Not a Lexis+ subscriber? Try it out for free.


DLA Piper LLP: 7th Circuit Rejects 3rd Circuit's ‘Heightened’ Ascertainability Analysis


By E. Colin Thompson

Critics of the controversial ascertainability requirement for class certification that the Third Circuit has been applying since 2012 are rejoicing after a recent Seventh Circuit Court of Appeals decision that flatly rejects the Third Circuit's approach. 

The Seventh Circuit characterized the Third Circuit's ascertainability analysis as a "new" and "heightened" requirement that some courts have used "to erect a nearly insurmountable hurdle at the class certification stage in situations where class action is the only viable way to pursue valid but small individual claims."  

Ultimately, the Seventh Circuit refused to adopt the heightened ascertainability requirement because "[n]othing in Rule 23 mentions or implies it, and [because it was] not persuaded by the policy concerns identified by other courts."  Those concerns, the court reasoned, "are better addressed by a careful and balanced application of the Rule 23(a) and (b)(3) requirements."  Instead, the court said, district courts should continue to insist that a class be defined clearly and with objective criteria so as to meet the "established meaning of ascertainability."  Courts should not, however, refuse certification just because the plaintiff proposes self-identification through affidavits.  Rather, the court declared, if a proposed class appears to present "unusually difficult manageability problems, district courts have discretion to press the plaintiff for details about the plaintiff's plan to identify class members."  When a district court does so, the court continued, and the plaintiffs cannot adequately address the court's concerns, the court may find the class does not satisfy the superiority requirement of Rule 23(b)(3).  

Defendants opposing class certification in the Seventh Circuit still will have the opportunity to challenge proposed class definitions as failing to satisfy the traditional superiority and manageability requirements of Rule 23.  The Seventh Circuit has, however, made clear that, unlike in the Third Circuit, its district courts cannot refuse to certify a class merely because the plaintiff does not present "a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition." 

The case 

In Mullins v. Direct Digital, LLC, Case No. 15-1776 (7th Cir. July 29, 2015) [enhanced opinion available to subscribers | Lexis Advance], the Seventh Circuit Court of Appeals affirmed a district court order certifying a class of consumers who purchased a supplement manufactured and sold by Direct Digital, LLC, which plaintiffs alleged fraudulently represented the product as relieving joint discomfort.  For purposes of its decision, the court assumed that Direct Digital had no records of a majority of retail purchasers and that most customers were unlikely to have kept their receipts. 

The Seventh Circuit began its decision by noting that it agreed to hear the interlocutory appeal "to address whether Rule 23(b) imposes a heightened 'ascertainability' requirement as the Third Circuit and some district courts have held recently," most notably in Carrera v. Bayer Corp., 727 F. 3d 300 (3d Cir. 2013) [enhanced opinion available to subscribers | Lexis Advance]. The existing requirements of Rule 23, the court held, "already address the balance of interests that Rule 23 is designed to protect" and, the "heightened" ascertainability requirement, "skew[s] the balance." 

"Ascertainability," the Mullins court affirmed, means that classes must "be defined clearly and based on objective criteria."  Until recently, courts were not focused on whether, "given an adequate class definition, it would be difficult to identify particular members of the class."  The court warned, however, that the language of the "well-settled" ascertainability requirement is "susceptible to misinterpretation."  That "misinterpretation," the court suggested, "may explain some of the doctrinal drift." 

Beginning with Marcus v. BMW of N. Am., LLC, 687 F. 3d 583 (3d Cir. 2012) [enhanced opinion available to subscribers | Lexis Advance], the Third Circuit began to adopt a more stringent version of "ascertainability."  As the Mullins court explained, the Third Circuit's test for ascertainability now has two prongs: (1) the class must be 'defined with reference to objective criteria' and (2) there must be 'a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.'"  Although the second requirement "sounds sensible at first glance," the Mullins court noted, "[i]n practice . . . some courts have used this requirement to erect a nearly insurmountable hurdle at the class certification stage in situations where class action is the only viable way to pursue valid but small individual claims."  "[I]mposing this stringent version of ascertainability" the court stated, "does not further any interest of Rule 23 that is not already adequately protected by the Rule's explicit requirements."  

