Mullins v. Direct Digital, LLC

• Decision Date: 28 July 2015
• Docket Number: No. 15–1776.,15–1776.
• Citation: 795 F.3d 654
• Parties: Vince MULLINS, on behalf of himself and all others similarly situated, Plaintiff–Appellee. v. DIRECT DIGITAL, LLC, a Delaware Limited Liability Company, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

795 F.3d 654

Vince MULLINS, on behalf of himself and all others similarly situated, Plaintiff–Appellee.

v.DIRECT DIGITAL, LLC, a Delaware Limited Liability Company, Defendant–Appellant.

No. 15–1776.

United States Court of Appeals, Seventh Circuit.

Argued June 3, 2015.

Decided July 28, 2015.

Elaine A. Ryan, Patricia N. Syverson, Bonnett, Fairbourn, Friedman & Balint PC, Phoenix, AZ, Joseph Siprut, Siprut PC, Stewart M. Weltman, Boodell & Domanskis, Chicago, IL, for Plaintiff–Appellee.

Kelly Elmore, Kovitz Shifrin Nesbit, Darrell John Graham, Roeser Bucheit & Graham, LLC, Chicago, IL, Ari Nicholas Rothman, Venable LLP, Washington, DC, for Defendant–Appellant.

Before BAUER, KANNE, and HAMILTON, Circuit Judges.

Opinion

HAMILTON, Circuit Judge.

We agreed to hear this appeal under Federal Rule of Civil Procedure 23(f), which permits interlocutory review of orders granting or denying class action certification, to address whether Rule 23(b)(3) imposes a heightened “ascertainability” requirement as the Third Circuit and some district courts have held recently. See, e.g., Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir.2013). In this case, the plaintiff alleges consumer fraud by the seller of a dietary supplement, and the district court certified a plaintiff class. The court found that the proposed class satisfies the explicit requirements of Rule 23(a) and (b)(3), and the court rejected defendant's argument that Rule 23(b)(3) implies a heightened ascertainability requirement.

We affirm. We and other courts have long recognized an implicit requirement under Rule 23 that a class must be defined clearly and that membership be defined by objective criteria rather than by, for example, a class member's state of mind. In addressing this requirement, courts have sometimes used the term “ascertainability.” They have applied this requirement to all class actions, regardless of whether certification was sought under Rule 23(b)(1), (2), or (3). Class definitions have failed this requirement when they were too vague or subjective, or when class membership was defined in terms of success on the merits (so-called “fail-safe” classes). This version of ascertainability is well-settled in our circuit, and this class satisfies it.

More recently, however, some courts have raised the bar for class actions under Rule 23(b)(3). Using the term “ascertainability,” at times without recognizing the extension, these courts have imposed a new requirement that plaintiffs prove at the certification stage that there is a “reliable and administratively feasible” way to identify all who fall within the class definition. These courts have moved beyond examining the adequacy of the class definition itself to examine the potential difficulty of identifying particular members of the class and evaluating the validity of claims they might eventually submit. See Byrd v. Aaron's Inc., 784 F.3d 154, 168 (3d Cir.2015) (distinguishing between our circuit's standard and the Third Circuit's ascertainability requirement).

This heightened requirement has defeated certification, especially in consumer class actions. See, e.g., Karhu v. Vital Pharmaceuticals, Inc., –––Fed.Appx. ––––, –––– – ––––, 2015 WL 3560722, at *2–4 (11th Cir. June 9, 2015) (purchasers of dietary supplements); Carrera, 727 F.3d at 307–12 (purchasers of dietary supplements); Xavier v. Philip Morris USA Inc., 787 F.Supp.2d 1075, 1089–90 (N.D.Cal.2011) (Marlboro smokers); Weiner v. Snapple Beverage Corp., No. 07 Civ. 8742(DLC), 2010 WL 3119452, at *12–13 (S.D.N.Y. Aug. 5, 2010) (purchasers of Snapple beverages). All of these classes would seem to have satisfied the established meaning of “ascertainability.” See generally Myriam Gilles, Class Dismissed: Contemporary Judicial Hostility to Small–Claims Consumer Class Actions, 59 DePaul L.Rev. 305 (2010) (describing recent cases).

We decline to follow this path and will stick with our settled law. Nothing in Rule 23 mentions or implies this heightened requirement under Rule 23(b)(3), which has the effect of skewing the balance that district courts must strike when deciding whether to certify classes. The policy concerns motivating the heightened ascertainability requirement are better addressed by applying carefully the explicit requirements of Rule 23(a) and especially (b)(3). These existing requirements already address the balance of interests that Rule 23 is designed to protect. A court must consider “the likely difficulties in managing a class action,” but in doing so it must balance countervailing interests to decide whether a class action “is superior to other available methods for fairly and efficiently adjudicating the controversy.” See Fed.R.Civ.P. 23(b)(3).

