Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—3d Cir.: Class certification of Sam’s Club “as-is” purchasers overturned for failure to show ascertainability, numerosity, (Aug 5, 2013)

The U.S. Court of Appeals in Philadelphia vacated a trial court’s certification of a New Jersey Consumer Fraud Act (CFA) class action in light of its holding in Marcus v. BMW of North America, LLC, 687 F.3d 583 (3d Cir. 2012) that discussed Federal Rule of Civil Procedure 23’s class definition, ascertainability, and numerosity requirements (Hayes v. Wal-Mart Stores, Inc., August 2, 2013, Scirica, A.).

Members-only retail warehouse Sam’s Club, owned and operated by Wal-Mart, Stores, Inc., has a section for certain clearance items, called “as-is” items. As is items may be items that were removed from their packaging to show to members, returned items, brand-new items that Sam’s Club wants to clear out, or damaged items. The purchaser filed suit on behalf of himself and all other persons who purchased from Sam’s Clubs a Service Plan for an as-is product. After purchasing an as-is television that was missing pieces, he returned it to the store. The store eventually provided Hayes with a manual and remote, and a store employee also informed him that Sam’s Club should not have sold him the Service Plan because it did not cover the television and offered to refund him the cost of the Service Plan.

A class representative must show by a preponderance of the evidence that there is a reliable and administratively feasible method for ascertaining a class. Wal-Mart argued that the trial court erred in failing to consider whether it was administratively feasible to ascertain the class.

In Marcus, the court held that an ascertainable class must be defined with reference to objective criteria and there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition. The trial court did not consider whether it would be administratively feasible to ascertain class members. Thus, the issue was remanded to consider that issue. Sam’s Club lack of records concerning the number of as-is items purchased during the class period did not alter the purchaser’s burden of showing ascertainability and numerosity.

On remand, the purchaser must offer a reliable and administratively feasible way for the court to determine:

(1) whether a Sam’s Club member purchased a Service Plan for an as-is item;

(2) whether the as-is item was a “last one” item or otherwise came with a full manufacturer’s warranty; and

(3) whether the member nonetheless received service on the as-is item or a refund of the cost of the Service Plan.

The purchaser’s evidence presented in the trial court was insufficient to support a finding of numerosity, according to the court. The holding in Marcus required that a plaintiff must show sufficient circumstantial evidence specific to the products, problems, parties, and geographic areas actually covered by the class definition to allow a district court to make a factual finding. Here, the purchaser was unable to show with specificity how many Sam’s Club purchases involved both as-is items and Service Plans that were not honored. Therefore, the purchaser failed to supply circumstantial evidence specific to the products and problems involved the litigation and instead premised his argument for numerosity on improper speculation.

The court noted that the on remand, the trial court should reevaluate whether the putative class satisfies the predominance requirement if the purchaser meets the Rule 23(a) requirements. The trial court must also determine whether the purchaser fell within the amended class definition and whether the purchaser sustained an injury.

The case is No. 12-2522.

Attorneys: Daniel Lapinski (Wilentz, Goldman & Spitzer) for William Hayes. Charles B. Casper (Montgomery, McCracken, Walker & Rhoads) for Wal-Mart Stores, Inc.

Companies: Wal-Mart Stores, Inc.

Cases: StateUnfairTradePractices DelawareNews NewJerseyNews PennsylvaniaNews