Another All Natural Class Shot Down

A federal court rejected a proposed class of  New York consumers challenging the “all natural” labeling of four Crisco oils that allegedly contained genetically modified ingredients.   See Ault v. J.M. Smucker Co., No.13-03409 (S.D.N.Y., 8/6/15).

On May 21, 2013, Plaintiff Adrianna Ault filed a complaint alleging that Defendant violated N.Y. Gen. Bus. Law ("GBL") §§ 349 and 350, and breached an express warranty by labeling certain Crisco cooking oils as "All Natural." Plaintiffs proposed class included: consumers who purchased one or more of the following products in New York: Crisco Pure Vegetable Oil and/or Crisco Pure Com Oil between February 15,2 009 and June 1, 2014; and/or Crisco Pure Canola Oil and/or Crisco Natural Blend Oil between June 1, 2010 and June 1, 2014.

According to Plaintiff, the "All Natural" label was deceptive for two reasons. First, Defendant allegedly purchased from third parties the crude soy, canola, and corn oils from which it
manufactures its cooking oils. Some of such crude oils were allegedly derived from GMO crops, and Defendant allegedly did not differentiate between GMO and non-GMO crops when purchasing crude oils.  Second, Plaintiff argued that the "All Natural" label was misleading because the Natural
Label Oils were "heavily processed" using chemicals: after Defendant purchases source oils from its suppliers, it allegedly refined the oils using a multi-step process,  Plaintiff argued that, as a result, the Natural Label Oils are chemically altered and highly processed, and cannot be considered "natural."

Plaintiffs moved for class certification.  Defendant responded that class certification is improper because the term "natural" is not susceptible to a uniform meaning. The Food and Drug Administration has declined to adopt a definition of "natural," Consumers define "natural" in diverse ways. Defendant pointed to a survey conducted by its expert, which determined that 55% of respondents could not define or did not even know what "All Natural" cooking oil meant.

Defendant argued that class certification must also fail because consumers bought the Natural Label Oils for many reasons unrelated to whether the products were "natural." According to the  Survey, respondents' most common considerations in deciding whether to purchase cooking oil were price and brand awareness.  Only 1.6% of respondents indicated that whether an oil was "natural" factored into their purchasing decision. Under the New York General Business Law, the plaintiff must demonstrate that she "sustained injury as a result" of defendant's action, and the plaintiff must show that she suffered a loss "because of' the defendant's "deceptive act." Rodriguez v. It 's Just Lunch, Int 'l, 300 F.R.D. 125, 147 (S.D.N.Y. 2014). Defendant argued this element highlighted individual issues among the class members.

The court noted that class action law recognizes an "implied requirement of ascertainability." In re Initial Pub. Offering Sec. Litig., 471 F.3d 24, 30 (2d Cir. 2006). A class is ascertainable if it is "readily identifiable, such that the court can determine who is in the class and, thus, bound by the ruling." Charrons v. Pinnacle Group NY LLC, 269 F.R.D. 221, 229 (S.D.N.Y.2010). The class must be "defined by objective criteria that are administratively feasible," and identifying class members should not "require a mini-hearing on the merits of each case." Id.

Here, it was undisputed that many potential class members will not have retained records of their
cooking oil purchases.  Plaintiffs argued that some class members could be identified by retailer records.  But, the court concluded, this fell well short of establishing ascertainability. While the criteria may be objective, Plaintiff had not shown that it was "administratively feasible." See Charrons, 269 F.R.D. at 229. The mere assertion that "records exist to identify many class members" does not suffice. Defendant sold to retailers and distributors, not to consumers, and therefore has no records regarding the ultimate purchasers of the Natural Label Oils. Plaintiffs' information did not relate exclusively to New York retailers, and there was no evidence concerning what percentage of sales this data represents, nor whether such data would identify more than a small percentage of class members.

As many plaintiffs do, the argument was made that self-identification was also a feasible method for determining class membership; however, there was no proof of  how such self-identification would be authenticated. Most courts reject such an approach, especially when there were a variety of related products only some of which fall within the class definition. Often, putative class members are unlikely to remember accurately every purchase during the class period, and soliciting  declarations from putative class members regarding their history of purchases would invite them to speculate, or worse. Here, defendant was selling nine different brands of cooking oil, only four of which ever bore the challenged label. Permitting potential class members to self-identify would require them to specifically recall each variety of Crisco cooking oil they purchased during the class period. Adding to the confusion, the "All Natural" label appeared on the four brands at different times, and the proposed class period was defined differently for the Vegetable and Corn Oils  than the Canola and Natural Blend Oils.  Based on the class definition, therefore, an individual who purchased Crisco Corn Oil in 2009 would be a member of the class, but one who purchased Canola Oil that same year would not. "Who could possibly recall that level of detail six years (or more) later?"  Indeed, the named Plaintiff herself could not recall the number of bottles of Crisco cooking oil  she had purchased during the class period.

The court turned next to commonality and predominance. Commonality requires plaintiffs' claims to "depend upon a common contention" that is  "capable of class-wide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). The determining factor is not whether common questions exist, but rather "the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation." !d. The predominance requirement "is a more demanding criterion than the commonality inquiry under Rule 23(a)." Moore v. PaineWebber, Inc. , 306 F.3d 1247, 1252 (2d Cir. 2002). Class-wide issues predominate if "resolution of some of the legal or factual questions ... can be achieved through generalized proof," and are "more substantial than the issues subject only to individualized proof." Id.  Although individualized damages determinations alone traditionally did not preclude certification under Rule 23(b )(3), the fact that "damages may have to be ascertained on an individual basis" is a factor that courts "must consider in deciding whether issues susceptible to generalized proof outweigh individual issues." Roach v. T.L. Cannon Corp., 778 F.3d 401, 408-09 (2d Cir. 2015). A plaintiffs damages model "must be consistent with its liability case," and  must "measure only those damages attributable to that theory." Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013). 

Here, plaintiff asserts that the injury to Plaintiff and class members was subject to common
proof' because the inclusion of the "All Natural" label had the effect of increasing the price of
the cooking oils for everyone.  Yet, Plaintiff offered no evidence that a price premium actually existed for cooking oils labeled "All Natural," nor had she proposed a reliable method for determining the existence or amount of any such price premium.  This plaintiffs proposed a survey to identify the allege price premium.  But such a methodology is not "consistent with [Plaintiffs] liability case," see Comcast Corp., 133 S. Ct. at 1433, because it made no attempt to calculate the amount that consumers actually overpaid due to the "All Natural" label. Rather than analyzing actual pricing and sale data for the Natural Label Oils, plaintiffs' expert merely proposed to ask some unspecified subsection of Crisco customers what they would pay for a hypothetical Crisco product. Moreover, this analysis further compounded the problems with the ascertainability of the class, by designating potential class members- many of whom may be unidentifiable--as the very individuals who will determine the amount of damages to which they are entitled.

Accordingly, Plaintiffs motion for class certification under Rule 23(b)(3) was denied.

 

Class Rejected Again Under Ascertainability Doctrine

We have posted before about the important doctrine of ascertainability, implicit in Rule 23's requirements.  And last year we posted about a federal court in New Jersey rejecting a class certification effort by plaintiffs complaining about the marketing of Skinnygirl Margaritas.

Following the Third Circuit decision clarifying one aspect of the ascertainability doctrine, in Byrd v. Aaron's Inc., 784 F.3d 154 (3d Cir. 2015), as amended (Apr. 28, 2015), plaintiffs tried a second time to show that class membership could be adequately determined.  See Bello v. Beam Global Spirits & Wine, Inc., No. CIV. 11-5149 NLH/KMW, 2015 WL 3613723 (D.N.J. June 9, 2015). The District Court again rejected the claim.

Many courts and commentators have recognized that an essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3), is that the class must be currently and readily ascertainable based on objective criteria.  If class members are impossible to identify without extensive and individualized fact-finding or mini-trials, then a class action is inappropriate.  The Third Circuit has explained that the ascertainability requirement serves several important objectives. First, at the commencement of a class action, ascertainability and a clear class definition allow potential class members to identify themselves for purposes of opting out of a class. Second, it ensures that a defendant's rights are protected by the class action mechanism. Third, it ensures that the parties can identify class members in a manner consistent with the efficiencies of a class action. If a class cannot be ascertained in an economical and administratively feasible manner, significant benefits of a class action are lost.

The method of determining whether someone is in the class must be administratively feasible. Administrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual factual inquiry. To satisfy ascertainability as it relates to proof of class membership, the plaintiff must demonstrate his purported method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence used to prove class membership. The Third Circuit has also held that a plaintiff does not meet his burden of showing by a preponderance of the evidence that there is a reliable and administratively feasible method for ascertaining the class when the only proof of class membership is the say-so of putative class members or if ascertaining the class requires extensive and individualized fact-finding.

Plaintiffs cited the clarification in Byrd as an avenue to submit the Declaration of an expert which purported to detail a claim submission process to identify class members in this matter. According to the Declaration, the screening method would involve three levels of claims validation to reduce the likelihood that individuals who submit fraudulent claims would be included in the class. One level included a supposed review by “sophisticated and state-of-the-art data matching technologies that identify patterns of duplication.” Plaintiffs also contended that the damages in this case would not be determined from claimants' proofs of purchase, but rather from Defendants' total sales.  Defendants responded that nothing had changed since the Court's prior denial of class certification, and that the expert's method had only been used in the context of settled class actions, and not in ascertaining class membership in litigated disputes. The Defendants expressed concern that potential class members would not accurately recall the details of their alleged purchases, such as the date of purchase, and the proposed process would do little to weed out fraudulent or inaccurate claims; in the end the individualized fact-finding as to each affidavit submitted that would be necessary to assess claim validity. 

The Court was not convinced that the putative classes in this case were ascertainable. The Third Circuit's concern that membership in the class cannot be ascertained other than the “say so” of proposed class members remained applicable here. Plaintiffs had not proposed an objective way of identifying class members, suggesting only the submission of claim forms by putative class members without any verifiable records or documents to corroborate the claims. The named plaintiffs in this case had already demonstrated difficulty remembering the details of their purchases,which implicated the defendant's ability to challenge class membership. A process requiring reliance on affidavits of putative class members as the primary method of ascertaining the members of the class “leaves Defendants without a suitable and fair method for challenging these individuals' purported membership in the class.”

