The End of Low-value Consumer Class Action Lawsuits?: the Federal Circuit Split on the Ascertainability Requirement for Class Certification

JurisdictionUnited States,Federal
Publication year2017
CitationVol. 68 No. 4

The End of Low-Value Consumer Class Action Lawsuits?: The Federal Circuit Split on the Ascertainability Requirement for Class Certification

Kyle Harris Timmons

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The End of Low-Value Consumer Class Action Lawsuits?: The Federal Circuit Split on the Ascertainability Requirement for Class Certification*

I. Introduction

This Comment seeks to address the growing circuit split on the ascertainability requirement of class action lawsuits. The split centers around what Rule 23 of the Federal Rules of Civil Procedure1 explicitly states are the requirements for class certification and what some courts have read into Rule 23. Under the high standard, creating a plan or proposing a method with which to identify purported class members is not enough to satisfy the ascertainability requirement. Instead, a class must show that evidentiary means exist and are readily obtainable to support the proposed method of identifying the case. Conversely, under the low standard, the implicit requirement of ascertainability focuses on the adequacy of the class definition and not whether, using the class definition, identifying particular members of the class would be difficult. The majority of case law examined in this Comment focuses on Rule 23(b)(3) class action lawsuits, primarily consumer class action lawsuits involving small-value claims. Rule 23(b)(3) cases are central in the circuit split over the ascertainability doctrine due to the challenge of identifying class members in cases where plaintiffs likely do not have evidence to

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support their status as class members, and defendants do not have adequate records to identify potential class members.

Though a narrow issue, the split falls into the changing landscape of federal class action lawsuits. In four recent cases with five-justice majorities, Justice Scalia wrote for a divided Court that upheld contractual waivers of class arbitration, questioned class-wide damages models, and required a strict interpretation of what constitutes common questions of law and fact sufficient to maintain a class action under Rule 23 of the Federal Rules of Civil Procedure.2 However, since Justice Scalia's death in early 2016, the Court is operating at less than full capacity for the first time since 2010.3 While turnover in the Court is natural, a tumultuous election year in 2016 caused the position to remain vacant for an extended period of time.4 At the end of last year's term, the Court likely declined certiorari in Mullins v. Direct Digital, LLC5 to avoid a split decision.

This Comment explores the issues and outcomes of recent cases involving the meaning of the ascertainability requirement, including the current circuit split in the area, as well as the possibility of future litigation in the Supreme Court of the United States. Part II discusses generally the history of class actions in the United States. Part III explores the different approaches to the ascertainability requirement taken by the federal circuit courts. Part IV addresses the various policy implications of a heightened ascertainability requirement, provides reasoning for the validity of the lower standard, and examines litigation that may find its way to the Supreme Court.

II. History of Class Action Lawsuits

A. The Development of Class Action Lawsuits

Like all areas of law, class action lawsuits arose because of a need. Sometimes, an injury, act, or conduct affects more than one person, and

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handling one, collective case makes more sense than handling many individual cases. Though it is easy to see class action lawsuits as a modern tool when industries like automobile manufactures and restaurant chains can affect countless customers through one action,6 class action lawsuits predate modern law, not by decades but by centuries.7

Thirteenth century England saw cases, then known as group litigation, that functioned the same as modern class action lawsuits.8 Generally, these actions were brought when an individual broke village, town, guild, or parish rules, affecting more than one person at the same time.9 The original convenience of these group actions was the avoidance of difficulties that arose from poor methods of transportation and communication at the time.10 Over time, the effects of the group litigation became more noticeable and important.11

Overuse of group litigation in England led to several parliamentary reforms, leading to a great decrease in its prominence and need in England after 1850.12 Even as group litigation was being phased out by

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English lawmakers, thanks to Justice Story of the Supreme Court of the United States,13 the group-litigation process survived in the United States.14

