Defendant’s Attempt To Value Plaintiff’s Case Above $5 Million Fails in Recent CAFA Ruling
"Gambits” or Just Good Lawyering: Recent Class Action Cases in the Supreme Court

No resolution of growing rift on acceptable method for establishing ascertainability for small-dollar claims

By Jill M. Hutchison

IStock_000009666174MediumThe Supreme Court recently declined to wade into a developing circuit split on the question of just what constitutes an ascertainable class under Fed. R. Civ. P. 23(b)(3) class. In the case of many consumer products, particularly those that are consumable, like food, cosmetics, and supplements, the defendant is unlikely to have records to document individual customers’ purchases, and the consumers are unlikely to have kept receipts. In such cases, some court have permitted class members to self-identify by affidavit and have held that this identification method is acceptable to create an ascertainable class.

However, in 2013, the Third Circuit set what many viewed as a heightened bar for Rule 23’s ascertainability requirement. Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), involved allegations that Bayer falsely claimed that its WeightSmart product enhanced metabolism. The sole issue considered by the Third Circuit was whether the class was ascertainable. The plaintiffs suggested two methods for ascertaining the class: (1) through retailers’ records of online sales and sales using store reward or loyalty cards and (2) by class member affidavits that would attest to their purchase and state the amount they had purchased. The court first found that the evidence of retailer records was insufficient to support ascertainability by that method. Then, the court rejected the use of affidavits and class members’ say-so, noting that a defendant is entitled to challenge class membership, particularly where individuals would have difficulty accurately recalling their purchases.

The Eleventh Circuit followed suit. In Karhu v. Vital Pharmaceuticals, 621 Fed. Appx. 945 (11th Cir. 2015), the plaintiffs brought claims based on Vital’s advertisement that its Meltdown dietary supplement aided fat loss. Like the Third Circuit, the Eleventh Circuit held that the district court acted within its discretion in rejecting self-identification via affidavit as the basis for ascertaining the class. The court did not entirely reject self-identification as a possible option, but it did detail the many challenges posed by self-identification and indicate that a plaintiff who proposes it must establish that it is administratively feasible and how it will avoid such problems as affording defendants the opportunity to challenge class membership without requiring mini-trials.

The Seventh Circuit, however, declined to follow the Third Circuit’s lead. In Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015), the court was likewise faced with a class alleging consumer fraud by a dietary supplement seller, which the district court had certified based on the use of affidavits to identify class members. The court explained that ascertainability means that “a class must be defined clearly and that membership be defined by objective criteria rather than by, for example, a class member's state of mind.” Id. at 657. The court characterized decisions such as Carrerra as imposing a new, heightened class certification requirement with two prongs: “(1) the class must be ‘defined with reference to objective criteria’ (consistent with long-established law . . . ), and (2) there must be ‘a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.’” Id. at 662.  The court detailed why it declined to follow the Third Circuit’s approach and, instead, affirmed the order granting class certification.

On February 29, 2016, the Supreme Court denied the petition for writ of certiorari.   This leaves open the question of whether concerns over administrative feasibility effectively bar the use of affidavits to ascertain class membership and permit certification of classes involving small-value claims and everyday consumer products, with plaintiffs in the Seventh Circuit now having more flexibility in establishing the ascertainability of their proposed class than those in the Third or Eleventh Circuits.

Direct Digital, LLC v. Mullins, --- S Ct. ---, 2016 WL 763259 (Feb. 29, 2016).