Third Circuit clarifies its ascertainability rule but doesn’t remove it

Byrd v. Aaron’s Inc., 2015 WL 1727613, No. 14–3050 (3d Cir. Apr. 16, 2015)
The Byrds filed a putative class action against Aaron’s for violating the Electronic Communications Privacy Act of 1986. The court of appeals reversed the district court’s finding that the proposed class was not ascertainable.
Aaron’s rented a laptop to the Byrds.  They discovered that the laptop was delivering screenshots of websites they visited as well as pictures of users to Aspen Way (which collected for Aaron’s) through spyware called “PC Rental Agent,” which could also collect keystrokes. In total, “the computers of 895 customers across the country … [had] surveillance conducted through the Detective Mode function of PC Rental Agent.”
The Byrds proposed two classes:
Class I—All persons who leased and/or purchased one or more computers from Aaron’s, Inc., and their household members, on whose computers DesignerWare’s Detective Mode was installed and activated without such person’s consent on or after January 1, 2007.
Class II—[The same, but including Aaron’s Inc. franchisees].
The district court concluded that the proposed classes were underinclusive because they did “not encompass all those individuals whose information [was] surreptitiously gathered by Aaron’s franchisees,” and overinclusive because not “every computer upon which Detective Mode was activated will state a claim under the ECPA for the interception of an electronic communication.”
The majority reasoned that the source of the circuit’s ascertainability requirement was “grounded in the nature of the class-action device itself.” A plaintiff must show that: (1) the class is “defined with reference to objective criteria”; and (2) there is “a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Plaintiffs don’t have to identify all class members at class certification—a plaintiff need only show that “class members can be identified.”
Carrera v. Bayer Corp.rejected certification of a class of consumers who purchased Bayer’s One–A–Day WeightSmart diet supplement in Florida. In that case, the court reasoned that retailer records and class member affidavits attesting to purchases of the diet supplement were insufficient.  Though retail records “may be a perfectly acceptable method of proving class membership,” the plaintiff’s proposed retail records did not identify a single purchaser of the Bayer diet supplement.  And affidavits risk relying on no more than potential class members’ say-so; there was no reason to think plaintiffs’ proposal for screening out false affidavits would work. “Remarkably, even the named plaintiff could not recall whether he had purchased the diet supplement.”
However, Carrera specified that “[a]lthough some evidence used to satisfy ascertainability, such as corporate records, will actually identify class members at the certification stage, ascertainability only requires the plaintiff to show that class members can be identified.” Thus, the court here said, “there is no records requirement.” Carrera stood for the proposition that “a party cannot merely provide assurances to the district court that it will later meet Rule 23’s requirements,” or propose a method of ascertaining a class without any evidence supporting the idea that the method will succeed.
Ultimately, ascertainability focuses on “whether individuals fitting the class definition may be identified without resort to mini-trials.”  This is closely tied to the provision of a proper class definition, using objective criteria and offering some assurance of “a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition,”  Ascertainability thus prepares a district court to “direct to class members the best notice that is practicable under the circumstances” if there is certification. 
The district court erred first by conflating standards governing class definition with the ascertainability requirement.  It next abused its discretion in determining that the proposed classes weren’t ascertainable because they were underinclusive, since non-buyers/lessees might have had their information surreptitiously gathered.  But the Byrds asked for a class of all buyers/lessees exposed to the program.  “[R]equiring such specificity may be unworkable in some cases and approaches requiring a fail-safe class.”  Having objective criteria isn’t the same as defining a class in terms of legal injury. Those who are injured but excluded from the class are simply not bound.  “Requiring a putative class to include all individuals who may have been harmed by a particular defendant could also severely undermine the named class representative’s ability to present typical claims.”
In addition, the district court abused its discretion in finding that the proposed classes weren’t ascertainable because they were “overly broad.” Defendants argued that the class wasn’t ascertainable because the definition was decoupled from the underlying allegations of harm. But predominance and ascertainability are separate issues. They also argued that the class was overbroad when putative members lack standing or haven’t been injured, but that again conflated ascertainability, predominance, and Article III standing.  Potential differences between the proposed class representatives and unnamed class members “should be considered within the rubric of the relevant Rule 23 requirements—such as adequacy, typicality, commonality, or predominance.” If defendants want to argue that all putative class members must have standing, that issue should first be decided by the district court.  (Nice dodge, there.)
The proposed classes of “owners” and “lessees” were ascertainable. There are “objective records” that could “readily identify” them, and finding to the contrary was abuse of discretion, as was the finding that “household members” weren’t ascertainable. The district court thought that this was too vague and hard to prove, but the Byrds argued that the plain meaning was “all of the people, related or unrelated, who occupy a housing unit,” as shown by multiple definitions used in government documents for census, taxation, and immigration purposes. Though these documents contained slight variations, there were various ways in which household members could be identified and verified.  A form similar to the government forms could be used to identify household members, and that was a “far cry” from an “unverifiable affidavit” or lack of a methodology to identify class members. Because the location of household members was already known, there were unlikely to be serious administrative burdens.
There will always be some level of inquiry required to verify class membership, but that doesn’t necessarily mean a mini-trial. “Carrera does not suggest that no level of inquiry as to the identity of class members can ever be undertaken. If that were the case, no Rule 23(b)(3) class could ever be certified.” Defendants argued that their due process rights were at risk, but the Byrds weren’t relying solely on unverified affidavits.  “Any form used to indicate a household member’s status in the putative class must be reconciled with the 895 known class members or some additional public records.”  Defendants could challenge the methods the Byrds used to identify them—after the other issues were resolved on remand.
Judge Rendell concurred to note that “the lengths to which the majority goes in its attempt to clarify what our requirement of ascertainability means, and to explain how this implicit requirement fits in the class certification calculus, indicate that the time has come to do away with this newly created aspect of Rule 23 in the Third Circuit. Our heightened ascertainability requirement defies clarification. Additionally, it narrows the availability of class actions in a way that the drafters of Rule 23 could not have intended.”  Paper trail requirements were ill-advised, because most low-value consumer class actions don’t involve such records. Judges worried about a mere say-so might require an affidavit from another household member, or a doctor, or something else.
The justifications for this rule were insufficient.  First, the claim that it avoided administrative burdens really meant “short-circuiting the claims process by assuming that when individuals file claims, they burden the court. But claims administration is part of every class action. Imposing a proof-of-purchase requirement does nothing to ensure the manageability of a class or the ‘efficiencies’ of the class action mechanism; rather, it obstructs certification by assuming that hypothetical roadblocks will exist at the claims administration stage of the proceedings.”
Denying certification to later avoid problems with notice also was senseless.  Rule 23 required the “best notice that is practicable under the circumstances.”  Potential difficulties with providing individualized notice to all class members shouldn’t be a reason to deny certification of a class. Due process is satisfied when notice is “reasonably calculated” to reach the defined class.
Finally, the Third Circuit expressed concerns for the due process rights of defendants, but “there is no evidence that, in small-claims class actions, fabricated claims impose a significant harm on defendants.” The chances of perjury to receive “a windfall of $1.59” were “far-fetched at best.” Although most injured people won’t take the effort to claim a few dollars, “in the aggregate, this sum is significant enough to deter corporate misconduct.” By “focusing on making absolutely certain that compensation is distributed only to those individuals who were actually harmed,” the Third Circuit’s ascertainability requirement “ignored an equally important policy objective of class actions: deterring and punishing corporate wrongdoing.”
The due process concern was also overblown because damages under Rule 23 are assessed in the aggregate, so whether an individual can show membership in a class doesn’t affect defendants’ rights to avoid paying more than they’re liable for. The related concern for diluting “deserving” class members’ recoveries “is unrealistic in modern day class action practice, and it makes little sense when used to justify the wholesale dooming of the small-value class action such that no injured plaintiff can recover at all.” This was in any event an implementation issue, not an ascertainability issue.  The Third Circuit’s rule cut at the heart of the class action mechanism, which makes the most sense when individual claims are small but aggregate injury is large.  As Judge Rakoff wrote, “[w]hile a rigorous insistence on a proof-of-purchase requirement … keeps damages from the uninjured, it does an equally effective job of keeping damages from the truly injured as well, and ‘it does so with brutal efficiency.’”
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