In a closely watched appeal, the US Court of Appeals for the Ninth Circuit has squarely weighed in on the “ascertainability” of class members in a class-action lawsuit. The three-judge panel further widened a rift among federal courts of appeal on the issue, holding that plaintiffs need not demonstrate an administratively feasible way to identify class members at the class-certification stage.
In an August, 2016 WLF Legal Backgrounder, we predicted that a trio of class actions then-pending in the Ninth Circuit could prompt the US Supreme Court to resolve the circuit split on the ascertainability issue. Although that issue was briefed in all three cases, it was not decided in Brazil v. Dole Packaged Foods, LLC (No. 14-17480), and a hold placed on Jones v. ConAgra Foods, Inc. (No. 14-16327) pending a Supreme Court decision in Microsoft v. Baker is still in effect. The Ninth Circuit did address ascertainability in the third case discussed in that Legal Backgrounder—Briseno v. ConAgra Foods, Inc. The January 3 decision presents a view sharply in contrast with that of certain other circuits, most notably the Third Circuit.
By way of background, “ascertainability” involves the identification of people who qualify for membership in a putative class action, and it has become a frequent battleground on which class certification has been fought in the past few years. The ascertainability issue has taken on particular importance in low-value consumer class actions involving inexpensive retail products, as these cases have become an increasing burden for manufacturers, distributors and retailers in the current litigation environment involving a flood of class actions over labeling on food, beverage and other consumer products. That litigation has been particularly active in the so-called “Food Court”, the U.S. District Court for the Northern District of California, which is within the Ninth Circuit.
Since the Third Circuit in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), announced a heightened standard for the ascertainability requirement, circuit courts have been sharply divided over the meaning and extent of the “ascertainability” requirement. The Fourth and Eleventh Circuits have adopted the heightened standard for ascertainability taken by the Third Circuit in Carrera. Under this approach, a plaintiff cannot certify a class if class members cannot be identified without extensive and individualized fact-finding or “mini-trials.” The First, Fifth, Sixth, and Seventh Circuits have rejected the approach to the ascertainability requirement taken in Carrera. These courts only require that a plaintiff demonstrate that the class definition is based on objective criteria to meet the ascertainability requirement and permit some fact investigation into class membership. The Supreme Court has opted to stay out of this quagmire, having denied certiorari in two cases in the October Term 2015 that addressed ascertainability. Previously, the Ninth Circuit had only obliquely discussed the ascertainability requirement but had not enunciated a clear standard.
In Briseno, the Ninth Circuit addressed ascertainability directly. Briseno presented an interlocutory appeal from an order certifying a class of purchasers of Wesson Cooking Oil. There was a single claim in the case, namely, that reasonable consumers believe “100 percent natural” to mean “no genetically modified organisms.” Like other low-value consumer product cases, class members were unlikely to have receipts or other evidence to establish what they bought and how much they paid. Neither the defendant nor any third party had records to supply these details. Thus, self-identification would be required. Nonetheless, the district court held that the class was ascertainable, because the definition of “purchaser” was objective.
On appeal, the Briseno panel affirmed the district court and, siding with the Sixth, Seventh, and Eighth Circuits, found that “administrative feasibility” for determining class membership was not part of the ascertainability analysis. The panel first embarked on a textual analysis of Rule 23, finding that “the language of Rule 23 does not impose a freestanding administrative feasibility prerequisite to class certification.” The panel found the omission of “administrative feasibility” from the language of Rule 23 to be important, given the “extensive deliberative process” that preceded the passage of the Rule.
The Briseno panel next went to great length to reject each of the rationales offered by the Third Circuit for a heightened ascertainability requirement. First, the panel found that while it is important to “mitigate the administrative burdens” associated with class actions, the appropriate time to consider such interests is part of the balancing test under the superiority prong of Rule 23(b)(3). A freestanding administrative feasibility requirement “would often be outcome determinative for cases [involving inexpensive consumer goods], in which administrative feasibility would be difficult to demonstrate but in which there may be no realistic alternative to class treatment.” The panel also rejected the argument that an administrative feasibility requirement is necessary to protect absent class members because Rule 23 and “the Due Process Clause do not require actual, individual notice in all cases.” As to the argument that illegitimate claims may dilute the recovery of legitimate claimants, the panel recognized that “[t]he fraud concern may be valid in theory” but found there to be a low risk of fraudulent claims, especially in cases “involving low-cost consumer goods,” querying “[w]hy would a consumer risk perjury charges and spend the time and effort to submit a false claim for a de minimis monetary recovery?”
Finally, the panel rejected the argument that an administrative feasibility requirement is necessary to protect defendants’ due process rights, reasoning that defendants “can oppose the class representatives’ showings at every stage” and may “individually challenge the claims of absent class members if and when they file claims for damages” through the use of claims administrators to validate claims. The panel was not troubled by the use of affidavits to prove class membership, explaining that, in an individual case, an affidavit stating the plaintiff purchased a product “could force a liability determination at trial without offending the Due Process Clause, [and] we see no reason to refuse class certification simply because that same consumer will present her affidavit in a claims administration process after a liability determination has already been made.”
Although the panel rejected a standalone administrative feasibility requirement, the decision reasoned that the concerns underlying Carrera can be addressed in the context of Rule 23’s enumerated criteria, specifically, “the manageability criterion of the superiority requirement” of Rule 23(b)(3). As noted above, Briseno was an interlocutory appeal from an order certifying a class, not from a final judgment. This decision arguably makes it easier in the Ninth Circuit to get a class certified the first time around, although it does not mean that difficulties administering a class might not become the basis for decertification at a later stage.
It is unclear whether ConAgra will seek en banc review or file a petition for certiorari with the Supreme Court. Given the growing circuit split on the ascertainability requirement, the Court certainly would look closely at any certiorari petition. The Court has demonstrated a willingness recently to delve into class certification issues, recently accepting certiorari in cases involving class action waivers in arbitration agreements and tolling of the statute of limitations in securities class actions. Unless and until the justices wade into this debate, forum shopping by plaintiffs will persist and companies can expect more class-action filings in low-value consumer cases in the Sixth, Seventh, Eighth, and Ninth Circuits. Indeed, since district courts in the Ninth Circuit will now be more likely to certify, the circuit split affords more opportunities for forum shopping even in class actions for products sold nationwide, thus making Supreme Court attention all the more important. Perhaps Briseno provides the Court with an opportunity to resolve that split.