in the united states court of appeals for the … · no. 17-1000 in the united states court of...
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No. 17-1000
IN THE
UNITED STATES COURT OF APPEALS FOR THE AMES CIRCUIT
WILLA D. LOWE, individually and on behalf of a class of similarly situated persons,
Plaintiff-Appellant,
v.
AMES MEAT, INC.,
Defendant-Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF AMES DOCKET NO. 16-CV-3500-JD
BRIEF FOR THE PLAINTIFF-APPELLANT
The John Hart Ely Memorial Team DAVID BEYLIK JASON ETHRIDGE JENYA GODINA ISAAC PARK MARCH 22, 2017, 6:15 P.M. DAVID PHILLIPS AMES COURTROOM DEREK REINBOLD HARVARD LAW SCHOOL Counsel for Plaintiff-Appellant Oral Argument
i
QUESTIONS PRESENTED
1. Does Federal Rule of Civil Procedure 23 permit a federal court
sitting in diversity to entertain a class action under the Ames
Deceptive Trade Practices Act, notwithstanding Ames Revised
Statutes § 1001.9(b)?
2. Does a class representative need to demonstrate an objectively
verifiable means of identifying absent class members at the
class certification stage, beyond providing a clear class definition
and proposing the use of affidavits signed under penalty of
perjury?
ii
TABLE OF CONTENTS
QUESTIONS PRESENTED...................................................................i
TABLE OF CONTENTS ....................................................................... ii
TABLE OF AUTHORITIES .................................................................iv
PRELIMINARY STATEMENT............................................................. 1
OPINIONS BELOW................................................................................ 2
JURISDICTION...................................................................................... 2
STATUTORY PROVISIONS AND FEDERAL RULES.................... 2
STATEMENT OF THE CASE............................................................... 3
SUMMARY OF ARGUMENT................................................................ 6
ARGUMENT ..........................................................................................12
I. Federal Rule of Civil Procedure 23 permits a federal court sitting in diversity to entertain a class action under the Ames Deceptive Trade Practices Act, notwithstanding § 1001.9(b). ..................................................12
A. Rule 23 is valid under the Constitution.................................. 13
B. Rule 23 is valid under the Rules Enabling Act. ..................... 14
1. Rule 23 is valid under the Rules Enabling Act because it “really regulates procedure.”.............................................. 14
2. Alternatively, Rule 23 is valid under the Rules Enabling Act because ADTPA § 1001.9 does not “define the scope” of a state right......................................................................... 22
3. In any event, Rule 23 is valid under the Rules Enabling Act by the bare holding of Shady Grove. ........................... 30
II. The district court abused its discretion by imposing a heightened ascertainability requirement. .........................31
A. The district court’s heightened ascertainability standard is inconsistent with the text of Rule 23. ..................................... 33
1. Rule 23’s text contains no express ascertainability requirement......................................................................... 33
2. An aggressive formulation of ascertainability contradicts certain provisions of Rule 23 and renders others superfluous.......................................................................... 34
iii
B. Willa Lowe’s class satisfies the traditional view of ascertainability......................................................................... 36
1. Administrative feasibility should follow the traditional view of ascertainability, which focuses on whether a class is defined using objective criteria. ..................................... 36
2. Lowe’s proposed class satisfies the conventional view of ascertainability because it is defined using objective criteria. ................................................................................ 39
C. A narrow reading of ascertainability best serves the policy preferences embedded in Rule 23............................................ 41
1. A narrow reading of ascertainability best serves Rule 23’s purposes. ............................................................................. 42
2. The concerns animating the district court’s heightened ascertainability requirement are unfounded. ................... 45
3. The district court’s “objective verifiability” test within the ascertainability requirement creates a nearly insurmountable obstacle for dispersed plaintiffs.............. 50
CONCLUSION ......................................................................................55
APPENDIX ........................................................................................... A1
iv
TABLE OF AUTHORITIES
Cases
Abbas v. Foreign Policy Grp., LLC., 783 F.3d 1328 (D.C. Cir. 2015) ............................................... 12, 16, 19
Allapattah Servs., Inc. v. Exxon Corp., 333 F.3d 1248 (11th Cir. 2003) ........................................................... 47
Am. Pipe & Const. Co. v. Utah, 414 U.S. 538 (1974) ....................................................................... 42, 43
Amchem Prods v. Windsor, 521 U.S. 591 (1997) ..................................................................... passim
Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 133 S. Ct. 1184 (2013) ............................................................. 30, 33, 51
Bearden v. Honeywell Int’l Inc., 2010 WL 3239285 (M.D. Tenn. Aug. 16, 2010) .................................. 28
Beech Aircraft Corp. v. Rainey, 488 U.S. 153 (1988) ............................................................................. 33
Bello v. Beam Glob. Spirits & Wine, Inc., 2015 WL 3613723 (D.N.J. June 9, 2015)............................................ 51
Brecher v. Republic of Argentina, 806 F.3d 22 (2d Cir. 2015)....................................................... 40, 41, 43
Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017) ..................................................... passim
Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013) ............................................................... 46
Carnegie v. Household Int’l, Inc., 376 F.3d 656 (7th Cir. 2004) ............................................................... 44
Carpenters Pension Tr. Fund v. Barclays PLC, 310 F.R.D. 69 (S.D.N.Y. 2015) ............................................................ 52
Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013)......................................................... passim
v
Delta Airlines, Inc. v. August, 450 U.S. 346 (1981) ............................................................................. 33
Dunnigan v. Metro. Life Ins. Co., 214 F.R.D. 125 (S.D.N.Y. 2003) .......................................................... 51
Ebert v. Gen. Mills, Inc., 2015 WL 867994 (D. Minn. Feb. 27, 2015)......................................... 38
Garman v. Campbell Cty., Sch. Dist. No. 1, 630 F.3d 977 (10th Cir. 2010) ............................................................. 17
Gregg v. Georgia, 428 U.S. 153 (1976) ......................................................................... 7, 15
Hanna v. Plumer, 380 U.S. 460 (1965) ..................................................................... passim
In re Dial Complete Mktg. & Sales Practices Litig., 312 F.R.D. 36 (D.N.H. 2015) ............................................................... 49
In re Fosamax Prods. Liab. Litig., 248 F.R.D. 389 (S.D.N.Y. 2008) .......................................................... 44
In re Hydroxycut Mktg. & Sales Practices Litig., 299 F.R.D. 648 (S.D. Cal. 2014) .................................................... 17, 30
In re Lithium Ion Batteries Antitrust Litig., 2014 WL 4955377 (N.D. Cal. Oct. 2, 2014) ........................................ 17
In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 209 F.R.D. 323 (S.D.N.Y. 2002) .......................................................... 37
In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015).................................................................... 49
In re Optical Disk Drive Antitrust Litig., 2012 WL 1366718 (N.D. Cal. Apr. 19, 2012)...................................... 30
In re Urethane Antitrust Litig., 237 F.R.D. 440 (D. Kan. 2006) ...................................................... 52, 53
In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001)................................................................. 48
Jones v. United Parcel Serv., Inc., 674 F.3d 1187 (10th Cir. 2012) ........................................................... 17
vi
King v. Palmer, 950 F.2d 771 (D.C. Cir. 1991) ....................................................... 16, 17
Koon v. United States, 518 U.S. 81 (1996) ............................................................................... 32
Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d 1331 (11th Cir. 2015) ................................................... passim
Los Gatos Mercantile, Inc. v. E.I. DuPont De Nemours & Co., 2015 WL 4755335 (N.D. Cal. Aug. 11, 2015) ..................................... 17
Lumbermen’s Mut. Cas. Co. v. Wright, 322 F.2d 759 (5th Cir. 1963) ............................................................... 22
Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825 (1988) ............................................................................. 35
Marks v. United States, 430 U.S. 188 (1977) ......................................................................... 7, 15
Matamoros v. Starbucks Corp., 699 F.3d 129 (1st Cir. 2012)................................................................ 37
McBean v. City of New York, 260 F.R.D. 120 (S.D.N.Y. 2009) .......................................................... 38
Miss. Pub. Corp. v. Murphree, 326 U.S. 438 (1946) ............................................................................. 21
MKB Constructors v. Am. Zurich Ins. Co., 2014 WL 2526901 (W.D. Wash. May 27, 2014).................................. 17
Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306 (1950) ............................................................................. 34
Mullins v. Direct Dig., 795 F.3d 654 (7th Cir. 2015) ....................................................... passim
Patterson v. McLean Credit Union, 491 U.S. 164 (1989) ............................................................................. 20
Rikos v. Procter & Gamble Co., 799 F.3d 497 (6th Cir. 2015) ............................................. 37, 38, 39, 40
Rodriguez v. Fly, — F.2d — (Ames Cir. 1985) .......................................................... 13, 32
vii
Ross v. Blake, 136 S. Ct. 1850 (2016) ......................................................................... 33
Saltzman v. Pella Corp., 257 F.R.D. 471 (N.D. Ill. 2009) ........................................................... 37
Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010) ..................................................................... passim
Sibbach v. Wilson & Co., 312 U.S. 1 (1941) ................................................................. 6, 13, 14, 20
Simer v. Rios, 661 F.2d 655 (7th Cir. 1981) ............................................................... 43
Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 387 (S.D. Ohio 2008)......................................................... 37
United States v. Johnson, 690 F.3d 60 (3d Cir. 1982)................................................................... 49
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) ............................................................................. 46
Whitlock v. FSL Mgmt., LLC, 843 F.3d 1085 (6th Cir. 2016) ............................................................. 17
Woodward v. Booztron Elecs., — F.3d — (Ames Cir. 2014) ................................................................ 32
Young v. Nationwide Mut. Ins. Co., 693 F.3d 532 (6th Cir. 2012) ................................................................ 37
Statutes
18 U.S.C. § 1621 (2012)........................................................................... 49
26 U.S.C. § 6065 (2012)........................................................................... 49
28 U.S.C. § 1292 (2012)............................................................................. 2
28 U.S.C. § 1332 (2012)......................................................................... 2, 4
28 U.S.C. § 2072 (2012)................................................................. 3, 14, 22
52 U.S.C. § 20508 (2012)......................................................................... 49
Ames Rev. Stat. § 1001.4 ........................................................................ 26
Ames Rev. Stat. § 1001.8 ........................................................................ 27
viii
Ames Rev. Stat. § 1001.9 ................................................................ passim
Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4 (2005) .......... 4
N.Y. C.P.L.R. § 901 (McKinney 2006).................................................... 24
Other Authorities
Geoffrey C. Shaw, Note, Class Ascertainability, 124 Yale L.J. 2354 (2015).............................................................. 33, 35
John Hart Ely, The Irrepressible Myth of Erie, 87 Harv. L. Rev. 693 (1974) ................................................................ 18
Michael D. Torpey et al., Securities Litigation: Planning and Strategies — Defending Securities Claims (ALI-ABA Course of Study, May 1–2, 2008), WL SN084 ALI-ABA 691 ......................................................... 53
William B. Rubenstein, Why Enable Litigation?: A Positive Externalities Theory of the Small Claims Class Action, 74 UMKC L. Rev. 709 (2006) .............................................................. 44
Rules
Fed. R. Civ. P. 23............................................................................. passim
Fed. R. Civ. P. 53..................................................................................... 49
Fed. R. Civ. P. 59..................................................................................... 49
Treatises
Alan Wright & Arthur Miller et al., Federal Practice & Procedure (3d ed. 1998) ....................................... 32
William B. Rubenstein, Newberg on Class Actions (5th ed. 2016) ........................... 3, 20, 44, 53
1
PRELIMINARY STATEMENT
Ames Meat has declared war on Rule 23. One of its customers,
Willa Lowe, says Ames Meat lied to her and other loyal customers
about what’s really in the food it sells. Understandably, the Ames
legislature has made such deception illegal. Now, Ames Meat wants to
avoid responsibility in federal court by either erasing or rewriting
federal procedure. But the power to create and define federal rules
rests solely with Congress, not Ames Meat.