Plaintiffs still had not offered a suitable method by which the Court could identify class members with any reliability. Defendants represented that they had no records to specifically identify the class members because they did not sell Skinnygirl Margarita directly to consumers. The Court found that the process proposed by the new expert did not demonstrate a reliable and administratively feasible mechanism for ascertaining class members.  It was unlikely that many, if any, class members had retained a receipt for their purchases of Skinnygirl Margarita approximately four to six years ago. (None of the three named plaintiffs has retained a receipt for their purchases.)  The proposed methodology also would not detect those instances in which multiple claimants file claims based on one receipt, or where a claimant has fabricated a receipt to support a fraudulent claim, or where a claimant happens to have a receipt but never actually purchased a bottle of Skinnygirl Margarita. Plaintiffs had not presented a mechanism to screen out these fraudulent types of claims, and as such had not demonstrated that their proposed methodology was reliable.

Plaintiffs' inability to remember the specifics of their purchases was not “beside the point,” for it highlighted a major flaw in Plaintiffs' proposed claim process. The specific details surrounding a claimant's purchase of Skinnygirl Margarita were necessary to validate a claim. The "Court is left to wonder how the named plaintiffs, or any claimant, can complete an affidavit attesting under oath to the details of their purchases when they cannot remember such specifics." Under the proposed method, it was unclear (1) whether a purchaser must recall the exact date of purchase versus a more general time frame; (2) an acceptable range of prices; and (3) whether all of the criteria must be accurately identified or, if not, the acceptable number of criteria that must be correctly identified for a claim to advance to the next level of review.

Plaintiffs further proposed cross-referencing claims with social media activity and e-mail communications as another means of providing reliability, but the Court rejected this argument. One inherent problem with Plaintiffs' suggested use of cross-checking social media and e-mail records is that such Facebook and e-mail records, at most, only identify some unknown, unspecified portion of the putative class and may very well include individuals who never bought the product and in fact are not members of the class.  Therefore, Plaintiffs' proposed reliance on affidavits alone, without any objective records to identify class members or a method to weed out unreliable affidavits, failed to satisfy the ascertainability requirement under the law of this Circuit.

Plaintiffs were unable to identify even one consumer class action in which the procedure identified in the expert declaration was used in a litigated class action, rather than one that was settled. Overall, the Court thus found that Plaintiffs had not met their burden of demonstrating the reliability of their model. Finally, the Court rejected Plaintiffs' argument that Defendants' due process rights were protected because the entire damages were purportedly objectively quantifiable and were not based on a claimant's proof of purchase. The ascertainability requirement not only seeks to protect a defendant's rights but is also aimed at protecting the rights of absent class members. As discussed above, there is a possibility that the proposed method for ascertaining the class would result in the submission of fraudulent claims. The recovery of true class members could therefore be diluted by these fraudulent claims. Thus, Plaintiffs' focus only on Defendants in addressing ascertainability of the class was misplaced.  

 

Another Artificial All Natural Class Action Rejected

We have posted before about the plaintiffs' bar ongoing war on innocuous product labels, especially the popular "natural" claims --seeking to take advantage of consumer protection acts designed for situations in which buyers actually suffer measurable damages.

A recent skirmish in this war involves plaintiff's claims that certain cooking oils were not "all natural." Introduced in 1911, the oils are primarily utilized for baking, frying, marinades, and dressings. Defendant produced nine varieties of oil, all bearing the Crisco name -- four of which were at issue here. Plaintiff proposed a class action, alleging that defendant engaged in false, unfair, deceptive and/or misleading trade practices by misrepresenting to consumers that Crisco oils are "All Natural," when they are, in fact, made allegedly in part from genetically modified plants.  Plaintiff averred that she was damaged by overpaying for a nonexistent product attribute--"All Natural."  

The federal court rejected this proposed class of consumers who allegedly purchased these natural cooking oils. See Randolph v. J.M. Smucker Co., 2014 WL 7330430 (S.D. Fla., 12/23/14).  Our review will focus on ascertainability and predominance.  

The burden of proof to establish the propriety of class certification rests with the advocate of the class. Rutstein v. Avis Rent-A-Car Sys., Inc., 211 F.3d 1228, 1233 (11th Cir. 2000). In order for an action to fall under Rule 23, a party must affirmatively demonstrate his compliance with the Rule. Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)). It is not sufficient that a party simply plead conformity with the requirements of the Rule; instead, “a party must not only be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses, and adequacy of representation, as required by Rule 23(a) . . . [t]he party must also satisfy through evidentiary proof at least one of the provisions of Rule 23(b).” Id.  Conclusory statements are insufficient to meet the burden of proof on a motion for class certification). In fact, the Supreme Court has indicated that only after rigorous analysis may certification be granted. See Comcast, 133 S. Ct. at 1432. The trial court can and should consider the merits of the case to the degree necessary to determine whether the requirements of Rule 23 will be satisfied.  Valley Drug Co. v. Geneva Pharm., Inc., 350 F.3d 1181, 1197 (11th Cir. 2003); see also Comcast, 133 S. Ct. at 1432 (“Repeatedly, we have emphasized that it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question . . . .”).

Before establishing the explicit requirements of Rule 23(a), a plaintiff must first establish that the proposed class is “adequately defined and clearly ascertainable.  This threshold issue of “ascertainability” relates in part to whether the putative class can be identified: an identifiable class exists if its members can be ascertained by reference to objective criteria. Bussey v. Macon Cnty. Greyhound Park, Inc., 562 F. App’x 782, 787 (11th Cir. 2014).  These “objective criteria” should be “administratively feasible,” meaning that the identification of class members should be “a manageable process that does not require much, if any, individual inquiries.” Id.  The district court must be satisfied that this requirement can be met even before delving into the rigorous analysis of the explicit Rule 23 elements.  If a plaintiff fails to demonstrate that the putative class is clearly ascertainable, then class certification is properly denied. See Walewski v. Zenimax Media, Inc., 502 F. App’x 857, 861 (11th Cir. 2012).   

Defendant contended that plaintiff had not offered a feasible mechanism for determining the purchasers of the Crisco oils containing the offending “All Natural” label. Second, even assuming that plaintiff could identify the oil purchasers, the court would have to make individualized inquiries, specifically, whether the term “All Natural” was a factor in the individual’s purchasing decisions, and how each individual defines the term “natural.” The court was not persuaded by the argument concerning the ability of class members to self-identify as purchasers, mistakenly believing that in challenging administrative feasibility defendant was seeking to require a class-action plaintiff to present proof that the identification of class members would be "next to flawless."  Nevertheless, the court agreed that the facts and circumstances of the instant case presented plaintiffs with substantial difficulties. During the relevant time period, at least nine different Crisco oils frequented retail establishments, but only four of these oils contained the challenged statement. Moreover, the challenged statement was not placed on all four oils uniformly throughout the class period.  Based on these facts, the likelihood that an individual would recall not only which specific kind of oil, but also, when that oil was purchased, complicated identification of the putative class.

This fact pattern reminded the court of Jones v. ConAgra Foods, Inc., No. C 12-01633 CRB, 2014 WL 2702726 (N.D. Cal. June 13, 2014). In Jones, the plaintiff sought to certify a class of  all persons in the state of California who purchased a certain canned tomato product bearing the label statement  "100% Natural" or "Free of artificial ingredients & preservatives" but which contained certain ingredients. Similar to the case at bar, the plaintiff in Jones argued that the class could be ascertained by reference to objective criteria, namely, whether the consumer claimed he purchased one of the products at issue during the class period.  In finding the class to be unascertainable, the Northern District of California recognized that there were literally dozens of varieties with different can sizes, ingredients, and labeling over time and some such cans included the challenged language, while others included no such language at all. Thus, the court identified this as a “subjective memory problem,” and found that “the variation in defendant's products and labels makes self-identification infeasible.” Id; see also Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK, 2014 WL 5794873, at *15 (N.D. Cal. Nov. 6, 2014).

After an extensive review of the record here, the court was inclined to agree that the class was similarly not ascertainable. The fact that putative class members were highly unlikely to retain proof of purchase for such a low price consumer item might be alone insufficient to defeat certification. However, taking the aforementioned variations in Crisco products in conjunction with the fact that the challenged product is a low-priced consumer item, of which the normal consumer likely does not retain significant memory about, the likelihood of a potential class member being able to accurately identify themselves as a purchaser of the allegedly deceptive product, was "slim." Not only would the individual need to recall purchasing Crisco oil, but also the specific variety purchased, and the specific date on which it was purchased beyond simply within the period between “May 2009 [and] the present.” Furthermore, the nature of the product at issue made it less likely for a consumer to recall a specific purchase. Crisco oil is intended to be an additive ingredient to a final product, rather than a final product directly consumed by the user. This fact made it less likely that the consumer would recall the specific purchase of the cooking oil during a specific time frame.

In fact, the named plaintiff’s own testimony reflected this point, failing to recall the number of times Crisco oils were purchased, when they were purchased, and what variations were purchased. Under the facts and record presented, self-identification through affidavit was not administratively feasible.

The Rule 23(b)(3) claim required that common issues predominate, and under the applicable act, FDUTPA, the labels at issue must have been “likely to mislead the consumer acting reasonably in the circumstances,” that is, a probability, not simply a mere possibility, of deception. Millennium Commc’ns & Fulfillment, Inc. v. Office of Attorney Gen., Dep’t of Legal Affairs, State of Fla., 761 So. 2d 1256, 1263 (Fla. 3d DCA 2000).  So the issue here was whether the challenged misrepresentation was likely to deceive a consumer acting reasonably in the same circumstances. However, like the hurdles presented when attempting resolve the issue of ascertainability, plaintiff had not demonstrated that an objectively reasonable consumer would agree with her individual interpretation of “all natural.” Plaintiff’s own evidence supported the assertion that the use of GMOs is a widely disputed issue; the fact is that there is a lack of consensus on the use of such products. See also Krzykwa, 946 F. Supp. 2d at 1374-75 (noting that the FDA has “repeatedly declined to adopt formal rule-making that would define the term ‘natural’”).  