Carrera and other decisions have discussed four policy reasons requiring the heightened ascertainability requirement and why affidavits from putative class members are insufficient, as a matter of law, to satisfy the requirement.  The Mullins court addressed these policy reasons and, in turn, rejected each one as justification for the "heightened" ascertainability requirement.  

            1.         Administrative convenience 

Courts have argued that imposing a stringent ascertainability requirement "eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members."  The Mullins court rejected this argument, concluding that the concern is "better addressed" by the explicit superiority requirement of Rule 23(b)," which, "unlike the freestanding ascertainability requirement, is comparative."  "[I]f courts look only at the cost-side of the equation and fail to consider administrative solutions," as they may under Rule 23, the Mullins court reasoned, "courts will err systematically against certification."  "The stringent version of ascertainability," the court warned, "invites precisely this type of systematic error."  

            2.         Unfairness to absent class members 

Courts have argued that "[i]f the identities of absent class members cannot be ascertained . . . it is unfair to bind them by the judicial proceedings," and, therefore, class members must receive actual notice of the class action so they can opt-out.  Rule 23(b), the court pointed out, does not require actual notice to all class members, but rather, the "best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."  Thus, the court concluded, "[d]ue process simply does not require the ability to identify all members of the class at the certification stage."  

The court went on to opine that the heighted ascertainability requirement "comes close to insisting on actual notice to protect the interests of absent class members, yet overlooks the reality that without certification, putative class members with valid claims would not recover anything at all."  Because "'only a lunatic or fanatic' would litigate the claim individually . . . opt-out rights are not likely to be exercised by anyone planning separate individual lawsuits."    Accordingly, the court warned, "[w]hen it comes to protecting the interests of the absent class members, courts should not let the perfect become the enemy of the good."  

            3.         Unfairness to bona fide class members 

"[I]f class members are identified only by their own affidavits," the argument goes, "individuals without a valid claim will submit erroneous or fraudulent claims and dilute the share of recovery for true class members."  The Mullins court saw two problems with using these concerns to justify the heightened ascertainability requirement.  First, it stated that it was not aware of any empirical evidence to support the assertion that the risk of dilution in the typical low-value consumer class action is significant.  Rather, in the court's eyes, the risk of dilution is small "because only a small fraction of eligible claimants ever submit claims" and, therefore, fraudulent or mistaken claims typically do not lessen bona-fide class members' recoveries, because the non-deserving claimant is taking from the unclaimed funds."  Moreover, the Mullins court pointed out, courts have tools available to combat any concerns regarding dilution during the claims administration process.  Accordingly, "relying on concerns about what are essentially claims administration issues to deny certification and to prevent any recovery on valid claims upsets the balance a district judge must consider."  

Second, the Mullins court warned, "[t]o deny class certification based on fear of dilution would in effect deprive bona fide class members of any recovery as a means to ensure they do not recover too little."  Furthermore, the court argued, refusing to certify on the basis of a risk of dilution "effectively immunizes defendants from liability because they chose not to maintain records of the relevant transactions" and nullifies a recognized important policy objective of class actions: "deterring and punishing corporate wrongdoing."  

The Mullins court used the standard rebuttal to this argument—that it is the plaintiff's burden to satisfy Rule 23 and, therefore, the deterrence concern is irrelevant—to address what it considered an important question: "Why are affidavits from putative class members deemed insufficient as a matter of law to satisfy this burden?"  It stated that "no one disputes that the plaintiff carries the burden; the decisive question is whether certain evidence is sufficient to meet it."  The court pointed out that self-serving affidavits are enough to support a defendant's motion for summary judgment.  It went on to say that in American law, the testimony of only one witness is legally insufficient to prove a fact in only one type of case: treason.  "There is no good reason," the court said, "to extend that rule to consumer class actions."  Thus, it said, "we believe a district judge has discretion to allow class members to identify themselves with their own testimony and to establish mechanisms to test those affidavits as needed."  