2
OPINIONS BELOW
The unreported opinion and order of the U.S. District Court for
the District of Ames regarding the Plaintiff-Appellant’s motion for
class certification is reproduced at page 2 of the Joint Appendix.
JURISDICTION
The district court had jurisdiction over Lowe’s claim under 28
U.S.C. § 1332(d) (2012). The district court denied Lowe’s motion for
class certification on January 8, 2017. Lowe filed a timely appeal
under Federal Rule of Civil Procedure 23(f), which this Court granted
on January 20, 2017. This Court has jurisdiction under 28 U.S.C.
§ 1292(e) and Rule 23(f).
STATUTORY PROVISIONS AND FEDERAL RULES
All relevant provisions and rules are reproduced in the
Appendix.
3
STATEMENT OF THE CASE
A Tale of Two Sovereigns
Over the years, Congress and the state of Ames have made their
own judgments about class certification in their respective court
systems. In 1934, Congress passed the Rules Enabling Act (REA),
allowing the Supreme Court to promulgate procedural rules for federal
courts. 28 U.S.C. § 2072(a) (2012). Rule 23, amended in 1966, created
a class action mechanism designed to promote efficiency by combining
“common issues into a single lawsuit.” 1 William B. Rubenstein,
Newberg on Class Actions § 1:15 (5th ed. 2016).
In 1993, the Ames legislature passed the Ames Deceptive Trade
Practices Act (the ADTPA) — “a strong and effective consumer
protection law [that would] protect both the consuming public and
honest businesses.” J.A. 12. The ADTPA was to be “broadly
construed” to achieve those goals. Id. Along with individual actions,
the Act created a mechanism in the Attorney General for investigating
and bringing claims of unlawful trade practices. J.A. 13, 15–16. A
procedural provision — § 1001.9(b) — prohibited individual consumers
from bringing ADTPA claims as class actions in state court; Ames
citizens instead had to go through the Attorney General for
representative claims. J.A. 16.
4
Congress then expanded the availability of class actions in
federal courts in 2005 with the Class Action Fairness Act (CAFA).
Pub. L. No. 109-2, 119 Stat. 4 (2005) (codified in scattered sections of
28 U.S.C.). CAFA granted federal courts jurisdiction over class actions
with minimum diversity and an aggregated amount-in-controversy. 28
U.S.C. § 1332(d) (2012).
An “All” Meat Treat
Ames Meat lied to Willa Lowe. When she left Jack’s Snacks
Grocery Emporium in October 2013, Lowe thought she had purchased
an “All Meat Treat.” J.A. 28. It was only through a local newspaper’s
investigative journalism that she discovered the truth — that her “all”
meat snack contained not just meat, but a blend of chemical binding
agents. J.A. 2–3. Growing up in Ames, Lowe had heard this lie more
than once. In fact, she knew it by heart. She bought Ames Meat’s
product knowing the familiar rhyme: “Meaties, it’s an all meat treat.”
J.A. 28. Now a resident of the neighboring state to the north, Lowe
returns often to Ames, purchasing her favorite snack every time. J.A.
3, 28. She, like many Ames residents, does not keep receipts for her
snacks. See J.A. 8, 29.
Procedural History
When Lowe discovered the lie, she sued Ames Meat under the
ADTPA in federal court. J.A. 3. She brought that claim on behalf of
5
herself and a proposed class defined as “[a]ll persons within the State
of Ames who purchased a Meaties product that was labeled as an ‘all
meat treat’ from May 7, 2011 to July 17, 2014.” Id. (alteration in
original). Ames Meat filed a motion to dismiss, which the district court
denied on March 18, 2016. J.A. 4. The court allowed limited class
discovery, which was closed on September 30, 2016. Id. The next day,
Lowe moved for class certification under Rule 23(b)(3). The district
court denied that motion on two independent grounds.
First, relying on the Supreme Court’s divided opinion in Shady
Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010),
the court held that Rule 23 could not “displace” the class action
limitation in ADTPA § 1001.9(b) without thereby violating the REA,
J.A. 7–8. Therefore, Ames law prevented Lowe’s claim from being
certified as a class action in federal court.
Second, the court found that Rule 23’s implied ascertainability
standard, J.A. 8, required “objective criteria” in order to “test the
accuracy” of class membership, and that the use of affidavits was
insufficient for that purpose. J.A. 9.
Lowe timely appealed, and this Court granted review on
January 20, 2017. J.A. 1.
6
SUMMARY OF ARGUMENT
I. Federal Rule of Civil Procedure 23 permits a federal court
sitting in diversity to certify a class action under the Ames Deceptive
Trade Practices Act. Rule 23 and Ames law directly conflict. Rule 23
authorizes “any plaintiff, in any federal civil proceeding, to maintain a
class action if the Rule’s prerequisites are met.” Shady Grove, 559 U.S.
at 406 (majority opinion). Ames law bars any plaintiff suing under the
ADPTA from bringing a class action. Ames Rev. Stat. § 1001.9(b).
Rule 23 therefore governs. When a state law and a Federal Rule
conflict, the Federal Rule applies unless it is invalid under (1) the
Constitution or (2) the REA. Hanna v. Plumer, 380 U.S. 460, 470
(1965). Neither is true here.
First, Rule 23 is constitutional. The Constitution permits
Congress to regulate matters that are “rationally capable of
classification” as procedural, Hanna, 380 U.S. at 472, and Rule 23 fits
the bill.
Second, Rule 23 is valid under the REA. Since Sibbach v.
Wilson & Co., 312 U.S. 1 (1941), the proper test for determining a
Federal Rule’s validity under the REA has been whether the Rule
“really regulates procedure.” Id. at 14. The court below replaced that
test with one that goes beyond the Federal Rule at issue to require a
searching inquiry into the relevant state procedural provision.
7
The court selected that test by erroneously following a single
Justice’s concurrence in Shady Grove. J.A. 7–8. In a splintered
decision, the controlling opinion is the “position taken by those
Members who concurred in the judgments on the narrowest grounds.”
Marks v. United States, 430 U.S. 188, 193 (1977) (quoting Gregg v.
Georgia, 428 U.S. 153, 169 n.15 (1976) (plurality opinion)). But Shady
Grove has no “narrowest” opinion because the plurality and
concurrence simply offered different approaches to the same question.
If there were a controlling opinion in Shady Grove, it would be
the plurality’s. Congress made a crucial policy choice when it enacted
the REA, embodying a “prima facie” judgment for a uniform set of
federal rules of civil procedure. Hanna, 380 U.S. at 471. Under
Marks, then, the plurality is the “narrower” opinion in Shady Grove
because it minimizes the instances where a Federal Rule is
invalidated.
Without a Marks mandate to the contrary, this Court must
apply the existing test: whether the Federal Rule “really regulates
procedure.” Rule 23 qualifies. It is a classically procedural device that
aggregates state rights and remedies while leaving their scope and
content unchanged.
Even under Justice Stevens’s Shady Grove concurrence, Rule 23
is valid. His approach examines the state procedural rule to see if it “is
8
so intertwined with a state right or remedy that it functions to define
the scope of [that] right.” Shady Grove, 559 U.S. at 423 (Stevens, J.,
concurring). But the bar to finding this entanglement is “a high one,”
id. at 432, and the Ames statute does not measure up.
Under his analysis, we look to text and purpose; both confirm
that § 1001.9(b) is procedural. Section 1001.9(b)’s text is facially
procedural — it simply declares that an individual “may not bring an
action on behalf of a class.” J.A. 16. This reading comports with
legislative history: Ames prohibited class actions to promote efficiency
by channeling ADTPA suits through the Attorney General. Efficiency
is a “classically procedural” concern. Id. at 435. Under Justice
Stevens’s concurrence, then, Rule 23 is valid.
In any event, the bare holding of Shady Grove resolves this case
because Ames § 1001.9(b) is indistinguishable from the New York
statute preempted in Shady Grove.
In sum, Rule 23 is valid under the REA for three reasons: it
really regulates procedure; it does not define the scope of state rights
or remedies; and it has already been upheld by the Supreme Court
against a state law limitation indistinguishable from § 1001.9(a).
Therefore, this Court should reverse.
9
II. Ascertainability is an implied prerequisite to class
certification that looks to whether a proposed class is “sufficiently
definite” so that it is “administratively feasible” to determine who is a
member. J.A. 8. When interpreting this judicially created
requirement, courts should hew closely to the text Congress enacted in
Rule 23 because they lack authority to introduce freestanding
certification criteria never adopted. See Amchem Prods v. Windsor,
521 U.S. 591, 620 (1997).
However, the lower court introduced just such a freestanding
bar when it denied certification to Lowe’s proposed class. This
imposition was an abuse of discretion. Moreover, the court’s standard,
which requires that absent class members be identified in an
“objectively verifiable” manner, J.A. 9, departs from the text of the
Rule 23 and the weight of authority and undermines the very purposes
of the Federal Rule.
First, this “objective verifiability” requirement is found nowhere
in the text of Rule 23. Indeed, it directly contradicts the Federal Rule’s
notice provision, which contemplates that class members may be
difficult to find — perhaps unreasonably so. See Fed. R. Civ. P.
23(c)(2)(B). Further, the heightened standard renders the requirement
that a class action be a “superior method” of adjudicating a claim
10
largely superfluous. See Briseno v. ConAgra Foods, Inc., 844 F.3d
1121, 1126 (9th Cir. 2017).
Second, ascertainability traditionally requires only that a
proposed class be defined by objective criteria. See Mullins v. Direct
Dig., 795 F.3d 654, 659 (7th Cir. 2015). This requirement that a class
must be defined clearly is sensible because subjective, vague, or
amorphous classes — each of which fail this narrow standard — pose
serious problems of administration for courts. See id. at 659–60. Lowe
provided a time-limited, place-limited, and product-limited class
definition that should have easily met this standard. See J.A. 3.
Third, Rule 23 was carefully calibrated to overcome procedural
hurdles to recovery. See Amchem, 521 U.S. at 617. By aggregating
claims, class members bring cases that promise only small recovery,
unlocking the compensatory and deterrent benefits sought by state
statutes like the ADTPA. Narrow ascertainability faithfully serves
this purpose by preserving the balance present in the rule as written.
Arguments that heightened ascertainability is necessary to
protect the due process rights of class members or defendants are
unfounded. See Mullins, 795 F.3d at 667, 670. Further, heightened
ascertainability is unnecessary to make class actions manageable —
claims management mechanisms make even the most complex class
actions readily administrable.
