Seventh Circuit Applies “Weak” Ascertainability Requirement, Splits From Third and Eleventh Circuits

Carlton Fields
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A panel from the Seventh Circuit split from the Third and Eleventh Circuits and rejected what it described to be a “heightened” ascertainability requirement under Rule 23(b)(3). In Mullins v. Direct Digital, LLC, plaintiff filed a class action complaint alleging that defendant had misrepresented, in marketing materials and on product labels, the purported health benefits of a glucosamine supplement in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act and similar laws in nine other states. In certifying the class, the district court rejected defendant’s argument that plaintiff’s motion for class certification should be denied unless plaintiff could demonstrate a reliable and administratively feasible way to determine class membership and, furthermore, that affidavits from putative class members are insufficient as a matter of law to satisfy this requirement. The Seventh Circuit granted 23(f) review in order to “facilitate the development of the law” on ascertainability, and affirmed the district court’s order certifying the class.

The panel began its analysis by stating that the law in the Seventh Circuit on ascertainability is that a class must be “defined clearly and based on objective criteria,” i.e., that there is no requirement to demonstrate “administrative feasibility” like there is under the purported “heightened” ascertainability requirement in the Third and Eleventh Circuits. It stated that this “‘weak’ version of ascertainability” is the “well-established” law in the Seventh Circuit and, further, suggested that a misinterpretation of the requirement had led to a “doctrinal drift” with respect to the law on ascertainability, including decisions by district courts within the Seventh Circuit.

The panel then described the three ways in which a plaintiff might run afoul of the “weak” ascertainability requirement: (1) failing to clearly define a class; (2) defining the class on subjective criteria; and (3) defining class membership based on success on the merits—a “fail safe” class whereby a plaintiff who succeeds on the merits would be included in the class but one who does not would be excluded and thus not bound by the judgment. In the panel’s view, the proposed class definition in this case, which simply included purchasers of Direct Digital’s product within the applicable statute of limitations periods, was sufficient and satisfied the ascertainability requirement, notwithstanding that Direct Digital may have no records with respect to its retail customers and most purchasers likely would not have kept their receipts.

The panel was particularly concerned with the effect of the Third and Eleventh Circuit’s application of the ascertainability requirement on cases involving low cost goods or services, where consumers are not likely to retain proof of purchase. In this regard, the court was critical of these courts’ rejection of the use of class member affidavits to determine class membership.

The panel further addressed four policy concerns identified by courts employing a “heightened” ascertainability requirement:  (1) administrative convenience, which the court stated is more appropriately addressed in assessing superiority, where it will be measured against the benefits of employing the class action device; (2) unfairness to absent class members because they may be bound by the judgment without receiving notice, to which the court responded by stating that class action notice is the best notice practicable and, further, that absent class members would have no real way of recovering on low value claims without the class action mechanism; (3) that it is unfair to bona fide class members whose claims will be diluted, to which the court responded that claims rates are low, such that the funds to be recovered by other class members will not be diluted by any fraudulent claims, merely the unclaimed residuary will be diminished and, furthermore, that administrative processes could be put in place to weed out fraudulent or mistaken claims; and (4) due process to defendants, to which the court responded that defendants could present individual defenses to class members’ claims at other stages of the litigation, including the damages phase.

The Seventh Circuit’s decision is in direct conflict with the law in the Third Circuit (under Carrera v. Bayer Corp., Marcus v. BMW of North America, LLC., and other cases) and the Eleventh Circuit, which require that the feasibility of ascertaining class membership be analyzed at the class certification stage (the Third Circuit, moreover, made clear in Carrera that this analysis must be “rigorous”). As we reported, the Eleventh Circuit, in Karhu v. Vital Pharmaceuticals, Inc., recently held that ascertainability requires plaintiff to demonstrate that a class definition “contains objective criteria that allows for class members to be identified in an administratively feasible way” and affirmed the denial of class certification where plaintiff had “failed to propose a realistic method of identifying” individuals in the class.

Mullins v. Direct Digital, LLC, No. 15-1776 (7th Cir. July 28, 2015).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Carlton Fields

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