Sandusky Wellness Ctr., LLC v. MedTox Scientific, Inc.

• Decision Date: 03 May 2016
• Docket Number: No. 15–1317.,15–1317.
• Citation: 821 F.3d 992
• Parties: SANDUSKY WELLNESS CENTER, LLC, an Ohio limited liability company, individually and as the representative of a class of similarly situated persons, Plaintiff–Appellant. v. MEDTOX SCIENTIFIC, INC.; Medtox Laboratories, Inc.; John Does 1–10, Defendants–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

821 F.3d 992

SANDUSKY WELLNESS CENTER, LLC, an Ohio limited liability company, individually and as the representative of a class of similarly situated persons, Plaintiff–Appellant.

v.MEDTOX SCIENTIFIC, INC.; Medtox Laboratories, Inc.; John Does 1–10, Defendants–Appellees.

No. 15–1317.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 18, 2015.

Filed: May 3, 2016.

Glenn L. Hara, argued, Rolling Meadows, IL (Brant D. Penney, Saint Paul, MN, on the brief), for Appellant.

Robert Ira Steiner, argued, New York, N.Y. (Geoffrey W. Castello, New York, N.Y., Lewis Albert Remele, Jr., Jeffrey Mulder, Jessica Lee Prom Klander, Minneapolis, MN, on the brief), for Appellee.

Before SMITH, BYE, and BENTON, Circuit Judges.¹

BENTON, Circuit Judge.

Sandusky Wellness Center, LLC, received an unsolicited fax from MedTox Laboratories, Inc. Sandusky brought a class action under the Telephone Consumer Protection Act (TCPA). The district court denied class certification, finding the class not ascertainable. Having jurisdiction under 28 U.S.C. § 1291, this court reverses and remands.

I.

In February 2012, MedTox, a toxicology lab, decided to contact pediatricians, family practitioners, health departments, and child-focused organizations about its lead-testing capabilities. Using a directory from a health insurance company, MedTox created a contact list of 4,210 fax numbers. Between February 18 and 26, MedTox successfully transmitted a single-page fax to 3,256 numbers, including Sandusky's number.

Sandusky is a chiropractic center owned by Dr. Gregg D. Winnestaffer, a chiropractor. Sandusky's name is not on the contact list. Rather, Dr. Bruce Montgomery—who worked one day a week at the center—is on the contact list. Dr. Montgomery, a family practitioner, occasionally required lead-testing for patients. Dr. Montgomery did give Sandusky's fax number to the health insurance company, which gave it to MedTox. MedTox's fax to Sandusky's number was not addressed to anyone and had no opt-out notice. Dr. Winnestaffer forwarded the fax to Sandusky's counsel, who filed this case.

In April 2014, Sandusky moved to certify as a TCPA class: “All persons who (1) on or after four years prior to the filing of this action, (2) were sent telephone facsimile messages regarding lead testing services by or on behalf of Medtox, and (3) which did not display a proper opt out notice.”

The district court denied class certification, holding the class was “not ascertainable, because it does not objectively establish who is included in the class.” Both parties moved for summary judgment. Sandusky requested a $500 judgment and an injunction prohibiting MedTox from sending unsolicited faxes to Sandusky. MedTox argued that a settlement offer—$3,500 and a promise not to send more faxes—mooted Sandusky's claim. The district court granted summary judgment to MedTox, holding its offer mooted Sandusky's entire demand. Sandusky appeals the denial of class certification, the order dismissing its case as moot, and the final judgment for MedTox.

II.

This court reviews a denial of class certification for abuse of discretion. Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1029 (8th Cir.2010). A district court abuses its discretion if, as relevant here, it commits an error of law. In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604, 616 (8th Cir.2011).

Federal Rule of Civil Procedure 23(a) “sets out four threshold requirements that must be met before a plaintiff may file a lawsuit on behalf of a class of persons. Once those prerequisites have been met, the plaintiff must also establish that the class fits within one of three types of class actions listed in Rule 23(b).” Avritt, 615 F.3d at 1029. The district court did not discuss the four requirements at length because: “Before considering the explicit requirements set forth in Rule 23 ... the court must be satisfied that the proposed class is ascertainable.” Sandusky Wellness Center LLC v. Medtox Scientific, Inc., 2014 WL 3846037, *3 (D.Minn. Aug. 5, 2014).

A.

