Heightened Ascertainability Remains a Formidable Requirement to Achieving Class Certification in the Third Circuit: Administrative Feasibility Following City Select v. BMW Bank of North America

Foley & Lardner LLP

When the Third Circuit Court of Appeals issued its decision in City Select Auto Sales Inc. v. BMW Bank of North America, Inc., in the middle of last year, many interpreted the decision as significantly lowering the bar to certification of class actions. By recognizing, for the first time, the use of affidavits as a legitimate method of identifying class members, some wondered whether City Select was a shift away from the “administrative feasibility” requirement for ascertainability consistently upheld by the Third, Fourth, and Eleventh Circuits. Two recent district court decisions in In re Tropicana Orange Juice Mktg. & Sales Practices Litig. [1] and Hargrove v. Sleepy’s, LLC, [2] demonstrate that the “administrative feasibility” requirement—a requirement that to certify a class its members must be capable of being readily identified through an administratively feasible process—remains alive and well in the Third Circuit.

In City Select, the Third Circuit reversed the district court’s denial of class certification of a claim under the Telephone Consumer Protection Act (TCPA) on lack of ascertainability grounds. [3] The plaintiff, a car dealership, filed a class action case against BMW’s financing arm, BMW Bank of North America (BMW), alleging that BMW, along with one of its vendors (Creditsmarts), had violated the TCPA by repeatedly sending unsolicited fax advertisements to several thousand dealerships across the country. The plaintiff sought certification of a nationwide class described as “auto dealerships included in the Creditsmarts database on or before December 27, 2012,”  [4] and moved to compel production of the same database. The district court in New Jersey denied the dealership’s motion to compel, and further denied class certification, explaining that the plaintiff had failed to demonstrate that class members could be identified using administratively feasible means. [5]

On appeal, the Third Circuit vacated and remanded for two reasons:

First, our ascertainability precedents do not categorically preclude affidavits from potential class members, in combination with the Creditsmarts database, from satisfying the ascertainability standard. Second, because the Creditsmarts database was not produced during discovery, plaintiff was denied the opportunity to demonstrate whether a reliable, administratively feasible method of ascertaining the class exists based, in whole or in part, on that database. [6]

Put another way, the Third Circuit determined that the plaintiff had been unfairly disadvantaged by Creditsmarts’ refusal to produce the very database that could potentially have been used, in combination with class member affidavits, to demonstrate an administratively feasible method of identifying class members.

Some observed that by allowing class representatives to rely upon affidavits to identify class members, City Select marked a notable departure from prior Third Circuit decisions where the court expressed class member identification concerns with the use of affidavits. [7] While not entirely ruling out the use of affidavits to identify class members, the Third Circuit’s decision in City Select acknowledged that “[a]ffidavits from potential class members, standing alone, without ‘records to identify class members or a method to weed out unreliable affidavits,’ will not constitute a reliable and administratively feasible means of determining class membership.” [8] City Select therefore clarified that the same standards previously applied by the court in assessing ascertainability for class certification remained in effect in the Third Circuit.

Two recent New Jersey District Court decisions demonstrate that City Select did not alter the “heightened” ascertainability requirement in the Third Circuit. On January 22, 2018, the U.S. District Court for the District of New Jersey issued its decision in In re Tropicana, denying class certification for lack of ascertainability, among other grounds. [9] In that case, the plaintiffs alleged that Tropicana had violated common law and state consumer protection laws in connection with the sale of orange juice. Specifically, the plaintiffs alleged that “[d]espite Tropicana’s ‘100% pure and natural’ claim, Tropicana’s [not from concentrate] juice is heavily processed, colored, and flavored—it is neither 100% pure nor 100% natural orange juice.” [10] In support of their class certification motion, the plaintiffs proposed a methodology for identifying class members whereby their expert would create a computer program to reconcile bulk retailer loyalty card data against the identifying information submitted by putative class members. [11] The same expert would then create a second computer program to “cross-check” the results and ensure that putative class members had been properly identified. [12]

The district court in Tropicana engaged in a lengthy ascertainability analysis, ultimately concluding plaintiffs had failed to show that their proposed methodology for identifying class members employed a “reliable and administratively feasible mechanism,” as required under the Third Circuit’s decision in Byrd v. Aaron’s, Inc. [13] To the contrary, the court opined, “Dr. Narayanan’s methodology assumes that the retailer data exists and contains the necessary information required to properly ‘cross-check’ against putative class members’ claim forms. It further assumes that all retailers will produce their consumer data to him in a useable electronic format.” [14] The court further found that the plaintiffs’ proposed methodology would necessarily exclude persons for whom retailer data was unavailable, explaining, “class member will still be bound by any judgment on the merits emanating from this Court. That defies one of the principal rationales of ascertainability—identifying persons bound by the final judgment—and simply cannot be permitted.” [15]

