Last week, the New Jersey Appellate Division veered from the doctrine of ascertainability, a requirement established by the Third Circuit Court of Appeals in 2012 that added a new, judicially created hurdle to granting class certification in class actions. The doctrine of ascertainability requires plaintiffs, typically consumers, to show at the class certification phase of a class action that there is a way to determine who is in the class and who is not. Not only is this doctrine not part of the law, it also sets a very high bar for class certification of smaller claims in consumer class actions.
To understand the impact of this requirement, consider this hypothetical: a bread product sold in supermarkets to consumers is touted as gluten free. When tested, the product is shown to contain significant gluten levels. Everyone buying the bread will have been misled about its gluten level. A prototypical case for a class action, one might think, because each person’s damages are far too low to bring an individual case, but taken as a whole, the producer of the bread will have made a lot of money as a result of its misrepresentations. All of the traditional elements of Rule 23 (the procedural rule regarding class actions) are satisfied: a large numbers of consumers are affected, class members have the same claim and the class representative’s claim is typical of class members’ claims, and the class action device is superior to any other legal process for adjudicating the consumers’ rights. If an “ascertainability” requirement is added to the mix (even though it appears nowhere in the Rule), class certification will likely be denied because there is no way to determine or ascertain who actually bought the bread and declarations by the consumers are often deemed insufficient. So the company gets away with misleading thousands of consumers and is not stopped from continuing to misrepresent its product. Most importantly, no one and no court is there to protect the little guy. As Third Circuit Judge Marjorie Rendell so aptly put it last month in Byrd v. Aaron’s, another class action, maybe “the time has come to do away” with the doctrine of ascertainability.
The state courts in New Jersey have declined to follow this flawed precedent. In Daniels v. Hollister, the NJ appellate court upheld a decision to reject the defendant’s plea to dismiss a putative class action based on the doctrine of ascertainability. Plaintiffs had brought a suit against clothing retailer, Hollister Co. In December 2009, Hollister distributed $25 gift cards based on purchases of $75 or more. The gift cards did not contain an expiration date. About one month later, Hollister voided all gift cards that had not been used, a value of approximately $3 million.
Hollister had argued that the doctrine of ascertainability should preclude class certification because the members of the class could not be determined. In contrast, plaintiffs argued that class actions are in fact designed as a cost-effective way for those harmed by wrongdoers to bring suits even when the damages are low. Simply put, class actions protect the “little guy,” ascertainability of the identity of the little guy is not a requirement.
The NJ Court found that the doctrine imposed “too heavy a burden on class certification where the purported injuries to class members are so minimal as to preclude the likelihood they would be individually asserted.” It noted that “(a)lthough we doubt the ‘ascertainability’ doctrine adopted by some federal courts should ever be incorporated into our own jurisprudence, we conclude in this matter … that ‘ascertainability’ must play no role in considering the certification of a low-value consumer class action.” The court further confirmed that the doctrine is “exploited by defendants in unsuitable cases to evade liability.”
In its decision, the court cited a 2007 Supreme Court ruling, Iliadis v. Wal-Mart, in which the Court held that “unitary adjudication through class litigation furthers numerous practical purposes, including judicial economy, cost-effectiveness, convenience, consistent treatment of class members, protection of defendants from inconsistent obligations, and allocation of litigation costs among numerous, similarly situated litigants.” The Court did not include the ascertainability of class members as an element of class actions in that decision.
About Goldman Scarlato & Penny, P.C.
Goldman Scarlato & Penny, P.C. prosecutes consumer class actions and represent consumers and business owners who purchased products that were misrepresented, defective or didn’t perform as advertised, or who were the victim of deceptive consumer practices. To learn more about Goldman Scarlato & Penny, P.C., please visit our website at www.lawgsp.com.