The heightened ascertainability requirement upsets this balance. In effect, it gives one factor in the balance absolute priority, with the effect of barring class actions where class treatment is often most needed: in cases involving relatively low-cost goods or services, where consumers are unlikely to have documentary proof of purchase. These are cases where the class device is often essential “to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997), quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.1997) ; see also Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 760 (7th Cir.2014) (reversing denial of class certification: “a class action has to be unwieldy indeed before it can be pronounced an inferior alternative—no matter how massive the fraud or other wrongdoing that will go unpunished if class treatment is denied—to no litigation at all”), quoting Carnegie v. Household Int'l, Inc., 376 F.3d 656, 661 (7th Cir.2004) (affirming certification of class with millions of members).

I. Factual and Procedural Background

Plaintiff Vince Mullins sued defendant Direct Digital, LLC for fraudulently representing that its product, Instaflex Joint Support, relieves joint discomfort. He alleges that statements on the Instaflex labels and marketing materials—“relieve discomfort,” “improve flexibility,” “increase mobility,” “support cartilage repair,” “scientifically formulated,” and “clinically tested for maximum effectiveness”—are fraudulent because the primary ingredient in the supplement (glucosamine sulfate) is nothing more than a sugar pill and there is no scientific support for these claims. Mullins asserts that Direct Digital is liable for consumer fraud under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., and similar consumer protection laws in nine other states.

Mullins moved to certify a class of consumers “who purchased Instaflex within the applicable statute of limitations of the respective Class States for personal use until the date notice is disseminated.” The district court certified the class under Rule 23(b)(3).

Direct Digital filed a petition for leave to appeal under Rule 23(f) arguing that the district court abused its discretion in certifying the class without first finding that the class was “ascertainable.” Direct Digital also argued that the district court erred by concluding that the efficacy of a health product can qualify as a “common” question under Rule 23(a)(2). We granted the Rule 23(f) petition primarily to address the developing law of ascertainability, including among district courts within this circuit. See Blair v. Equifax Check Services, Inc., 181 F.3d 832, 835 (7th Cir.1999) (granting an appeal is appropriate to “facilitate the development of the law” governing class actions).¹

We review the grant or denial of a motion for class certification for an abuse of discretion, e.g., Harper v. Sheriff of Cook County, 581 F.3d 511, 514 (7th Cir.2009), but a decision based on an erroneous view of the law, such as imposing a new requirement under Rule 23(b)(3), is likely to be an abuse of discretion. E.g., Ervin v. OS Restaurant Services, Inc., 632 F.3d 971, 976 (7th Cir.2011) (“If, however, the district court applies an incorrect legal rule as part of its decision, then the framework within which it has applied its discretion is flawed, and the decision must be set aside as an abuse.”).

II. Analysis

A. The Established Meaning of “Ascertainability ”

We begin with the current state of the law in this circuit. Rule 23 requires that a class be defined, and experience has led courts to require that classes be defined clearly and based on objective criteria. See William B. Rubenstein, Newberg on Class Actions § 3:3 (5th ed.2015) ; Joseph M. McLaughlin, McLaughlin on Class Actions § 4:2 (11th ed.2014) ; see, e.g., Matamoros v. Starbucks Corp., 699 F.3d 129, 139 (1st Cir.2012) ; Bakalar v. Vavra, 237 F.R.D. 59, 64 (S.D.N.Y.2006) ; DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir.1970) (per curiam). When courts wrote of this implicit requirement of “ascertainability,” they trained their attention on the adequacy of the class definition itself. They were not focused on whether, given an adequate class definition, it would be difficult to identify particular members of the class.

This “weak” version of ascertainability has long been the law in this circuit. See Jamie S. v. Milwaukee Public Schools, 668 F.3d 481, 495 (7th Cir.2012) (“It's not hard to see how this class lacks the definiteness required for class certification; there is no way to know or readily ascertain who is a member of the class.”); Oshana v. Coca–Cola Co., 472 F.3d 506, 513 (7th Cir.2006) (class definition “must be definite enough that the class can be ascertained”); accord, Adashunas v. Negley, 626 F.2d 600, 604 (7th Cir.1980) (“In summary, the proposed class of plaintiffs is so highly diverse and so difficult to identify that it is not adequately defined or nearly ascertainable.”).

The language of this well-settled requirement is susceptible to misinterpretation, though, which may explain some of...