Circuit Courts Split Over Class Action Suits (Audio)

claimed that label was false and misleading. But the question was how could all the members of the class be identified when consumers generally don't save grocery receipts might not even remember purchasing a particular cooking oil. The Ninth Circuit ruled the plaintiff's attorneys don't have to lay out a feasible plan to identify the class members at the time the class is being formed. That puts the Ninth Circuit in line with the sixth, seventh, and Eighth Circuits, but

in conflict with the Third Circuit. Our guest is securities and class action attorney Mark Rifkin, a partner at Wolf Haldenstein. Mark, this is about what's called class certification. Will you start by explaining what that is and how this issue came up? Sure,

I'd be pleased to do that. Early in a case that's brought us a class action, the court has to make a determination that the case is suitable to be maintained as a class action, that the point off is an appropriate representative of the class, and that the pointiff's

lawyer is competent to represent the class as well. Because the case is brought on behalf of thousands or tens of thousands or even more people who are not present in court to represent themselves, so the court has to be satisfied that the representative plaintiff can proceed on behalf of everyone. And the court makes that determination following a specific set of rules that are set forth in the

Federal Rules of Civil Procedure Rule twenty three. And in this case, the court looked at the rule and analyzed whether the district court properly followed the class certification Rule rule three in certifying the class to seed as a class action, and mark, how does this whole issue of ascertainability fit into that? Or let me ask it a different way, what what in this case did contagras claim that the plaintiffs needed to show at the certification stage?

Sure the issue is this? The Third Circuit said that in order to have a class certified, in addition to meeting the specific requirements of Rule twenty three, the plaintiff also has to demonstrate during the class certification process that the absent members of the class, all those tens of thousands of people who bought in this case West and Oil, are reasonably identifiable through some means that the plaintiff identifies

in the process of class certification. And the Ninth Circuit looked at that argument and disagreed and said that Rule twenty three does not have a special requirement for ascertainability. And and so the Court said, we're not going to create a new requirement. We think the we think we should apply Rule twenty three the way it was drafted.

The Court went through a complex analysis of the legislative history of the rule and said, the rule covers these issues, and we don't need to create a whole new additional requirement for point offs. What was the argument that the Third Circuit made in saying that you have to identify the people up front. There were essentially three principal issues

that the Third Circuit said the first. The first of those issues is the Court says that one of the reasons we go through the certification process, is to identify class members who are entitled to receive notice of appending class action so they can decide whether to participate in the class action or request exclusion to pursue their own individual claims. And the court says, if you can identify the members of the class easily, you can't send notice out.

So that's one issue. And then Ninth Circuit disagreed and it said, no, you don't. Number one, the neither the rules nor general principles of federal law require UH that kind of mandatory individual notice to every conceivable member of the class. And the Court also said, then, in a consumer case like this, and this had to do with the labeling of West and brand UH cooking oils. Contagres sells Western oil and it markets and advertises them as

a percent natural. The plaintiffs say, no, they're not add percent natural. And that's the essence of the dispute. And the Ninth Circuit says, in a case like this, in a consumer case like this, where any individuals damages are going to be extremely small, the real interest that any consumer, anyone consumer has in opting out and pursuing an individual claim for two or three or four dollars in damages or whatever it may be, is so remote as to

be consequential. So we're not too worried about notice, well, Mark Mark at some point, uh they if the plaintiffs win this case, you know, there's going to have to be uh, you know, they're gonna have to ascertain who is entitled to the damages. What's the problem with with requiring the plaintiffs lawyers to say up front, and here's how we would do that, which which is what sort of sounds like what Knager was asking them to do.

Well in and of itself, there's nothing wrong with asking the plaintiff, do you have a mechanism for identifying class members at the end of the day, And and I suppose the courts analysis permits that to be done, but only within the context of the specific inquiry that's required under Rule twenty three. There's two parts to Rule twenty three. The first part says that the plaintiff has to identify for specific criteria for certification being a sufficient number of people.

We call that moorosity, that they all share common interests. That's called commonality. That the pointiff's claim is typical of the claims of the absent class members, that it's the same kind of a claim and and that the pointiff is an adequate class representative. And the Ninth Circuit says, we're we're going to infer from the rule that the this is the limit of our inquiry. The second part of Rule twenty three has an additional requirement, and that's manageability.

And the Ninth Circuit says that if you're going to consider this question of identifying class members, you should do so in the context of that inquiry, the manageability inquiry. Will it be possible to identify these class members without imposing such a burden on the court or on the litigants that it would be inappropriate to certify the class But that's within the delicate balance that the statute Rule twenty three itself puts in place, not a judicial creation.

This this fifth element that the Third Circuit has suggested, this reasonable identifiabilities, uh element, So, Mark, what kind of impact does it have that the Ninth Circuit is now in line with the sixth, seventh, and Eighth Circuit and the Third Circuit is the outlier. I mean, is it going to go to the Supreme Court, or is it just easier in those circuits. Well, Junior asked a good question.

It highlights the split between the circuits, the first, second, and third Circuit at one end of the spectrum having this additional requirement, and the sixth, seventh, eighth, and ninth circuits now having said no to the additional requirement. Uh. We often see cases go up to the Supreme Court when there is a split among the circuits. And and there was a split because already the sixth, seventh, and eighth circuits had rejected the Third Circuits approach a this case,

I think number one highlights the difference. But number two it lends some weight to the view of the Seventh Circuit, which was the first circuit to say no to the Third Circuits requirement. And and I think it it does so in a in a very clear, very persuasive way, analyzing the language of the statute and applying what Justice Scalia would refer to as strict construction of rule Tree. We have just about three seconds left with the new Supreme Court coming up. You think it's going to be

tougher on class actions? You know, I don't think so. I As you know I've said before, I think this Court has in recent years been fairly good for class certification, and I think it's likely that we'll see the same trend continue. I don't think there's going to be a sea change, but I think, um with with the new admitted station coming in, anything is possible. Thank you so much. It's always a pleasure to have you on. That's Mark rift In, a partner at Will Paul Denstein. He is

a securities and class action attorney. Coming up on Bloomberg Law. Chief Justice John Roberts drops out of a case after hearing arguments because he discovered a possible conflict of interest from his stockholdings. Seems to be a pattern among the three justices who hold individual stocks. What about that pattern and should there be changes made. I'm June Groslo with Greg Store. That's coming up on Bloomberg Law. This is Bloomberg