11
These illusory benefits cannot support such a drastic departure
from the text and traditional understanding of Rule 23. The district
court’s requirement would threaten the viability of the consumer class
action. See Briseno, 844 F.3d at 1132. And its impact would not be
limited to the consumer context: focusing on “objective verifiability”
makes little sense in antitrust or securities cases, where plaintiffs lack
key information at the early stages of litigation. It further provides a
perverse incentive for defendants to avoid retaining identifying
information, in hopes that they may skirt liability through lax record-
keeping.
In the end, the district court’s heightened standard improperly
places the burden on consumers to anticipate corporate wrongdoing. It
is unsupportable as a matter of law, and thus constitutes an abuse of
the district court’s discretion, necessitating remand.
12
ARGUMENT
I. Federal Rule of Civil Procedure 23 permits a federal court sitting in diversity to entertain a class action under the Ames Deceptive Trade Practices Act, notwithstanding § 1001.9(b).
Rule 23 and Ames law provide opposite answers to the same
question: can Willa Lowe maintain her ADTPA claim as a class action?
The text of the Rule “unambiguously” answers the question of class
certification. Shady Grove, 559 U.S. at 406 (majority opinion).1 The
Rule “authorizes any plaintiff, in any federal civil proceeding, to
maintain a class action if the Rule’s prerequisites are met.” Id. It
creates a “categorical rule entitling a plaintiff whose suit meets the
specified criteria to pursue h[er] claim as a class action.” Id. at 398. In
contrast, Ames law bars any plaintiff suing under the ADTPA from
“bring[ing] an action on behalf of a class.” Ames Rev. Stat. § 1001.9(b).
The two provisions are therefore in direct conflict.
Rule 23 governs this case. When the collision between a state
law and a Federal Rule is “unavoidable,” the Federal Rule applies
unless it transgresses (1) the bounds of the Constitution or (2) the
terms of the REA. Shady Grove, 559 U.S. at 398 (majority opinion);
Hanna, 380 U.S. at 470. Neither is true. Thus, the Federal Rule
governs.
1 Section II-A of Shady Grove was joined by five Justices and is controlling. Abbas v. Foreign Policy Grp., LLC., 783 F.3d 1328, 1337 (D.C. Cir. 2015).
13
Determining the preclusive effect of a state provision on a
Federal Rule is a question of law reviewed de novo. Rodriguez v. Fly,
— F.2d — (Ames Cir. 1985).
A. Rule 23 is valid under the Constitution.
The bar for constitutionality here is low. The Constitution
permits Congress to “regulate matters which, though falling within the
uncertain area between substance and procedure, are rationally
capable of classification as either.” Hanna, 380 U.S. at 472. That
middle ground includes rules that rationally relate to “the judicial
process of enforcing rights and duties recognized by substantive law.”
Sibbach, 312 U.S. at 14. Rule 23 is a procedural device that, at
minimum, falls within this intermediate territory. It sets out the
preconditions for maintaining a class action in federal court and
therefore directly relates to “the practice and pleading” of a litigant’s
claim. Id. Such a rule is “rationally capable of classification” as
procedural. Id.
On this point, Shady Grove controls. Justice Scalia’s plurality
opinion held that Rule 23 fell within Congress’s “undoubted power to
prescribe rules for the courts it has created.” Shady Grove, 559 U.S. at
406 (plurality opinion). Similarly, Justice Stevens’s concurrence
recognized that Rule 23 fell within Congress’s “constitutional power ‘to
supplant state law’ with rules that are ‘rationally capable of
classification as procedure.’” Id. at 422 (Stevens, J., concurring)
14
(quoting id. at 406 (plurality opinion)). Lower courts applying Shady
Grove have unanimously followed suit; no court has held that Congress
lacks the constitutional power to regulate class actions in federal
courts. See, e.g., Lisk v. Lumber One Wood Preserving, LLC, 792 F.3d
1331, 1336 (11th Cir. 2015). Rule 23 is therefore valid under the
Constitution.
B. Rule 23 is valid under the Rules Enabling Act.
Under the REA, the Supreme Court has “the power to prescribe
general rules of practice and procedure,” 28 U.S.C. § 2072(a) (2012), so
long as they do not “abridge, enlarge, or modify any substantive right,”
id. § 2072(b). In Sibbach, the Supreme Court clarified that a Federal
Rule meets both of these requirements if the Rule “really regulates
procedure — the judicial process for enforcing rights and duties
recognized by substantive law and for justly administering remedy and
redress for disregard or infraction of them.” 312 U.S. at 14. Rule 23
qualifies.
1. Rule 23 is valid under the Rules Enabling Act because it “really regulates procedure.”
In Shady Grove, the Court held that Rule 23 passed that test,
displacing a New York statute barring class actions for statutory
penalties. 559 U.S. at 397–98 (majority opinion); id. at 416 (plurality
opinion). Four Justices agreed that in evaluating a Federal Rule’s
validity under the REA, “it is not the substantive or procedural nature
15
or purpose of the affected state law that matters, but the substantive or
procedural nature of the Federal Rule.” Id. at 410 (emphases added).
Justice Stevens went further. Instead of focusing only on the
Federal Rule, he read § 2072(b) of the REA to require examination of
the conflicting state law to determine whether that law was
substantive. See id. at 424 (Stevens, J. concurring). But he did not
stop there. He noted — in dicta — that even displacement of an
“undeniably procedural” state rule might nevertheless run afoul of the
REA if it is “sufficiently intertwined with a state right or remedy.” Id.
at 428. The court below reached its decision by relying on Justice
Stevens’s expansive reading of the REA’s requirements. See J.A. 7.
But that reliance was misguided.
a) Justice Stevens’s concurrence does not control.
For Justice Stevens’s opinion to control, it must be the “position
taken by those Members who concurred in the judgments on the
narrowest grounds.” Marks, 430 U.S. at 193 (quoting Gregg, 428 U.S.
at 169 n.15 (plurality opinion)). However, applying the Marks test to
Shady Grove requires this Court to first ask: narrow with respect to
what?
There is no principled answer. If the relevant metric is
invalidation of a Federal Rule, Justice Stevens sweeps more broadly.
In his view, it is not enough for a federal rule to “really regulate
16
procedure.” It must also avoid conflicting with a state procedural rule
that is “bound up” with a state right or remedy. Thus, Justice
Stevens’s approach logically leads to more — not fewer —
invalidations. Only if the relevant metric is preemption of state law
can Justice Stevens’s rationale be considered narrower. So the choice
between which outcome to measure — invalidation or preemption —
collapses into the ultimate question: whether to favor the state or
federal rule.
This dilemma dooms the Marks inquiry. Marks applies only
“when one opinion is a logical subset of other, broader opinions.” King
v. Palmer, 950 F.2d 771, 781 (D.C. Cir. 1991) (en banc). In other
words, “the narrowest opinion must represent a common denominator
of the Court’s reasoning.” Id. Shady Grove has no common
denominator. Instead, it offers two “distinct approaches” to the same
issue. Id. One favors state law; the other federal. One favors
invalidation; the other preemption. Without a background rule telling
this Court which result to measure, “asking which of [the] two opinions
is narrower is akin to asking, ‘Which is taller, left or right?’” Lisk, 792
F.3d at 1337. Thus, Stevens’s concurring opinion cannot possibly
control. See id. (refusing to piece together a controlling opinion from
Stevens’s concurrence); see also Abbas, 783 F.3d at 1337 (finding that
“neither [Shady Grove] opinion can be considered the Marks middle
17
ground or narrowest opinion”); Los Gatos Mercantile, Inc. v. E.I.
DuPont De Nemours & Co., 2015 WL 4755335, at *21 (N.D. Cal. Aug.
11, 2015) (same); In re Lithium Ion Batteries Antitrust Litig., 2014 WL
4955377, at *20 n.20 (N.D. Cal. Oct. 2, 2014) (same); In re Hydroxycut
Mktg. & Sales Practices Litig., 299 F.R.D. 648, 653 (S.D. Cal. 2014)
(same). Revealingly, the only courts to adopt Justice Stevens’s
concurrence as controlling have done so in footnotes that simply
assume his opinion to be the “narrowest” without explaining how. See
Whitlock v. FSL Mgmt., LLC, 843 F.3d 1085, 1091 n.2 (6th Cir. 2016);
Garman v. Campbell Cty., Sch. Dist. No. 1, 630 F.3d 977, 983 n.6 (10th
Cir. 2010).
A false positive under Marks turns “a single opinion that lacks
majority support into law.” King, 950 F.2d at 782. Therefore, courts
must be especially vigilant not to “endow” the opinion of a single
Justice “with controlling force, no matter how persuasive it may be.”
Id. This Court should avoid that pitfall by refusing to divine a Marks
mandate from the splintered opinions in Shady Grove.
b) If anything, the plurality opinion controls.
Only Justice Scalia’s plurality opinion in Shady Grove can
possibly lay claim to being the narrowest.2 Under Marks, to deem an
opinion “narrower” requires making a choice about which outcomes are
2 Indeed, at least two courts have followed the plurality opinion. See, e.g., Jones v. United Parcel Serv., Inc., 674 F.3d 1187, 1206 (10th Cir. 2012); MKB Constructors v. Am. Zurich Ins. Co., 2014 WL 2526901, at *8 n.5 (W.D. Wash. May 27, 2014).
18
ordinary and which are divergent. Here, Congress made that choice
when it enacted the REA. The Act struck a decisive blow in favor of
federal uniformity: its express purpose was to authorize a uniform set
of rules of civil procedure for federal courts, preempting state law to
the contrary. Hanna, 380 U.S. at 473.3 Through the Act, Congress has
instructed federal courts to apply the Federal Rules, and courts “can
refuse to do so only if the Advisory Committee, this Court, and
Congress erred in their prima facie judgment that the Rule” complies
with the Constitution and the REA. Hanna, 380 U.S. at 471. Under
Marks, then, the “narrower” opinion in Shady Grove should minimize
the instances in which a court finds that Congress and the Supreme
Court erred in their “prima facie judgment” that the federal rule is
valid.
Justice Scalia’s approach does exactly that. His opinion would
invalidate a federal rule only when it doesn’t “really regulate
procedure” — an approach that requires looking only to the
substantive or procedural nature of the challenged federal rule. Shady
Grove, 559 U.S. at 410 (plurality opinion). Such an approach
minimizes the instances in which a Federal Rule is invalidated under
the REA. In contrast, Justice Stevens’s concurrence would invalidate
3 See also John Hart Ely, The Irrepressible Myth of Erie, 87 Harv. L. Rev. 693, 721 (1974) (“About all we can be sure of respecting the Enabling Act’s intendment is that it was designed to authorize a comparatively enlightened set of Federal Rules of Civil Procedure to be applied in all federal courts.”).
19
even concededly procedural rules if they displace state rules that are
“sufficiently intertwined with a state right or remedy.” Id. at 416
(Stevens, J., concurring). This approach would result in the
invalidation of more federal rules than Justice Scalia’s more limited
inquiry. Justice Stevens’s approach therefore reflects a comparatively
greater departure from the policy of federal uniformity established by
Congress in the REA. If Marks guides this Court’s reasoning, only
Justice Scalia’s plurality opinion can be considered “narrower.”
c) Because Shady Grove provides no single binding rationale, Sibbach controls and validates Rule 23.
