Third Circuit: Speculation about the Scope of the Class Is Insufficient for Certification under FRCP 23(a) | Practical Law

Third Circuit: Speculation about the Scope of the Class Is Insufficient for Certification under FRCP 23(a) | Practical Law

In Hayes v. Wal-Mart, a consumer class action against Sam's Club, the US Court of Appeals for the Third Circuit held that mere speculation about who the members of a class are does not meet the plaintiff's burden to prove by a preponderance of the evidence that the ascertainability and numerosity requirements of FRCP 23(a) are satisfied, even when the defendant's incomplete recordkeeping contributes to the difficulty of gathering the necessary evidence.

Third Circuit: Speculation about the Scope of the Class Is Insufficient for Certification under FRCP 23(a)

by Practical Law Litigation
Published on 12 Aug 2013 • USA (National/Federal)
In Hayes v. Wal-Mart, a consumer class action against Sam's Club, the US Court of Appeals for the Third Circuit held that mere speculation about who the members of a class are does not meet the plaintiff's burden to prove by a preponderance of the evidence that the ascertainability and numerosity requirements of FRCP 23(a) are satisfied, even when the defendant's incomplete recordkeeping contributes to the difficulty of gathering the necessary evidence.
On August 2, 2013, in Hayes v. Wal-Mart, a consumer class action against Sam's Club, the US Court of Appeals for the Third Circuit issued a decision that mere speculation about who the members of a class are does not meet the plaintiff's burden to prove by a preponderance of the evidence that the ascertainability and numerosity requirements of FRCP 23(a) are satisfied, even when the defendant's incomplete recordkeeping contributes to the difficulty of gathering the necessary evidence.

Background

Sam's Club, a member-only retail warehouse owned and operated by Wal-Mart, marks certain items for clearance, called "as-is" items. Sam's Club sells extended warranties that do not extend to "as-is" items unless they are covered by a manufacturer's warranty. Plaintiff Hayes purchased two as-is items, including a television, and was offered a service warranty for both, which he accepted. Hayes returned the defective television to the store, where he was told the store employee should not have offered him a service warranty. Hayes filed suit on behalf of himself and everyone who purchased a warranty since January 2004. The district court granted class certification.

Outcome

The Third Circuit reversed. It found that the plaintiff did not meet his burden of proving by a preponderance of the evidence the ascertainability and numerosity requirements of FRCP 23(a). The district court's decision was issued before the Third Circuit's opinion in Marcus v. BMW of North America, LLC, which clarified the Circuit's standards under FRCP 23(a). The court therefore vacated the certification order and remanded the case to the district court.

Ascertainability

Under Marcus, FRCP 23(a)'s requirement that the class be ascertainable means the class must be defined with reference to objective criteria, and an administratively feasible mechanism must exist for determining whether putative class members fall within the class definition. Sam's Club did not have records that would definitively determine how many "as-is" items were sold, how many were sold that were covered by manufacturer warranties or how many service plans were sold for "as-is" items. The Third Circuit held that the plaintiff needed to provide that information to determine whether the class was ascertainable. The defendant's lack of recordkeeping does not change the plaintiff's burden.

Numerosity

The plaintiff similarly failed to meet the burden of proving numerosity. Though the evidence showed that there were 3,500 sales during the class period that might have been for "as-is" items, the plaintiff provided no evidence beyond speculation about how many there actually were. The Third Circuit ruled that mere speculation is not enough because the class certification process is designed to avoid litigating "mini-trials" to determine who is a class member.

Practical Implications

Class certification cannot rest on speculation. Even if the defendant keeps insufficient records to ascertain the class, the plaintiff still carries the burden to prove each element of FRCP 23(a).

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