Third Circuit Emphatically Enforces Last Year’s Ruling in Marcus on Rule 23(a) Prerequisites

In Hayes v. Wal-Mart Stores, Inc., the Third Circuit determined that the plaintiff consumer failed to satisfy Rule 23’s ascertainability and numerosity requirements for class actions as articulated in Marcus v. BMW of North America, LLC and remanded the matter to the District Cout so that the plaintiff could address the clarified requirements expressed in Marcus, which was not yet decided at the time of the District Court proceedings in Hayes. By doing so, the Third Circuit demonstrated that it intends to continue vigilantly enforcing Rule 23’s threshold requirements for plaintiffs.

In Hayes, the plaintiff sought class certification for claims brought against Wal-Mart for the sale of extended warranty plans sold through Sam’s Club stores. Granting Wal-Mart’s interlocutory appeal under Rule 23(f), the Third Circuit considered, in addition to two other related issues, whether the plaintiff satisfied the ascertainability and numerosity prerequisites for the class action to proceed against Wal-Mart.

The Third Circuit first addressed whether the plaintiff met his burden of establishing the second element of ascertainability as articulated in Marcus — “there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.” Noting again that the District Court did not have the benefit of the guidance in Marcus, the Third Circuit determined that the defendant’s lack of certain records that may have been useful for ascertaining the class did not eliminate the need for the plaintiff to establish ascertainability because “the nature or thoroughness of a defendant’s recordkeeping does not alter the plaintiff’s burden to fulfill Rule 23’s requirements.” On this issue, the panel ultimately held that “class certification will founder if the only proof of class membership is the say-so of putative class members or if ascertaining the class requires extensive and individualized fact-finding” or “mini-trials.”

Next, reviewing the District Court’s numerosity analysis under Marcus, the Third Circuit found that the plaintiff “did not fulfill his burden of supplying circumstantial evidence specific to the products and problems involved [in] the litigation and instead premised his argument for numerosity on improper speculation.” The panel explained that “where a putative class is some subset of a larger pool, the trial court may not infer numerosity from the number in the larger pool alone.” Moreover, according to the panel, trial courts are not permitted to take “a wait-and-see approach to numerosity or any other requirement of Rule 23” because that approach is equivalent to “certify[ing] the class conditionally, which Rule 23 does not permit.”

A careful review of Hayes in conjunction with Marcus is essential for any defendant facing a putative class action in the District of New Jersey or another district court within the Third Circuit. More specifically, a defendant should ensure at the outset that the plaintiff’s evidence on ascertainability, numerosity, and the other class action prerequisites of Rule 23 is properly challenged.