Absent an authoritative word from Shady Grove, the proper
approach “is to follow the Court’s pre-existing precedent in Sibbach.”
Abbas, 783 F.3d at 1337. Since 1949, the test articulated by Sibbach
— whether the federal rule “really regulates procedure” — has been
“settled law.” Shady Grove, 559 U.S. at 413 (plurality opinion); see also
Abbas, 783 F.3d at 1337 (“Unless and until the Supreme Court
narrows or overrules its decision in Sibbach, that case remains good
law and is binding on lower courts.”). However, Justice Stevens would
replace that test with one that considers the relationship between the
Federal Rule and state substantive rights. See Abbas, 783 F.3d at
1336 (“Justice Stevens’s opinion . . . would have distinguished and
limited Sibbach.”). But while the Supreme Court can overturn its own
precedent with “special justification,” Patterson v. McLean Credit
20
Union, 491 U.S. 164, 173 (1989), the Ames Circuit cannot do it for
them. Since Justice Stevens’s concurrence does not control under
Marks, Sibbach supplies the test for determining whether a Federal
Rule exceeds the authority granted by the REA.
Under Sibbach, procedural rights remain procedural even when
they touch upon substantive rights. The essence of Sibbach is that, to
avoid “endless litigation and confusion,” courts must not consider even
“important” rights like “freedom from invasion of the person” that are
merely implicated by procedural restrictions and requirements.
Sibbach, 312 U.S. at 14. Instead, courts must focus their REA analysis
exclusively on whether a federal rule really does enforce and
administer substantive claims in the first place. Id.
That is precisely what Rule 23 does. It is “fundamentally a
procedural device.” Rubenstein, Newberg, supra, § 1:1. It changes
nothing about an Ames consumer’s right to receive what she pays for.
Nor is Lowe’s right expanded or modified by the decision to enforce
that right through class procedures. Rule 23 “merely enables a federal
court to adjudicate claims of multiple parties at once, instead of in
separate suits.” Shady Grove, 559 U.S. at 408 (plurality opinion).
“[L]ike traditional joinder,” class certification “leaves the parties’ legal
rights and duties intact and the rules of decision unchanged.” Id.; see
also id. at 432 (Stevens, J., concurring) (assuming that Rule 23
21
“dictates an answer to a traditionally procedural question”). Rule 23
aggregates existing claims but does not impact Ames Meat’s
substantive exposure to liability. Each member of the proposed class
could have brought an individual claim without this suit, Ames Rev.
Stat. § 1001.9(a), and each member can still bring an individual claim
by opting out of the class, Fed. R. Civ. P. 23(c)(2)(B)(v). The fact that
convenient or inexpensive class procedures might encourage more
plaintiffs to collect on their independently existing claims “is just the
sort of ‘incidental effect[]’ [the Court has] long held does not violate
§ 2072(b).” Shady Grove, 559 U.S. at 408 (plurality opinion) (quoting
Miss. Pub. Corp. v. Murphree, 326 U.S. 438, 446 (1946) (internal
quotation marks omitted)). Thus, Rule 23 “really regulates procedure,”
irrespective of any secondary effects on substantive rights.
d) The correct reading of Sibbach avoids unnecessary and unadministrable inquiries into state law.
Focusing on whether the federal rule really regulates procedure
avoids burdening federal judges with “hundreds of hard questions”
about the “substantive or procedural character of countless state rules
that may conflict with a single Federal Rule.” Id. at 415; see also id. at
426 (Stevens, J. concurring) (implying that the plurality’s approach
would be “easiest on federal courts,” “administrable,” and “in service of
simplicity”). Justice Stevens’s approach does not just create fifty-one
sets of Federal Rules. It creates fifty-one sets of Federal Rules whose
22
validity varies case-by-case, depending on (1) the state law provision
the Rule displaces in a particular scenario and (2) whether that
provision can be characterized as substantive or procedural-but-
sufficiently-intertwined-with-a-right-or-remedy. Such a patchwork
approach to federal procedure undermines “one of the shaping
purposes of the Federal Rules . . . to bring about uniformity in the
federal courts,” Hanna, 380 U.S. at 472 (quoting Lumbermen’s Mut.
Cas. Co. v. Wright, 322 F.2d 759, 764 (5th Cir. 1963)), and allows
states to exercise a line-item veto over the Federal Rules by simply
couching procedural judgments in substantive terms. To allow Ames
to invalidate Rule 23 here “would be to disembowel either the
Constitution's grant of power over federal procedure or Congress's
attempt to exercise that power in the Enabling Act.” Id. at 473–74.
2. Alternatively, Rule 23 is valid under the Rules Enabling Act because ADTPA § 1001.9 does not “define the scope” of a state right.
Examining Rule 23’s interaction with § 1001.9(b) only confirms
that allowing the class action to proceed comports with the REA. The
Act prohibits federal rules from modifying substantive rights.
§ 2072(b). Even under Justice Stevens’s approach to this requirement,
however, a court will strike down a Federal Rule only if it conflicts
with a state procedural rule that is “so intertwined with a state right
or remedy that it functions to define the scope of the state-created
right.” Shady Grove, 559 U.S. at 423 (Stevens, J., concurring). This
23
level of entanglement is difficult for the Defendant to demonstrate
here, as “the bar for finding an Enabling Act problem is a high one.”
Id. at 432. An REA violation cannot rest on the “mere possibility” of a
change in the scope of the state right: for Ames Meat to unseat Rule
23, “[t]here must be little doubt.” Id. Justice Stevens’s two-step
reasoning from text and legislative purpose in Shady Grove dictates
that ADTPA §1001.9(b) is properly procedural. Therefore, Rule 23
governs.
a) The text of § 1001.9(b) demonstrates the provision is procedural and does not define the scope of substantive rights.
Ames’s prohibition on consumer class actions within the ADTPA
is procedural on its face. Section 1001.9(b) does not mention rights or
remedies; it states only that individual consumers “may not bring an
action on behalf of a class.” J.A. 16. Although the inquiry does not end
here for Justice Stevens, the considerations that render Rule 23
facially procedural for the plurality in Shady Grove apply with equal
force to § 1001.9(b). Like joinder, class actions “merely enable[] . . .
court[s] to adjudicate claims of multiple parties at once,” and they do
not disturb “parties’ legal rights and duties” or “the rules of decision.”
Id. at 408 (plurality opinion). Thus, a textual provision regulating
class actions, like one regulating joinder, is perforce procedural.
Indeed, the text of Ames’s § 1001.9(b) is essentially identical to
the New York statute at issue in Shady Grove. There, the New York
24
provision required that unless authorized by another statute, “an
action to recover a penalty, or minimum measure of recovery created or
imposed by statute may not be maintained as a class action.” N.Y.
C.P.L.R. § 901(b) (McKinney 2006). Similarly, Ames’s § 1001.9(b)
simply bars any “consumer or other person” from “bringing an action
on behalf of a class.” Both statutes identify a subset of claims and
prevent them from being brought as a class in state courts. The New
York provision targeted claims eligible for noncompensatory damages;
the Ames provision targets claims brought under the ADTPA. If the
“plain textual reading” of New York’s § 901(b) indicated that it was
procedural, Shady Grove, 559 U.S. at 436 (Stevens, J., concurring),
then Ames’s § 1001.9(b) is procedural as well.
Since the meaning of the text is clear, appeals to legislative
purpose that require “extensive speculation” about the Ames
legislature’s motives are irrelevant. Id. The legislative history behind
the New York statute in Shady Grove did indicate that one of the
rationales guiding § 901(b) was the legislature’s desire to limit
statutory damages. Id. at 432. Yet even record evidence of this
purpose was not enough to override the statute’s clear text. Id. at 432–
33. Simply put, a limitation on statutory damages was “not the law
that New York adopted.” Id. at 433. Just so here. Even if the record
were to show that the Ames legislature intended § 1001.9(b) to
25
function as a limitation on damages, that is not the statute they
enacted. The provision could have allowed for class actions and then
simply set a ceiling on the amount of recovery. The legislature also
could have included a statement of an intention to limit recovery. But
no such explanation appears in the statement of legislative intent in
§ 1001.2. Instead, Ames made its prohibition on class actions in
§1001.9(b) purely procedural. Rather than conflict with the plain text
of the provision, the legislative purposes behind the ADTPA support its
procedural characterization.
b) The legislative purposes behind § 1001.9(b) are inherently procedural and are not aimed at defining substantive rights.
Justice Stevens’s approach would turn next to legislative
history. If a facially procedural state provision was adopted for “some
policy reason” apart from defining the scope of a substantive right, the
court will not second guess the plain reading of the statute. Id. In
Shady Grove, Justice Stevens named a number of possible reasons a
legislature might prefer not to allow class actions when they are
unnecessary to encourage litigation. Among others, a state might view
class actions as an inefficient use of state court resources or as
burdening state courts with “unwieldy lawsuits.” Id. at 435. Either
would explain why Ames chose to disallow class actions for a category
of claims, and neither involves defining the scope of a substantive
right. Where evidence for these procedural rationales exists, the court
26
must “respect the plain textual reading” of the statute at issue. Id. at
436. Section 1001.9(b) fits the bill. Ames crafted the ADTPA to
maximize efficient use of state resources by channeling claims through
the mechanism of the Attorney General. See Ames Rev. Stat. § 1001.4.
Efficiency judgments are hallmarks of the procedural choices that both
states and Congress are permitted to make for their own courts; they
do not define substantive rights.
As an initial matter, the legislative history of § 1001.9(b) gives
no indication that the Ames legislature prohibited class actions as a
crude means of protecting defendants from excessive liability — the
reason considered and rejected in Shady Grove. In fact, the statute’s
statement of legislative intent encourages courts to construe the Act
broadly “to effect the goals embodied herein of effective consumer
protection.” J.A. 12 (emphasis added). The ADTPA does not merely
lack the potentially substantive purpose behind Shady Grove’s New
York statute; the Act flatly contradicts it.
Instead, Ames crafted the ADTPA — including its prohibition on
class actions — to maximize efficiency in state court proceedings
through the use of the Attorney General. First, the Act reduces costs
to potential plaintiffs by tasking the Attorney General with the initial
steps of litigation. The Attorney General has the duty to investigate
complaints, Ames Rev. Stat. § 1001.4(a), bring actions on behalf of the
27
state, and obtain restraining orders and injunctions against offending
parties, id. § 1001.8(a). The savings for complainants only increase
with the added responsibility of state departments to “cooperate with
and assist” the Attorney General, id. § 1001.4(b), and the power of
courts to appoint receivers and to sequester defendant assets, id. §
1001.8(b). Second, this framework saves litigation costs for potential
defendants by allowing them to meet with the Attorney General or
district attorney to resolve conflicts out of court. See id. § 1001.8(a).
