The Third Circuit Circuit’s recent decision in Carrera v. Bayer Corporation, No. 12-2621 (3d Cir. Aug. 21, 2013), could have a significant impact on false advertising class actions involving the purchase of consumer products such as dietary supplements, foods and beverages, and cosmetics, where consumers generally do not save receipts or packaging, and manufacturers do not have lists of individuals who purchased those products.  In Carrea, the Third Circuit, relying heavily on its earlier decision in Marcus v. BMW of North America, LLC, 687 F.3d 583 (3d Cir. 2012), vacated the district court’s order certifying a class of consumers who purchased Bayer’s One-A-Day WeightSmart multivitamin and dietary supplement in Florida (which plaintiff alleged was deceptively advertised), finding that the class members were not ascertainable.  The Third Circuit noted that in Marcus, it “explained that if class members cannot be ascertained from a defendant’s records, there must be a ‘a reliable, administratively feasible alternative,’ but we cautioned ‘against approving a method that would amount to no more than ascertaining by potential class members’ say so.’”

The Third Circuit began its analysis by finding that the “rigorous analysis” requirement for class certification “appl[ies] to the question of ascertainability,” which the court called an “essential prerequisite of a class action.”  The court stated that “[a] plaintiff may not merely propose a method of ascertaining a class without an evidentiary support that the method will be successful.”  The court noted that “[t]he method of determining whether someone is in the class must be ‘administratively feasible,’” which means that identifying class members does not require individual factual inquiries.  “A plaintiff does not satisfy the ascertainability requirement if individualized fact-finding or mini-trials will be required to prove class membership.”  Thus, the Third Circuit found that “[i]n sum, to satisfy ascertainability as it relates to proof of class membership, the plaintiff must demonstrate his purported method for ascertaining class members is reliable and administratively feasible, and permits defendant to challenge the evidence used to prove class membership.”

The court stated that the “ascertainability question” in this case “is whether each class member purchased WeightSmart in Florida.”  The court noted that there was no dispute in the case “that class members are unlikely to have documentary proof of purchase, such as packaging or receipts.  And Bayer has no list of purchasers because . . . it did not sell WeightSmart directly to consumers.”  Given the lack of proofs of purchase or records identifying purchasers of the product, the plaintiff pointed to two types of evidence to ascertain the class:  (1) through retailer’s records of online sales and sales made with store loyalty or rewards cards, and (2) by affidavits of class members attesting that they purchased the product and stating the amount of product purchased.  The court determined that “neither method satisfies [plaintiff’s] burden to show the class is ascertainable.”

With respect to plaintiff’s first argument concerning retailer records, the Third Circuit found that the plaintiff failed to put forth sufficient evidence to show that these records can be used to identify class members.  The court found that there was “no evidence that a single purchaser of WeightSmart could be identified using records of customer membership cards or records of online sales” and that there was “no evidence that retailers even have records for the relevant period.”

With respect to the plaintiff’s second argument concerning class member affidavits, the court rejected plaintiff’s argument that class members were unlikely to submit fraudulent affidavits because of the relatively low value of the claims.  The Third Circuit stated that “[t]his argument fails because it does not address a core concern of ascertainability:  that a defendant must be able to challenge class membership.  This is especially true where the named plaintiff’s deposition testimony suggested that individuals will have difficulty accurately recalling their purchases of WeightSmart.”  The court also rejected the plaintiff’s argument that the level of proof for ascertainability should be relaxed because the defendant’s ultimately liability would not be affected by the affidavits, whether accurate or not.  The court pointed out that the defendant had an interest in ensuring that it only paid legitimate claims because “[i]f fraudulent or inaccurate claims materially reduce true class members’ relief, these class members could argue the named plaintiff did not adequately represent them because he proceeded with the understanding that absent members may get less than full relief,” and they could then bring a new action since class members who are not adequately represented are not bound by the judgment.  Finally, the court found that the screening model that plaintiff proposed to screen out unreliable affidavits – the defendant argued that the memories of putative class members would be unreliable as to the circumstances of their purchase(s) that had occurred many years earlier – was insufficient because the plaintiff “suggested no way to determine the reliability of such a model.”  In vacating and remanding the case, the Third Circuit stated that it would allow the plaintiff to submit a screening model and prove how that model would be reliable and how it would allow Bayer to challenge the affidavits, but the “[m]ere assurances that a model can screen out unreliable affidavits will be insufficient.”

It is also important to note that the Carrera decision contains a significant discussion on the due process rights of defendants in class actions.  The court found that “[a] defendant in a class action has a due process right to raise individual challenges and defenses to claims, and a class action cannot be certified in a way that eviscerates this right or masks individual issues.”  The court further stated that a “defendant has similar, if not the same, due process right to challenge the proof used to demonstrate class membership as it does to challenge the elements of a plaintiff’s claim,” and that “[a]scertainability provides due process by requiring that a defendant be able to test the reliability of the evidence submitted to prove class membership.”

The Carrera decision makes it more difficult for class action plaintiffs, particularly in the Third Circuit, to demonstrate that a class is ascertainable, even where the determination of class membership seemingly does not involve complex or complicated factual issues.  Regardless of the class definition, the class plaintiff must present reliable evidence showing that the class is ascertainable, and district courts must apply the “rigorous analysis” standard to the ascertainability analysis.  The decision also provides a significant argument for defendants in any case involving the sale of consumer products where class members generally do not save receipts, defendants do not have records of consumers who purchased the products, and putative classes are typically defined in ways similar to this case, i.e., individuals who purchased a product in a particular state.  Defendants in such cases can use this decision to argue that, given that they do not have records of consumer purchases, class plaintiffs must submit evidence showing that there is an “administratively feasible” and reliable method to ascertain class membership, or the ascertainability requirement cannot be met.