Can you have a class action if class members can’t reliably be found? That question is at the heart of the debate over ascertainability—one that has divided the federal courts. Earlier this week, the Ninth Circuit weighed in, holding in Briseno v. ConAgra Foods, Inc. (pdf) that plaintiffs need not demonstrate “an administratively feasible way to identify class members [as] a prerequisite to class certification.”

That conclusion is disappointing.

Continue Reading Ninth Circuit rejects meaningful ascertainability requirement for class certification, cementing deep circuit split

The class action plaintiffs’ bar celebrated yesterday’s Supreme Court’s decision in Tyson Foods, Inc. v. Bouaphakeo (pdf), rejecting Tyson’s challenge to class certification. One lawyer called it “a huge David v. Goliath victory.”

But when plaintiffs’ lawyers wake up this morning and focus on the details of the Court’s opinion, they are in for a serious post-celebration hangover.

The Court’s reasoning for the first time maps a clear route for defendants to use in challenging plaintiffs’ use of statistical evidence in class actions. It also provides important guidance for defendants about preserving the ability to challenge plaintiffs’ reliance on statistics.

Continue Reading What does Tyson Foods, Inc. v. Bouaphakeo mean for class actions?

As readers of our blog know, ascertainability is one of the most contentious issues in class action litigation these days.  Ascertainability is the main issue presented in Jones v. ConAgra Foods, No. 14-16327, a pending Ninth Circuit case in which the plaintiff and his amici have mounted a full-scale attack on whether the ascertainability requirement even exists.  Along with our colleagues Andy Pincus and Dan Jones, we have filed an amicus brief (pdf) on behalf of the Chamber of Commerce of the United States arguing that ascertainability is a critical requirement for class certification, and that due process forbids courts from relaxing that requirement in the name of certifying a class.

As we explain in the brief, the plaintiff in Jones proposed a consumer class whose members will be largely impossible to identify.  The putative class consists of California residents who purchased certain Hunt’s canned tomato products bearing particular labels.  Who are these people?  The answer cannot be found through objective documentation:  Consumers typically do not keep receipts or packaging from food products (or other similar products) that likely were purchased or consumed years ago.  The plaintiff in Jones says that this hurdle can be overcome by allowing absent class members to file affidavits testifying that they purchased a particular product (presumably based on their recollection).  But that testimony and recollection (under the plaintiff’s proposal) would be immune from challenge by the defendant (for example, through cross-examination).

The district court properly held (pdf) that this proposal flunked the ascertainability requirement implicit in Rule 23.  On appeal, Jones and his amici (Public Citizen and the Center for Science in the Public Interest) argue that the approach to ascertainability adopted by the district court is a recent invention of the Third Circuit in Carrera v. Bayer Corp.  (We’ve discussed Carrera extensively.)  They contend that the ascertainability requirement should be either eliminated from the class certification analysis altogether or substantially relaxed in order to clear the runway for consumer class actions.

In our brief, we explain why that view is mistaken.  Here are some of the key points from our brief:

  • The assumption by the plaintiff and his amici that the ability to certify class actions is to be promoted at every turn is deeply misguided.  Class actions are a means of dispute resolution, not an end in themselves.  As the Supreme Court recently reiterated in Wal-Mart Stores, Inc. v. Dukes, class actions are an “exception to the usual rule” that cases are litigated individually, and it is therefore critical that courts apply a “rigorous analysis” to the requirements governing class certification before a lawsuit is approved for class treatment.
  •  Ascertainability is one of those requirements that, like many other class certification requirements, is rooted in well-established principles of due process.  It seems hard to dispute that if the named plaintiff were to sue a company over a particular product on his own, he would have to prove at trial that he purchased the challenged product and that he was injured as a result.  As a matter of due process, the defendant would have to be given the opportunity to challenge the plaintiff’s evidentiary showing, including through cross-examination, and to have a court or jury resolve any factual disputes.
  • The fact that a plaintiff has chosen to bring a class action cannot alter the due process rights of defendants.  A Rule 23 class action is the sum of the individual class members’ claims within it—nothing more.  The Supreme Court made this clear in Dukes when it held that a class can’t be certified “on the premise that [the defendant] will not be entitled to litigate its * * * defenses to individual claims.”  Interpreting Rule 23 otherwise would violate the Rules Enabling Act, which embodies the due process principle that procedural rules cannot “abridge, enlarge or modify any substantive right.”  28 U.S.C. § 2072(b).
  • Ascertainability ensures that due process is honored by preserving defendants’ ability to challenge any would-be class member’s claim of eligibility and right to recovery.  Without a reliable and administratively feasible method for identifying who is in a class, defendants will have no way to bring such challenges, short of extensive individualized fact-finding and an unmanageable series of mini-trials.
  • Virtually all courts to consider the issue have insisted that plaintiffs demonstrate that a proposed class is ascertainable.  And the notion that ascertainability should be relaxed or ignored in order to make consumer class actions easier to bring runs headlong into defendants’ due process rights.
  • The policy argument advanced by the plaintiff and his amici that unascertainable class actions of this sort are beneficial cannot be squared with the evidence.  In a theme we have explored on this blog, the ordinary justification for class actions—that they offer benefits for class members who would not pursue relief on their own—is simply inapplicable to cases involving class members who can’t be identified; when such class actions are certified, only a handful of class members actually receive benefits.