This alternative dispute resolution mechanism furthers the law’s
purpose to “reward those entities that conduct their business in an
honest manner.” J.A. 18. Third, by limiting class actions to
representative suits brought by the Attorney General, the Act reduces
the burden on state courts of consolidating numerous cases concerned
with the same violation. In short, one of the ADTPA’s key concerns is
to deliver remedies in a cost-effective way, without overburdening
state courts. To that end, § 1001.9(b) simply channels litigants
through the Attorney General.
Choosing the most efficient method of accessing remedies does
not define the scope of those remedies; it merely establishes the best
procedures to deliver them. This is precisely the sort of “classically
procedural calibration” Justice Stevens identified in Shady Grove: the
state legislature decided that the people of Ames are sufficiently
28
served by turning to the Attorney General. Under this logic, consumer
class actions are not “necessary” for the state of Ames, Shady Grove,
559 U.S. at 435 (Stevens, J., concurring), and allowing them would
only impose extra costs on its judicial system. Governor Davis, Jr.’s
signing statement affirms as much, describing the Attorney General’s
sole ability to bring representative actions as “procedur[al],” aimed at
“vindicating public rights in the most efficient manner possible.” J.A.
18 (emphasis added). Thus, it would be wrong to describe the role of
the Attorney General as a “remedy” in itself as other courts have
suggested. See, e.g., Bearden v. Honeywell Int’l Inc., 2010 WL 3239285,
at *10 (M.D. Tenn. Aug. 16, 2010). Within the ADTPA, the Attorney
General is a channel through which litigants pursue their remedies, all
the while reducing societal costs through centralization. How to bring
actions most efficiently for a given constituency is a procedural
question, and one that Ames and the federal government have
answered differently.
It is of no moment that § 1001.9(b) appears within the ADTPA
rather than as part of Ames’s general procedural rules. While Justice
Stevens did consider the location of § 901(b) in Shady Grove, he did so
as one means of discerning legislative purpose, not as a per se rule.
See 559 U.S. at 434 n.17 (Stevens, J., concurring). Strong evidence of
substantive legislative purpose remains the touchstone, and such
29
evidence is nowhere found in § 1001.9(b). In contrast, the procedural
efficiency rationale considered dispositive by Justice Stevens appears
everywhere in the ADTPA, and it applies just as forcefully on a
statute-by-statute basis as on a state-wide basis. Every time Ames
creates causes of action and protects new rights, the state must decide
whether or not to let those suits proceed as class actions. It is
eminently reasonable for the state legislature to make that decision on
a case-by-case basis after considering what class actions the state
already allows and the current burdens on its courts. If anything
should be drawn from the statutory location of the class action
prohibition, it is that Ames is less averse to representative actions than
is New York — the ADTPA still allows them to be brought by the
Attorney General. See Lisk, 792 F.3d at 1336 (noting that a total ban
on class actions seems more substantive than a statute merely limiting
who can bring a class action).
At bottom, Ames was making a judgment about efficiency in its
own courts. It is reasonable for Congress to hew a different path. The
federal government has a much larger jurisdiction and may have
inadequate resources to maintain representative suits on a national
basis. A federal version of Ames’s Attorney General provision may
therefore be impracticable. Instead, for litigation in federal courts,
Congress has made the procedural policy judgment that “the class
30
action mechanism is [necessary] 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.” Amgen Inc. v. Conn. Ret.
Plans & Tr. Funds, 133 S. Ct. 1184, 1202 (2013) (quoting Amchem, 521
U.S. at 617). This is a judgment to which Congress is entitled.
3. In any event, Rule 23 is valid under the Rules Enabling Act by the bare holding of Shady Grove.
Regardless of how this Court interprets Shady Grove, its result
decides this case because the New York statute at issue there is
indistinguishable from § 1001.9(b). See Lisk, 792 F.3d at 1335
(upholding Rule 23 in the face of state class action limitations by
reasoning directly from Shady Grove’s result); In re Hydroxycut Mktg.
& Sales Practices Litig., 299 F.R.D. 648, 653 (S.D. Cal. 2014) (same); In
re Optical Disk Drive Antitrust Litig., 2012 WL 1366718, at *8 (N.D.
Cal. Apr. 19, 2012) (same).
Just as Lisk was indistinguishable from Shady Grove, this case
is indistinguishable from Lisk. The court in Lisk found “no relevant,
meaningful distinction” between the statute at issue and the statute in
Shady Grove; thus, Rule 23 displaced state law regardless of which
opinion the court followed. 792 F.3d at 1335. The same is true here.
In Lisk, the displaced class action limitation was “part of the statute
that created the statutory penalty,” but the court concluded that “how
a state chooses to organize its statutes affects the analysis not at all.”
31
Id. at 1336 (emphasis added). The same is true here. In Lisk, the
class limitation was limited to Alabama statutory law, but the court
nevertheless declined to distinguish it from the general prohibition in
Shady Grove because the actual “claim at issue in Shady Grove arose
under New York substantive law.” Id. The same is true here. In Lisk,
the class limitation had an exception for representative actions
brought by the Attorney General. Id. But the availability of attorney-
general suits only made Lisk an even “stronger case than Shady Grove
for applying Rule 23” because the limitation did not preclude class
actions entirely, but simply required they be brought by the Attorney
General. Id. The same is true here. Thus ADTPA § 1001.9(b), like the
prohibition in Lisk, cannot unseat Rule 23 without violating the bare
holding of Shady Grove.
II. The district court abused its discretion by imposing a heightened ascertainability requirement.
Federal Rule of Civil Procedure 23 was enacted through “an
extensive deliberative process” by a diverse group of experts, including
the Supreme Court and Congress. Amchem, 521 U.S. at 620. The
Supreme Court has emphasized that “[t]he text of a rule thus proposed
and reviewed limits judicial inventiveness.” Id. Thus, federal courts
“lack authority to substitute for Rule 23’s certification criteria a
standard never adopted.” Id. at 622.
32
In the Ames Circuit, a proposed class must be “ascertainable” to
be certified. See Woodward v. Booztron Elecs., — F.3d — (Ames Cir.
2014). In other words, a class must be “sufficiently definite so that it is
administratively feasible for the court to determine whether a
particular individual is a member.” Id. (quoting Alan Wright & Arthur
Miller et al., Federal Practice & Procedure § 1760 (3d ed. 1998)). But
the district court went further — converting the basic principle that
“the general outlines of the membership of the class [be] determinable
at the outset of the litigation,” Wright & Miller, supra, § 1760, into a
freestanding obstacle almost insurmountable in practice. The new
“objective verifiability” test that the district court added to the implied
ascertainability requirement, see J.A. 9, departs from Rule 23’s text
and the weight of authority, and undermines Rule 23’s core purpose of
enabling efficient class actions.
The district court erred when it grafted its stringent
ascertainability standard onto the express provisions of Rule 23,
frustrating the policy choices embedded in the rule as written. See
Amchem, 521 U.S. at 622. Thus, the district court’s denial of
certification to Lowe’s proposed class was an abuse of discretion. See
Rodriguez v. Fly, — F.2d — (Ames Cir. 1985); see also Koon v. United
States, 518 U.S. 81, 100 (1996) (“A district court by definition abuses
its discretion when it makes an error of law.”).
33
A. The district court’s heightened ascertainability standard is inconsistent with the text of Rule 23.
When interpreting a statute or federal rule, courts lack
discretion to deviate from its plain meaning. See Delta Airlines, Inc. v.
August, 450 U.S. 346, 350 (1981). Courts employ traditional tools of
statutory construction when interpreting a Federal Rule. See Beech
Aircraft Corp. v. Rainey, 488 U.S. 153, 163 (1988). And statutory
interpretation “begins with the text.” Ross v. Blake, 136 S. Ct. 1850,
1856 (2016).
1. Rule 23’s text contains no express ascertainability requirement.
Ascertainability is an implied prerequisite to certification found
nowhere in Rule 23.4 To obtain certification, Lowe’s proposed class
must satisfy Rule 23(a)’s express “prerequisites of numerosity,
commonality, typicality, and adequacy of representation.” Amgen, 133
S. Ct. at 1191. Once these conditions are met, the proposed class must
also fit into one of three categories. See Fed. R. Civ. P. 23(b). Lowe
proposes her class under Rule 23(b)(3), which requires the
predominance of questions common to the class and that a class action
be a superior means of adjudicating a controversy. See Fed. R. Civ. P.
23(b)(3). One of the considerations in the “superiority” inquiry is
4 Far from “nearly unanimous,” J.A. 8, courts and scholars have fiercely debated the very existence of the ascertainability requirement, see generally Geoffrey C. Shaw, Note, Class Ascertainability, 124 Yale L.J. 2354 (2015), and the matter is anything but settled, compare, e.g., Briseno, 844 F.3d at 1124 n.4, with Carrera v. Bayer Corp., 727 F.3d 300, 306–07 (3d Cir. 2013).
34
whether a class action will be manageable. See Fed. R. Civ. P.
23(b)(3)(D). The district court concedes, as it must, that
ascertainability is found nowhere in Rule 23’s itemized list of
requirements. See J.A. 8. Because the ascertainability requirement is
itself judicially created, this Court should proceed with caution when
defining its contours.
2. An aggressive formulation of ascertainability contradicts certain provisions of Rule 23 and renders others superfluous.
The lower court’s ascertainability standard would automatically
bar classes that Rule 23’s notice requirement specifically contemplates.
Rule 23(c)(2)(B) provides that notice to absent class members must be
“the best notice practicable under the circumstances, including
individual notice to all members who can be identified through
reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B) (emphases added); cf.
Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 318 (1950)
(holding that notice “reasonably calculated” to inform the relevant
parties under the circumstances satisfies due process). Thus, the rule
contemplates that classes may properly include parties who can never
be identified or for whom identification would require unreasonable
effort. Adequate notice has never required that class membership be
objectively verifiable before certification. At most, it requires that a
class be clearly defined, so that individuals can determine if they are
members and opt out if necessary. Thus, the plain meaning of Rule 23
35
cannot be squared with the district court’s objective verifiability
standard.
Further, stringent ascertainability would render Rule 23’s
express “superiority” requirement superfluous by seeking to
accomplish the same goal in a more demanding way. Both
requirements invite courts to “evaluate likely information[-]gathering
difficulties and dismiss classes presenting overwhelming burdens.”
Shaw, supra, at 2383. And courts should be “hesitant to adopt an
interpretation” that renders superfluous a provision of a congressional
enactment. See, e.g., Mackey v. Lanier Collection Agency & Serv., Inc.,
486 U.S. 825, 837 (1988) (collecting cases); see also Briseno, 844 F.3d at
1126. But the problem with substituting the superiority requirement
enacted in Rule 23 with the district court’s stringent standard goes
deeper than mere redundancy. Under Rule 23(b)(3), courts consider
whether “a class action is superior to other available methods for fairly
and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3)
(emphasis added). However, courts applying heightened
ascertainability ignore this bedrock comparative feature. For instance,
the Carrera court focused only on the cost-of-the-class-action side of
the equation when it wrote that, if a class cannot be ascertained in an
economical manner, “significant benefits of a class action are lost.”
Carrera, 727 F.3d at 307. Under ordinary class certification analysis,
36
the court should have also considered whether the proposed class of
purchasers had alternative avenues for redress. But it didn’t. See id.