            4.         Due process interest of the defendant 

Courts have argued that defendants have a due process right to challenge the reliability of evidence to prove class membership, and that the heightened ascertainability requirement safeguards this right.  The Mullins court agreed that "[a] defendant has a due process right to challenge the plaintiffs' evidence at any stage of the case, including the claims or damages stage."  But, it went on to say, "[i]t does not follow that a defendant has a due process right to a cost-effective procedure for challenging every individual claim to class membership."  Thus, the court reasoned, "[t]he due process question is not whether the identity of class members can be ascertained with perfect accuracy at the certification stage, but whether the defendant will receive a fair opportunity to present its defenses when putative class members actually come forward."  To provide such opportunity, a district court is able to "tailor fair verification procedures to the particular case, and a defendant may need to decide how much it wants to invest in litigating individual claims."  

The court provided three examples of types of cases that demonstrate why the due process argument does not justify a heightened ascertainability requirement.  The first is where the total amount of damages can be determined in the aggregate, where the identity of the individual class members "does not implicate the defendant's due process interest at all" because "the addition or subtraction of individual class members affects neither the defendant's liability nor the total amount of damages it owes to the class."  

The second is the model that fits most consumer fraud class actions − "where the total amount of damages cannot be determined in the aggregate, but there is a common method of determining individual damages."  The Mullins court acknowledged that this situation implicates the defendant's due process rights.  That is why, the court said, "the method of determining damages must match the plaintiff's theory of liability and be sufficiently reliable" and "why the defendant must be given the opportunity to raise individual defenses and to challenge the calculation of damages awards for particular class members."  Neither of these two requirements, according to the Mullins court, "has any necessary connection to the heightened ascertainability requirement"; therefore, "[w]hether putative class members self-identify by affidavits simply does not matter."  "So long as the defendant is given a fair opportunity to challenge the claim to class membership and to contest the amount owed to each claimant during the claims administration process, its due process rights have been protected."  

The third type of class action the Mullins court discussed is "where the defendant's liability can be determined on a class-wide basis, but aggregate damages cannot be established and there is no common method for determining individual damages."  In these types of cases, the court explained, courts have long recognized that the need for individual damages determinations should not preclude class certification and, therefore, have routinely bifurcated these types of cases into a liability phase and a damages phase.  From this, the Mullins court concluded, "[a]s long as the defendant is given the opportunity to challenge each class member's claim to recovery during the damages phase, the defendant's due process rights are protected."       


After Mullins, the Seventh Circuit still requires that a class meet each of the requirements of Rule 23, including the implicit ascertainability requirement.  The version of ascertainability applied in the Seventh Circuit, however, is the "established," "weak" version.  As long as classes are clearly defined with objective criteria, they will satisfy the ascertainability requirement.  The Seventh Circuit allows plaintiffs to simply assure courts that defendants will have an opportunity to challenge class membership, and leaves it to the district courts to use their discretion and the tools available to them to create a claims administration process, after expensive and time consuming class litigation, that protects absent class members and defendants' due process rights.  

As a result, plaintiffs seeking certification of classes of purchasers of low-cost goods and services will likely flock to the Seventh Circuit unless and until there is a change to Rule 23 to make explicit and heighten the ascertainability requirement or the US Supreme Court considers and rules on the issue.  The Ninth Circuit is likely the next to weigh in on the issue in Jones v. ConAgra Foods, Inc., Case No. 14-16327 [enhanced opinion available to subscribers | Lexis Advance]. Whatever way the Ninth Circuit goes, we are sure to see in its decision extensive discussions of Carrera and Mullins.

Published by DLA Piper LLP (US)
Copyright © 2015 DLA Piper LLP (US)
All Rights Reserved

This bulletin is intended as a general overview and discussion of the subjects dealt with. It is not intended, and should not be used, as a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. Pursuant to applicable Rules of Professional Conduct, it may constitute advertising.

Circular 230 Notice: In compliance with US Treasury Regulations, please be advised that any tax advice given herein (or in any attachment) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing or recommending to another person any transaction or matter addressed herein.

You are receiving this communication because you are a valued client or friend of DLA Piper.

DLA Piper LLP (US) is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. Further details of these entities can be found at All rights reserved.

To unsubscribe from this mailing list, reply to this message with REMOVE in the subject line.

For more information about LexisNexis products and solutions, connect with us through our corporate site.