even after applying a more rigorous standard in the first few cases involving ascertainability, the Third Circuit retreated in a subsequent case Shelton v. Bledsoe, 775 F.3d 554, 563 (3d Cir. 2015), and held that the ascertainability standard need not be applied in cases seeking solely “injunctive and declaratory relief.” Daniels v. Hollister Co., 113 A.3d at 800 (citing Shelton v. Bledsoe, 775 F.3d at 563). This has further eroded the initial holding of Carrera.

Finally, Daniels’ review of the Third Circuit’s decision in Byrd v. Aaron’s Inc. (3d Cir. April 16, 2015), highlights what many practitioners saw as the continued chipping away of Carrera. Daniels used Circuit Judge Rendell’s concurring opinion to all but disregard Carrera: “[T]he lengths to which the majority goes in its attempt to clarify what our requirement of ascertainability means, and to explain how this implicit requirement fits in the class certification calculus, indicates that the time has come to do away with this newly created aspect of Rule 23 in the Third Circuit.” Daniels v. Hollister Co., 113 A.3d at 800 (citing Byrd v. Aaron’s Inc., 784 F.3d at 172).

Daniels also noted that the concerns raised by Judge Rendell in Byrd were “more in line” with the U.S. Supreme Court’s policies in regards to class actions. Specifically, the Daniels court used the Supreme Court’s prior reasoning to support the Daniels’ position that ascertainability was a barrier to the policy, which incentivizes individuals to bring suit to protect their rights even if the recovery is of low value. This reasoning lead to Daniels’ finding that ascertainability did not play a role in the analysis for the class certification. Daniels agreed that low value aggregation through the class action mechanism becomes worth the time and resources required to bring suit. Daniels mimicked the Supreme Court, stating the “historic mission” of the class action lawsuit is to look after “the smaller guy.” Daniels v. Hollister Co., 113 A.3d at 798 (N.J. App. 2015) (citing Iliadis v. Wal-Mart Stores Inc., 191 N.J. 88, 104 (2007) (citing (quoting Marvin E. Frankel, Amended Rule 23 From a Judge’s Point of View, 32 Antitrust L.J. 295, 299 (1966)) In Daniels, there was no question that a multitude of individuals had suffered small value injuries as a result of not being allowed to use their $25 gift cards. The trial judge in Daniels acknowledged Hollister admittedly voided “over $3 million worth of $25 gift cards.”

Similarly, the court in Daniels agreed with the concerns of the concurring and dissenting judges in both Carrera and Byrd, specifically that when ascertainability is applied in a rigid fashion, it will “burden or eliminate” class actions without any true benefit to society. Id. at 801.

Daniels ultimately concluded that on a state level, ascertainability standards have no place in a “low value consumer class action” case. Daniels did decline to rule on ascertainability beyond the realm of small value class actions. However, based on the reasoning set forth and the analysis shown by Daniels, there is hope that the ascertainability standard is slowly eroding from the rigorous standard once set forth in Carrera.

—By Brian S. Kabateck, Jennifer Duffy and Shelly Gill, Kabateck LLP

Brian Kabateck is a founding and managing partner in Kabateck LLP’s Los Angeles office. Kabateck is the former president of the Consumer Attorneys of California.

Jennifer Duffy is an associate in Kabateck LLP’s Los Angeles office. Prior to joining the firm, Duffy was a prosecutor for Long Beach, California, and a criminal defense attorney.

Shelly Gill is a post-bar law clerk at Kabateck LLP.