On April 16, 2015, the United States Court of Appeals for the Third Circuit vacated a district court’s order denying class certification of a computer spyware suit against Aaron’s Inc., concluding that district court had misapplied the Third Circuit’s standards regarding the ascertainability requirement of Federal Rule of Civil Procedure 23 (“Rule 23”).  See Byrd v. Aaron’s Inc., No. 14-3050, 2015 U.S. Dist. LEXIS 6190 (3d Cir. April 16, 2015).

The plaintiffs, Crystal and Brian Byrd, rented a laptop from a franchisee of the defendant, Aaron’s Inc. (“Aaron’s”).  The plaintiffs alleged that Aaron’s secretly monitored and recorded their use of the laptop, and filed suit against Aaron’s in United States District Court for the Western District of Pennsylvania, alleging violations of the Electronic Communications Privacy Act of 1986, 18 U.S.C. § 2511.  The plaintiffs sought to represent a class of 895 similarly situated individuals that rented laptops from Aaron’s that had the same computer monitoring software installed. 

At the district court, the plaintiff moved for class certification under Fed. R. Civ. P. 23(b)(2) and 23(b)(3).  The district court denied class certification, holding that the proposed classes were not ascertainable under recent Third Circuit precedent, namely Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013).  On appeal, the Third Circuit vacated the district court’s order denying class certification and remanded for reconsideration, holding that the district court had misapplied Third Circuit precedent regarding ascertainability.

Before addressing the specific facts in Byrd, the Third Circuit “address[ed] the scope and source of the ascertainability requirement that our cases have articulated.”  The Court noted that while its prior decision have been “consistent,” decisions such as Carrera—which have led to a substantial increase in ascertainability challenges under Rule 23—have created “apparent confusion in the invocation and application of ascertainability….”

The Third Circuit noted that ascertainability, which requires (1) that a class “is defined with reference to objective criteria,” for which there is (2) “a reliable and administrative feasible mechanism for determining whether putative class members fall within the class definition,” “consists of nothing more than these two inquiries.”  The Third Circuit emphasized that not all class members need to be identified at the time of class certification, but instead that the plaintiff “need only show that ‘class members can be identified.’” 

The Third Circuit explained that in its prior cases—such as CarreraMarcus v. BMW of North America, LLC, 687 F.3d 583 (3d Cir. 2013), and Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349 (3d Cir. 2013)—the plaintiffs had failed to prove ascertainability not because they failed to identify who the putative class members were, but because they “propose[d] a method of ascertaining the class without any evidentiary support that the method will be successful.”

The Third Circuit also cautioned against conflating ascertainability with the issue of predominance under Rule 23, noting that ascertainability focused on whether individuals whofit the class definition could be identified without resort to individualized fact-finding, whereas predominance focuses on whether the centralized issues of liability could be proven using common, as opposed to individualized, evidence.  The Third Circuit concluded by noting that “[t]he ascertainability inquiry is narrow.  If defendants intend to challenge ascertainability, they must be exacting in their analysis and not infuse the ascertainability inquiry with other class-certification requirements.”  To this end, the Third Circuit held that the district court abused its discretion in denying class certification in four ways.

First, the Third Circuit held that the district court abused its discretion by misstating the rule governing ascertainability, by stating that an element of ascertainability is that the named plaintiff must be part of the class. 

Second, the district court engrafted “an ‘underinclusive’ requirement that is foreign to our ascertainability standard.”  Specifically, the district court held that the class was “underinclusive” because the class definition did not include other persons who may have been injured by the same wrong.  The Third Circuit held that this inquiry was not relevant for purposes of ascertainability because “[i]ndividuals who are injured by a defendant but are excluded from a class are simply not bound by the outcome of that particular action.”  The Court clarified that its previous holdings regarding “underinclusivity” only related to whether the records used to identify class members in a proposed class were sufficient.

Third, the district court erred in holding that an “overly broad” class, i.e., a class where certain individuals in the class may not have suffered any injury, was not ascertainable.  The Third Circuit held that whether a class definition was overly broad did not relate to ascertainability and that the district court’s finding “conflate[d] the issues of ascertainability, overbreath (or predominance), and Article III standing.”  The Third Circuit held that to the extent the Aaron’s meant to challenge any potential differences between the proposed class representatives and unnamed class members, “such difference should be considered within the rubric of the relevant Rule 23 requirements.”

Finally, the Third Circuit held that the district court improperly applied the holding of Carrera to the issue of whether “household members” in the putative class members could be ascertainable.  The district court held that under Carrera, affidavits were not permitted as a means to identify “household members.”  The Third Circuit clarified that under Carrera, affidavits alone could not be used to identify putative class members where there were no objective records to identify putative class members and to “weed out” unreliable affidavits.  The Court concluded that while class definitions including “household members” would not always be categorically ascertainable per se, the plaintiffs had proposed various ways regarding “how relevant records could be used to verify the identity of household members” in the present case. 

Accordingly, the Third Circuit vacated the district court’s order denying class certification.  Significantly, the Third Circuit did not hold that class certification was necessarily appropriate in the given case, but remanded the case for reconsideration as to whether the plaintiffs had satisfied the remaining elements of Rule 23.

A copy of the Third Circuit’s decision is available here.