This one-sided approach, adopted by the district court here, is at best
redundant and at worst unfaithful to the comparative superiority
analysis enacted in the text.
B. Willa Lowe’s class satisfies the traditional view of ascertainability.
While the Ames Circuit requires class membership
determinations to be “administratively feasible,” it has not elaborated
the meaning of that amorphous phrase. See J.A. 8. As the Ames
Circuit “flesh[es] out” its notion of ascertainability for the first time,
id., this Court should align itself with the weight of authority by
reading administrative feasibility to require only that a class be
objectively defined, not objectively verifiable.
1. Administrative feasibility should follow the traditional view of ascertainability, which focuses on whether a class is defined using objective criteria.
Courts routinely view ascertainability at the certification stage
as a question of whether the class definition is adequately precise —
not whether the identities of class members are verifiable. See
Mullins, 795 F.3d at 659. “When courts wrote of [the] implicit
requirement of ‘ascertainability,’ . . . [t]hey were not focused on
whether, given an adequate class definition, it would be difficult to
identify particular members of the class.” Id. On this view, for a class
37
definition to be ascertainable, “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.” Rikos v. Procter & Gamble Co.,
799 F.3d 497, 525 (6th Cir. 2015) (quoting Young v. Nationwide Mut.
Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012)); see also Saltzman v. Pella
Corp., 257 F.R.D. 471, 475 (N.D. Ill. 2009), aff’d, 606 F.3d 391 (7th Cir.
2010) (“[T]he traditional view of ascertainability [is] as an adjunct to
the class definition, requiring only that a class be ‘defined by objective
criteria.’”); Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 387, 391
(S.D. Ohio 2008) (“[T]he touchstone of ascertainability is whether the
class is objectively defined.”).
Applying this traditionally low bar for ascertainability, courts
have repeatedly found that objectively defined classes are certifiable.
See, e.g., Matamoros v. Starbucks Corp., 699 F.3d 129, 139 (1st Cir.
2012) (“The presence of . . . an objective criterion overcomes the claim
that the class is unascertainable.”); In re Methyl Tertiary Butyl Ether
Prods. Liab. Litig., 209 F.R.D. 323, 337 (S.D.N.Y. 2002) (“Here,
plaintiffs’ class definition refers only to objective criteria . . . . Thus,
this proposed class meets Rule 23(a)’s implied requirement that it be
theoretically ‘ascertainable.’”).
While the Third Circuit in Carrera understood “administrative
feasibility” as an additional inquiry distinct from clarity of class
38
definition, see 727 F.3d at 306–08, that reasoning has been widely
criticized. See, e.g., Briseno, 844 F.3d at 1126–27 (rejecting Carrera
and summarizing criticism by other circuits); Rikos, 799 F.3d at 525
(“We see no reason to follow Carrera, particularly given the strong
criticism it has attracted from other courts.”); Mullins, 795 F.3d at 662
(“The Third Circuit’s approach in Carrera . . . goes much further than
the established meaning of ascertainability and in our view misreads
Rule 23.”). Because the vague notion of “administrative feasibility” has
yet to be defined in the Ames Circuit, this Court is free to reject
Carrera’s flawed reasoning. Instead, the Ames Circuit should adopt
the traditional view of ascertainability by equating administrative
feasibility with the requirement of an objective class definition. See,
e.g., Ebert v. Gen. Mills, Inc., 2015 WL 867994, at *12 (D. Minn. Feb.
27, 2015) (“[T]he [class] description must be sufficiently definite that it
is administratively feasible for the court to determine whether a
particular individual is a member.”); McBean v. City of New York, 260
F.R.D. 120, 133 (S.D.N.Y. 2009) (“A class is ascertainable when defined
by objective criteria that are administratively feasible, without a
subjective determination.”). As the Ames Circuit defines
administrative feasibility for the first time, this Court should view the
concept through the traditional lens, requiring only that a class be
defined by objective criteria.
39
2. Lowe’s proposed class satisfies the conventional view of ascertainability because it is defined using objective criteria.
The putative class, described as “[a]ll persons within the State of
Ames who purchased a Meaties product that was labeled as an ‘all
meat treat’ from May 7, 2011 to July 17, 2014,” J.A. 3, is delimited by
objective criteria and therefore satisfies the traditional ascertainability
requirement. By circumscribing a group with reference to a specific
place, product, and time, the proposed class definition parallels that of
other consumer classes that have been recently upheld as certifiable.
In Briseno, the Ninth Circuit upheld class certification because a class
was “defined by an objective criterion: whether class members
purchased Wesson oil during the class period.” 844 F.3d at 1124.
Similarly, the class in Mullins was found to be ascertainable because
“[i]t identifie[d] a particular group of individuals (purchasers of
Instaflex)” affected in a “particular way” within “a specific period in
particular areas.” 795 F.3d at 660–61. Like those classes, Lowe’s
proposed class is circumscribed using definite and objective criteria,
including a specific geography, purchased product, and time period.
Because Lowe’s class is defined with clear and objective criteria,
it is an administratively feasible class. In Rikos, the court found a
class to be ascertainable merely because it was objectively defined.
799 F.3d at 525. The fact that subclasses could be determined “with
reasonable — but not perfect — accuracy” was not a bar to
40
certification. Id. Because “[t]he proposed class [was] defined by
objective criteria” — purchasers of a particular nutritional supplement
in specific states — the class was ascertainable, even though
determining subclasses “would [have] require[d] substantial review . . .
supplemented through the use of receipts, affidavits, and a special
master to review individual claims.” Id. Similarly, here, through the
use of affidavits signed under penalty of perjury, the clearly defined
group of class members who purchased Ames Meat’s mislabeled
products can be determined in an administratively feasible manner.
Lowe’s proposed class, defined with reference to objective and
immutable criteria, differs from the putative class denied certification
in Brecher v. Republic of Argentina, 806 F.3d 22 (2d Cir. 2015).
Brecher read the ascertainability requirement through the traditional
lens of adequacy of the class definition;5 however, the Brecher class,
defined as all owners of beneficial interests in a particular bond series
without reference to a specific time period, was deemed too indefinite
to be ascertainable. Id. at 25. Given the complexity of the transactions
and the active secondary market for the interests in question, the
proffered criteria were not sufficiently definite. Id. The Brecher class
5 The district court misread Brecher when it cited that case for the proposition that administrative feasibility “necessarily entails some evaluation, beyond just the class definition, of whether there is a real-world mechanism for identifying absent class members.” See J.A. 9 n.5. In fact, such considerations “played no role in the [Brecher] court’s decision, which instead turned on the principle that a class definition must be objective and definite.” Briseno, 844 F.3d at 1127 n.6.
41
definition was similar to a hypothetical class “defined as ‘those wearing
blue shirts,’” which would clearly be unascertainable because of the
absence of a “limitation on time or context” as well as its “ever-
changing composition.” Id. Unlike that unstable class definition,
Lowe’s proposed class is properly demarcated: it is limited by the
immutable characteristic of having purchased a specific physical
product within a specific time period. Unlike the participants in the
fluid and complex transactions at issue in Brecher, or the amorphous
hypothetical class of blue-shirt wearers, Lowe’s class is a finite and
ascertainable group of people who have all purchased Ames Meat’s
deceptive product. Thus, under the proper view of ascertainability as a
requirement that a class be defined in reference to objective criteria,
Lowe’s proposed class is ascertainable, and the lower court’s denial of
certification should be reversed because it applied the wrong legal
standard.
C. A narrow reading of ascertainability best serves the policy preferences embedded in Rule 23.
A narrow reading of ascertainability better achieves the policy
choices Congress enacted, while a broad reading would be harmful to
society and produce outcomes contrary to congressional intent. Thus,
the fears motivating the district court’s denial of certification are
misguided, and the standard it imposed creates serious and avoidable
policy problems. This Court should reject such a standard.
42
1. A narrow reading of ascertainability best serves Rule 23’s purposes.
By permitting aggregate litigation, Rule 23 serves at least two
purposes: First, it promotes administrative efficiency in federal courts.
Am. Pipe & Const. Co. v. Utah, 414 U.S. 538, 553 (1974)
(characterizing “efficiency and economy of litigation” as “a principal
purpose of the [class action] procedure”). Second, it overcomes the
critical procedural hurdle that “small recoveries do not provide the
incentive for any individual to bring a solo action prosecuting his or
her rights.” Amchem, 521 U.S. at 617. The narrow view of
ascertainability best achieves these purposes.
a) A narrow ascertainability requirement promotes efficiency.
First, the traditional approach to ascertainability weeds out
unwieldy classes. By requiring that classes “be defined clearly,”
Mullins, 795 F.3d at 659, narrow ascertainability filters vague,
subjective, and amorphous classes that raise manageability concerns
for federal courts. After all, “a court needs to be able to identify who
will receive notice, who will share in any recovery, and who will be
bound by a judgment.” Id. at 660. Vague classes — like that of “all
bald people” — fail because a judge may not know how to define
“baldness.” Subjective classes — like “people who felt discouraged
from applying for government energy assistance” — fail because a
court could never know who was or was not discouraged. See Simer v.
43
Rios, 661 F.2d 655, 669–70 (7th Cir. 1981). Amorphous classes fail
because “the ever-changing composition of the membership” makes the
identity of class members indeterminable. See Brecher, 806 F.3d at 25.
Hence, a minimally clear definition is crucial — without it, no amount
of administrative effort at any stage will conclusively determine
whether some individuals fit into a class. By focusing on objective
definition, the traditional approach draws precisely the right line.
Second, the narrow ascertainability standard draws that line
without sacrificing the economies of scale inherent in the class action
mechanism. Federal class actions are “designed to avoid, rather than
encourage, unnecessary filing of repetitious papers and motions.” Am.
Pipe, 414 U.S. at 540. Simply put, Congress decided it is more efficient
to process a single class action than many individual actions. But
heightened ascertainability forfeits this benefit in cases that are
otherwise valid but fail to meet its demanding standard — cases like
Willa Lowe’s.
b) A narrow ascertainability requirement preserves the benefits of compensation and deterrence that flow from the federal class action mechanism.
A narrow ascertainability requirement removes procedural
hurdles to litigation, better achieving deterrence and facilitating access
to compensation. Due to the high costs of litigation, often the “realistic
alternative to a class action is not 17 million individual suits, but zero
44
individual suits.” See Carnegie v. Household Int’l, Inc., 376 F.3d 656,
661 (7th Cir. 2004) (Posner, J.). This collective action problem is
especially acute for plaintiffs dispersed throughout the country. See
William B. Rubenstein, Why Enable Litigation?: A Positive
Externalities Theory of the Small Claims Class Action, 74 UMKC L.
Rev. 709, 713 (2006). Here, allowing Lowe’s case to proceed as a class
in federal court solves that problem and provides a vehicle for
vindicating the compensatory and deterrent rationales of statutes like
the ADTPA, just as Congress intended. Narrow ascertainability clears
the path for that process.
Further, narrow ascertainability preserves the compensatory
and deterrent benefits of the federal class action mechanism by
removing vague and subjectively defined classes. Vague classes
undercut compensation because potential members are hard-pressed to
know if they are included, potentially forfeiting recovery that is rightly
theirs. Cf. In re Fosamax Prods. Liab. Litig., 248 F.R.D. 389, 395–96
(S.D.N.Y. 2008) (noting that potential class members need not be
individually identified but that a clear class definition is vital “so that
they may decide whether to exercise their right to opt out of the class”).