Finally, predominance also requires that damages resulting from the injury be measurable on a class-wide basis through use of a “common methodology.” Comcast, 133 S. Ct. at 1430. A model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory. If the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3). The Supreme Court has instructed lower courts to conduct a “rigorous analysis” to determine whether the purported damages model fits the liability case. Id. at 1433. Actual damages for a claim brought under FDUTPA is the difference in the market value of the product or service in the condition which it was delivered and its market value in the condition in which it should have been delivered.  Contrary to plaintiff’s contention, more is required than simply demonstrating the existence of a viable damages model.

That is, plaintiff’s theory of liability rested on the fact that defendant’s product contained a “price premium” by virtue of the “All Natural” label.  But plaintiff had not demonstrated that the proposed damages model would be capable of measuring damages on a class-wide basis and tying those damages to the specific issue of liability, that is, the “All Natural” label. Other than the "bald, unsupported assertion" that this method would work, plaintiff presented no hard-and-fast evidence that the alleged premium was capable of measurement.  Nor had plaintiff demonstrated that the model could isolate a premium received by the inclusion of the alleged misrepresentation. See Werdebaugh, 2014 WL 7148923, at *14 (“Plaintiff has failed to show that his proposed damages stemmed from the defendant’s actions that created the legal liability.”  Accordingly, plaintiff had failed to present sufficient evidence of a viable damages model capable of estimating damages on a class-wide basis as is required by Comcast.
 

Federal Court Denies Class Certification in "Smart Meter" Case

A Florida federal court recently denied class certification in a case alleging negligence against Honeywell  over its installation of smart electric meters at the homes of Florida Power & Light customers. See Cortes, et al. v. Honeywell Building Solutions SES Corporation, et al., No. 1:14-cv-20429 (S.D. Fla., Sept. 25. 2014). 

Plaintiffs alleged the meters were defective, damaging the connections and allegedly causing electrical arcing, which resulted in more extensive damage to items like pools and air conditioners. 
They sought certification of a class defined as “All Florida Power & Light customers in Florida who had a Smart Meter installed at their property after September, 2009 and who have suffered or will suffer unreimbursed economic loss arising from the defendant’s improper installation of the Smart Meter."

The court noted that, although the trial court should not determine the merits of the plaintiffs’ claim at the class certification stage, the trial court can and should consider the merits of the case to the degree necessary to determine whether the requirements of Rule 23 will be satisfied. Valley Drug Co. v. Geneva Pharms., Inc., 350 F.3d 1181, 1188 n.15 (11th Cir. 2003).  Indeed, sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question; certification is proper only if the trial court is satisfied, after a rigorous analysis, that the
prerequisites of Rule 23 have been satisfied. Frequently that rigorous analysis will entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be helped.

Before analyzing the Rule 23(a) requirements, a court must determine whether the class definition is adequate. O’Neill v. The Home Depot U.S.A., Inc., 243 F.R.D. 469, 477 (S.D. Fla. 2006); see also Bussey v. Macon Cnty. Greyhound Park, Inc., 562 F. App’x 782, 787 (11th Cir. 2014).  A vague
class definition portends significant manageability problems for the court.  O’Neill, 243 F.R.D.
at 477. “An identifiable class exists if its members can be ascertained by reference to objective criteria."   The analysis of the objective criteria also should be administratively feasible, said the court. Administrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual inquiry.  Bussey, 562 F. App’x at 787.

Defendants argued that membership in the proposed class required a determination whether the
Smart Meter was improperly installed; whether the customer had unreimbursed economic loss;
and whether the loss was caused by the improper installation. The court agreed that the proposed class definition impermissibly required a finding of liability and causation at the class certification stage. For the court to determine membership, it would also need to determine the validity of putative class members’ claims and defenses to those claims. The focus on individuals’ experiences — merely to determine membership in the class — would typically require the putative class members to self-report electrical problems started occurring after the Smart Meters were installed. As such, “the only evidence likely to be offered in many instances will be the putative class member’s uncorroborated claim that he or she” observed electrical problems after the Smart Meter installation. Perez v. Metabolife Int’l, Inc., 218 F.R.D. 262, 269 (S.D. Fla. 2003). This self-interested reporting, often unverifiable but for the Plaintiffs’ own testimony, implicates defendants’ due process rights, and “individualized mini-trials would be required even on the limited issue of class membership.” Id.  The repeated use of these procedures would result in inefficient resolution of the claims, defeating one of the central purposes of the class action tool. See McGuire v. Int’l Paper Co.,
1994 WL 261360, at *5 (S.D. Miss. Feb. 18, 1994).

The court also found the definition of the class impermissibly vague in its inclusion of “customers . . . who have suffered or will suffer unreimbursed economic loss . . . .”  Plaintiffs were requesting a class to be certified of individuals who, at any point in the future, may suffer economic losses as a result of the Smart Meter installations. Apart from the considerations of causation, this proposed subset of class membership was presently impossible to determine.

The court also questioned the showing of numerosity ( a somewhat rare gem for the class action defense reader). Plaintiffs made reference to 603 FPL customer inquiries involving alleged property damage related to Smart Meter installation, but they failed to indicate whether any of these 603 inquiries involve “unreimbursed economic loss,” a requirement contained in the proposed class definition. Plaintiffs then tried to point to evidence of a subset of customers who sought repairs following installation. But nothing in plaintiffs’ factual showing indicated these customers’ problems were caused by the Smart Meter installation — as opposed to any number of other factors — or, again, involved unreimbursed economic loss, two prerequisites to membership in the proposed class. Thus, said the court, these assertions did not come close to showing the number of plaintiffs is large enough to satisfy the numerosity requirement. See Hugh’s Concrete & Masonry Co. v. Southeast Pers. Leasing, Inc., No. 8:12-CV-2631-T-17AEP, 2014 WL 794317, at *2 (M.D. Fla. Feb. 26, 2014) (“[T]he Court cannot find Plaintiff’s bases for numerosity go beyond mere speculation, bare allegations, or unsupported conclusions. Thus, Plaintiff fails the numerosity requirement.”).


Turning to predominance under Rule 23(b)(3), under the law of the Eleventh Circuit, the combination of significant individualized questions going to liability and the need for individualized assessments of damages precludes Rule 23(b)(3) certification. In re Conagra Peanut Butter Products Liab. Litig., 251 F.R.D. 689, 698 (N.D. Ga. 2008).  As is typical, plaintiffs pointed to alleged common issues of defendant's conduct, such as training of employees on installation. While defendants may well have employed similar methods of training employees to install the Smart Meters, those actions were but one component of the tort inquiry. Plaintiffs also would need to prove a breach of duty, if any, was the proximate cause of the damages. The proximate cause determinations would predominate over the determination of the common issue of defendants’ alleged conduct, due to the numerous potential causes of meter can damage. The mere fact that installers were negligent in installations does not mean that negligence caused any damages. Even assuming negligence could be proven, plaintiffs “would still have the bulk of
their cases to prove,” namely injury in fact and causation. Neenan v. Carnival Corp., 199 F.R.D.
372, 376 (S.D. Fla. 2001); see also In re Agent Orange’ Prod. Liab. Litig. MDL No. 381, 818 F.2d 145, 165 (2d Cir. 1987) (“The relevant question, therefore, is not whether Agent Orange has the capacity to cause harm, . . . but whether it did cause harm and to whom. That determination is highly individualistic [] and depends upon the characteristics of individual plaintiffs (e.g. state of health, lifestyle) and the nature of their exposure . . . .”).  The fact-finder would still need to make specific determinations of proximate causation for additional plaintiffs, which would predominate over a class-wide determination of negligence.

Certification denied.

 

Long-lasting Lipstick Class Kissed Off

A federal court has rejected a proposed class of plaintiffs who alleged that they purchased deceptively labeled lipstick and foundation, in part because of an inability to show class-wide damages. See Algarin v. Maybelline, LLC,  No. 12-03000 (S.D. Cal., 5/12/14).

Maybelline manufactures, markets, sells, and distributes SuperStay 24HR Lipcolor, a line of lipcolors, and SuperStay 24HR Makeup, a line of skin foundations, Plaintiffs alleged these products were marketed to provide "all day comfort,” that withstands “heat, sweat, and humidity,” but allegedly do not. Plaintiffs alleged they paid a price premium because of the company's claims. On behalf of a proposed California class of consumers who bought the SuperStay products, they asserted claims under the California Unfair Competition Law and Consumers Legal Remedies Act.

In assessing the motion for class certification, the court found that there were issues with the proposed class definition. Plaintiffs defined the class as: “[a]ll California consumers who purchased SuperStay 24HR Lipcolor and/or SuperStay 24HR Makeup for personal use."  Given the number of differences between the two products, including but not limited to, pricing differences, claims differences, labeling differences, and ultimately merits differences, the Court questioned whether creating sub-classes would be needed. Beyond that, though not explicitly stated in Rule 23, courts have held that the class must be adequately defined and clearly ascertainable before a class action may proceed. See Chavez v. Blue Sky Natural Beverage Co., 268 F.R.D. 365, 376 (N.D. Cal. 2010) .  A class is sufficiently defined and ascertainable if, among other things, it is administratively feasible for the court to determine whether a particular individual is a member. See O’Connor v. Boeing N. American, Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998).   It must be administratively feasible to determine whether a particular person is a class member as an identifiable class exists if its members can be ascertained by reference to objective criteria, but not if membership is contingent on a prospective member’s state of mind. While here the class definition seemed ascertainable in the sense that class membership might be determined based on an objective criterion -- whether members purchased either the SuperStay lipcolor of the SuperStay makeup --  Plaintiffs failed to provide a reliable method of determining who the actual members of the class were. So it was not ascertainable in the sense that members could actually ever be determined. Plaintiffs failed to show how it was “administratively feasibile" to determine whether a particular person was a class member. The court correctly noted that this inquiry overlaps with the “manageability” prong of Rule 23(b)(3).

