Reliable Evidence Required To Show Class Ascertainability

The Third Circuit recently reaffirmed its prior pronouncement that an “essential prerequisite” to class certification is a showing by a preponderance of the evidence that the class is ascertainable in a way that is both “objective,” as well as “reliable and administratively feasible.”  In doing so, the Court stated bluntly that class membership cannot be based on the “say-so” of putative class members.

In Hayes v. Wal-Mart StoresInc., 2013 U.S. App. Lexis 15959 (August 2, 2013), the Third Circuit granted an interlocutory appeal under Fed. R. Civ. P. 23(f) and reversed a trial court order certifying class claims for consumer fraud, breach of contract and unjust enrichment on behalf of those who purchased extended warranties for “as is” items from Sam’s Club.

Plaintiff alleged that he purchased two open box appliances – a power washer and a 37″ television – from Sam’s Club that were sold “as is.”  At check out, he was offered an extended warranty on both items which he agreed to purchase. When plaintiff opened the package, however, he discovered that the television manual and remote control were missing.  The store promptly replaced the manual and remote, but also told him that he should not have been offered a service plan for the “as is” items because the warranty specifically excluded coverage for items sold “as-is.” Plaintiff was offered a refund for the service plan, which he refused. Instead, he filed a class action asserting claims under the New Jersey Consumer Fraud Act on behalf of all consumers who bought a service plan for “as-is” items from Sam’s Club in New Jersey during the past 6 years.

The problem with plaintiff’s definition of the class was not all products sold “as-is” were actually excluded under the warranty. The extended warranty said it would cover any product sold “as is” as long as it is still covered by the manufacturer’s original warranty.  This qualification applied to floor models and “last one” items as long as they were still factory sealed and otherwise brand new.

The District Court attempted to craft a class definition that included the “as-is” items but excluded the others:

All consumers who, from January 26, 2004 to the present, purchased from Sam’s Clubs in the State of New Jersey, a Sam’s Club Service Plan to cover as-is products. Excluded from the class are consumers whose as-is product was covered by a full manufacturer’s warranty, was a last-one item, consumers who obtained service on their product, and consumers who have previously been reimbursed for the cost of the Service Plan.

Defendant filed an interlocutory appeal challenging whether plaintiff had met his burden in showing the class could be easily ascertained and that the class was sufficiently numerous.  According to defendant, there was no way to ascertain from its sales records who properly belonged in the class. All discounted products (whether sold as an open box, last one, or floor model) were entered into defendant’s system by way of a manual override of the regular price.  Defendant argued that it had no way to verify which products were sold “as-is” but without a full manufacturer’s warranty.  Moreover, defendant argued, without such evidence, there was no objective proof of just how many people met the class definition. The Third Circuit agreed with defendant and reversed and remanded the trial court’s ruling.

Existing Case Law

It is of course black-letter law that it is plaintiff’s burden to show that a class action is a proper vehicle in any particular instance. Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013).  While most published cases tend to focus on the well-known factors of Rule 23(a)(1)-(4) and 23(b)(3), there is relatively little discussion in the published case law about Rule 23(c)(1)(B), which  requires any order certifying a class to “define the class and class claims, issues or defenses.”  In fact, in 2006 the Third Circuit became the first court to interpret Rule 23(c)(1)(B).  See  Wachtel v. Guardian Life Inc. Co., 453 F.3d 179 (3d Cir. 2006). There, the Third Circuit interpreted the rule to require district courts to include in the text of any order granting certification:

“1) a readily discernible, clear, and precise statement of the parameters defining the class or classes to be certified, and 2) a readily discernible, clear, and complete list of the claims, issues or defenses to be treated on a class basis.”

Id. at 187-188.

In a subsequent opinion, Marcus v. BBW of North America, LLC, 687 F.3d 583 (3d Cir. 2012), the Third Circuit again cautioned district courts on the need to carefully and objectively define class membership. Furthermore, the Third Circuit held that in the situation where the defendant’s internal records did not permit the court to ascertain the class, there must be a “reliable, administratively feasible alternative” to determining class membership. Id. at 594.  The court specifically ruled out the possibility of allowing class members to submit affidavits to confirm that they met the class definition. According to the Third Circuit: “Forcing [defendant] to accept as true absent persons’ declarations that they are members of the class, without further indicia of reliability, would have serious due process implications.”  Id.


In Hayes, the Third Circuit once again rejected a class definition that was not based on “objective criteria.”  There, the approved class definition was built around a definition of those who had been harmed (i.e., those who purchased extended warranties for as-is products) AND an exclusion of those who had not suffered a comparable harm (i.e., those whose products were covered by a full manufacturer’s warranty, a “last-one” item, or those who received refunds.)  The problem with the trial court’s class definition was that there did not appear to be any way to determine who belonged in the class and who did not, because Sam’s Club did not have any record or data base that would permit it to distinguish between items sold “as-is” and those sold with a full warranty or on a “last one” basis. Thus, defendant argued, it was not possible to ascertain the class without resorting to impractical “mini trials” to determine if putative class members fell within the class definition. The Third Circuit agreed and held that the absence of objectively verifiable evidence from which the court could ascertain the class meant that the court would instead have no choice but to rely improperly upon the “say-so” of class members.


The Third Circuit also rejected the trial court’s finding that the class was sufficiently numerous to warrant class action treatment. The trial court had reasoned that since there were approximately 3500 price override transactions for which a service plan was purchased, even if only 5% of those price overrides were for “as-is” items otherwise ineligible for extended warranty coverage, the class would be sufficiently numerous under Rule 23. The Supreme Court’s landmark opinion in Dukes v. Wal Mart, 131 S.Ct. 2541 (2011) held that “[a] party seeking class certification must…be prepared to prove that there are in fact sufficiently numerous parties….” Id. at 2551.  In Hayes, the Third Circuit stated that “mere speculation as to the number of class members — even if such speculation is ‘a bet worth making’ cannot support a finding of numerosity.” Hayes, 2013 U.S. App. Lexis 15959 at *17.   In the absence of direct evidence, “a plaintiff must show sufficient circumstantial evidence specific to the products, problems, parties and geographic areas actually covered by the class definition to allow a district court to make a factual finding.” Id. at *18, FN 13 (citing Marcus, supra, at 596-97).

Less than three weeks after Hayes, the Third Circuit reversed an order granting class certification for similar reasons in the case of Carrera v. Bayer Corp., 2013 U.S. App. Lexis 17479 (August 21, 2013).

The take-away for those defending class actions is that, in the Third Circuit at least, there are real teeth to the Rule 23(c)(1)(B) “prerequisite” requirements that the class be easily and objectively ascertainable and that it be sufficiently numerous to warrant class treatment.

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