Subjective class definitions leave class membership “solely to
[members’] own desires and interests.” Rubenstein, Newberg, supra,
§ 3:5. As a result, subjectively defined classes are overly deterrent:
45
potential defendants may forgo perfectly legal opportunities for fear of
harming people they cannot hope to identify. In short, narrow
ascertainability promotes compensation and deterrence by rooting out
vague and subjective classes.
2. The concerns animating the district court’s heightened ascertainability requirement are unfounded.
a) The narrow ascertainability standard sufficiently protects class action plaintiffs from having their claims diluted.
The Carrera court justified its stringent standard by asserting:
“It is unfair to absent class members if there is a significant likelihood
their recovery will be diluted by fraudulent or inaccurate claims.” 727
F.3d at 310. This worry is simply unfounded. In practice, there is no
“significant likelihood” of dilution of bona fide claims. In consumer
class actions, “the risk of dilution based on fraudulent or mistaken
claims seems low, perhaps to the point of being negligible.” Mullins,
795 F.3d at 667 (citing studies that found class participation rates
ranged from 10–15%, leaving the vast majority of funds unclaimed).
Thus, the fear of dilution is baseless and cannot be the foundation for
imposing a heightened ascertainability standard. Paradoxically, this
approach prevents any recovery due to fears that some class members
may recover too little.
46
b) Heightened ascertainability is unnecessary to protect a defendant’s due process rights.
A defendant has no due process right to challenge the identity of
absent class members before the damages phase of trial. Courts have
discretion to certify the class for the limited purpose of “determining
liability on a class-wide basis, with separate hearings to determine —
if liability is established — the damages of individual class members.”
Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir. 2013)
(Posner, J.). Rule 23(c)(4) specifically contemplates such a division —
it enables courts to certify classes for “particular issues,” Fed. R. Civ.
P. 23(c)(4), like liability, before proceeding to damages-specific
questions like proof of harm. Lowe bears the burden of demonstrating
compliance with Rule 23 for certification. See Wal-Mart Stores, Inc. v.
Dukes, 564 U.S. 338, 350 (2011). Further, Lowe must prove each
element of her claim at trial. See id. at 351 n.6. Given these
protections, due process does not require that defendants be able to
individually challenge the claims of absent class members at
certification.
Further, in cases involving aggregate damages, a defendant has
no interest in challenging individual claims for class membership even
at the damages phase. In cases like this one, where aggregate liability
47
may be asserted,6 the “identity of particular class members does not
implicate the defendant’s due process interest at all” because the
“addition or subtraction of individual class members affects neither the
defendant’s liability nor the total amount of damages it owes the
class.” Mullins, 795 F.3d at 670. Simply put, “a defendant has no
interest in how the class members apportion and distribute [the
damage award] among themselves.” Allapattah Servs., Inc. v. Exxon
Corp., 333 F.3d 1248, 1258 (11th Cir. 2003), aff’d, 545 U.S. 546 (2005).
A defendant’s interest is in its total liability. But liability is a question
for trial, where Ames Meat will have a full and fair opportunity to
challenge each element of Lowe’s claim. Thus, due process does not
require courts to smuggle damages questions into the class
certification inquiry.
c) Heightened ascertainability is not necessary to make class actions manageable.
Saving challenges to individual claims of class membership for
the damages phase will not make this case unmanageable. As an
initial matter, manageability is but one part of one element of the
certification decision. See Fed. R. Civ. P. 23(b)(3). As such, there is a
well-settled presumption that courts rarely fail to certify a class on the
sole ground that it would be unmanageable. See In re Visa
6 Willa Lowe’s theory of damages was sufficient to survive a motion to dismiss, J.A. 4, and the statute provides multiple ways of calculating damages, J.A. 16. All of these remain available to her.
48
Check/MasterMoney Antitrust Litig., 280 F.3d 124, 141 (2d Cir. 2001)
(Sotomayor, J.); see also Briseno, 844 F.3d at 1128; Mullins, 795 F.3d
at 663.
Further, courts have many options at their disposal to make
cases like this one more manageable. See In re Visa Check, 280 F.3d at
140. In addition to bifurcating the liability and damages phases of
trials, courts may (1) appoint a special master to preside over
individual damages proceedings; (2) decertify the class after the
liability trial and provide notice to class members concerning how they
may proceed to prove damages; (3) create subclasses; or (4) alter or
amend the class. See id. Compared to individual suits, these
mechanisms make even the most burdensome cases efficient — often
complex class actions will still be preferable to hundreds of separate
actions. The district court’s heightened ascertainability standard is
simply not necessary in this context. Courts have ample resources to
manage classes like Willa Lowe’s.
d) Mistrust of affidavits does not justify a heightened ascertainability standard.
Affidavits are a widely accepted claims-management tool. In an
individual trial, a plaintiff can use an affidavit to force a liability
determination without offending the Due Process Clause. See Briseno,
844 F.3d at 1132. So too for class actions:
[I]f such consumer testimony would be sufficient to establish injury in an individual suit, it follows that
49
similar testimony in the form of an affidavit or declaration would be sufficient in a class action. There cannot be a more stringent burden of proof in class actions than in individual actions.
In re Nexium Antitrust Litig., 777 F.3d 9, 20 (1st Cir. 2015). Even in
jurisdictions that, like Ames, look to administrative feasibility as part
of ascertainability, affidavits have been recognized as “an acceptable
methodology for establishing class membership.” In re Dial Complete
Mktg. & Sales Practices Litig., 312 F.R.D. 36, 50 (D.N.H. 2015).
In fact, affidavits pervade the legal system. Under Rule
53(c)(1)(A), an affidavit alone can create a genuine issue of material
fact that would prevent summary judgment and force the case to the
liability phase. See Fed. R. Civ. P. 53(c)(1)(A). Affidavits may be used
to demonstrate that a warrant is not constitutionally invalid for lack of
particularity, see, e.g., United States v. Johnson, 690 F.3d 60, 64 (3d
Cir. 1982), or to show juror misconduct based on outside influence —
possibly leading to a new trial, see Fed. R. Civ. P. 59(a), (c). Further,
the penalty of perjury suffices to ensure the reliability of critical
government documents like voter registration forms or income tax
returns. See 26 U.S.C. § 6065 (2012); 52 U.S.C. § 20508(b)(2)(C)
(2012). Federal law classifies perjury as a felony, punishable by up to
five years in prison. See 18 U.S.C. § 1621 (2012). Given the pervasive
use of affidavits and the strictness of penalties associated with their
misuse, it is unclear why the district court regarded affidavits as a
50
suspect means of verifying the identities of absent class members.
There is no reason for a court to be especially skeptical of affidavits in
the class action context. Therefore, this Court should not impose an
ascertainability requirement that assumes citizens of Ames would risk
the penalties of perjury for the menial sum of $500.
3. The district court’s “objective verifiability” test within the ascertainability requirement creates a nearly insurmountable obstacle for dispersed plaintiffs.
a) Heightened ascertainability threatens the viability of consumer class actions.
Federal class actions with dispersed claimants and severe
informational asymmetries are an especially problematic context for
adding a heightened ascertainability standard. The Supreme Court
has acknowledged that the dominant policy underlying the class action
mechanism is to provide an incentive for groups of plaintiffs with small
claims to prosecute their rights. Amchem, 521 U.S. at 617. Consumer
class actions are a paradigmatic example. As the Ninth Circuit has
recognized, “[c]lass actions involving inexpensive consumer goods in
particular would likely fail at the outset if administrative feasibility
were a freestanding prerequisite to certification.” Briseno, 844 F.3d at
1128. The district court’s “objective verifiability” test would
automatically wipe out consumer class actions, where the procedural
mechanism is greatly needed.
51
The fate of these cases within the Third Circuit attests to this
danger. For instance, in Bello v. Beam Glob. Spirits & Wine, Inc., 2015
WL 3613723 (D.N.J. June 9, 2015), the plaintiff retained a professional
claims administration firm and proposed “three levels of claims
validation to reduce the likelihood that individuals who submit
fraudulent claims [would] be included in the class,” id. at *6, but was
nonetheless denied certification, id. at *15. Rule 23 was intended as a
procedural device that would make bringing small dollar claims easier,
not as a tool for making consumer class actions impossible. If
consumer class actions are to be eviscerated, the prerogative for doing
so properly rests with Congress. Cf. Amgen, 133 S. Ct. at 1202 (“We
have no warrant to encumber securities-fraud litigation by adopting an
atextual requirement . . . that Congress, despite its extensive
involvement in the securities field, has not sanctioned.”). Thus, this
Court should reject an approach that subverts the carefully calibrated
procedural devices Congress enacted.
b) Adopting a heightened ascertainability standard is also inappropriate in other class action contexts.
In securities class actions, demonstrating the objective
verifiability of individual class members at the class certification stage
is especially difficult, but judges allow the cases to proceed when the
class is objectively defined. See, e.g., Dunnigan v. Metro. Life Ins.
Co., 214 F.R.D. 125, 135 (S.D.N.Y. 2003) (“Class members need not be
52
ascertained prior to certification, but must be ascertainable at some
point in the case.”). In such cases, it would be unreasonable to require
plaintiffs to prove when all shares in the class were purchased or sold
at class certification. Instead, the time to prove membership and
damages is after discovery on the merits. See Carpenters Pension Tr.
Fund v. Barclays PLC, 310 F.R.D. 69, 99 (S.D.N.Y. 2015) (holding that
“plaintiffs are not required to demonstrate either loss causation or
damages for purposes of class certification”). Because searching
discovery related to damages is out of place at class certification, an
ascertainability requirement that requires demonstrating “objectively
verifiable” criteria beyond defining the outer contours of the class
definition is incompatible with the realities of securities class actions.
Further, tunnel vision on proving the objective verifiability of
plaintiffs at class certification is particularly unwise when damages
are calculated in the aggregate or based on market-wide data. In the
antitrust context, where damages are dispersed across entire markets,
there are many administratively feasible methods for proving damages
on a class-wide basis, even when “individualized issues (rather than
common issues) were to predominate the damage inquiry.” In re
Urethane Antitrust Litig., 237 F.R.D. 440, 452 (D. Kan. 2006). In that
case, “the more appropriate course of action would be to bifurcate a
53
damages phase and/or decertify the class as to individualized damages
determinations.” Id.
Lastly, an ascertainability inquiry that limits classes to
objectively verifiable members could harm defendants who seek a
broad class definition to purchase “global peace,” Rubenstein, Newberg,
supra, § 9:50, and undermine the purposes of finality underlying Rule
23. Simply put, a heightened ascertainability requirement can
incentivize plaintiffs to bring narrower classes. But defendants facing
potentially massive liability spanning entire markets in securities,
antitrust, and consumer class actions may actually prefer “the broadest
class possible” in order to consolidate various types of cases into a
single proceeding or to purchase a settlement with a greater preclusive
effect. Michael D. Torpey et al., Securities Litigation: Planning and
Strategies — Defending Securities Claims (ALI-ABA Course of Study,
May 1–2, 2008), WL SN084 ALI-ABA 691, 791. Thus, even though
traditional ascertainability might be inconvenient for Ames Meat here,
other defendants may be adversely affected by a heightened
ascertainability standard that can discourage the certification of
broadly defined classes.
c) Heightened ascertainability improperly puts the burden on consumers to anticipate corporate wrongdoing.