Specifically, Maybelline argued that purchasers were unlikely to have documentary proof of purchase of products like these years later, and Maybelline does not maintain a purchaser list or other identifying method. In such a situation, the Court and the parties would necessarily rely on class members to self-identify. There are a number of cases that stand for the proposition that where a court has no way to verify if a purchaser is actually a class member, class certification may be improper. See e.g., Red, 2012 WL 8019257, at *4;  Hodes v. Int’l Foods, 2009 WL 2424214, at
*4 (C.D. Cal. July 23, 2009). Here, the relevant purchase was not a memorable “big ticket” item, but rather small-ticket items that cost around $10.00; it was extremely unlikely the average purchaser would even remember she purchased the specific SuperStay products versus a competitor product.

The court also observed that expert evidence shows that materiality and reliance varied from consumer to consumer, such that these elements were not an issue subject to common proof. Under the claims alleged, a representation is considered material if it induced the consumer to alter his position to his detriment. If the issue of materiality or reliance is a matter that would vary from consumer to consumer, the issue is not subject to common proof, and the action is properly not certified as a class action. Maybelline introduced evidence of who the reasonable consumer in the target audience was and what drives her in making purchasing decisions. With cosmetics such as the ones at issue here, customers can readily discern how well they work and whether they lived up to the claimed representations. Accordingly, repeat purchasers can not be considered injured in the manner proposed by Plaintiffs. A repeat purchase indicates satisfaction. The evidence suggested that duration was not the only motivating factor in making the purchases; actual duration expectations varied widely among purchasers; and very few consumers actually read the package the way plaintiffs' counsel did and thus could have been “injured” in the manner alleged by Plaintiffs.

This undermined both the commonality and the typicality prerequisites. Based upon the evidence presented, the named Plaintiffs’ reliance on the alleged misrepresentations was not typical of other class members.

Under Rule 23(b)(2), the court concluded that the injunctive relief requested by the plaintiffs wasn't appropriate for the class as a whole. Class members who bought the cosmetics and used them became well aware of the realities of the products, and wouldn't benefit from the relief sought.

Under Rule 23(b)(3), the Plaintiffs sought individual monetized relief that would require an assessment of each class member's claim based on purchase history.  Given the number of individual purchasing inquiries, as well as the evidence showing materiality and reliance varied from consumer to consumer, it was evident that common issues did not predominate.  As is standard, Plaintiffs proposed the “price premium” method of determining class-wide damages, contending  that their damage theory was “simple."  It was not obvious to the Court, however, that the alleged 24 hour/no transfer claim commanded the alleged premium of $1.00-$3.00. Indeed, that was pure speculation on the part of Plaintiffs. Pricing could have been equally impacted by a higher quality of ingredients, the selection of colors offered, or the unique costs Maybelline expended in the research and development of these products. Plaintiffs’ method of using comparable products from other sellers is inconsistent with the law. To establish that any difference in price was attributed  to the alleged misrepresentation, the Court needed to compare a product, exactly the same but without the challenged marketing claim. Such a task was nearly impossible as no two products are completely identical.

Moreover, Maybelline did not sell retail and does not set retail prices. Establishing a higher price for a comparable product would be difficult where prices in the retail market differ and are affected by the nature and location of the outlet in which they are sold and/or the use of promotions and coupons. The Court could not simply assume that all retailers throughout California purchase and sell the products at one price. 

Finally, the existence of an economic injury was also not a common question as many purchasers were satisfied with the products. Economic injury is not a common question when many purchasers find the class products were worth the amount paid and fully satisfied.

Class motion denied.

Juice Class Decertified at Close of Discovery

A federal court recently decertified a class action filed on behalf of  juice buyers, recognizing the grave ascertainability problems in the case alleging that the beverage maker misleadingly advertised its drink's health benefits. See In re Pom Wonderful LLC Mktg. & Sales Practices Litig., No. 2:10-ml-2199-DDP-RZ (C.D. Cal. 3/25/14).

Back in 2012, the court had certified a damages class comprised of all persons who purchased a Pom Wonderful 100% juice product between October 2005 and September 2010. After the  completion of discovery, Pom moved to decertify the class, in light of the facts developed and in light of the U.S. Supreme Court's decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). On a motion for decertification, as at the certification stage, the burden to demonstrate that the requirements of Federal Rules of Civil Procedure 23(a) and (b) are met lies with the party advocating certification. E.g., Marlo v. United Parcel Serv. Inc., 639 F.3d 942, 947 (9th Cir. 2011).

The court noted that the Ninth Circuit has adopted a rather narrow reading of Comcast, which holds that, under rigorous analysis, “plaintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability.” Leyva v. Medline Indus., Inc., 716 F.3d 510, 514 (9th Cir. 2013). Thus, the court proceeded to examine plaintiffs’ damages models and the relationship of those models to the plaintiffs’ legal theories. Plaintiffs' expert advanced two damages models. The "Full Refund" model concluded that consumers spent $450 million on Pom’s 100% pomegranate juice and juice blends during the class period, and that class damages are 100% of the amount paid, or $450 million.  Defendant argued that the Full Refund model was invalid because it failed to account for any value consumers received. Even putting aside any potential health benefits, defendant argued, consumers still received value in the form of hydration, vitamins, and minerals.  The court agreed.  The California consumer acts authorize a trial court to grant restitution to private litigants asserting claims under those statutes. Colgan v. Leatherman Tool Group, Inc.,135 Cal.App.4th 663, 694 (2006). “The difference between what the plaintiff paid
and the value of what the plaintiff received is a proper measure of restitution.” In re Vioxx Class Cases, 180 Cal.App.4th 116, 131 (2009). “A party seeking restitution must generally return any
benefit that it has received.” Dunkin v. Boskey, 82 Cal.App.4th 171, 198 (2000).  Since the model did not account for this, it did not comport with Comcast.

The second or "Price Premium" model assumed that, absent the alleged misrepresentations, “demand for Pom would have been less and the Pom market price would have been lower.” The Price Premium model quantified alleged damages “by comparing the price of Pom with other refrigerated juices of the same size.”  This model yielded a damage calculation of “about $290 million.”  The parties agreed that the Price Premium model depended upon a “fraud on the market” theory. Plaintiffs essentially asserted (1) that a presumption of reliance dependent upon defendant’s alleged material misrepresentations establishes the existence of a fraud on the
entire juice market, (2) that because of that fraud on the market, every consumer who purchased defendant’s juices was similarly damaged, regardless of motivation or satisfaction, and (3) damages could therefore be measured on a class-wide basis. But, the court was not aware of any authority applying a fraud on the market theory to this type of consumer action. (It's a securities thing!)  Putting that issue aside, a plaintiff alleging a fraud on the market must show that the relevant market is efficient. See Smilovits v. First Solar, Inc., 295 F.R.D. 423, 429 (D. Ariz. 2013). This court was not persuaded that the market for defendant’s high-end refrigerated juice products operates efficiently.

Third, whether the entire class can be said to have relied upon the alleged  misrepresentations for liability purposes, this did not necessarily speak to the adequacy of a damages model. Plaintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability.  Plaintiff's expert made no attempt upon a sound methodology to explain how defendant’s alleged misrepresentations caused any amount of damages. Instead, the expert  simply observed that Pom’s juices were more expensive than certain other juices. Rather than
answer the critical question why that price difference existed, or to what extent it was a result of Pom’s alleged actions, the expert simply assumed that 100% of that price difference was attributable to the alleged misrepresentations. Rather than draw any link between Pom’s actions and the price difference between the juice average benchmark price and average Pom prices, the Price Premium model simply calculated what the price difference was. This damages “model” did not comport with Comcast’s requirement that class-wide damages be tied to a legal theory.

The other basis for the decision was ascertainability.  In situations where purported class members purchase an inexpensive product for a variety of reasons, and are unlikely to retain receipts or other transaction records, class actions may present such daunting administrative challenges that class treatment is not feasible.  See, e.g., In re Phenylpropanolamine Prods., 214 F.R.D. 614, 620 (W.D. Wash. 2003) (describing critical manageability problems concerning sales of a three dollar medication, despite possibility of fluid recovery); Sethavanish v. ZonePerfect Nutrition Co., 2014 WL 580696 at *5 (N.D. Cal. Feb. 13, 2014) (denying certification because proposed class of nutrition bar purchasers would not be ascertainable).  Here, plaintiffs acknowledged that, based on the volume of product sold, every adult in the United States is a potential class member. Realistically, the class included at least ten to fifteen million purchasers. These millions of consumers paid only a few dollars per bottle, and likely made their purchases for a variety of reasons, observed the court. Few, if any, consumers were likely to have retained receipts during the class period, which closed years before the filing of this action. This case therefore fell well toward the unascertainable end of the spectrum. Here, at the close of discovery and despite plaintiffs’ efforts, there was no way to reliably determine who purchased defendant’s products or when they did so.

Class decertified.

Certification Rejected in Dietary Supplement Claim

The important issues of ascertainability and choice of law led a federal court to deny class certification in litigation relating to the dietary supplement VPX Meltdown Fat Incinerator.  See Karhu v. Vital Pharm., Inc., No. 13-60768 (S.D. Fla., 3/3/14).

Plaintiff filed a class complaint against Vital Pharmaceuticals Inc.  to recover damages based upon VPX's alleged false advertisements, and to enjoin any further alleged misrepresentations. He sought to bring the suit on behalf of all persons in the United States who have purchased Meltdown for purposes other than resale since April 4, 2008. The claims included:  (1) breach of express warranty under the Magnuson-Moss Warranty Act ("MMWA"), 15 U.S.C. § 2301, et seq.; (2) breach of
express warranty; (3) unjust enrichment; and (4) violation of the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. § 501.201, et seq.