We will be watching Jones v. ConAgra closely to see whether the Ninth Circuit—which oversees the so-called “Food Court”—continues to ensure that ascertainability is satisfied in class actions.  But the Ninth Circuit is not the only circuit that will address the question.  This Friday (February 6), the Eleventh Circuit will hear oral argument in Karhu v. Vital Pharmaceuticals, Inc., No. 14-11648.  (We’ve covered the district court’s decision in Karhu.)  In Karhu, plaintiffs argue that class members can be identified through claimant affidavits and retailer records.  Like the plaintiffs in Jones, the Karhu plaintiffs argue that Carrera was wrongly decided and should not be followed.

Will either circuit create a split with Carrera and other cases?  Stay tuned!

In Duran v. U.S. Bank N.A. (pdf), the California Supreme Court recently addressed an important question in the context of state-court class actions: Can plaintiffs invoke statistical sampling in an attempt to prove class-wide liability and overcome the presence of individual questions that ordinarily would defeat class certification?

The court’s answer to that question is a mixed bag for business. The court firmly rejected the haphazard approach to sampling used by the trial court in the lawsuit against U.S. Bank. But the court left open the troubling possibility that sampling might be used in support of class certification in the future. Continue Reading California Supreme Court Rejects Exceptionally Poor Sampling Method, But Leaves Open Many Questions About Sampling And Class Certification

We previously wrote about the Third Circuit’s decision in Carrera v. Bayer Corp., which reversed a district court’s class-certification order because there was no reliable way to ascertain class membership—indeed, no way to identify who was a member of the class aside from a class member’s own say-so. Last week, the full Third Circuit denied (pdf) the plaintiff’s request to rehear the case en banc over the dissent of four judges. The clear message of Carrera is that when plaintiffs file class actions that have no hope of compensating class members for alleged wrongs because the class members can’t be found, courts should refuse to let these actions proceed.

As we discuss below, the denial of rehearing is significant in itself, given the concerted efforts by Carrera and his amici to draw attention to the case. But what might be most significant about this latest set of opinions is what even the dissenting judges did not say.

Continue Reading Third Circuit Rejects Effort At End Run Around The Ascertainability Requirement

Last year, we reported on the Second Circuit’s ruling in Police & Fire Retirement System of City of Detroit v. IndyMac MBS, Inc. (pdf), 721 F.3d 95 (2d Cir. 2013), that the filing of a class action does not toll the statute of repose in the Securities Act of 1933 for would-be class members who later seek to intervene or file their own suits. On Monday, the Supreme Court announced that it has chosen to review the Second Circuit’s ruling. Now, the Supreme Court has an opportunity to establish a uniform national rule that the tolling principles applicable to statutes of limitation under American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), do not apply in the very different statute-of-repose context.

In American Pipe, the Supreme Court held that the filing of a class action suspends the statute of limitations as to all putative class members so long as they remain members of the proposed class. But lower courts have reached different conclusions on whether this American Pipe tolling applies to the three-year statute of repose for claims under Sections 11, 12(a)(2), and 15 of the Securities Act. As our previous post described, in the IndyMac case, the Second Circuit rejected an effort by putative class members to revive class claims under Section 11 of the Securities Act after the period of repose had expired. (The district court had first concluded that the named plaintiffs lacked standing to assert the claims.) The Second Circuit reasoned that the American Pipe rule cannot be applied to the Securities Act’s statute of repose because the Supreme Court held in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991), that equitable tolling does not apply to a repose period and because the Rules Enabling Act does not allow a court to use Rule 23—the source of any legal tolling—to “abridge, enlarge or modify” the repose promised by the Securities Act.

One of the absent class members who had sought to intervene petitioned for a writ of certiorari. It argued that IndyMac conflicted with a Tenth Circuit decision, Joseph v. Wiles, 223 F.3d 1155 (10th Cir. 2000), which held that American Pipe tolling applied to the Securities Act’s statute of repose. The petitioner also asserted a conflict with Federal Circuit decisions applying American Pipe to time limits for suits against the United States. In my view the claimed conflicts are mirages. That said, the Supreme Court—having now granted certiorari—has a perfect opportunity to bless the Second Circuit’s well-reasoned conclusion that there is no basis for American Pipe tolling of the repose period created by Section 13 of the Securities Act. That provision is an absolute bar to stale claims. Would-be plaintiffs should not be able to use American Pipe to bring such claims after Section 13 has cut off liability for a challenged securities offering.

Before the Supreme Court’s decision last Term in Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), the Ninth Circuit had held that a named plaintiff can continue to pursue a putative class action even after the defendant has extended that plaintiff an offer of judgment for the full individual relief sought in the complaint, including reasonable attorneys’ fees and costs. See Pitts v. Terrible Herbst, Inc., 653 F.3d 1081 (9th Cir. 2011). In a case that bears watching, a federal district judge in California recently certified for interlocutory review the question whether Pitts’s mootness holding remains good law. See Chen v. Allstate Ins. Co., No. 4:13-cv-00685-PJH (N.D. Cal. July 31, 2013).

Continue Reading Will the Ninth Circuit Revisit the Issue of Whether an Offer of Judgment to the Named Plaintiff Can Moot a Class Action?