Last month, the Seventh Circuit further added to the tension between the circuits regarding the interpretation and application of Rule 23(f)’s shadow ascertainability requirement. As we previously reported, we await a ruling in the Ninth Circuit on this issue; it is almost certain that this recent opinion will now be added to the mix affecting that ruling.
The case, Mullins v. Direct Digital, LLC, is a consumer class action alleging that the product Instaflex Joint Support is falsely advertised to “relieve discomfort,” “improve flexibility,” “increase mobility,” “support cartilage repair,” as well as being “scientifically formulated” and “clinically tested for maximum effectiveness” because the primary active ingredient, glucosamine sulfate, is nothing more than a sugar pill.
Affirming the lower court’s class certification order, the Seventh Circuit declined to apply what it termed a “heightened ascertainability” requirement under Rule 23(b)(3).
The Seventh Circuit first laid out what it deemed to be the “long recognized” implicit Rule 23 ascertainability requirement, namely, that a “class must be defined clearly and that membership be defined by objective criteria rather than by…a class member’s state of mind.” The Court found that this bare requirement that a class be clearly defined (and not vague, subjective, or a “fail-safe” class) was satisfied in the lower case.
In affirmation certification, what the Seventh Circuit refused to do was “raise the bar” for ascertainability and require that “plaintiffs prove at the certification stage that there is a ‘reliable and administratively feasible’ way to identify all who fall within the class definition.” The Court expressed the concern shared by many courts refusing to apply holdings like the Third Circuit opinion in Carrera, that this more strident application of the law effectively bars class actions in cases involving low-cost goods or services, where consumers are not likely to retain proof of purchase.
Going further, the Court identified the major policy concerns prompting application of a heightened ascertainability requirement – namely 1) administrative convenience, 2) unfairness to absent class members, 3) unfairness to bona fide class members, and 4) due process interests of defendants – and set about shooting them down one by one.
Briefly, the Court found that addressing the administrative convenience of contacting class members is not the job of ascertainability, but is better addressed by the Rule 23(b)(3) requirement that mandates that a class action be “superior to other available methods for fairly and efficiently adjudicating the controversy” and highlighted the Rule 23(b)(3)(D) factor of “likely difficulties in managing a class action.” The Court held that tackling administrative concerns on ascertainability “renders the manageability criterion of the superiority requirement superfluous.”
Courts applying the “heightened ascertainability” requirement have also found that the requirement is needed to protect unidentified class members, based on the theory that if they cannot be ascertained, they would be unfairly bound by any judicial proceeding because they were not given the ability to opt-out. The Seventh Circuit disregarded this concern, stating that while Rule 23(c)(2)(B) requires that “best notice” possible under the circumstances be given, that it is not perfect notice – and the rule recognizes the impossibility of providing notice to all potential class members.
The Court also notes concerns expressed over the dilution of bona fide claims, based on the theory that only requiring personal affidavits for class membership means an increased likelihood of fraudulent claims which could dilute the recovery of actual class members. The Seventh Circuit, however, essentially dismisses these concerns, saying that the risk of this happening seems low and that claims administration procedures have ways of detecting fraudulent submissions.
Finally, the Court takes on the argument that defendants’ due process rights are violated when they lack the ability to test the reliability of evidence submitted to prove class membership and that forcing them to accept as true declarations of purchase violates this right. While the Court credits this concern, it says that defendants always have the right to challenge class member affidavits – but it does not mean the Court cannot accept these affidavits to establish class membership. The Court goes on to say that a defendants’ due process right to challenge the affidavits does not extend to a right to a “cost effective” method of challenging those defenses, essentially saying defendants are free to spend the money to challenge each affidavit if they so choose.
Obviously, this new decision – which contains probably the most comprehensive opposition to Carrera’s application of the ascertainability requirement – adds a significant dimension to the ongoing ascertainability debate. If it wasn’t clear before, there is now a distinct split between the circuit in terms of the meaning of this shadow requirement and we wait to find out how the Ninth Circuit will deal with the issue (and whether any of these opinions will be teed up for the Supreme Court in the near future).