The court concluded that the case would be unmanageable as a class action. First, the court saw no practical method of verifying membership in the proposed Class of Meltdown purchasers. No central record of Meltdown customers existed, and it was unlikely that each Meltdown purchaser since 2008 has retained a proof of purchase. Second, the claims of the Nationwide Class would implicate the laws of multiple states. The varied requirements of the states' laws would require different proof on each claim depending on the locations of the class members. These legal permutations would render an eventual trial unwieldy, and would overshadow the common factual questions that otherwise allegedly united the class members' claims.

Regarding ascertainability, a plaintiff seeking class certification must first craft a class definition clear enough to allow the court to understand whether a particular individual is a member of the class, and that membership is ascertainable. A class is ascertainable only if the court can determine whether a given person is a class member through administratively feasible methods. See In re Checking Account Overdraft Litig., 286 F.R.D. 645, 650–51 & n.7 (S.D. Fla. 2012). Here, plaintiff failed to propose a realistic method of identifying the individuals who purchased Meltdown. The courts have come to recognize that purchasers are less likely to retain receipts or other records of minor purchases, and thus cannot rely on those proofs to ascertain the identities of class members. See Red v. Kraft Foods, Inc., 2012 U.S. Dist. LEXIS 186948, at *14–19 (C.D. Cal. Apr. 12, 2012).

Nor could the court trust individuals to identify themselves as class members through the submission of affidavits. Accepting affidavits of Meltdown purchases without verification would deprive VPX of its due process rights to challenge the claims of each putative class member.  On the other hand, having VPX contest each affidavit would require a series of mini-trials and defeat the purpose of class-action treatment. Using affidavits to determine class membership would also invite fraudulent submissions and could dilute the recovery of genuine class members, said the court.

Regarding predominance, the court noted that the MMWA does not define a stand-alone federal cause of action for breach of express written warranty, but instead borrows state law causes of action for breach of both written and implied warranties. Under choice of law analysis, the law governing each class member's warranty claim is the law of the state where he or she purchased the Meltdown. The court noted that state law varied on issues such as privity and reliance. In short, varied state laws would govern the MMWA claims of class members across the country, imposing different legal requirements and overshadowing the allegedly common factual bases of the claims. Moreover, some of these laws would require individualized proof inappropriate for class treatment. In light of the differences among applicable laws and the potential need for individualized proof, the court found that individualized legal and factual issues predominate over the common aspects of the proposed class MMWA claims, rendering class certification inappropriate under Rule 23(b)(3).

Class certification denied.

Ascertainability Issues Doom Class

The federal court in Maryland recently rejected a proposed class action under the Telephone Consumer Protection Act, raising the important issue of ascertainability. See Brey Corp. v. LQ Mgmt. LLC, (D. Md., 1/30/14).

The implicit requirement of ascertainability is an important but sometimes overlooked prerequisite to class certification. A plaintiff must offer a definition of a class that is precise, objective and presently ascertainable. A threshold requirement to a Rule 23 action is the actual existence of a class which is sufficiently definite and identifiable.The courts have observed that the ascertainability requirement serves several important objectives. First, it eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members. Second, it protects absent class members by facilitating the best notice practicable under Rule 23(c)(2) in a Rule 23(b)(3) action. Third, it protects defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable. If a class cannot be ascertained in an economical and administratively feasible manner, any significant benefits of a class action are lost.

Here, the court focused on the notice rationale.  The general proposition is of course that a class should be certified before class notices are sent. See generally Carrera v. Bayer Corp., 727 F.3d 300 (3rd Cir. 2013). But here, it was already clear that the court could not figure out who to send notice to.  First, the members of the putative class complaining about the junk faxes would have standing to assert a claim against defendant only if they received an unsolicited fax. There were no objective criteria that establish that a putative class member in fact obtained an unsolicited fax. A putative class member would be able to establish his, her, or its standing only by submitting an affidavit that he, she, or it had received the unsolicited fax. A sort of self defining, impossible to verify, class. In order for a plaintiff to recover, he or she must prove to the satisfaction of the fact-finder, after being cross-examined, that she, he, or it is entitled to the relief sought. And that would clearly involve, here, multiple individual issues and mini-trials.   

Second, said the court, the unsolicited faxes in question were sent some 6 or 7 years ago. Therefore, the dim recollection of a putative class member that he, she, or it had received a particular unsolicited fax would be involved, and obviously somewhat suspect.

Finally, the court observed that the provenance of this litigation was "somewhat suspect." Plaintiff’s counsel entered into a retainer agreement with plaintiff not because plaintiff was aggrieved by an unsolicited fax that it received. Instead, the retainer agreement provided that plaintiff was to send to plaintiff’s counsel any unsolicited fax it received so that plaintiff’s counsel could determine whether a violation of the Telephone Consumer Protection Act had occurred.

Class certification denied.  

 

 

 

 

 

 

Ice Cream Class Action Melts

Happy New Year to all our readers. Let's start 2014 with a delicious class action decision, a Late night snack for our readers.

A California court recently rejected a proposed statewide class in a suit accusing Ben & Jerry's Homemade Inc. of falsely advertising ice cream products as “all-natural.”  See Astiana v. Ben & Jerry’s Homemade Inc., No. 4:10-cv-04387 (N.D. Cal., 1/7/14).  Yes, we are starting off the year right where we left off, another all natural complaint.

Readers probably know that with a $5 correspondence course from Penn State in making ice cream, two regular guys named Ben and Jerry opened their first ice cream scoop shop in Burlington, Vermont, in 1978. 

Here, plaintiffs claimed that both the packaging and the advertising for the Ben & Jerry's ice cream products were deceptive and misleading to the extent that the cocoa in some of them was allegedly alkalized with a "synthetic" agent. Plaintiff filed the complaint in this action in 2010, alleging six causes of action – "unlawful business practices" in violation of Business & Professions Code § 17200; "unfair business practices" in violation of § 17200; "fraudulent business practices" in violation of § 17200; false advertising, in violation of Business & Professions Code § 17500; restitution based on quasi-contract/unjust enrichment; and common law fraud.  Everything but the ...pretty typical in these kinds of label attacks.

The parties originally reached a tentative settlement, which fell apart because of cy pres problems and S'mores issues regarding settlement distribution procedures.

Eventually, plaintiffs moved for class certification. Before certifying a class, the trial court must conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Federal Rule of Civil Procedure 23. Mazza v. American Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). The party seeking class certification must affirmatively demonstrate that the class meets the requirements of Rule 23. See Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011); see also Gen'l Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 156 (1982).  As a threshold matter, and apart from the explicit requirements of Rule 23, the party seeking class certification must also demonstrate that an identifiable and ascertainable class exists. Mazur v. eBay Inc., 257 F.R.D. 563, 567 (N.D. Cal. 2009).

The court here found that the motion must be denied, for two primary reasons – plaintiff had not established that the class was ascertainable, and she had not established that common issues predominated over individual issues.

While there is no explicit requirement concerning the class definition in Rule 23, courts have held that the class must be adequately defined and clearly ascertainable before a class action may proceed. See Xavier v. Philip Morris USA Inc., 787 F.Supp. 2d 1075, 1089 (N.D. Cal. 2011); Schwartz v. Upper Deck Co., 183 F.R.D. 672, 679-80 (S.D. Cal. 1999). A class definition need not be Berry, berry extraordinary, but should be precise, objective and presently ascertainable. See Rodriguez v. Gates, 2002 WL 1162675 at *8 (C.D. Cal. May 30, 2002). That is, the class definition must be sufficiently definite so that it is administratively feasible to determine whether a particular person is a class member. See Xavier, 787 F.Supp. 2d at 1089.

Defendant contended that because cocoa can be alkalized using one of several alkalis – some of which are "natural" and some of which are allegedly "non-natural" (i.e., "synthetic") – it would be necessary to determine which class members bought an ice cream containing alkalized cocoa processed with a synthetic ingredient.  However, there was no way to identify which class members bought which type of ice cream, particularly given that Ben & Jerry's is a wholesale manufacturer that does not maintain records identifying the ultimate customers or their purchases. What a cluster it would be.

The district court agreed with the defendant that the class was not sufficiently ascertainable. The class was defined as persons who bought Ben & Jerry's labeled "all natural" which contained alkalized cocoa processed with a synthetic ingredient. However, plaintiffs provided no evidence as to which ice cream contained the allegedly "synthetic ingredient" (assuming that alkali can even be considered an "ingredient"). More importantly, plaintiffs had not shown that a means exists for identifying the alkali in every class member's ice cream purchases. The packaging labels said only "processed with alkali," because that is all the FDA required.

A second basis for rejecting the class was the predominance requirement. This inquiry requires the weighing of the common questions in the case against the individualized questions, and the predominance analysis under Rule 23(b)(3) can be more stringent than the commonality requirement of Rule 23(a)(2).  Rule 23(b)(3) focuses on the relationship between the common and individual issues. The inquiry is rigorous as it tests whether proposed class is sufficiently cohesive to warrant adjudication by representation. See AmChem Prods., 521 U.S. at 623-24. 

Defendant asserted that reliance, materiality, and causation were all inherently individual; for example, its experts established that consumer choice is affected by many different factors, and plaintiff had no evidence to show that "all natural" has any uniform meaning or that it would have any major impact on a consumer's decision to purchase (or not to purchase) a particular brand of ice cream. Defendant also contended that the likelihood of confusion from the label must be "probable," not just "possible," and that studies showed that at most 3% of consumers who saw "all natural" on the packaging expected that the alkali used to process the cocoa was "natural."

Defendant similarly argued that the only way to test materiality and reliance would be to determine how much each consumer would have de-valued the ice cream products given the alleged presence of the "synthetic" alkalizing agent. However, this also could not be done on a class-wide basis, because consumer choice is affected by myriad factors. 

Most importantly, the damages claim was Half-baked, as the evidence showed that no one paid a premium for the "all natural" Ben & Jerry's ice cream, as Ben & Jerry's charges its wholesale customers the same price regardless of flavor and regardless of the contents of the label. When Ben & Jerry's changed its label and removed the "all natural" label from some ice cream packages, the prices did not decrease (neither the wholesale nor the retail prices);  so there was no support for plaintiff's speculation that "all natural" ice creams command a premium.

