The Supreme Court’s next big class action controversy: ascertainability

January 4, 2016

(Reuters) – A confession: When I speculated last October that the hot-button issue of class action ascertainability – the process of figuring out just who is a member of a plaintiffs’ class – could arise at the U.S. Supreme Court in Tyson Foods v. Bouaphakeo, I was wrong. The Tyson case, as you will recall, was at its heart a dispute over the certification of a class of meat-processing plant workers who ended up winning a $6 million wage-and-hour judgment against Tyson. Tyson’s lawyers at Sidley & Austin wanted to inflate the case into an inquiry over the constitutionality of certifying classes that may contain uninjured class members. Tyson’s final Supreme Court brief insisted that at the very least, trial courts should require class action lawyers to offer a mechanism for culling plaintiffs who haven’t been injured, which is exactly what ascertainability literalists demand.

After oral arguments in November, it seems extremely unlikely that the justices will use the Tyson case to institute any big class action reforms. The court seemed to consider itself boxed in by the context of the case, which was both a class action and a collective action under the Fair Labor Standards Act, and by Tyson’s own pretrial arguments against separate liability and damages trials. Whatever the justices rule in the Tyson case, they almost certainly won’t resolve the question of whether plaintiffs have to provide a method of determining every potential class member’s eligibility before they can be certified as a class.

But ascertainability is now knocking at the Supreme Court’s front door – and in two different cases. On Oct. 26, Orrick Herrington & Sutcliffe filed a petition for certiorari for Direct Digital, the marketer of a nutritional supplement it bills as a joint pain reliever. Last July, you may recall, the 7th U.S. Circuit Court of Appeals affirmed the certification of a class of consumers who alleged Direct Digital falsely advertised the supplement – and explicitly split with the reasoning of the 3rd Circuit, which in a series of recent decisions culminating in 2013’s Carrera v. Bayer, has held that plaintiffs’ lawyers cannot rely on affidavits from supposed class members to ascertain who’s in a class but must provide a “reliable and administratively feasible” membership mechanism in order to win class certification.

Orrick’s cert petition argued that the 7th Circuit’s loose ascertainability requirement also conflicts with precedent from the 1st, 4th and 11th Circuits (though only the 11th Circuit’s unpublished opinion directly endorses the 3rd Circuit’s rigorous ascertainability standard. In November, Direct Digital’s cert petition got a boost from amicus briefs from pro-business groups including the Chamber of Commerce and the Product Liability Advisory Council.

Last week, Procter & Gamble filed a second cert petition claiming a circuit split on ascertainability, this one challenging a split holding from the 6th Circuit last August that affirmed certification of a class of purchasers of an allegedly ineffective probiotic supplement. The 6th Circuit majority said it agreed with the 7th Circuit in the Direct Digital case that the 3rd Circuit went too far when it conditioned class certification on a stringent test for class membership. Moreover, the majority said, a good number of P&G’s customers could be identified through the company’s own sales records.

P&G’s counsel at Jones Day said its records actually don’t identify purchasers of the supplement. So according to its petition, the class certification affirmed by the 6th Circuit would not have survived in the 3rd Circuit (or, the petition said, in the 4th or 11th Circuits). That’s the classic definition of a circuit split, P&G argued. The cert petition asserted other reasons for the Supreme Court to take the case, including Article III standing issues also raised in the Tyson and Spokeo v. Robins cases already before the justices, and says the court may want to hold the P&G petition until it issues those decisions. Acknowledging Direct Digital’s first-filed cert petition on ascertainability, P&G also said that if the justices agree to hear that case, they should also hold the P&G petition.

Class members in the Direct Digital case are counting on New York University law professor Sam Issacharoff to stop that from happening. The class filed its cert opposition last week, arguing that Direct Digital’s own business records actually identify most of the consumers in the class. So contrary to Direct Digital’s assertions, the class said, ascertainability simply isn’t an issue that will decide this case, regardless of the 7th Circuit’s espoused divergence from the 3rd Circuit’s analysis. The opposition brief also argues that the Supreme Court should give the federal circuits more time to figure out this whole thing.

“Certiorari review would be premature for the evolving law of the management of common consumer fraud claims,” the brief said. “What (Direct Digital) presents as a circuit split on an issue of law in reality boils down to a nascent difference in case management approaches.”

Will the Supreme Court have the same eagerness to hear class action issues in 2016 as it did last year? The Direct Digital and P&G cases will be an important early test.

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