The Third Circuit, in City Select, had recognized that “[t]he determination whether there is a reliable and administratively feasible mechanism for determining whether putative members fall within the class definition must be tailored to the facts of the particular case.” [16] Adopting that rationale and distinguishing the case against Tropicana from City Select, the district court instead drew a parallel to the Third Circuit’s 2013 decision in Carrera v. Bayer Corp., which similarly involved products distributed to consumers through a broad variety of retail stores unaffiliated with the defendant. [17] In Carrera, the Third Circuit vacated the district court’s order granting class certification and remanded for further consideration on the grounds that the plaintiff’s exclusive reliance on affidavits from potential class members was not a sufficiently reliable means of identification. [18] Likewise, in In re Tropicana, the district court concluded that the plaintiffs’ proposed method for identifying class members would run afoul of the two critical rationales underlying the ascertainability requirement: “facilitating opt-outs and identifying persons bound by the final judgment.” [19]

More recently, on February 28, 2018, the New Jersey district court issued its decision in Hargrove v. Sleepy’s, LLC, another case involving the denial of class certification on ascertainability grounds. [20] In Hargrove, a group of former delivery drivers for Sleepy’s, LLC, a New York-based mattress retailer, filed a complaint under the Employee Retirement and Income Security Act (ERISA), alleging that Sleepy’s had misclassified them as independent contractors, rather than employees, and thereby denied them base and overtime wages due under New Jersey state law. [21]

In its opinion and order denying class certification, the district court concluded that the plaintiffs were unable to offer a methodology by which individuals falling within the class definition could be identified in a reliable and administrative feasible manner. [22] The court found instead that, even following the deposition of the paralegal at the plaintiff’s firm who was primarily responsible for reconciling driver rosters, gate logs, and pay statements to identify class members, the several “gaps” in the record “would make assessing the size, as proposed by the [p]laintiff, tenuous or speculative.” [23] In other words, because the records available to the parties did not enable an administratively feasible identification of class members, the plaintiffs had run afoul of the prohibition on “specific fact-finding as to each individual” previously set forth in the Third Circuit’s decision in Marcus v. BMW of North America. [24]

Taken together, In re Tropicana and Hargrove demonstrate that the administrative feasibility requirement remains a prime consideration in class certification proceedings within the Third Circuit. While City Select clarified that in certain limited circumstances, class member affidavits might find their place in ascertaining class membership, the overarching requirement is that class members be identified accurately and without the need for individualized fact-finding.

[1] 2018 U.S. Dist. LEXIS 9797 (D.N.J. Jan. 22, 2018, Civ. No. 2:11-cv-07382).

[2] 2018 U.S. Dist. LEXIS 32323 (D.N.J. Feb. 28, 2018, Civ. No. 3:10-cv-01138).

[3] 867 F.3d 434 (3d Cir. 2017).

[4] City Select, 867 F.3d at 441.

[5] Id. at 436, 438.

[6] Id. at 440-41.

[7] See Marcus v. BMW of North America, LLC, 687 F.3d 583 (3d Cir. 2012); Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013); Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349 (3d Cir. 2013).

[8] City Select, 867 F.3d at 441 (quoting Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015)).

[9] See 2018 U.S. Dist. LEXIS 9797, *36-38.

[10] Consolidated Amended Complaint at ¶ 1, In re Tropicana (Dkt. No. 32).

[11] Id. at *29.

[12] Id. at *29-30.

[13] Id. at 29 (quoting Byrd v. Aaron’s, Inc., 784 F.3d 154, 163 (3d Cir. 2015)).

[14] Id. (internal citations omitted).

[15] Id. at 37-38 (citing City Select, 867 F.3d at 441).

[16] Id. at 34 (quoting City Select, 867 F.3d at 442).

[17] Id. at 35.

[18] Carrera, 727 F.3d at 303-04.

[19] In re Tropicana, 2018 U.S. Dist. LEXIS at *36 (citing City Select, 867 F.3d at 441; Carrera, 727 F.3d at 307-09).

[20] See Hargrove, 2018 U.S. Dist. LEXIS 32323.

[21] Id. at *1-3.

[22] Id. at *17-21.

[23] Id. at *21.

[24] Id. at *17 (citing Marcus v. BMW of N. Am., LLC, 687, F.3d 583, 593 (3d Cir. 2012)), *21.

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