The Court agreed. Whichever way one approached it, plaintiff had not met her burden of showing that there was a class-wide method of awarding relief that was consistent with her theory of deceptive and fraudulent business practices, false advertising, or common law fraud (or the alternative theory of restitution based on quasi-contract). Plaintiff had not offered any expert testimony demonstrating that the market price of Ben & Jerry's ice cream with the "all natural" designation was higher than the market price of Ben & Jerry's without the "all natural" designation. More importantly, plaintiff had not offered sufficient expert testimony demonstrating a gap between the market price of Ben & Jerry's "all natural" ice cream and the price it purportedly should have sold for if it had not been labeled "all natural" – or evidence demonstrating that consumers would be willing to pay a premium for "all natural" ice cream that was made with cocoa alkalized with a "natural" alkali, and did in fact pay such a premium.

Under Comcast, the plaintiff is required to provide evidentiary proof showing a class-wide method of awarding relief that is consistent with plaintiff's theory of liability. See 133 S.Ct. at 1432. Here, however, plaintiff provided no such damages evidence, and the failure to offer a damages model that was capable of measurement across the entire class for purposes of Rule 23(b)(3) barred her effort to obtain certification of the class. 

Class of Coffee Purchasers Rejected

Let's continue on our recent focus on some interesting class action decisions. A federal court recently rejected a proposed class of coffee product purchasers.  See McManus v. Sturm Foods Inc., No. 3:11-cv-00565 (S.D. Ill., 8/26/13).

Plaintiffs claimed that defendants violated the consumer protection statutes and unjust enrichment laws of the eight states with regard to their Grove Square Coffee single serving coffee product.  Per the amended complaint, defendants allegedly misrepresented and omitted the true nature of Grove Square Coffee products by indicating the product contained fresh ground coffee and a filter rather than “instant” or “soluble” coffee.

In considering a motion for class certification, the court looked to the implicit, foundational prerequisites. A court must first ensure that the class is sufficiently “defined.” Jamie S. v. Milwaukee Public Schools, 688 F.3d. 481, 493 (7th Cir. 2012) (“a class must be sufficiently definite"). The class should be “ascertainable,” which it is if the court can  determine membership with objective criteria. A class is, on the other hand, overbroad if it sweeps in a great number of members who “for some reason could not have been harmed by the defendant’s allegedly unlawful conduct.” Messner, 669 F.3d 802 at 824; Kohen v. Pacific Inv. Management Co. LLC, 571 F.3d 672, 677 ( 7th Cir. 2009) (“a class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant.”); Oshana v. Coca-Cola Co., 472 F.3d 506, 514 (7th Cir. 2006) (denying class certification when “[c]ountless members of Oshana’s putative class could not show any damage, let alone damage proximately caused by the alleged deception.”). A class is overbroad if it sweeps in many members who could not have been harmed at all: This distinction is critical for class certification purposes. If a proposed class consists largely (or entirely, for that matter) of members who are ultimately shown to have suffered no harm, that may not mean that the class was improperly certified but only that the class failed to meet its burden of proof on the merits. If, however, a class is defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct, the class is defined too broadly to permit certification.  A class cannot, then, include numerous people who have no claim at all, observed the court.

The court here found that under any of the relevant the state consumer protection laws requiring causation or actual reliance, the plaintiffs’ class definitions were overbroad. The class definition included all individuals who purchased a Grove Square Coffee product. This definition necessarily includes purchasers who knew, or who were indifferent to the product’s alleged insoluble coffee content. For those purchasers, plaintiffs cannot prove causation, reliance, or actual injury from defendants’ alleged misrepresentation. For this reason, plaintiffs’ claims under Alabama, New York, New Jersey, North Carolina, Illinois, and South Carolina were overbroad and improper for class certification.

Turning to the remaining states, the court engaged in a specific analysis of the state law.  For example, to the extent a state requires plaintiffs to prove an actual loss, but would allow a class-wide presumption of actual loss if the defendant’s alleged misrepresentations were material and made to the entire class, the definition still ran into problems,  In California, said the court, an inference of reliance may be established on a class wide basis with a showing of materiality.  Materiality is objective and exists if a reasonable person would attach importance to the misrepresentation’s existence or nonexistence in determining his choice of action in the transaction in question. However, the inference of reliance is only appropriate if all purported class members were exposed to the alleged misleading advertising. Plaintiffs’ proposed class definition here included individuals who were not exposed to
defendants’ alleged misrepresentation; therefore a court could not presume reliance. In 2011, Sturm Foods allegedly changed its label to include the word “instant.” Class members that were exposed to the packaging after this date (nearly 4 million dollars of gross sales; a vast majority of the overall sales during the class period) were not exposed to what plaintiffs claim was defendants’ primary deception. 

Moreover, the record indicates that extensive sales occurred online, and the class as defined by plaintiffs included these online purchasers. Consumers who purchased the product online without ever seeing the packaging or product placement could not have been exposed to the alleged misrepresentation prior to purchase.

Plaintiffs’ amended complaint thus did not contain sufficient evidence of sales such that any presumption of exposure was appropriate. Materiality cannot be presumed and plaintiffs cannot adequately allege actual injury for the California class.

Overall, the class potentially included a great many individuals who bought Grove Square Coffee products because of, or in spite of, knowing that it contained instant coffee;  thus, the class included a great number of individuals who could not prove causation or an ascertainable loss, as required in various states. These individuals suffered no lost value or incurred no out of pocket expenses as a result of the alleged misrepresentation. Since this class definition potentially swept in a great number of individuals that could not show harm resulting from defendant’s conduct, the class definition was fatally overbroad.

Was there any way to cure the deficiency? It must be administratively feasible for the court to determine whether a particular individual is a member of the proposed class. Clay v. American Tobacco Co., 188 F.R.D. 483, 490 (S.D. Ill. 1999). And the administrative burden of using subjective membership criteria obviates the judicial efficiency that is the fundamental motive for class actions. See Milwaukee Public Schools, 668 F.3d 481, 496 (7th Cir. 2012) (denying class certification for indefiniteness when “identifying disabled students who might be eligible for special-education services is a complex, highly individualized task, and cannot be reduced to the application of a set of simple, objective criteria.”); Simer v. Rios, 661 F.2d 655, 669 (7th Cir. 1981) (noting that determining whether potential class members “knew of the existence of the regulation and were
discouraged from applying for [state heating] assistance . . . would be a burden on the court and require a large expenditure of valuable court time.”); Alliance, 565 F.2d at 978 (“In those cases in which class certification has been denied on account of indefiniteness, the primary defect in the class definition has been that membership in the class was contingent on the state of mind of the prospective class members.”).

Here, the only way to avoid over-inclusiveness would have been to impose criteria limiting class
membership to individuals properly captured by the underlying claim. However, any such criteria would necessarily be subjective. Limiting class membership to individuals that were actually exposed to the deceptive packaging or advertisement would be largely subjective and thus improper. See In re Yasmin, 2012 WL 865041, at *16. This court saw no way to limit class membership without an impermissible plaintiff-by-plaintiff subjective inquiry. Plaintiff’s proposed class was inadequate.

Another useful recent decision as courts place proper focus on the implicit requirements of Rule 23 and the no-longer-pro-forma issues of class definition.

Class certification denied.

Third Circuit Issues Opinion on Ascertainability

We have posted before about the potential importance of the implicit requirement under Rule 23 that a class be ascertainable under the definition proposed by plaintiffs.  Earlier this week, the Third Circuit vacated class certification of a class of WeightSmart supplements purchasers on the basis of ascertainability.  See Carrera v. Bayer Corp., No. 12-2621 (3d Cir. 8/21/13).


Last year the Third Circuit had decided Marcus v. BMW of North America, LLC, in which it held “[i]f class members are impossible to identify without extensive and individualized fact-finding or mini-trials, then a class action is inappropriate.” 687 F.3d 583, 593 (3d Cir. 2012). The court explained that if class members cannot be ascertained from a defendant's records, there must be a reliable, administratively feasible alternative; the court cautioned against approving a method that would amount to no more than ascertaining by potential class members' say so. Id. at 594. A plaintiff does not satisfy the ascertainability requirement if individualized fact-finding or mini-trials will be required to prove class membership. Id. at 593. Administrative feasibility means that identifying class members is a manageable process that does not require much, if any, individual factual inquiry.

The court of appeals explained that the ascertainability requirement serves several important objectives. First, it eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members. Second, it protects absent class members by facilitating the best notice practicable under Rule 23(c)(2) in a Rule 23(b)(3) action. Third, it protects defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable. If a class cannot be ascertained in an economical and administratively feasible manner, any significant benefits of a class action are lost.

Accordingly, a trial court should ensure that class members can be identified without extensive and individualized fact-finding or mini-trials, a determination which must be made at the class certification stage.  Class ascertainability is an essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3). Marcus, 687 F.3d at 592-93. There is „no reason to doubt that the “rigorous analysis” requirement for trial courts considering class certification applies with equal force to all Rule 23 requirements. Accordingly, said the court, a plaintiff must show, by a preponderance of the evidence, that the class is currently and readily ascertainable based on objective criteria, and a trial court must undertake a rigorous analysis of the evidence to determine if the standard is met.

Of great interest to our readers is the court of appeal's analysis of the due process implications of ascertainability. In this case, the ascertainability question was whether each class member purchased WeightSmart in Florida. If this were an individual claim, a plaintiff would have to prove at trial that he purchased WeightSmart. A defendant in a class action has a due process right to raise individual challenges and defenses to claims, and a class action cannot be certified in a way that eviscerates this right or masks individual issues. See McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231-32 (2d Cir. 2008) (rejecting a “fluid recovery” method of determining individual damages, in which aggregate damages would be based on estimates of the number of defrauded class members and their average loss), abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008); see also Dukes, 131 S. Ct. at 2561 (rejecting a method of class certification in which a sample set of class members would be used to extrapolate average damages). A defendant has a similar, if not the same, due process right to challenge the proof used to demonstrate class membership as it does to challenge the other elements of a plaintiff's claim. To force a defendant to accept as true the absent class members' declarations that they are members of the class, without further indicia of reliability, would have serious due process implications.  Ascertainability thus helps provide a measure of due process by requiring that a defendant be able to test the reliability of the evidence submitted to prove class membership.


