03.23.2017
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Updates
The U.S. Court of Appeals for the Ninth Circuit handed down its (by now) hotly discussed decision in Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017), on January 3, 2017, holding there is no separate “administrative feasibility” requirement for class action certification under Federal Rule of Civil Procedure 23. In so holding, the Ninth Circuit split with the U.S. Court of Appeals for the Third Circuit, which for years has required plaintiffs to show—in addition to the enumerated Rule 23 factors—that their “purported method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence used to prove class membership.”[1]
Given the widespread use of the class action device to prosecute antitrust claims, the decision is an important one for competition law practitioners, even though the underlying claims in Briseno concerned labeling rather than antitrust. This update summarizes early commentary, analysis, and application of the decision.
Case Background
Briseno involved claims that ConAgra Foods had deceptively and misleadingly marketed its GMO cooking oils as “100% Natural.” The named plaintiffs brought a putative class action against ConAgra on behalf of consumers in 11 states who had purchased Wesson-brand cooking oils labeled “100% Natural” during the relevant period. ConAgra opposed class certification on the ground that there was no administratively feasible way to identify members of the proposed classes. This was the case, ConAgra argued, because—as with most household products—few of the putative class members likely kept their receipts, and the stores where they made their purchases did not retain records of the transactions with customer-identifying information.
The district court rejected this argument as a basis for denying class certification, and the Ninth Circuit affirmed. The court acknowledged the circuit split on this issue: Whereas the U.S. Court of Appeals for the Sixth, Seventh, and Eighth Circuits have rejected an “administrative feasibility” or “ascertainability” requirement for class certification, the Third Circuit has expressly adopted this requirement as an additional factor that must be satisfied before class certification can be granted.[2] On February 14, 2017, the Ninth Circuit denied rehearing en banc.
Implications of Briseno
Commentators and practitioners have offered varying interpretations of Briseno and its implications. Some argue that Briseno simply clarifies that administrative feasibility arguments must be couched in terms of manageability, superiority, predominance, or objectivity in class definition—other required considerations under the Rule 23 analysis—rather than “ascertainability.” Others argue that the decision effectively greenlights determination of liability and damages on an aggregate basis, with verification of valid individual claims to be managed by claims administrators.
The U.S. District Court for the Northern District of California (Judge William H. Orrick) has already twice invoked Briseno in granting plaintiffs’ motions for class certification in antitrust cases. In In re Lidoderm Antitrust Litigation,[3] direct and end-purchaser plaintiffs brought putative class actions against defendant pharmaceutical manufacturers, challenging their reverse payment patent litigation settlement, which the plaintiffs contended led to inflated costs for brand-name and generic versions of lidocaine patches. The defendants argued that class certification should be denied on the grounds that, inter alia, the plaintiffs had not shown administrative ascertainability because the class definitions were so complex and the plaintiffs lacked reliable data to identify the end-purchaser plaintiffs.
The court rejected this argument, finding it sufficient that “the class definition—while somewhat complex—is based on objective criteria that allow potential class members to determine whether they are included in the class.”[4] Citing Briseno, the court observed:
[As]certainability (much less “administrative a[s]certainability”) is not a requirement under Rule 23. . . . [T]hat consumers may not have documentation to support their claims of injury or damages does not mean a class of consumers cannot be certified. Post-judgment claims forms and other tools can be used to allow defendants to test a class member’s purported entitlement to damages and to apportion damages appropriately between class members.[5]
Notably, the court observed that “Defendants’ arguments against certification would result in certification of very few antitrust cases as . . . class actions, despite repeated direction from the Supreme Court that the class device is particularly useful in the antitrust context.”[6]
Similarly, in In re Korean Ramen Antitrust Litigation,[7] the court rejected the defendants’ arguments to deny class certification on administrative feasibility grounds. In re Korean Ramen concerned allegations by direct and indirect purchasers that the defendant noodle manufacturers conspired to raise the price of Korean noodles in Korea and the United States. “Because absent class members can only be identified by uncorroborated self-identification, defendants argue[d] the class is not ascertainable.”[8] The court rejected this argument:
[A]s the Ninth Circuit recently reaffirmed, concerns about illegitimate claims and manageability—such as those expressed by defendants here—are accounted for by other provisions of Rule 23; that consumers do not generally save “grocery receipts and are unlikely to remember details about individual purchases of a low-cost product” like ramen, does not mean a class of consumers cannot be certified. . . . Neither the fact that class members have to “self-identify” nor that they might not have readily available proof of purchase, means that they are not ascertainable sufficient for class certification. . . . Post-judgment claims forms and other tools can be used to allow defendants to test an absent class member’s purported entitlement to damages and to appropriately apportion damages between class members.[9]
Thus, the early caselaw applying Briseno points toward a further-reaching and more plaintiff-friendly interpretation of this important decision than repeat class certification defendants might have hoped.
On March 2, 2017, the Ninth Circuit granted ConAgra’s motion to stay the mandate pending ConAgra’s cert petition, which must be filed by May 15, 2017. For a thoughtful discussion of how the addition of Neil Gorsuch to the U.S. Supreme Court could tilt the balance (or not), see Amy Howe’s recent SCOTUSblog post.
ENDNOTES
[1] Carrera v. Bayer Corp., 727 F.3d 300, 308 (3d Cir. 2013).
[2] See Sandusky Wellness Ctr., LLC, v. Medtox Sci., Inc., 821 F.3d 992, 995-96 (8th Cir. 2016); Rikos v. Procter & Gamble Co., 799 F.3d 497, 525 (6th Cir. 2015); Mullins v. Direct Digital, LLC, 795 F.3d 654, 658 (7th Cir. 2015), cert. denied, 136 S. Ct. 1161 (2016); Byrd v. Aaron’s Inc., 784 F.3d 154, 162-63 (3d Cir. 2015); Carrera, 727 F.3d at 306-08.
[3] In re Lidoderm Antitrust Litig., No. 14-MD-02521-WHO, 2017 WL 679367 (N.D. Cal. Feb. 21, 2017).
[4] Id. at *25.
[5] Id.
[6] Id. at *1.
[7] In re Korean Ramen Antitrust Litig., No. 13-CV-04115-WHO, 2017 WL 235052 (N.D. Cal. Jan. 19, 2017).
[8] Id. at *21.
[9] Id.
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