United States: Third Circuit Emphasizes Distinction Between Ascertainability Analysis And Rule 23 Requirements

Action Item: Byrd, the latest in a recent line of cases from the Third Circuit concerning the ascertainability standard, emphasizes the importance of keeping the ascertainability analysis distinct from Rule 23's other requirements.

In Byrd v. Aaron's, Inc., the Third Circuit reversed a decision denying class certification on ascertainability grounds after concluding that the District Court conflated its ascertainability analysis with the explicit requirements of Rule 23. 2015 WL 1727613 (3d Cir. April 16, 2015). While citing to and discussing its recent decisions that required an ascertainability finding at the class certification stage in class actions arising under Rule 23(b)(3), (see Marcus v. BMW of N. Am., LLC, 687 F.3d 583 (3d Cir. 2012); Hayes v. Wal–Mart Stores, Inc., 725 F.3,d 349 (3d Cir. 2013); Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013)), the Court emphasized that the ascertainability requirement is separate from Rule 23's other requirements and consists of "nothing more" than the following inquiries: "(1) the class is 'defined with reference to objective criteria'; and (2) there is a 'reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition." Byrd, 2015 WL 1727613, at *3.

Crystal and Brian Byrd filed a putative class action against Aaron's, Inc. and its franchisees ("Defendants") alleging violations of the Electronic Communications Privacy Act of 1986 ("ECPA"). The Byrds moved for class certification under Rules 23(b)(2) and 23(b)(3) providing two proposed classes:

Class I: All persons who leased and/or purchased one or more computers from Aaron's Inc., and their household members, on whose computers DesignerWare's Detective Mode was installed and activated without such person's consent on or after January 1, 2007.

Class II: All persons who leased and/or purchased one or more computers from Aaron's, Inc. or an Aaron's, Inc. franchisee, and their household members, on whose computers DesignerWare's Detective Mode was installed and activated without such person's consent on or after January 1, 2007.

The reasons the District Court denied the motion for certification on ascertainability grounds was threefold: (1) the classes were underinclusive because they did not include all those whose interests were harmed; (2) the classes were overly broad because not every person who purchased or leased a computer had a claim under the ECPA; and (3) the term "household members" was not properly defined. The Third Circuit reversed this decision for several reasons.

First, the Third Circuit held that the District Court abused its discretion by misstating the rule governing ascertainability and, specifically, because" the District Court blended the issue of ascertainability with that of class definition, something "that Marcus took pains to address as separate preliminary inquiries that preceded Rule 23 analysis." Id. at *6 (citing Marcus, 687 F.3d at 591-94).

Second, the Third Circuit held that the District Court erred in "engraft[ing] an underinclusive requirement that is foreign to [the Third Circuit's] ascertainability standard." Id. The Court found that such a consideration is irrelevant, as "[i]ndividuals who are injured by a defendant but are excluded from a class are simply not bound by the outcome of that particular action." Id. at *7.

Third, the District Court's ascertainability analysis was considered flawed as it concluded that proposed classes were not ascertainable because they were "overly broad." Id. at *8. In doing so, the District Court erroneously injected "the explicit requirements of Rule 23 into the ascertainability standard without actually analyzing those requirements under the correct portion of Rule 23." Id.

Fourth, the Third Circuit held that the District Court had improperly applied the legal principles from Carrera to the issue of whether "household members" were ascertainable. Id. The Third Circuit held that the Byrds had provided a sufficient definition of "household members" and that records could be used to verify the amount and identity of those individuals. Id. Furthermore, the Court held that the Byrds' proposed reliance on relevant records to identify household members was a "far cry" from the unverified affidavits found deficient for ascertainability purposes in Carrera.¹

Based on these findings, the Third Circuit reversed the District Court's order denying class certification and remanded the matter with instructions to consider all of Rule 23's certification requirements. Class action practitioners should keep a close eye on how the District Court addresses class certification on remand.

Footnote

1. Judge Rendell filed a strongly worded concurring opinion, criticizing reliance on the ascertainability requirement in "low value consumer class actions" and stating that "it is time to retreat from our heightened ascertainability requirement in favor of following the historical meaning of ascertainability under Rule 23."

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