Here, Carrera advanced two ways to ascertain the class: first, by retailer records of online sales and sales made with store loyalty or rewards cards; second, by affidavits of class members, attesting they purchased WeightSmart and stating the amount they purchased (despite the fact that in named plaintiff's own deposition testimony, he failed to remember when he purchased WeightSmart and confused it with WeightSmart Advanced and other generic or similar products, none of which are part of this litigation). The Third Circuit concluded this evidence did not satisfy the ascertainability requirement.  There was no evidence that a single purchaser of WeightSmart could be identified using records of customer membership cards or records of online sales. There was no evidence that retailers even have records for the relevant period.  As to the second, this argument failed because it did not address a core concern of ascertainability: that a defendant must be able to challenge class membership. 

Another key feature for our readers relates to plaintiff's claim that because he was proceeding under a state consumer fraud act (Florida's FDUTPA) which allegedly did not require individual proof of reliance, the total amount of damages that defendant would pay (the total sales in the state in the class period) did not change -- only which class member got what amount. Under Carrera's view, if fraudulent or inaccurate claims were paid out, the only harm was to other class members. But ascertainability protects absent class members as well as defendants, said the court, so Carrera's focus on defendant alone was misplaced. It would be unfair to absent class members if there was a significant likelihood their recovery will be diluted by fraudulent or inaccurate claims. In this case, there was the possibility that Carrera's proposed method for ascertaining the class via affidavits would dilute the recovery of true class members.  The defendant still had an interest in ensuring it pays only legitimate claims. If fraudulent or inaccurate claims materially reduce true class members' relief, these class members could argue the named plaintiff did not adequately represent them because he proceeded with the understanding that absent members may get less than full relief. When class members are not adequately represented by the named plaintiff, they potentially are not bound by the judgment.

Thus, the case could be an important precedent for defendants, especially those facing class actions asserting fraud allegations about products for which detailed, accurate receipts likely no longer exist.

Case remanded for further limited discovery on the issue, given the timing of Marcus.


 

Rule 23's "Ascertainability" and "Numerosity" Prerequisites Again Prove Their Worth in Defeating Class Certification

Today a special treat for our readers: my partner Becky Schwartz has submitted a post as guest blogger.  Becky has defended numerous high profile class actions for tobacco, pharmaceutical, medical device, and alcoholic beverage manufacturers, and others. Her focus is a recent Third Circuit class action decision.  And she writes:

Good news for defendants facing threatened consumer class actions: the Third Circuit has once again confirmed that ascertainability and numerosity, two seemingly humble definition-related prerequisites of Fed. R. Civ. P. 23, can be sufficient to foil class certification. In a companion decision to last year’s Marcus v. BMW of North America, LLC, 687 F.3d 583 (3d Cir. 2012), last week the Third Circuit vacated a New Jersey district court’s order certifying a class against defendant Wal-Mart Stores, Inc. See Hayes v. Wal-Mart Stores, Inc., No. 12-2522, 2013 WL 3957757 (3rd Cir. Aug. 2, 2013). Plaintiff asserted claims for violation of the New Jersey Consumer Fraud Act, breach of contract and unjust enrichment in connection with the sale of extended warranty (service) plans for items sold at Wal-Mart’s wholly owned subsidiary, Sam’s Club. Plaintiff had allegedly purchased two “as is” items from Sam’s Club a clearance area, along with extended warranty service plans for each item. The express terms of the service plans sold, however, allegedly made them inapplicable to the “as is” items. The district court certified a class of persons who had purchased service plans to cover ineligible “as is” products sold at Sam’s Club, and Wal-Mart appealed the class certification on an interlocutory basis pursuant to Fed. R. Civ. P. 23(f).

Ascertainability and Numerosity Are Evidentiary Questions the Proponent of Certification Must Prove.

The district court’s certification of the Hayes class occurred before last year’s decision by the Third Circuit in Marcus, where the appellate court addressed Rule 23’s ascertainability, and numerosity requirements in significant detail. The Third Circuit here agreed to consider Wal-Mart’s appeal based on the company’s argument that Hayes had failed to establish by a preponderance of the evidence that the class was both ascertainable and sufficiently numerous under the class action rule. Specifically, Wal-Mart argued that the district court had erred by finding the Hayes class ascertainable without considering whether it was administratively feasible to determine class membership. And as to numerosity, Wal-Mart asserted that plaintiff had not adduced evidence sufficient to demonstrate that anyone (including himself) and thus that sufficient claimants could satisfy the proposed class definition.

Putative Class Members’ “Say So” Is Not Enough to Establish Class Membership.

Last year in Marcus, the Third Circuit held that to satisfy the implied Rule 23 prerequisite of ascertainability, a proposed class must be defined with reference to objective criteria, and an administratively feasible mechanism must exist for determining whether putative class members fall within the class definition. 687 F.3d at 593-94.  One key factor in assessing ascertainability is whether the defendant possesses records that could show whether individuals should be included in the class; if not, the class definition would be insufficient. Id. at 593.

In Hayes, the evidence reflected that Wal-Mart kept some records related to “as is” clearance items for sale, but lacked records that could definitively link the sale of extended service plans to ineligible “as is” clearance items. The Third Circuit confirmed that in such circumstances, a lack of evidence is the class proponent’s problem, not the defendant’s. “[T]he nature or thoroughness of a defendant’s record-keeping does not alter the plaintiff’s burden to fulfill Rule 23’s requirements,” particularly where there is no “statutory or regulatory authority obligating [defendant] to create and maintain a particular set of records.” Hayes, 2013 WL 3957757 at *4. “Rule 23’s requirements . . . cannot be relaxed or adjusted” simply because a defendants’ records prove to be no help to plaintiff. Id. Importantly, a dearth of evidence in defendant’s possession cannot be overcome by form affidavits provided by putative class members: a “petition for class certification will founder if the only proof of class membership is the say-so of putative class members or if ascertaining the class requires extensive individual fact-finding.” Id. at *5.

Mere Speculation Is Insufficient to Prove Rule 23(a) Numerosity.

The Third Circuit also made clear that precise proof is required to prove numerosity. Just as it had previously in Marcus, 687 F.3d at 596-97, the Third Circuit in Hayes considered whether and when “common sense” or “logic” could be substituted for such evidence. Sam’s Club had records reflecting 3,500 sales transactions that might have qualified purchasers for class membership, but no record evidence to establish which of those transactions actually did qualify purchasers for class membership. Proof of class membership would thus have required impermissible mini-trials for each putative class member. The district court nonetheless found the Rule 23(a)’s numerosity prerequisite met by reasoning that if even a mere hypothetical 5% of those potential class members actually qualified, the class would be sufficiently numerous under Rule 23. Hayes, 2013 WL 3957757 at *5.

Despite acknowledging that in some limited instances “circumstantial evidence” might permit the district court to make a factual finding by using “’common sense’ to forgo precise calculations and exact numbers,” the Third Circuit made clear that a district court cannot certify a class based on “improper speculation.” Id. at *6. And that, it found, is precisely what the district court had done: “the only conclusion that can be drawn from the evidence presented to the trial court is that the number of class members would equal-to-or-less than 3,500 and equal-to-or-greater than zero,” meaning that the court “can only speculate as to the number of class members.” Id. at *6. “[W]here a putative class is some subset of a larger pool, the trial court may not infer numerosity from the number in the larger pool alone.” Id. (citations omitted). Nor can a trial court take a “wait-and-see approach” to numerosity (or any other requirement of Rule 23). Id.

Key Takeaways.

Defense counsel working with clients facing class action allegations – particularly in the consumer fraud context where complete transactional histories and other class membership related records may not be available in defendants’ records – should recognize the potential power of Rule 23’s ascertainability and numerosity prerequisites to bar class certification.  

Keep the following in mind:
- Lack of available evidence to prove ascertainability and/or numerosity is plaintiff’s problem, not defendant’s;
- Class member affidavits alone (mere “say-so”) cannot be used to establish class membership; the result would be an impermissible compromise of defendants’ rights;
- Plaintiffs’ imperative to find evidence supportive of class certification could very well give rise to surprisingly aggressive and contentious discovery;
- Some trial courts may require reminders of the evolving standards applicable to these Rule 23 prerequisites, including burden of proof; and
- Defendants’ briefing and argument should focus on any gaps (when available) in the evidence supporting ascertainability and/or numerosity; courts must be dissuaded from employing speculation masquerading as “common sense” and “logic” to fill such gaps.

Court of Appeals Vacates Class Certification in Tire Case

Last week, the Third Circuit reversed a trial court's certification of a class of consumer who alleged their vehicles were equipped with allegedly defective run-flat tires. Marcus v. BMW of North America LLC, Nos. 11-1192, 11-1193 (3d Cir.,  8/7/12).

As their name suggests, run-flat tires  can “run” while “flat.” Even if an RFT suffers a total and abrupt loss of air pressure from a puncture or other road damage, the vehicle it is on remains operable.  Plaintiff alleged he experienced four “flat” tires during his three-year lease of a BMW equipped with this tire technology.  In each case, the RFT worked as intended. That is, even though the tire lost air pressure, Marcus was able to drive his car to a BMW dealer to have the tire replaced. He nonetheless sued BMW and the tire maker Bridgestone, asserting consumer fraud, breach of warranty, and breach of contract claims. in part because the tires needed to be replaced rather than repaired.  The District Court certified plaintiff’s suit under Federal Rule of Civil Procedure 23(b)(3) as an opt-out class action brought on behalf of all purchasers and lessees of certain model-year BMWs equipped with Bridgestone RFTs sold or leased in New Jersey with tires that “have gone flat and been replaced.” Defendants appealed.

The requirements set out in Rule 23 are not mere pleading rules. The party seeking certification bears the burden of establishing each element of Rule 23 by a preponderance of the evidence. The Third Circuit has repeatedly emphasized that actual, not presumed, conformance with Rule 23 requirements is essential. Newton v. Merril Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 167 (3d Cir. 2001) (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)).  To determine whether there is actual conformance with Rule 23, a district court must conduct a “rigorous analysis” of the evidence and arguments put forth. When doing so, the court cannot be bashful. It must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits — including disputes touching on elements of the cause of action.

