This week, we get our yearly reminder not to take the humble numerosity requirement for granted. InSpread Enterprises, Inc. v. First Data Merchant Services Corp., No. 11-CV-4743, 2014 U.S. Dist. LEXIS 22972 (E.D.N.Y. Feb. 22, 2014), the named plaintiff--a prepaid phone minutes company--sued a bank and a credit card payment processor for charging "excessive" fees for certain transactions on one of the processing platforms.
When the plaintiff moved for class certification, the defendants opposed on numerous grounds, including challenging commonality and predominance. They also argued that the definitions of each subclass, each of which referred to merchants who "were charged excessive fees," were impermissible, fail-safe definitions.
The court agreed that the definitions were fail-safes, but did not find that to be a fatal problem with the class. Instead, it rewrote the class definition to focus on the fees charged rather than their "excessive" nature.
But then the court found that the plaintiff could not demonstrate numerosity, because the evidence it had offered in support of these rewritten classes was too "speculative."
[T]he Plaintiff in this case attempts to establish numerosity through evidence that is over-inclusive and which does not acknowledge that many of the Merchants that the Plaintiff assumes would be Class members might not actually share the Plaintiff's breach of contract claim for the host of reasons articulated above. Instead, in order to demonstrate numerosity, the Plaintiff needed to proffer evidence showing that a sufficient number of other Merchants (1) had Merchant Processing Agreements substantively the same as the Plaintiff's Subject Agreement and (2) experienced an injury similar to the Plaintiff's alleged injury while using the Omaha Platform. As the Plaintiff has not done so here, the Plaintiff has not established the necessary element of numerosity.
(Emphasis added) The court also that the proposed classes could not demonstrate commonality or predominance because of the variations in contracts different class members signed. But the real takeaway here is that, in the realm of Rule 23 arguments, there is an implicit hierarchy. Ascertainability arguments are appealing because they are easy to grasp and usually require looking only at the class definition, but they do not require evidence. Where possible, the defendants should focus in on those requirements that dorequire evidence, because they are harder to fix on the fly. Courts will sometimes rewrite a class definition to fix a proposed class; they will rarely give the plaintiffs a second chance to establish a Rule 23(a) requirement.