Whether federal district courts may certify a damages class action where no reliable, administratively feasible method exists for identifying class members is a question that has long plagued class-action defendants. The need for class ascertainability is especially dire in low-value consumer class actions in which manufacturers, distributors, and retailers are sued over “mislabeled” food, beverages, or other inexpensive consumer products. Unfortunately, the federal courts of appeals are sharply and hopelessly divided on whether Rule 23, which governs class actions in federal courts, includes an implicit ascertainability requirement.
Many observers—including WLF—have high hopes that the US Supreme Court will mercifully agree to settle the vexing question of ascertainability next Term by granting certiorari in Conagra Brands, Inc. v. Briseño. In the meantime, federal courts of appeals have continued weighing in on whether an unascertainable class should be certified under Rule 23. In just the past week, in fact, the Second and Sixth Circuits have each issued divergent opinions that further muddy the water on ascertainability.
Before its July 7 opinion in In re Petrobras Securities, No. 16-1914, 2017 WL 2883874 (2d Cir. July 7, 2017), most observers counted the Second Circuit among those federal appeals courts that embrace an ascertainability requirement. See, e.g., Brecher v. Republic of Argentina, 806 F.3d 22, 26 (2d Cir. 2015) (holding that class plaintiffs must propose an “objective,” “readily identifiable class” that does not “require the kind of individualized mini-hearings that run contrary to the principle of ascertainability”). But the panel in Petrobras Securities “clarified” the Second Circuit’s prior decision in Brecher by essentially abandoning it altogether.
Relying on precedents from other circuits that have rejected an ascertainability requirement, Petrobras Securities held that “a freestanding administrative feasibility requirement is neither compelled by precedent nor consistent with Rule 23.” Expressly “declining to adopt an administrative feasibility requirement,” the court purported to “join a growing consensus that now includes the Sixth, Seventh, Eighth, and Ninth Circuits.” In doing so, the Second Circuit rejected the very ascertainability requirement that had recently been widely understood to be the law of the circuit under Brecher.
Only four days later, on July 11, the Sixth Circuit issued an opinion that appears to move that court outside the “growing consensus” in which Petrobras had tried to place it. In Sandusky Wellness Center, LLC v. ASD Specialty Healthcare, Inc., No. 16-3741, 2017 WL 2953039 (6th Cir. July 11, 2017), the appeals court rejected the appellant’s contention that “difficulties in identifying class members are not relevant to either ascertainability or Rule 23(b)(3) predominance.” Recognizing that “courts have been inconsistent in how they have accounted for difficulties in identifying class members,” the panel affirmed the district court’s view that, because class members could not be readily identified, the class device was not “superior to other available methods” due to “the likely difficulties in managing a class action.” While insisting that it “has not outlined a requirement of ascertainability,” the panel nonetheless emphasized that the Sixth Circuit requires that a class “must be adequately defined and clearly ascertainable … regardless of whether this concern is properly articulated as part of ascertainability, Rule 23(b)(3) predominance, or Rule 23(b)(3) superiority.”
Whether class identity is characterized as a predominance, superiority, or ascertainability problem, the Sixth Circuit’s decision in Sandusky Wellness Center is definitely a step in the right direction. Unfortunately, the Second Circuit’s about-face in Petrobras Securities returns the circuit-split head count on ascertainability to the status quo ante. Nonetheless, the fluid uncertainty of this issue among the federal courts of appeals should provide an additional reason for the Supreme Court to grant review in Briseño.
Also published by Forbes.com on WLF’s contributor site.