Can you ascertain that class?

Defendants facing class actions often wrestle with questions involving who is in the class, who is out, and how and when class members will be identified. These issues are sometimes framed in terms of whether the class is "ascertainable." Ascertainability questions are particularly vexing in certain types of cases, including those in which the defendant has not kept records of the transactions at issue -- for example, cases involving over-the-counter sales of consumer products.

While many class actions present these sorts of membership questions, courts have often disagreed over what ascertainability means or whether a separate ascertainability requirement for class certification even applies. Most courts have, at a minimum, acknowledged that plaintiffs must provide a clear class definition that is understandable to prospective members. Significantly more controversial is whether plaintiffs must also submit proof of a reasonable method for identifying and notifying putative class members -- sometimes referred to as an "administrative feasibility" requirement.

California appellate courts have issued conflicting opinions on administrative feasibility and whether plaintiffs must establish a viable plan for member identification and notice before having a class certified. Two recent cases exemplify competing positions.

California's Ascertainability Requirement

Neither the federal nor the California rules of procedure expressly reference a separate ascertainability requirement for class certification, and the subject has generated sharp disagreement. The 9th U.S. Circuit Court of Appeals, in fact, recently declined to acknowledge ascertainabilty as a certification requirement. See Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, n.4 (9th Cir. 2017). Most other federal circuits acknowledge ascertainability as a precondition to certification, but even these courts disagree over what exactly ascertainablity means and whether a separate administrative feasibility requirement applies.

For its part, the California Supreme Court has acknowledged ascertainability as a certification prerequisite. See Wash. Mut. Bank v. Superior Court, 24 Cal. 4th 906, 913 (2001). Further, California appellate courts construing the ascertainability requirement generally have recognized that the inquiry should focus on (1) the class definition, (2) the class size, and (3) the means of identifying class members. See, e.g., Sotelo v. Medianews Group, Inc., 207 Cal. App. 4th 639 (2012). Like their federal counterparts, however, California state courts disagree on the meaning and application of these factors, particularly the third criterion, which mirrors the administrative feasibility component discussed in federal cases.

Aguirre: Emphasis on Class Definition Over Feasibility of Member Identification

In Aguirre v. Amscan Holdings, Inc., 234 Cal. App. 4th 1290 (2015), the plaintiff alleged that the defendant requested and recorded customer ZIP codes for credit card purchases in its retail stores in violation of California law. The plaintiff sought to certify a class of "[a]ll persons in California from whom Defendant requested and recorded a ZIP code in conjunction with a credit card purchase transaction" during a specified date range.

The defendant moved to strike and dismiss the class allegations and to deny class certification on ascertainability grounds. The defendant contended that no means existed for identifying or locating class members because it did not retain names or addresses of customers who paid by credit card or provided ZIP codes. The trial court agreed the class was not ascertainable. It found that the lack of member-identifying information in the defendant's records meant personal notice of the lawsuit could not be provided to absent class members through reasonable expenditures of time and money.

The 3rd District Court of Appeal reversed, holding that the trial court erred in concluding that the plaintiff needed to show a means for providing personal notice to individual class members. Requiring personal notice, the court reasoned, conflicted with California rules allowing notice by publication. The court found that an ascertainable class existed because (1) the class definition set forth common characteristics sufficient to allow a member of that group to self-identify as having a right to recover, and (2) the plaintiff had proposed an objective method for identifying class members at the remedial (damages) phase, i.e., post-certification. According to the court, the plaintiff satisfied the second prong because she had "pointed to sales receipts and credit card statements," which she argued could be cross-referenced with the defendant's records to show that a ZIP code was requested for a specific transaction. How prospective members would be notified to come forward with their documentation was not addressed, nor were other details of the proposed "cross-referencing" process.

Noel: A more rigorous but flexible approach

A decision from the 1st District Court of Appeal, Noel v. Thrifty Payless, Inc., 17 Cal. App. 5th 1315 (2017), criticized Aguirre and took a tougher, though still flexible, stance on member identification. In Noel, the plaintiff alleged that an inflatable pool he purchased was materially smaller than depicted on its packaging and sued for restitution under California consumer protection statutes. The trial court denied certification of a class of approximately 20,000 California purchasers, finding that the plaintiff failed to show any means of identifying and notifying absent class members.

The court of appeal affirmed, holding that, although personal notice is not required in all class actions, it is preferred. The court thus criticized Aguirre for precluding trial courts from inquiring into the means of giving notice until the remedial phase, which gave "short shrift" to due process concerns affecting absent class members who may be bound by the final outcome. Accordingly, the court held, trial courts have the discretion to require at the certification phase that the plaintiff identify a method for providing personal notice, considering factors such as the class size and the amounts at stake for individual members to determine whether such notice should be required. In Noel, because the plaintiff failed to make even a modest evidentiary showing regarding how notice would be given by any means, the class was not ascertainable.

Takeaways

While many California appellate courts addressing ascertainability recite similar tests and factors, Noel and Aguirre demonstrate the different approaches courts have applied in practice, with Aguirre endorsing a permissive standard that has little focus on the logistical hurdles associated with class member identification and notice, and Noel requiring at least "minimal" proof of a feasible notice plan at the certification stage.

Practically speaking, Aguirre's endorsement of the plaintiff's loosely described methodology for identifying absent class members arguably just "kicked the can" of fundamental administrative problems to the remedial stage. It is also difficult to quibble with Noel's requirement that plaintiffs provide at least a baseline quantum of proof of a plan that is suitable in the context of the particular case. Trial courts should be afforded discretion to consider factors such as class size and the amount of individual recoveries before dispensing with personal notice requirements and associated due process concerns.

In any event, without additional guidance from the California Supreme Court, parties face uncertain terrain with respect to the member identification and notice elements of the ascertainability question. Noel, however, provides a reasoned analysis that can be cited by defendants in favor of a more rigorous standard on administrative feasibility. Further, even Aguirre recognizes that plaintiffs must present some type of objective method for identifying class members eventually -- which, arguably, opens the door for defendants to submit proof that the plaintiff's approach will not work, presently or down the road.

Accordingly, in addition to taking plaintiffs to task on any ambiguities or other defects in their class definition, defendants wishing to assert an ascertainability challenge should develop evidence and build a record -- including, where appropriate, expert and percipient witness declarations -- directed at defects or holes in the plaintiff's proposed mode of identification. Such evidence may be effective in countering sweeping assertions -- as seen in Aguirre -- regarding the availability and utility of various types of business records, and may ultimately render the trial court less willing to "kick the can" on potential administrative or managerial pitfalls.

It is also important to keep in mind that even if the court is not receptive to an ascertainability argument per se, similar evidence and arguments can be utilized to challenge other, less esoteric certification elements, including manageability and predominance. Moreover, focusing on the class definition, class size and class notice in the early stages of a matter generally makes good sense from a risk assessment perspective, whether or not a separate ascertainabilty challenge is contemplated.