Third Circuit Ascertainability Rulings Continue to Imperil Low-End Consumer Class Actions

by Cozen O'Connor
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It’s a pattern repeated in millions of households every day:  you go to the grocery or the drug store, buy the items you need, and don’t bother to keep the receipt.  You may throw the receipt away immediately, you may throw it away after you get home, or you may not even take it from the cashier in the first place.  But if you bought a low-end, everyday consumer item more than a week or two ago, chances are that you no longer have the receipt.

So if the product you purchased ultimately becomes the subject of a class action lawsuit, how are you going to prove your claim?  Typically, purchasers of such small-dollar items are permitted to recover their portion of an award or settlement through an affidavit of purchase, often with a higher recovery to those few class members who can actually provide proof of purchase.

A recent series of opinions from the Third Circuit, however, appears to have put an end to the “affidavit of purchase” method, on grounds that such affidavits are an insufficiently reliable way of ascertaining who is in the class.  Because ascertainability is a threshold issue for class certification, consumer class actions based on typically undocumentable purchases are becoming problematic in the Third Circuit—and may do so elsewhere, if the court’s reasoning persuades other circuits.

Last month, a federal court in New Jersey denied class certification in Stewart v. Beam Global Spirits & Wine, Inc., a case alleging that the producers and sellers of “Skinnygirl Margarita” made false claims about the product.  The court held that the membership of the class of Skinnygirl Margarita purchasers could not be reliably ascertained, as the defendants had no sales records that would identify the retail purchasers of the product and few class members were likely to have retained their receipts.  The problem was exacerbated by the fact that the defendants themselves were not retailers, and thus did not sell directly to the class members.

The named plaintiffs in Stewart proposed that putative class members submit affidavits regarding their class membership.  The court rejected this idea, finding it “unlikely that putative class members will accurately remember every Skinnygirl Margarita purchase they made during the class period, let alone where these purchases were made and the prices they paid each time.”

The court relied on three Third Circuit decisions in 2012 and 2013 (Hayes v. Wal-Mart Stores, Inc.; Marcus v. BMW of North America, LLC; and Carrera v. Bayer Corp.), in which “the Circuit clearly cautioned district courts against approving the use of affidavits to ascertain members of the class.”  The plaintiffs attempted to limit the scope of those cases to situations in which the number of allegedly defective or deceptive products sold could not be verified—unlike Skinnygirl Margaritas, where the volume of sales could be determined from retailer records.  The court rejected this narrow reading of the Third Circuit’s precedent.

The plaintiffs also argued that the Third Circuit had not completely ruled out the use of affidavits as a principal means to identify class members, but had left the door open for affidavits if the plaintiffs proposed a sufficiently reliable process whereby a qualified claims administrator would screen the affidavits for “further indicia of reliability.”  The plaintiffs in Stewart proposed that a claims administrator could screen the Skinnygirl Margarita affidavits by cross-referencing them with currently available records of consumers (including emails sent by consumers to the defendants), social media “likes,” and comments about Skinnygirl Margarita on the defendants’ websites.  As to those affidavits that could not be cross-checked, the plaintiffs proposed using “proven algorithms” to identify fraudulent claims based on data and behavioral patterns tailored to the case; cross-checking prices paid and geographic retail locations against the defendants’ retailer records; and requiring affiants to provide specific information regarding packaging and method of purchase to detect fraud or inaccuracy.

The court was not satisfied, noting the absence of any evidence regarding the percentage of Skinnygirl Margarita purchasers who were likely to either email the defendants or “like” the product on Facebook.  The court reiterated that the Third Circuit cases “make clear that relying on affidavits of putative class members as the primary method of ascertaining the members of the class is not a prudent course of action for a district court and is generally insufficient to meet the requirements of Rule 23.”  The court added that affidavits “amount to nothing more than reliance on the subjective ‘say so’” of the putative class members, leaving defendants “without a suitable and fair method for challenging these individuals’ purported membership in the class. . . .”

Was the Stewart court overly rigid in its interpretation of the Third Circuit’s position on affidavits?  Apparently not.  In dissenting from the Third Circuit’s denial in May of a petition for rehearing en banc in Carrera, Judge Thomas L. Ambro expressed concern that Carrera “gives the impression to many that we now carry [the ascertainability] requirement too far.”  Judge Ambro noted that one California federal court had opined that Carrera “eviscerates low purchase price consumer class actions in the Third Circuit.”

If putative class counsel held out any hope for the continued viability of affidavits to ascertain class membership in the Third Circuit, Stewart appears to have slammed the door shut.  It remains to be seen whether the Third Circuit’s approach gains traction in other circuits, or whether an apparent circuit split eventually works its way to the Supreme Court.

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.

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