Home Home About Us Practice Areas Our Attorneys Press & Publications Events Diversity Pro-Bono Careers
FOLLOW US:

2016 Mitigating Risk: Key Litigation Developments

Consumer Class Actions >> “Ascertainable” Class Members in Consumer False Advertising Actions

April 5, 2016

Consumer class action lawsuits often unfold into protracted and expensive cases, regardless of merit. In 2015, companies spent approximately $2.1 billion defending class actions, with consumer class actions being the largest category of those cases.

Courts have shown increasing receptivity to the argument that a consumer class action should not proceed where the plaintiff cannot demonstrate a reliable and efficient method for identifying or “ascertaining” the members of the potential class. This “ascertainability” requirement protects absent class members by ensuring that they get notice of the action and protects defendants by enabling them to challenge the class and obtain finality on the matter when the case is resolved. Defendants have been increasingly successful in arguing that a court should not permit a class action to proceed when it is based on the purchase of an inexpensive product or an allegedly false advertisement and the plaintiff is unable to satisfy the ascertainability requirement.

For example, the federal appeals court in Atlanta recently affirmed a Florida trial judge’s ruling that plaintiffs alleging that a pharmaceutical company falsely advertised its weight loss supplement could not proceed with a class action because the potential class members — consumers who primarily purchased the supplement through third-party retailers at relatively low prices — were not ascertainable. The court found it unlikely that consumers kept receipts proving their purchases of the supplement and also held that proving class members by affidavit posed too great a risk of fraudulent claims and would deny the defendant the ability to challenge the truthfulness of each class member’s statements without a multitude of mini-trials.

Similarly, a federal judge in California recently refused to certify a class of plaintiffs asserting that a video game producer had used “bait-and-switch” advertising to trick consumers into purchasing a game that looked nothing like the game’s commercials and demos. The judge held that no reliable method existed by which the plaintiff could identify those consumers who actually saw the ads and demos before buying the game.

The ascertainability requirement could be an insurmountable hurdle in many consumer class actions involving the purchase of an inexpensive product through a third-party retailer rather than directly from the defendant. Not all courts have adopted a strict approach to this requirement yet, and the U.S. Supreme Court recently declined to hear an appeal that might have resolved the courts’ different views on this issue.

Takeaways

  • Companies confronted with consumer class action claims immediately should examine the nature of the products at issue and the circumstances under which those products were sold.
  • Small items sold largely via retailers present the biggest ascertainability challenges for class action plaintiffs. Consumers of these products are unlikely to retain receipts for such small purchases, and neither the company nor its retail partners are likely to possess records sufficient to identify the potential class members, which could present a threshold problem for plaintiffs’ counsel.

Author(s)

NEAL H. KLAUSNER
Partner/Co-Chair
212.468.4992
nklausner@dglaw.com
Litigation

DAVID S. GREENBERG
Senior Attorney
212.468.4895
dgreenberg@dglaw.com
Litigation