Reuters Column: “3rd Circuit is trying to kill consumer class actions”

by Deepak Gupta

Legal reporter Alison Frankel of Reuters has a new column highlighting the effort to seek full-court rehearing of the Third Circuit's troubling decision in Carrera v. Bayer, which holds that plaintiffs must show, before they can certify a class, how they will identify and prove the class membership of consumers who purchased the defendant's product.  The opinion further holds that the traditional methods — requiring consumer affidavits and employing established screening procedures by class action adminsitrators, for example — aren't good enough. The defendant, the court reasons, has a substantial property interest, protected by the Due Process Clause of the Fourteenth Amendment, in avoiding a collateral attack. Allison Zieve and Brian Wolfman have both recently blogged about the case here and here.

I wasn't involved in this appeal before the panel decision came down but was recently asked to prepare the plaintiffs' petition for rehearing en banc, which we filed last Friday. Amicus briefs in support of the petition are due by the end of this week.

Even before the rehearing petition, the panel's opinion in Carrera had attracted an unusual amount of commentary, including some specifically calling for en banc rehearing. Frankel's column situates the case within the context of a broader debate in the appellate courts over the future of class actions. She also points out why the panel's decision, if left standing, will be so dangerous for the fate of consumer class actions. Plaintiffs, she explains:

usually satisfy the ascertainability requirement for certification by defining the class in a way that sets appropriate limits on membership – not by setting forth a process of identifying individual claimants. That usually comes later, when class notices are being formulated and damages are being determined. Considering that consumers rarely save receipts or packages to prove their purchases and that there’s scant record-keeping on the purchase of low-cost, unregulated products, the 3rd Circuit decision could make consumer class actions involving these items uncertifiable.

Frankel also unpacks the panel's due-process logic:

It doesn’t matter, according to the appeals court, that under Florida law, Bayer’s potential damages don’t depend on who’s a member of the class. What if some Florida purchasers later asserted that fake claimants diluted their recovery so their interests weren’t adequately represented by the name plaintiff in the class? “They could then bring a new action against Bayer and, perhaps, apply the principles of issue preclusion to prevent Bayer from re-litigating whether it is liable,” the 3rd Circuit said. “Bayer has a substantial interest in ensuring this does not happen.”

The class brief also pointed out the utter unlikeliness of the chain of events the 3rd Circuit posited in its consideration of Bayer’s due process rights. There have been only a handful of collateral attacks on class action judgments in the history of the vehicle, the brief said (quoting my coverage of one of the extremely rare such attacks). 

The bottom line: "Should consumer class actions be gutted on the off chance that an absent class member with a claim for a few bucks might surface with allegations of inadequate representation?" 

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