Third Circuit Rulings Tighten Ascertainability and Numerosity Requirements Under Rule 23

Three recent class certification decisions from the Third Circuit have tightened the ascertainability and numerosity requirements under Rule 23.

The key takeaways:

1. Plaintiff must offer an administratively feasible way of determining class membership. If doing so would require the district court to engage in extensive individual fact-finding, the class fails the ascertainability requirement.

2. Plaintiff must demonstrate that there are, in fact, sufficiently numerous parties. Offering a “potential pool” of plaintiffs does not suffice. Plaintiff must offer facts from which the district court may find, by a preponderance of the evidence, that there are a sufficient number of plaintiffs to satisfy Rule 23(a)’s numerosity requirement.

Marcus v. BMW of North America, LLC

In Marcus v. BMW of North America, LLC, 725 F.3d 349 (3d Cir. 2012), the Third Circuit recognized that ascertainability is an essential class certification requirement in Rule 23(b)(3) cases, and that if class members cannot be identified without extensive individualized fact-finding, a class is not ascertainable and may not be certified. There, plaintiffs sued BMW and Bridgestone for selling allegedly defective run-flat tires (RFTs). Plaintiffs’ class definition sought to capture owners and lessees who purchased or leased new BMWs with original-equipment Bridgestone RFTs from BMW dealerships in New Jersey and whose tires had gone flat and been replaced. The Third Circuit found “serious ascertainability issues” in the Marcus class because plaintiffs had no administratively feasible way to identify current and former original owners and lessees of BMW vehicles factory-equipped with Bridgestone run-flat tires which were initially purchased or leased from New Jersey dealerships. Nor could plaintiffs identify an administratively feasible way to determine whether potential class members’ Bridgestone [run-flat tires] had gone flat and been replaced. As a result, the Third Circuit vacated class certification and remanded for a determination whether the defendants’ records can ascertain class members and, if not, whether there is a reliable, administratively feasible alternative.

Hayes v. Wal-Mart Stores, Inc.

Following Marcus, Montgomery McCracken’s Class Action Defense practice group scored an important victory when the Third Circuit vacated a New Jersey District Court decision certifying a consumer class action. In Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349 (3d Cir. 2013), plaintiff purchased an extended warranty for a clearance item. He sued claiming the terms of the extended warranty excluded clearance items from coverage, making his extended warranty worthless. But the terms excluded only clearance items that did not come with a manufacturer’s warranty. As a result, the Third Circuit held that determining class membership would require individualized fact-finding (e.g., did the proposed class member purchase a service plan for a clearance item? Did the clearance item come with a manufacturer’s warranty?).

Hayes is also significant because the Third Circuit made clear that plaintiffs must offer evidence that there are, in fact, sufficiently numerous parties. Though plaintiff offered evidence of a “potential pool” of 3,500 class members, he offered no evidence of the extent to which any of those 3,500 potential class members actually fell within the class definition. He just speculated that some percentage must have purchased extended warranties for clearance items that did not come with a manufacturer’s warranty. Absent such evidence, a finding of numerosity improperly rested on pure speculation.

Carrera v. Bayer Corp.

The Third Circuit’s decision in Carrera further underscores the importance of ascertainability. In Carrera, plaintiff filed a false-advertising class action against Bayer after purchasing one of its multivitamins. The district court certified a class of all persons who purchased the multivitamin in Florida.

Plaintiff’s proposed class failed the ascertainability requirement because he offered no administratively feasible way of identifying proposed class members. Bayer did not sell directly to consumers. There was no master list of purchasers and no showing that retailers kept sufficient records. As in Hayes, the Third Circuit rejected plaintiff’s proposal that class members submit affidavits confirming class membership. The court explained that Bayer would have the right to challenge each proposed class member’s claim that he or she purchased the multivitamin. The Third Circuit emphasized that “[a]scertainability provides due process by requiring that a defendant be able to test the reliability of the evidence submitted to prove class membership.”

On September 27, the Carrera plaintiffs petitioned the Third Circuit for a rehearing en banc:

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These decisions will likely have a far reaching impact on the certification of class actions under Rule 23(b)(3). Plaintiffs often point to the “potential pool” of class members to satisfy the numerosity requirement. But as the Third Circuit has made clear, the question is whether there is evidence sufficient to show the number of consumers who meet plaintiff’s class definition. And if that inquiry requires extensive fact finding, plaintiff’s bid for class certification may fail the ascertainability requirement.