United States: The Incredible Shrinking Red Bull Refund: How Should Courts Verify Class Membership?

Last Updated: October 20 2014
Article by Michelle Gillette and Joshua T. Foust

A recent class action settlement has brought fresh attention to two age-old questions. The first: does Red Bull actually give you wings? The second: how carefully should courts screen out bogus claimants from proposed classes of refund-seeking consumers?

Earlier this month, a federal court in Manhattan conditionally approved a settlement in two related class actions brought against Red Bull North America and Red Bull GmbH, makers of the eponymous–and ubiquitous–energy drink. The class actions allege that Red Bull falsely advertised the energy benefits of its products through advertising claims such as the slogan "Red Bull Gives You Wings."

According to the plaintiffs, Red Bull's advertisements violate a panoply of state consumer protection statutes by touting its effects on "performance, concentration and reaction speed" without any scientific support that its ingredients provide "any more benefit to consumers than a caffeine tablet or cup of coffee." Red Bull consumers have suffered harm, they claim, by paying a higher price for Red Bull products instead of "simpler and less expensive caffeine-only products."

Red Bull has agreed to settle these twin suits by creating a settlement fund that will pay a $10 refund (or Red Bull products up to the value of $15) to any purchaser who files a valid claim. All a Red Bull consumer needs to do is (a) mail in a signed, dated claim form listing her name and address and confirming that she purchased at least one Red Bull product since 2002, or (b) submit an online claim form with the same information–no receipts or other proof of purchase required.

The catch, at least for Red Bull drinkers, is that the size of the settlement fund ($13 million) is set in stone, irrespective of how many class members apply for a refund. If fewer purchasers than expected claim their refund, each may receive more than the allotted $10; but if too many submit claims, each will have his refund "reduced proportionately" to ensure there is enough of the finite settlement pool to go around. The number of claimants to date is not public, but media reports indicate that the claims website crashed under a deluge of hits soon after the settlement was announced.

At first glance, the benefits of the settlement for each side seem obvious. For the plaintiffs' counsel, the settlement ensures a return on what was likely to be a challenging lawsuit full of thorny issues. Red Bull, for its part, made the business decision to obtain a settlement that admits no wrongdoing and is not binding in other cases.

As the shrinking refund in the Red Bull settlement illustrates, though, the question can be much more complicated for actual members of the class. The reason: what many courts have come to call the "ascertainability" problem. And it's an issue that any manufacturer or retailer in the consumer products space should be aware of.

Simply put, "ascertainability" boils down to one question that courts must answer before approving a class: have the plaintiffs' lawyers put forth a set of objective, reliable criteria–a checklist, so to speak–that the court can use to ascertain who is, and who is not, a qualifying class member? Consumer products companies have likely encountered a version of this problem in administering product recalls and refunds: with a finite budget allocated for such programs, how does a company ensure that only bona fide buyers are taking advantage of the refunds offered to incentivize returns and implement a recall?

Both legally and practically speaking, this issue is deceptively complex, and federal courts have reached strikingly different stances on the question. Some have found that prospective class members need simply "self-identify" by submitting a sworn statement confirming they purchased one of the products at issue–at least in class actions involving inexpensive consumer products. Their reasoning: since purchasers so rarely retain receipts for inexpensive products like Red Bull, a higher bar to membership would have the practical effect of making such class actions unfeasible.

But others have taken a stricter approach to ascertainability, and one key reason is exactly the danger posed by the Red Bull settlement–dilution of each member's recovery due to unverified claims:

Under no circumstances . . . will [the defendant] pay any amount other than $1[3] million, even if a significant number of inaccurate claims are submitted and paid out. For example, if claims are made for more than $1[3] million, and inaccurate or false claims cannot be screened out, claimants will simply receive less than they are entitled to. . . . It is unfair to absent class members if there is a significant likelihood their recovery will be diluted by fraudulent or inaccurate claims. In this case, . . . there is the possibility that [the plaintiff's] proposed method for ascertaining the class via [self-identification] will dilute the recovery of true class members.

That's how the Third Circuit explained the problem in Carrera v. Bayer, a seminal decision from 2013 that has divided other circuits. While Carrera may be destined for Supreme Court review, even its tougher critics have begun to take a firmer stance on verifying class membership. Just this July, for example, the Ninth Circuit upheld a denial of class certification because the proposed class relied on self-identification and was not ascertainable.

Ascertainability rarely becomes a major issue in class actions that settle, as opposed to those heading to trial, because it is inherently easier for courts to manage the former. In either context, though, the dilution problem should give defendants more ammunition for contesting class proposals with weak mechanisms for screening out false claims–especially when extremely popular or visible consumer products like Red Bull are involved. And despite the preliminary approval of the Red Bull settlement, look for the court to revisit its decision at the final approval hearing in May 2015 if claimants find their promised refunds have mysteriously taken flight.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions