On The Case

Calif. Supreme Court rejects strict ascertainability standard, boosts class actions

(Reuters) - The California Supreme Court took a step back from the roiling appellate debate over class action ascertainability in its ruling Monday in Noel v. Thrifty Payless to contemplate the purpose of consumer class actions. These cases exist, the state justices said, to vindicate people whose individual claims wouldn’t be worth pursuing. And while it’s obviously important to remember that all of those absent class members have a due process right to be notified of a case implicating their interests, the California Supreme Court said, judges have to weigh the risk of failing to identify class members against the benefits of classwide litigation.

The court, in an opinion written by Chief Justice Tani Cantil-Sakauye, concluded decisively that the benefits of consumer class actions outweigh the potential complications of identifying who’s in the class. The Supreme Court overturned an intermediate appellate ruling that lead plaintiff Diana Noel had not provided adequate evidence her lawyers could ascertain the identity of 20,000 purchasers of an allegedly mislabeled inflatable pool. (Noel said the pool’s labeling falsely implied it could accommodate several adults when it was hardly big enough for a few children; Rite Aid, which sold the $59.99 pool, said Noel hadn’t inflated it properly.)

Want more On the Case? Listen to the On the Case podcast.

The Supreme Court established a “bright-line” rule that named plaintiffs in California class actions “need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.” To be certified as a class, the state justices held, name plaintiffs must only define the class “in terms of objective characteristics and common transactional facts” that will allow class members to be identified, even if only by self-identification.

The Supreme Court ruling is really everything that class action plaintiffs could have hoped for, according to Peter Roldan of Emergent and Leslie Brueckner of Public Justice, who represent Noel. (Brueckner argued for Noel at the state supreme court; Roldan’s firm has handled the case since it was filed.) Roldan said the ascertainability standard defendants had advocated would have made it all but impossible for consumers to win class certification in the California courts.

And framing ascertainability as protection for the due process rights of absent class members, he said, is “a red herring.” Defendants, Roldan said, may pay “lip service” to the notion that class members must receive notice lest they unwittingly lose the right to assert an individual claim. In fact, he said, “corporations are looking out for their own interests.”

Brueckner added that most class members in this case can be identified through credit and debit card records or through Rite Aid’s own purchase records. The store nevertheless argued that unless every class member, including those who paid cash and no longer have proof of purchase, could be ascertained, the class could not be certified.

That view of ascertainability, Brueckner said, was “a class-action killer.” The California Supreme Court’s decision, she said, will remove that obstacle as long as classes are defined clearly and objectively - and could impact federal appellate courts that have not yet registered their views in the ascertainability debate.

I emailed defense lawyers Michael Early and Mark Iezza of Klein Hockel Iezza & Patel. Early was not available and Iezza did not respond. The Noel case attracted significant amicus attention from consumer, public interest and business groups.

As you know, and as the California Supreme Court explained in the Noel opinion, federal appellate courts are divided on the extent to which lead plaintiffs must prove they can identify absent class members in order to win class certification. The 3rd U.S. Circuit Court of Appeals established a stringent standard of ascertainability, holding that plaintiffs cannot simply rely just on sworn declarations from purported class members but must show an objective, efficient and administratively feasible way to establish who is in the class. The 7th Circuit, meanwhile, explicitly rejected the 3rd Circuit standard in 2015’s Mullins v. Direct Digital, holding that the federal class action rules impose no heightened standard of ascertainability. The U.S. Supreme Court declined to take up the issue in 2017, despite considerable foment in the lower courts.

The California Supreme Court adopted and expanded upon the 7th Circuit’s analysis in Mullins. “We regard this standard as including class definitions that are ‘sufficient to allow a member of (the class) to identify himself or herself as having a right to recover based on the (class) description,’” the state justices said. “This understanding of the threshold requirement of ascertainability for class certification protects the due process interests of all parties and absent class members without unduly impairing the efficacy of the class action mechanism.”

Trial courts can still consider whether class notification would be so unmanageable that a class cannot be certified, the California Supreme Court said. But those questions are outside the bounds of the requirement that class membership be ascertainable.

The Noel case now goes back to the trial court for reconsideration of class certification. The trial judge, Marin County Superior Court Judge Paul Haakenson, previously denied class certification on the separate conclusion that individual issues of reliance on the allegedly false labeling predominate over classwide issues. That holding was not before the California Supreme Court.