Prerequisites to class certification should not penalize plaintiffs
to the benefit of defendants accused of fraud. Denying class
54
certification in this case imposes a penalty on Lowe and her fellow
class members who transact in cash and rarely keep receipts for low-
cost food items like Meaties. See J.A. 8, 29. That said, in terms of
objective verifiability, Lowe, and many like her, will present easy
cases. She has eaten Meaties since childhood, buys them on her
regular visits to Ames, and even knows the “all meat treat” slogan by
heart. J.A. 28. She can presumably collect affidavits from friends,
family, and local merchants if needed, and few would risk a perjury
prosecution in the hopes of obtaining a $500 judgment. Further, many
will have credit card data linking them to businesses in Ames that sell
the mislabeled Meaties. But in most cases, unscrupulous companies
know customers will not keep receipts. So under the regime proposed
by Ames Meat and accepted by the district court, J.A. 8, defendants
could skirt liability simply by maintaining lax sales records.
Heightened ascertainability therefore penalizes consumers for not
anticipating the fraudulent activity of companies. And, ironically, the
less scrupulous a company is in maintaining records, the more it
evades liability. Thus, the district court’s approach puts the fox in
charge of the proverbial henhouse.
Lowe should not be expected to demonstrate the verifiability of
class members before she has received discovery on the merits —
indeed, many have yet to learn that Ames Meat has lied to them.
55
Further, the credibility of a class member’s affidavit testimony cannot
be judged before it is even heard. And to apply a heightened standard
here would reward Ames Meat for its own misrepresentations and lax
record-keeping. Because the district court abused its discretion by
departing from the text of Rule 23, the weight of authority, and
Congress’s policy choices, this Court should reverse the judgment
below.
CONCLUSION
For the foregoing reasons, Plaintiff-Appellant requests that this
Court reverse the district court’s denial of class certification and
remand for further proceedings.
February 20, 2017 Respectfully submitted,
The John Hart Ely Memorial Team ______________________________ David Beylik
______________________________ Jason Ethridge
______________________________ Jenya Godina
______________________________ Isaac Park ______________________________
David Phillips
______________________________ Derek Reinbold
A1
APPENDIX
18 U.S.C. § 1621 (2012) § 1621. Perjury generally Whoever—
(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or
(2) in any declaration, certificate, verification, or
statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall, except as otherwise expressly
provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States.
A2
26 U.S.C. § 6065 (2012)
§ 6065. Verification of returns Except as otherwise provided by the Secretary, any return,
declaration, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall contain or be verified by a written declaration that it is made under the penalties of perjury.
A3
28 U.S.C. § 1332(d) (2012)
§ 1332(d). Class Action Fairness Act. (d)
(1) In this subsection—
(A) the term “class” means all of the class members in a class action;
(B) the term “class action” means any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action;
(C) the term “class certification order” means an order issued by a court approving the treatment of some or all aspects of a civil action as a class action; and
(D) the term “class members” means the persons (named or unnamed) who fall within the definition of the proposed or certified class in a class action.
(2) The district courts shall have original jurisdiction of
any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which—
(A) any member of a class of plaintiffs is a citizen of
a State different from any defendant; (B) any member of a class of plaintiffs is a foreign
state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or
(C) any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state.
. . . .
A4
28 U.S.C. § 2072 (2012) § 2072. Rules of procedure and evidence; power to
prescribe (a) The Supreme Court shall have the power to prescribe general
rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals.
(b) Such rules shall not abridge, enlarge or modify any
substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect.
A5
52 U.S.C. § 20508(b)(2)(C) (2012)
§ 20508. Federal coordination and regulations . . . . (b) Contents of mail voter registration form The mail voter registration form developed under subsection
(a)(2)— . . . . (2) shall include a statement that— (A) specifies each eligibility requirement (including citizenship); (B) contains an attestation that the applicant meets each such
requirement; and (C) requires the signature of the applicant, under penalty of
perjury;
A6
Fed. R. Civ. P. 23
Rule 23. Class Actions (a) Prerequisites. One or more members of a class may sue or
be sued as representative parties on behalf of all members only if: (1) the class is so numerous that joinder of all members is
impracticable;
(2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect
the interests of the class.
(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:
. . . . (3) the court finds that the questions of law or fact common to
class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:
. . . . (D) the likely difficulties in managing a class action. (c) Certification Order; Notice to Class Members;
Judgment; Issues Classes; Subclasses. (1) Certification Order.
(A) Time to Issue. At an early practicable time after a person sues
or is sued as a class representative, the court must determine by order whether to certify the action as a class action.
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(B) Defining the Class; Appointing Class Counsel. An order that certifies a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel under Rule 23(g).
(C) Altering or Amending the Order. An order that grants or denies class certification may be altered or amended before final judgment.
(2) Notice. . . . . (B) For (b)(3) Classes. For any class certified under Rule
23(b)(3), the court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice must clearly and concisely state in plain, easily understood language:
. . . .
(v) that the court will exclude from the class any member who requests exclusion;
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Fed. R. Civ. P. 53
Rule 53. Masters (c) Master's Authority. (1) In General. Unless the appointing order directs otherwise, a
master may: (A) regulate all proceedings;
(B) take all appropriate measures to perform the assigned duties
fairly and efficiently; and (C) if conducting an evidentiary hearing, exercise the appointing
court's power to compel, take, and record evidence.
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Fed. R. Civ. P. 59
Rule 59. New Trial; Altering or Amending a Judgment (a) In General.
(1) Grounds for New Trial. The court may, on motion, grant a new trial on all or some of the issues — and to any party — as follows:
(A) after a jury trial, for any reason for which a new trial has
heretofore been granted in an action at law in federal court; or
(B) after a nonjury trial, for any reason for which a rehearing
has heretofore been granted in a suit in equity in federal court.
(2) Further Action After a Nonjury Trial. After a nonjury trial,
the court may, on motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones, and direct the entry of a new judgment.
. . . .
(c) Time to Serve Affidavits. When a motion for a new trial is based on affidavits, they must be filed with the motion. The opposing party has 14 days after being served to file opposing affidavits. The court may permit reply affidavits.
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N.Y. C.P.L.R. § 901
§ 901. Prerequisites to a class action . . . . b. Unless a statute creating or imposing a penalty, or a
minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.
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Ames Deceptive Trade Practices Act, Ames Revised Statutes §§
1001 et. seq. . . . . § 1001.2. Legislative Intent. The Ames General Assembly finds that it is in the best interest
of the people of this State to have a strong and effective consumer protection law in order to protect both the consuming public and honest businesses. The General Assembly further finds that the Ames Deceptive Trade Practices Act set forth herein, which grants the Attorney General authority to enforce its provisions and provides an individual private right of action in favor of consumers injured by deceptive and dishonest trade practices, will advance these goals and further the public health, welfare, and interest. It is the intent of the General Assembly that the Ames Deceptive Trade Practices Act be broadly construed to effect the goals embodied herein of effective consumer protection.
. . . . § 1001.4. Enforcement. (a) The office of the Attorney General and the district attorneys
shall have the following functions, powers, and duties: (1) Conduct preliminary investigations to determine the merit of
complaints. (2) Receive information and documentary material from
complainants and take whatever action is appropriate in connection therewith as authorized by this chapter. The office of the Attorney General and the district attorneys may otherwise receive and investigate complaints with respect to acts or practices declared to be unlawful by this chapter, and inform the complainants with respect thereto.
(3) Institute legal proceedings or take such other actions provided for herein which are necessary or incidental to the exercise of its powers and functions.
(b) Each department, agency, officer, or employee of the state
shall cooperate with and assist the office of the Attorney General or a district attorney in the performance of its functions, powers, and
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duties. When a complaint is referred by the office of the Attorney General or a district attorney to a department, agency, officer, or employee of the state or a county, such entity shall, upon final disposition of the complaint, make a final report in writing to the office of the Attorney General or a district attorney describing the action taken and the final results of that action.
(c) Nothing contained in this chapter shall be deemed to
delegate or detract in any way from the functions, powers, and duties prescribed by law for any other department or agency of the state, nor to interrupt or preclude the direct relationships of any such department or agency or units of county government in the performance of such functions, powers and duties, nor shall good faith compliance with any federal or state law or regulation be a violation of this chapter with respect to that specific act of compliance.
. . . . § 1001.8. Restraining Orders.
(a) Whenever the office of the Attorney General or the office of the district attorney has reason to believe that any person is engaging in, has engaged in or is about to engage in any act or practice declared to be unlawful by this chapter, the Attorney General or the district attorney may bring an action in the name of the state against such person to restrain by temporary restraining order, temporary or permanent injunction such acts or practices. However, unless the Attorney General or district attorney determines that a person subject to the provisions of this chapter designs quickly to depart from this state or to remove his property therefrom, or to conceal himself or his property therein, or to continue practices unlawful under this chapter, he shall, before initiating any legal proceedings is contemplated, allow such person a reasonable opportunity to appear before the Attorney General or district attorney and solve the dispute to the parties’ satisfaction.
(b) The court may appoint a master or receiver or order
sequestration of assets whenever it shall appear that the defendant threatens or is about to remove, conceal, or dispose of his property to the damage of persons to whom restoration would be made, or whenever a person who has been ordered to make restitution under this section has failed to do so within three months after the order to make restitution has become
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final and nonappealable, and assess the expenses of the master or receiver against the defendant.
(c) Upon a showing to the court by the office of the Attorney
General or the office of the district attorney that a person has engaged in continuous and willful violations of the provisions of this chapter, the court may suspend or revoke any license or certificate authorizing that person to engage in business in this state or the court may enjoin any person from engaging in business in this state.
(d) The penalties authorized under this section shall not apply to any person who shows by a preponderance of evidence that he had established reasonable procedures to comply with the provisions of this chapter.
(e) The court may grant such other appropriate relief as the court may determine. § 1001.9. Private Right of Action. (a) Any person who commits one or more of the acts or practices
declared unlawful under this chapter and thereby causes monetary damage to a consumer shall be liable to each consumer for:
(1) Any actual damages sustained by such consumer or person, or
the sum of $500, whichever is greater; or
(2) Up to three times any actual damages, in the court’s discretion. In making its determination under this subsection, the court shall consider, among other relevant factors, the amount of actual damages awarded, the frequency of the unlawful acts or practices, the number of persons adversely affected thereby, and the extent to which the unlawful acts or practices were committed intentionally; (b) A consumer or other person bringing an action under this
chapter may not bring an action on behalf of a class. (c) The office of the Attorney General or district attorney shall
have the authority to bring an action in a representative capacity on behalf of any named person or persons. In any such action brought by the office of the Attorney General or a district attorney, the court shall
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not award minimum damages or treble damages, but recovery shall be limited to actual damages suffered by the person or persons, plus reasonable costs and attorneys’ fees.