New Jersey Federal Court Doubts Ascertainability of Putative Class

As consumers continue to file putative class actions for allegedly defective products, it is imperative that practitioners take note of how federal courts are applying the requirements of Federal Rule of Civil Procedure 23.

Recently, the District Court of New Jersey denied class certification of a proposed putative class action commenced by six named Plaintiffs, on behalf of themselves and five state subclasses of current and former Volvo vehicle owners and lessees. See Neale et al. v. Volvo Cars of North America, LLC, No. 10-4407 (JLL) (D.N.J. December 6, 2017). Specifically, Plaintiffs claimed that Volvo sold cars with allegedly defective sunroof drainage systems. Plaintiffs asserted a variety of state law claims including breach of warranty, deceptive trade practices, and consumer protection.

Back in 2012, Plaintiffs initially moved to certify both a nationwide class and state subclasses. While Plaintiffs’ nationwide class was denied, the District Court certified the state subclasses. Volvo moved for reconsideration, which was denied, and Volvo subsequently appealed to the Third Circuit. On appeal, the Third Circuit concluded, among other things, that the District Court’s certification order failed to specify the claims certified and failed to limit the “Class Vehicles” to those with sunroofs. As a result, the Third Circuit remanded to the District Court to define the class membership, claims, and defenses.

At play on remand was the well-known class requirement of ascertainability. The Third Circuit set forth the standard on ascertainability, which requires a class to be “defined with reference to objective criteria” with a “reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Id. at 9 (citation omitted). In this case, Plaintiffs defined their state subclasses as follows: “All persons or entities who purchased or leased a Class Vehicle within [State] who 1) currently own or lease that Class Vehicle, or 2) previously owned or leased that Class Vehicle and can offer proof or otherwise be identified as having incurred out-of-pocket expenses related to the Sunroof Defect.” Id. at 8.

On remand, the District Court concluded that Plaintiffs’ state subclasses were not properly defined and “suffer[ed] from definitional deficiencies.” Id. at 10. First, the Court found that the class definitions lacked any class period, which created an issue with respect to the used vehicle market since new purchases of used cars could “create a seemingly endless supply of new potential class members.” Id. Second, Volvo argued, and the District Court agreed, that the class as defined based on where each class member purchased or leased their car still resulted in the need for a choice-of-law analysis since the increased number of car purchases online made it unlikely that a buyer or lessee resided in the same state where he or she purchased the car. In addition, Plaintiffs provided no evidence that members resided in the state where they purchased or leased their vehicles. Third, the District Court found that the definition of “current owner” was problematic as it applied to leased cars since it was not clear whether that included the current lessee, the current owner-lessor, or both.

Finally, the District Court concluded that the state subclasses could not be reliably or feasibility determined for certification. Specifically, Volvo argued that Plaintiffs could not determine which states the class members purchased their used cars in, as required by the class definitions. While Plaintiffs did set forth an administratively feasible scheme to identify class members using data from IHS Markit and CARFAX, the District Court nevertheless found “holes” in the reliability of such scheme that precluded certification. Id. at 15. For example, using the CARFAX report was feasible for current owners, but not for former owners who no longer knew the VIN number of their former class vehicle. In addition, Plaintiffs failed to identify the percentage of class vehicles that may have changed hands in private transactions, which may not show up on a CARFAX or IHS report. As such, the District Court concluded that the proposed state subclasses were not ascertainable, precluding certification of a Rule 23(b)(3) class.

Practitioners should take particular note of decisions like this one, which highlight potential weaknesses in proposed class actions and can assist defense attorneys in developing strategies to defeat certification.