Plot Thickens on Class Member Test Awaiting SCOTUS Eye

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By Perry Cooper

Two federal appeals courts may have muddied the waters on the test for class action membership even further—just in time for the U.S. Supreme Court to decide whether to take up the issue.

Or, it turns out, maybe not. It depends on who you ask.

The Supreme Court is currently weighing Conagra Brands Inc.'s petition to review a decision by the the U.S. Court of Appeals for the Ninth Circuit that rejected the Third Circuit’s “heightened” ascertainability standard.

In the Third Circuit, plaintiffs must show an “administratively feasible” way to identify class members as a prerequisite to class certification. Whether it has backed off from the heightened standard is debated.

According to Conagra, that also was the rule in the Second, Third, Fourth, and Eleventh circuits when the company filed its brief in April. At that time, the Sixth, Seventh, Eighth, and Ninth circuits only required a class to be defined with objective criteria that establish a class with definite boundaries, it said.

The Second and Sixth circuits may have shaken up that break down in recent ascertainability rulings.

The Second Circuit expressly disavowed the “heightened” test July 7 in a securities case ( In re Petrobras Secs. Litig. (Univs. Superannuation Scheme Ltd. v. Petrobras) , 2017 BL 234491, 2d Cir., No. 16-1914, 7/7/17 ).

And the Sixth Circuit used the Third Circuit’s “administratively feasible” language July 11, but didn’t explicitly say it was adopting that court’s heightened standard ( Sandusky Wellness Ctr. LLC v. ASD Specialty Healthcare, Inc. , 2017 BL 237856, 6th Cir., No. 16-3741, 7/11/17 ).

But whether the split is now wider or narrower or, really, whether much of a split exists at all, seems to vary with who you talk to.

Defense attorney Jonathan R. Chally is one class practitioner who says the two courts’ new rulings may be creating distinctions without differences.

“While both opinions are examples of the ebbs and flows on this issue, they are part of a long-ish walk towards harmony in the various circuit approaches,” Chally told Bloomberg BNA in an email.

In fact, overall, he doesn’t see that much difference in the approaches of any of the circuit courts. “Call it what you want—ascertainability, manageability, or predominance—what matters for class action defendants is that if mini-trials are required to evaluate class membership, class certification is inappropriate,” Chally, partner at King & Spalding in Atlanta, said.

Plaintiffs’ attorney Michael R. Reese told Bloomberg BNA the Second Circuit rulings is an important departure from the heightened standard, and Sixth Circuit ruling is particular to the facts. He is an adjunct law professor at Brooklyn Law School and founder of the plaintiffs’ class-action firm Reese LLP in New York.

Reese agrees that there may be too much ado about the existence of a circuit split.

“The appellate courts continue to move towards an unified application of ascertainability such that there really is no need for the Supreme Court to weigh in,” Reese said in an email.

That’s also the argument the consumers suing Conagra are making to the Supreme Court.

The rulings are further proof that “this is an area where the courts are working through new doctrine,” the consumers told the Supreme Court July 11, after Petrobras came down.

“This is precisely an area where the law should be permitted to percolate before premature, and perhaps unnecessary, intervention from the court,” the consumers’ brief said.

Second Circuit: No Heightened Standard

The Second Circuit vacated certification of a class of investors alleging Brazil-owned oil and gas company Petrobras Brasileiro SA concealed a multi-year, multi-billion dollar money-laundering and kickback scheme. The lower court didn’t consider the need for individual inquiries into whether the investors engaged in “domestic” transactions, the appeals court said.

But the appeals court also took the opportunity to clarify its stance on ascertainability.

Petrobras relied on a 2015 Second Circuit decision that said “the touchstone of ascertainability is whether the class is ‘sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member.’”

But that language “did not create an independent administrative feasibility requirement,” the Second Circuit said in Petrobras.

It explained that “a class must be ‘sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member'; a class must be ‘defined by objective criteria; so that it will not be necessary to hold ‘a mini-hearing on the merits of each case.’”

The court explicitly declined to adopt the Third Circuit’s heightened standard. In doing so it will “join a growing consensus that now includes the Sixth, Seventh, Eighth, and Ninth circuits,” the court said.

Sixth Circuit: Higher Standard?

The Sixth Circuit affirmed denial of class certification in a Telephone Consumer Protection Act case over unwanted faxes.

Fax logs linking the fax numbers to the names of the intended recipients no longer existed when the suit was filed.

The Sixth Circuit said it wasn’t “administratively feasible” to ascertain class members in the absence of such a log. That language mirrors the Third Circuit’s language, but the Sixth Circuit didn’t explicitly say it was adopting that court’s standard.

Interestingly, the Sixth Circuit relied on an unpublished Second Circuit opinion from February that the Second Circuit didn’t acknowledge in Petrobras.

Conagra will likely notify the Supreme Court of this opinion, just as the consumers notified it of Petrobras.

SCOTUS Prospects

The Supreme Court turned down two opportunities to consider ascertainability last term. The plaintiffs in both cases were represented by Samuel Issacharoff, a civil procedure professor at New York University School of Law. He also represents the plaintiffs in Conagra.

The new decisions could convince the court that the issue is so muddled it needs to step in, or that the lower courts are working through it on their own.

Aside from the possibility of a shifting circuit split, the timing of the petition may work against Conagra.

The Supreme Court will consider the case at its “long conference” Sept. 25. That’s the conference where the court considers all of the petitions that have piled up over the summer. One court advocate called it “where petitions go to die.”

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

Full text of Petrobras at http://src.bna.com/qFc. Full text of Sandusky at http://src.bna.com/qHG.

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