After its initial development by the Supreme Court, Equity Rule 48,15 also known as group litigation, was codified in 1833.16 As the name suggests, the rule developed in the equity courts.17 Fundamentally, Equity Rule 48 followed two principles: all plaintiffs or defendants materially interested in one suit, no matter how numerous, should be made parties to the suit, but parties not present in the suit should not be bound by the decision.18 This new rule allowed for representative litigation, where "an excessive number of similar, individual cases had been filed."19 Courts and legislators quickly realized Equity Rule 48's non-binding nature on absent class members, though explicitly stated in the text of the rule, ineffectively served the goals and needs of class action lawsuits.20

Early in the twentieth century, Equity Rule 38 replaced the already defunct Equity Rule 48.21 Equity Rule 38 only lasted until 193822 when the Federal Rules of Civil Procedure23 were adopted as a replacement for

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the Federal Rules of Equity and the Conformity Act.24 Although the advisory committee said that Rule 23 was essentially a restatement of Equity Rule 38, Rule 23 still provided many problems for the courts and prospective classes trying to bring suit, such as not clarifying when and if absent members would be bound by a judgment.25

The Supreme Court amended Rule 23 in 1966.26 The new language explicitly provided for a class action judgment to be binding on all absent class members.27 Additionally, the Court laid out the requirements for class certification and included procedures for notifying class members of the action.28 The Court continues to shape the law of class action lawsuits in America as Rule 23 continues to serve as the starting point for all federal class action lawsuits.29

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B. General Types of Class Action Lawsuits

The 1966 amendment of Rule 23 helped shape the current landscape of class action lawsuits in the United States, creating several general types of class action lawsuits.30 The amendment created Rule 23(b)(2) "class action for injunctive or declaratory relief against defendants who had acted on grounds applicable to the class,"31 and Rule 23(b)(3) "class action for money damages on behalf of a grouping of persons who had a question of law or fact in common."32 The first paved the way for civil rights and institutional reform class actions in the 1970s and 1980s, while the latter helped develop the broad areas of antitrust, securities fraud, employment discrimination, commercial, consumer protection, environmental, products liability, and mass tort class actions.33

"Small-dollar" consumer class action lawsuits are becoming a particularly important area of class action litigation, especially in regards to the ascertainability requirements of the consumer class.34 Unlike other cases, "small-dollar" consumer class action lawsuits usually involve class members who purchased "relatively low-cost goods or services," and likely no longer have documentary proof of purchase.35 Without a receipt or other documentary proof, both identifying class members and class members' ability to prove membership become much harder.36 Although recovery for these types of claims has become more challenging in certain federal circuits,37 undoubtedly, this area of class action litigation demonstrates the essential nature of class action litigation.38

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C. Rule 23: The Requirements for Class Certification

Rules 23(a) and (b) of the Federal Rules of Civil Procedure enumerate the requirements for class certification.39 Rule 23(a) begins with four prerequisites to certification,

(1) The class is so numerous that joinder of class members is impracticable (numerosity); (2) there are questions of law or fact common to the class (commonality); (3) the claims or defenses of the class representatives are typical of those of the class (typicality); and (4) the class representatives will fairly and adequately protect the interests of the class (adequacy).40

Additionally, prior to a grant of certification, a court must find that the class meets one of the Rule 23(b) requirements: (1) prosecuting claims individually creates a risk of inconsistent adjudications with respect to individual class members or substantially impairs the ability of others to protect their interests; (2) the party opposing class certification "has acted or refused to act on grounds that apply generally to the class"; or (3) "the court finds that the questions of law or fact common to class members predominate" questions affecting individual members, and that a class action is the superior method to fairly and efficiently adjudicate the controversy.41

Beyond the explicit words of the text of Rule 23, courts have added implicit requirements for class certification, such as "(1) that a definable class exists, (2) the named representatives are members of that class, and (3) the claim of the class is live, rather than moot."42

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1. The 23(a) Requirements

Rule 23 does not provide a specific number guideline43 for determining whether a class meets the numerosity requirement of 23(a)(1).44 Instead, courts look to the impracticality of joinder.45 Impracticality of joinder can arise for many...

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