You may remember Carrera v. Bayer Corp., the somewhat controversial Third Circuit decision that decertified a consumer class because the court found that there was no reliable, objective way to determine class membership. The Carrera court deemed that the proposed class was not ascertainable because Bayer didn’t sell directly to consumers and there was no master list of people who had purchased the product at issue. For a refresher on Carrera and the ascertainability requirement, see here and here.
Critics of the Carrera decision have suggested that the ascertainability standard it sets for plaintiffs threatens the viability of the low-value consumer class action, which is what necessitated the class action mechanism in the first place. Carrera has also raised questions about what is an administratively feasible method to make class-wide determinations about ascertainability.
In the past few months, we have written about other federal courts grappling with the contours of the ascertainability requirement (the Ninth Circuit, for instance). Now, we have a decision from a state court within the Third Circuit — the Superior Court of New Jersey, Appellate Division — that clearly rejects the Third Circuit’s reasoning on the ascertainability requirement. The case is Daniels v. Hollister Co., No. A-3629-13T3 (May 13, 2015).
The Daniels plaintiffs sued Hollister Co., a clothing retailer, alleging that Hollister failed to honor certain gift cards despite representations at the time that the gift cards would never expire. The trial court certified the proposed plaintiff class, finding that the plaintiffs were not required to show ascertainability. The appeals court reviewed this as an issue of first impression and concluded that “‘ascertainability’ must play no role in considering the certification of a low-value consumer class action.”
In its decision, the Daniels appeals court noted that in New Jersey, the policy is to liberally construe plaintiffs’ allegations in favor of class certification, and that classes should be certified unless they are “clearly infeasible.” Citing Iliadis, a 2007 New Jersey Supreme Court decision, the Daniels court emphasized that “the decision to certify a class should be guided by the policy that favors an even playing field. . . .In short, the class action device’s ‘historic mission’ is caring for ‘the smaller guy.'”
The court went on to observe that the New Jersey Supreme Court has not recognized the ascertainability doctrine. In addressing federal courts’ recognition of the doctrine, the Daniels court called the issue “quite unsettled” in the Third Circuit, despite Carrera. The Daniels court ultimately held: “[W]hen the concept of ascertainability is applied inflexibly it becomes a device that serves to burden or eliminate nascent class actions without providing any societal benefit. We find that this federal doctrine as urged here imposes far too heavy of a burden on class certification where the purported injuries to class members are so minimal as to preclude the likelihood that they would be individually asserted.”
The Daniels court also noted that an ascertainability argument is especially misguided in a case where any difficulties in identifying class members are the consequence of a defendant’s own acts or omissions (such as poor record keeping policies). Finally, the court noted that should individualized mini-trials become necessary to identify class members, that such a problem should be addressed at the claims administration stage, and not the class certification stage. And even then, the court found, such an issue would not be a compelling ground for decertification.
This decision reminds us that procedural requirements can have a huge impact on outcomes. In federal courts in the Third Circuit, for instance, a putative class of small-claim consumers will have an uphill battle toward certification. But not so in a New Jersey state court. A jurisdiction’s approach to interpreting the ascertainability requirement will in large part depend on that jurisdiction’s balancing of a desire to preserve the interests of small-claims plaintiffs with concern about the preclusive effect of judgments where class membership is uncertain. Until other courts say otherwise, defendants outside New Jersey would be wise to consider raising ascertainability arguments at the certification stage.