Most of the other circuit courts of appeals have “recognized that Rule 23 contains an implicit threshold requirement that the members of a proposed class be ‘readily identifiable’ .... an ‘ascertainability’ requirement.” EQT Prod. Co. v. Adair, 764 F.3d 347, 358 (4th Cir.2014). See, e.g., In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st Cir.2015) ( “[T]he definition of the class must be ‘definite,’ that is, the standards must allow the class members to be ascertainable.”); Brecher v. Republic of Argentina, 806 F.3d 22, 24 (2d Cir.2015) (“Like our sister Circuits, we have recognized an ‘implied requirement of ascertainability’ in Rule 23 ”); Marcus v. BMW of North America, LLC, 687 F.3d 583, 592–93 (3d Cir.2012) ( “[A]n essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3), is that the class must be currently and readily ascertainable”); Union Asset Management Holding A.G. v. Dell, Inc., 669 F.3d 632, 639 (5th Cir.2012) (“[I]n order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.”); Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir.2015) (discussing “the ascertainability inquiry”); Mullins v. Direct Digital, LLC, 795 F.3d 654, 659 (7th Cir.2015) (stating that a “ ‘weak’ version of ascertainability has long been the law in this circuit.”); Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1071 n. 3 (9th Cir.2014) (mentioning a “threshold ascertainability test”); Little v. T–Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir.2012) (“Before a district court may grant a motion for class certification, a plaintiff seeking to represent a proposed class must establish that the proposed class is ‘adequately defined and clearly ascertainable.’ ”).

The circuits diverge on the meaning of ascertainability. The Third Circuit has a heightened test for ascertainability, which the Seventh Circuit expressly rejects. The Third Circuit states that a “plaintiff seeking certification of a Rule 23(b)(3) class must prove by a preponderance of the evidence that the class is ascertainable.” Byrd v. Aaron's Inc., 784 F.3d 154, 163 (3d Cir.2015). “The ascertainability inquiry is two-fold, requiring a plaintiff to 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.’ ” Id. (Applying that standard, owners and lessees of computers with activated spyware were an ascertainable class due to “ ‘objective records' that can ‘readily identify’ these class members”). See also Brecher, 806 F.3d at 24 (clarifying that “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.’ ”); Karhu v. Vital Pharm., Inc., 621 Fed.Appx. 945, 947 (11th Cir.2015) (“In order to establish ascertainability, the plaintiff must propose an administratively feasible method by which class members can be identified.”).

Rejecting the Third Circuit's heightened standard, the Seventh Circuit says: “Nothing in Rule 23 mentions or implies this heightened requirement under Rule 23(b)(3).... 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).” Mullins, 795 F.3d at 658. According to the Seventh Circuit, a heightened ascertainability requirement “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.” Id. See also id. at 672 (rejecting the Third Circuit's second requirement of an “administratively feasible mechanism” for determining class members), criticizing Carrera v. Bayer Corp., 727 F.3d 300, 304 (3d Cir.2013) (finding a class not ascertainable because the only way to identify members was “retailer records of online sales and sales made with ... rewards cards” or “by affidavits of class members, attesting they purchased WeightSmart”). Affirming the class certification in Mullins, the Seventh Circuit held the class was “not vague,” “not based on subjective criteria,” and did identify “a particular group of individuals ... harmed in a particular way ... during a specific period in particular areas.” Id. at 660–61. The court so held even assuming there were “no records for a large number of retail customers” and that consumers were “unlikely to have kept their receipts.” Id. at 661. See also Rikos, 799 F.3d at 525 (explaining that for “a class to be sufficiently defined, the court must be able to resolve the question of whether class members are included or excluded from the class by reference to objective criteria.”).

This court, unlike most other courts of appeals, has not outlined a requirement of ascertainability. “It is elementary that in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.” Ihrke v. N. States Power Co., 459 F.2d 566, 573 n. 3 (8th Cir.) (noting “that the membership of the subclass (persons who because of their poverty are unable to pay for utility services), would be impossible to determine because of the vagueness of its description”), vacated due to mootness, 409 U.S. 815, 93 S.Ct. 66, 34 L.Ed.2d 72 (1972). Since Ihrke, this court has not addressed ascertainability as a separate, preliminary requirement. Rather, this court adheres to a rigorous analysis of the Rule 23 requirements, which includes that a class “must be adequately defined and clearly ascertainable.”

B.

Sandusky's class definition includes: “All persons who (1) on or after four years prior to the filing of this action, (2) were sent...