New Jersey Appellate Division Says Ascertainability Not Required for Class Certification

As recently reported by this blog, the U.S. Court of Appeals for the Third Circuit upheld and clarified the implied requirement of Rule 23 that a class be ascertainable in order to be certified. But a New Jersey appellate court recently ruled that there is no such requirement under the New Jersey Court Rules, at least where each class member holds a low-value claim.

In Daniels v. Hollister Co., the plaintiff brought the case on behalf of a putative class of Hollister customers who received $25 gift cards that allegedly possessed no expiration date, but were nonetheless voided by Hollister. The trial court granted class certification, and the Appellate Division granted leave to appeal. On appeal, Hollister argued that an ascertainability requirement is embedded in Rule 4:32-1 – and recognized by some courts in the state – and that the proposed class was not ascertainable.

The Appellate Division upheld the trial court’s grant of class certification, concluding that “‘ascertainability’ must play no role in considering the certification of a low-value consumer class action ….” The Court expressed doubt as to whether ascertainability should be a requirement for any class action, but left that question for another day.

The Court placed heavy emphasis on New Jersey courts’ liberal construction of Rule 4:32-1 in favor of class certification, and it observed that the class action device is intended to empower “the smaller guy.” The Court thus determined that an ascertainability requirement would place too much of a burden on class members whose injuries are too small to be individually asserted. It distinguished the New Jersey Supreme Court’s apparent recognition of the ascertainability doctrine in Iliadis v. Wal-Mart Stores, Inc., finding that Iliadis addressed what is required to properly define a class, and did not establish an obligation to show that all class members are identifiable.

The Court also predicted that ascertainability will soon be on the wane in the federal courts, relying heavily upon the concurring opinion in the Third Circuit’s recent decision in Byrd v. Aaron’s, which stated that “the time has come to do away with” the ascertainability doctrine. Although the Appellate Division “declined to consider” the application of the doctrine in other cases, it clearly expressed its distaste for the doctrine generally. It deemed ascertainability “misguided” where a defendant’s own recordkeeping practices lead to problems identifying class members and asserted that “the doctrine is practically unworkable in application and is being exploited by defendants in unsuitable cases to avoid liability.”

In practice, the Appellate Division’s opinion may make New Jersey state court a more attractive forum for plaintiffs filing “low-value” class actions that are not at risk of being removed to federal court. But while ascertainability may not be available as a defense in “low-value” class actions in New Jersey state courts, it remains to be seen whether the courts will require that classes of individuals with more valuable claims be ascertainable. Given the Appellate Division’s strongly unfavorable view of the doctrine generally, courts may become reluctant to deny class certification based upon a lack of ascertainability.

Jason R. Halpin is an Associate in the Gibbons Business & Commercial Litigation Department.
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