The term "game-changer" is often misused and overused as a buzz word in the business world by those who want sound trendy, but the Third Circuit here correctly recognized that, as a practical matter, the certification decision is "typically a game-changer, often the whole ballgame," for the parties and counsel. That is, denying or granting class certification is often the defining moment in class actions. 

The Third Circuit first addressed the issue of numerosity.  When a plaintiff attempts to certify both a nationwide class and a state-specific subclass, as plaintiff did here, evidence that is sufficient to establish numerosity with respect to the nationwide class is not necessarily sufficient to establish numerosity with respect to the state-specific subclass. See Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1266-68 (11th Cir. 2009) (plaintiff could not simply rely on the nationwide presence of T-Mobile to satisfy the numerosity requirement without Florida-specific evidence).  The District Court found that the New Jersey class met the numerosity requirement because “it is common sense" that there will probably be at least 40 class members in New Jersey. The court of appeals noted that this may be a bet worth making, but it cannot support a finding of numerosity sufficient for Rule 23(a)(1);  a district court must make a factual determination, based on the preponderance of the evidence, that Rule 23’s requirements have been met. Mere speculation is insufficient.

The second major issue was predominance. A plaintiff must demonstrate that the elements of the legal claim capable of proof at trial through evidence that is common to the class predominate over the issues that must be litigated through proof individual to its members. The court’s  obligation to consider all relevant evidence and arguments on a motion for class certification  extends to expert testimony on the common or individual nature of issues and proof, whether offered by a party seeking class certification or by a party opposing it. Expert opinion with respect to class certification, like any matter relevant to a Rule 23 requirement, calls for rigorous analysis. Weighing conflicting expert testimony at the certification stage is not only permissible, it may be integral to the rigorous analysis Rule 23 demands.  

Here, the District Court then found plaintiff could show, without resort to individual proofs, that the alleged common defect (RFTs go "flat" too easily) caused the class members’ damages. But that causation finding was an abuse of discretion.  Central to plaintiff's claim was what caused class members’ tires to go flat and need replacement. Causation was pivotal to each of Marcus’s claims. The District Court failed to analyze an undisputed, fundamental point: any tire can “go flat” for myriad reasons. Even “defective” tires can go flat for reasons completely unrelated to their defects. Critically, to determine why a particular class member’s Bridgestone RFT had “gone flat and been replaced” requires an individual examination of that class member’s tire. But these individual inquiries are incompatible with Rule 23(b)(3)’s predominance requirement.

For example, of the two tires plaintiff presented for inspection in his lawsuit, one went “flat” and was replaced because he ran over a jagged chunk of metal, and the other because he ran over a sharp object that tore and gouged the tire and damaged the sidewall. All the experts agreed that the two tires could not have been repaired and that any tire (run-flat or conventional, defective or not) would also have been damaged under the circumstances. Thus, even if Marcus could prove that Bridgestone RFTs suffer from common, class-wide defects, those defects did not cause the damage he suffered for these two tires: the need to replace them. In this sense, Marcus was no different than a class member who, seconds after buying his car, pulled off the dealership lot and ran over a bed of nails -- neither could claim a “defect” caused his tires to go flat and need replacement.

One other key aspect of the opinion for our readers: the court of appeals also raised an issue should plaintiffs attempt to get a different class certified on remand.  Many courts have recognized that an essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3), is that the class must be currently and readily ascertainable based on objective criteria. See, e.g., John v. Nat. Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007).  If class members are impossible to identify without extensive and individualized fact-finding or “mini-trials,” then a class action is inappropriate. Some courts have held that where nothing in company databases shows or could show whether individuals should be included in the proposed class, the class definition fails. See Clavell v. Midland Funding LLC, No. 10-3593, 2011 WL 2462046, at *4 (E.D. Pa. June 21, 2011); Sadler v. Midland Credit Mgmt, Inc., No.06-C-5045, 2008 WL 2692274, at *5 (N.D. Ill. July 3, 2008); In re Wal-Mart Stores, Inc. Wage & Hour Litig., No. C 06-2069 SBA, 2008 WL 413749, at *8 (N.D. Cal. Feb. 13, 2008); Deitz v. Comcast Corp., No. C 06-06352 WHA, 2007 WL 2015440, at *8 (N.D. Cal. July 11, 2007).

The ascertainability requirement serves several important objectives. First, it eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members.  Second, it protects absent class members by facilitating the “best notice practicable” under Rule 23(c)(2) in a Rule 23(b)(3) action. See Manual for Complex Litigation, § 21.222 (4th ed. 2004). Third, it protects defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable. See Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075, 1089 (N.D. Cal. 2011). Ascertainability is needed for properly enforcing the preclusive effect of final judgment. The class definition must be clear in its applicability so that it will be clear later whose rights are merged into the judgment; that is, who gets the benefit of any relief and who gets the burden of any loss. If the definition is not clear in its applicability, then satellite litigation will be invited over who was in the class in the first place.

If plaintiff attempts to certify a class on remand, the District Court would have to resolve the critical issue of whether the defendants’ records can ascertain class members and, if not, whether there is a reliable, administratively feasible alternative. The Third Circuit cautioned against approving a method that would amount to no more than ascertaining by potential class members’ say so. For example, simply having potential class members submit affidavits that their Bridgestone RFTs have gone flat and been replaced may not be “proper or just.”  Defendants would be able to cross-examine an individual plaintiff at trial about whether and why his tires “have gone flat and been replaced.” So, forcing defendants to simply accept as true absent persons’ declarations that they are members of the class, without further indicia of reliability, "would have serious due process implications."

 

Amicus Files Third Circuit Brief on Important Class Issue

One of the things we like to do is flag for our readers interesting arguments raised by amicus on important appeals. The Product Liability Advisory Council recently submitted a brief to the Third Circuit. weighing in on the surprising and troubling certification of a class of consumers in a vitamin case. Carrera v. Bayer Corp. et al., No.12-2621 (3d Cir. 2012).

The implicit requirement of ascertainability is an important but sometimes overlooked prerequisite to class certification. A plaintiff must offer a definition of a class that is precise, objective and presently ascertainable. A threshold requirement to a Rule 23 action is the actual existence of a class which is sufficiently definite and identifiable. See, e.g., Kline v. Sec. Guards, Inc., 196 F.R.D. 261, 266 (E.D. Pa. 2000); Reilly v. Gould, Inc., 965 F. Supp. 588, 596 (M.D. Pa. 1997); Clay v. Am. Tobacco Co., 188 F.R.D. 483 (S.D. Ill. 1999). The initial inquiry on class definition is distinct from the analysis required by Federal Rule of Civil Procedure 23. See, e.g., Sanneman v. Chrysler Corp., 191 F.R.D. 441, 446 n. 8 (E.D. Pa. 2000). This notion means, in part, that the court can see sufficient administrative feasibility in determining whether a particular person belongs to a class -- that the court can identify class members in a practical and non-burdensome manner. A “proposed class must be sufficiently identifiable,” and it must be “administratively feasible to determine whether a given individual is a member of the class.”Mueller v. CBS, Inc., 200 F.R.D. 227, 233 (W.D. Pa. 2001). A class may not be ascertainable if it will require individual inquiry into each class member’s particular situation to determine whether that plaintiff suffered the injury alleged. Similarly, a class is not ascertainable if membership depends on a particular subjective state of mind. And even when plaintiffs offer ostensibly objective criteria for membership, the court must be able to apply that objective criteria to determine who is in the class without addressing numerous fact-intensive questions. Certification is denied when determining membership in the class essentially requires a mini-hearing as to each prospective class member. E.g., Agostino v. Quest Diagnostics Inc., 256 F.R.D. 437, 478 (D.N.J. 2009); Solo v. Bausch & Lomb Inc., 2009 WL 4287706, (D. S.C. Sept. 25, 2009) (class not appropriate for certification where determining class membership would require “fact-intensive mini-trials”).

Here, the trial court certified a class of Florida residents who purchased One-A-Day WeightSmart, a multivitamin that Bayer stopped selling in January 2007 – more than five years ago. As the
experience of the named plaintiff vividly illustrated, PLAC noted, membership in the class could not be demonstrated through objective documentation. Obviously, most consumers do not keep receipts or packaging from small-value, one-use products consumed years ago, and  plaintiff could not substantiate his own purchases (or offer any evidence that anyone else’s purchases could be substantiated).

Instead, noted the amicus, plaintiff proposed to prove class membership – for himself and for
the alleged members of the class – through self-serving statements whose veracity Bayer would have no ability to challenge. As the district court’s brief order described it, plaintiff and the other class members who lack objectively verifiable evidence that they ever purchased WeightSmart could still “establish” class membership by way of “claim forms or affidavits.” The order apparently made no provision for any substantive challenge to these proposed forms or affidavits; rather, the court viewed such submissions as “sufficient” in themselves to “verify claims.”

This one-sided procedure clearly violates a defendant's fundamental right to present individualized defenses, a right that is protected by the Due Process Clause. That right cannot be vitiated merely because the case is a putative class action or because the claims at issue have low dollar values.

Nor is the right to challenge class membership a mere technicality, noted PLAC. The named plaintiff himself had no definitive evidence that he purchased the product at issue in his suit. To the contrary, there was a real question, flagged by PLAC, whether he ever bought WeightSmart, given his erroneous recollection of the product’s packaging and the time period when it was on the market. Other potential class members would face similar challenges in proving that they purchased WeightSmart. Contrary to the district court's view, these were not minor manageability issues that should not prevent certification of a class.  That view, noted PLAC, confused Bayer’s fundamental rights with minor procedural issues that can be disregarded in service of class certification.

PLAC correctly pointed out the real danger in decisions like this: establishing a rule of law that defendants can be held liable to consumers without any real proof that those consumers purchased the defendants’ products, and sending a message that administrative convenience can override the basic due-process right to defend oneself in litigation.