United States: More Thoughts On Ascertainability And Why It Matters In Deciding Whether To Certify A Class Action

Can you have a class action if you can't figure out who's in the proposed class? According to many in the plaintiffs' bar, the answer is "yes." But as we have discussed in prior blog posts, there is an emerging consensus to the contrary. Most courts agree that plaintiffs in consumer class actions have the burden of proving that members of the putative class can be identified (i.e., that the class is ascertainable). And most of those courts have held that it is not sufficient for plaintiffs to rely upon affidavits by would-be class members who attest that they fall within the class definition.

The Third Circuit adopted both of those principles last fall in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013). As we have reported, that court recently denied en banc review over objections by plaintiffs' lawyers that taking ascertainability seriously would render many class actions unsustainable.

As it turns out, a growing number of other courts are following Carrera's lead in holding that classes whose membership cannot be determined flunk the ascertainability requirement and therefore cannot be certified.

For example, in Karhu v. Vital Pharmaceuticals, Inc. (pdf) (S.D. Fla. Mar. 3, 2014), the court refused to certify a putative class of purchasers of weight-loss supplements. The court explained that the plaintiffs had failed to show any objective, administratively feasible method of ascertaining the identities of class members. Class members could not be identified from the defendants' records because the products were sold to retailers, and defendants therefore had no database of end-user consumers. The plaintiffs could not show that the purchasers could be identified from the records of third-party retailers. And, of course, few if any purchasers would have retained receipts from such purchases years after the fact.

The plaintiffs argued that class members could simply submit affidavits confirming that they bought the supplements at issue during the relevant time period. But the court recognized that this process would be extremely unwieldy, and would inevitably devolve into "a series of mini-trials" over the circumstances of particular purchases that would "defeat the purpose of class action treatment." And the court added—citing Carrera—that simply exempting the affidavits from individualized challenges would lead to fraudulent claims, which "could dilute the recovery of genuine class members."

Similarly, a federal court recently decertified a California class action—in part on ascertainability grounds— in In re Pom Wonderful LLC Marketing and Sales Practices Litigation (pdf) (C.D. Cal. Mar. 25, 2014). The plaintiffs alleged that Pom Wonderful had misled a class of California customers with purportedly false or misleading statements in advertising about the "various health benefits" of "certain Pom juice products." But the court held that class members could not be identified, and therefore that no "ascertainable class exists." In reaching that conclusion, the court provided some useful guidance on how ascertainability works:

  • "Class actions, and consumer class actions in particular, each fall on a continuum of ascertainability dependent upon the facts of the particular case or product."
  • "While no single factor is dispositive, relevant considerations include the price of the product, the range of potential or intended uses of a product, and the availability of purchase records."
  • "In situations where purported class members purchase an inexpensive product for a variety of reasons, and are unlikely to retain receipts or other transaction records, class actions may present such daunting administrative challenges that class treatment is not feasible."

Applying these principles, the court readily concluded that the proposed class in Pom Wonderful "falls well towards the unascertainable end of the spectrum." That was so for multiple reasons, including that (i) "millions of consumers paid only a few dollars per bottle"; (ii) "[f]ew, if any consumers, are likely to have retained receipts"; (iii) "[n]o bottle, label, or package included any of the alleged misrepresentations" (as they were all contained in advertising); and (iv) "consumer motivations" for purchasing Pom juice "likely vary greatly, and could include a wide array of sentiments such as 'I was thirsty,' 'I wanted to try something new,' 'I like the color,' 'It mixes well with other beverages,' or even, 'I like the taste,' or, as Plaintiffs contend, 'It prevents prostate cancer.'" As a result, "there is no way to reliably determine who purchased [the challenged] products or when they did so."

(The decision also contains an extensive discussion of why the plaintiffs' proposed damages models failed to satisfy the predominance requirement under Comcast Corp. v. Behrend.)

Carrera, Karhu, and Pom Wonderful should be helpful for defendants who oppose class certification when the proposed class consists of purchasers of consumer products for which there are no customer lists. In these cases, plaintiffs often have no real plan for satisfying the ascertainability requirement other than by inviting a show of hands—via barebones affidavits—from the (relatively few) individuals who might want a small payout from a potential class fund.

In response, defendants routinely (and appropriately) argue that affidavits are not good enough, because due process entitles them to challenge an individual's claim that he or she purchased a given product, such as by cross examination at a trial. Recognizing that the right to individualized cross-examination would render a trial unmanageable—making class certification inappropriate—plaintiffs sometimes argue that fraudulent claims can be winnowed out through the use of a claims administrator.

That approach strikes us as improper. To be sure, in class action settlements, the parties often agree that a claims administrator may make judgments to determine whether a claimant truly is a class member who qualifies for benefits and to assess whether any submitted claims are fraudulent. But that agreement reflects one of the compromises of settling a case, in which defendants trade away the right to cross-examine each putative class member in exchange for certainty, finality, and—most significantly—a substantial discount on the potential liability claimed by the plaintiff and his or her counsel.

By contrast, in a litigated case, defendants' due process rights cannot be so easily jettisoned. In the absence of party agreement, how can it be that the administrative determinations of an outside third party serve as an adequate substitute for a defendant's right to cross-examine its accusers and for judicial resolution of factual disputes? (We leave to one side whether assessments by claims administrators would be accurate, but commend to our readers an article by Alison Frankel discussing an interesting amicus brief on the subject that was filed in Carrera.)

* * *

In short, when it comes to ascertainability, the list of questions goes on and on. Defendants targeted by consumer class actions where customer lists are not readily available may wish to insist upon answers.

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Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2014. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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