Whether a class of plaintiffs must be “ascertainable”—i.e. capable of being feasibly identified through an objective process—continues to be one of the most contested legal issues in class-action litigation. We’ve written about ascertainability mostly in the context of food labeling lawsuits (our collection is here) but it has arisen in claims involving other consumer products. The U.S. Court of Appeals for the Eleventh Circuit is the latest jurisdiction to weigh in on the issue with a decision that directly addresses one of the common objections to ascertainability—that it dooms small-dollar class-action suits.
The plaintiff in Karhu v. Vital Pharmaceuticals accused the defendant of falsely advertising its dietary supplement, “Meltdown Fat Incinerator,” because it did not in fact incinerate his fat. The federal district court dismissed Karhu’s claims because he failed to demonstrate the class members were ascertainable. The Eleventh Circuit affirmed the district court. Judge Richard Goldberg of the U.S. Court of International Trade, sitting by designation, authored the majority opinion and Judge Beverly Martin wrote a cautionary concurrence.
Judge Goldberg acknowledged that ascertainability is an implicit requirement of Rule 23, writing that “the plaintiff seeking certification bears to burden of establishing the requirements of Rule 23, including ascertainability.” (our emphasis). To meet that requirement, the plaintiff must “propose an administratively feasible method by which class members can be identified.” Under that definition of ascertainability, plaintiffs do not meet their burden by simply defining the class with narrow, objective criteria. This places the Eleventh Circuit at odds with numerous district courts in the Ninth Circuit, which have accepted narrow class definition as sufficient proof of ascertainability.
Plaintiffs also do not meet their burden, the Karhu court reasoned, by asserting that objective criteria or methods exist that can demonstrate ascertainability. Karhu informed the district court that class members could be identified using Vital Pharmaceuticals’ sales records or that members could self-identify through the use of affidavits attesting to their purchases of Meltdown. The plaintiff must in both instances establish that the methods are “administratively feasible and not otherwise problematic.”
Other federal circuit courts, such as the Third Circuit in Bayer v. Carrera, have expressed especially serious reservations with self-identification, such as the potential for fraud and the need to respect defendants’ due-process rights by allowing them to scrutinize the affidavits. Karhu argued that “defendants have no due-process right against unverified self-identification when total liability will be established at trial, and will not change depending on the number of claims actually made. Because defendants’ total liability will not be affected, it should not matter to them whether or not they are defrauded.” Several district courts in the Ninth Circuit have cited this as their justification for a low ascertainability threshold. Judge Goldberg, however, found this argument “has no force,” because the due-process right also ensures the finality of a judgment. If fraud reduces the amount of recovery injured plaintiffs can receive, those plaintiffs could argue that they were inadequately represented, and thus not bound by the judgement.
Karhu also argued that the ascertainability requirement will put an end to small-dollar class actions. This policy argument has proven persuasive with several district court judges in the Ninth Circuit, and was the subject of an amicus brief by Public Citizen in a case awaiting oral argument in that circuit, Jones v. ConAgra. Judge Goldberg did not share Karhu’s concerns. He noted that in Karhu’s motion to amend the class certification denial, he proposed class member identification methods which, had he included them in his certification motion, may have met the ascertainability requirement. In her concurrence, Judge Martin agreed that the plaintiff belatedly offered a method—subpoenaing retailers for their records—that could feasibly identify class members. Because her fears over the future of small-dollar class actions were more pronounced than the majority’s, Judge Martin also argued that self-identification “can and should be a sufficient means of ascertaining a class.”
Regretfully, the majority in Karhu missed an opportunity to more forcefully respond to Judge Martin’s hand-wringing over the future of class actions with two retorts, both of which Washington Legal Foundation addressed in its Jones v. ConAgra amicus brief. First, the ascertainability requirement only applies for money-damage class actions, under Rule 23(b)(3). Plaintiffs need not prove ascertainability in actions for injunctive or declaratory relief under Rule 23(b)(2). While such actions right the wrongs alleged by plaintiffs, their lawyers would likely reap far lower attorneys’ fees, which is of course why the class-action bar so fiercely opposes ascertainability for money-damage classes.
Second, the ascertainability requirement not only protects the due-process rights of defendants, it also safeguards the rights and recovery of “absent” class members. As we explained in a past post, unascertainable classes are vulnerable to widespread fraud if defendants settle or plaintiffs are victorious. That fraud reduces the recovery for those who were supposedly injured. A named plaintiffs’ failure to ascertain the size of a class can also lead to low claims rates on settlement funds. Those settlements offer no value to absent class members and are at a high risk of being judicially rejected.
That said, Karhu positively confirms the Eleventh Circuit’s acceptance of ascertainability as a judicial check on unmanageable class actions. In addition, Judge Goldberg’s opinion implicitly affirmed that courts can deny class certification on lack of ascertainability alone. That conclusion is contrary to the outcome of Jones v. ConAgra, the case now pending before the Ninth Circuit. In his district court ruling, Judge Charles Breyer held the class was not ascertainable, but noted explicitly that such a determination did not end a court’s review of a motion for certification.
Courts should not certify a class of plaintiffs whose members cannot be feasibly ascertained by objective methods even if the class otherwise satisfies the requirements of Rule 23. The Ninth Circuit and other federal courts considering ascertainability should follow the Eleventh Circuit’s lead on that point and its broader holding. Unacertainable class actions benefit no one other than the plaintiffs’ lawyers who file them.
Also published by Forbes.com at WLF’s contributor page