William Hayes v. WalMart Stores Inc , 725 F.3d 349 ( 2013 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 12-2522
___________
WILLIAM HAYES
v.
WAL-MART STORES, INC., doing business as
SAM’S CLUB; ABC CORPORATIONS I-V (fictitious
names)
Wal-Mart Stores, Inc., doing business as SAM’S CLUB,
Appellant
_______________________
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action No. 1-10-cv-00460
(Honorable Jerome B. Simandle)
______________
Argued: January 8, 2013
Before: SCIRICA, AMBRO and FUENTES, Circuit Judges.
(Filed: August 2, 2013)
Charles B. Casper, Esq.
John G. Papianou, Esq. [ARGUED]
Paul H. Zoubek, Esq.
Montgomery, McCracken, Walker & Rhoads
123 South Broad Street
28th Floor
Philadelphia, PA 19109
Counsel for Appellant
Daniel Lapinski, Esq. [ARGUED]
Wilentz, Goldman & Spitzer
90 Woodbridge Center Drive
8th Floor
Woodbridge, NJ 07095
James C. Shah, Esq.
Shepherd, Finikelman, Miller & Shah
475 White Horse Pike
Collingswood, NJ 08107
Counsel for Appellee
_________________
OPINION OF THE COURT
_________________
SCIRICA, Circuit Judge.
This is an interlocutory appeal under Fed. R. Civ. P.
23(f). Plaintiff Hayes brought a putative class action against
2
Wal-Mart, asserting claims for violation of the New Jersey
Consumer Fraud Act, breach of contract, and unjust
enrichment in connection with Wal-Mart’s sale of extended
warranty plans through Sam’s Club retail stores. Defendant
Wal-Mart contests the trial court’s order granting plaintiff
Hayes’ motion for class certification. Post certification, we
decided Marcus v. BMW of North America, LLC, 687 F.3d
583 (3d Cir. 2012), which thoroughly explored Rule 23’s
class definition, ascertainability, and numerosity
requirements. Because those requirements are key issues in
this appeal, we will vacate the certification order and remand
in light of Marcus.
I.
Sam’s Club is a members-only retail warehouse owned
and operated by Wal-Mart. Each of Sam’s Club’s stores has a
section for certain clearance items, called “as-is” items. Items
may be designated for the as-is section for a variety of
reasons. They may be: (1) display items, which were removed
from their packaging to show to members; (2) items that were
purchased and then returned; (3) items that are brand-new but
that Sam’s Club wants to clear out, called “last one” items; or
(4) items that were damaged in-Club. Each item in the as-is
section is marked with an orange sticker that states the
product is being sold as-is.
When a person desires to purchase an as-is item, a
Sam’s Club cashier at the point of sale scans the item. The
original price appears on the point of sale system, and the
cashier must perform a “price override” by manually entering
the discounted price. Sam’s Club’s software records the fact
that a price override was performed, but does not include the
3
reason for the override. Significantly, price overrides can be
made for reasons other than the fact that an item was
designated as-is, including when a member requests a
discount because the item is sold for less elsewhere, or when
a member purchases an item and later finds it on sale.
Separately, each of the Sam’s Club stores keeps a handwritten
log of items that are marked as-is and the reason for doing so.
It is notable that the log does not track the sale of those items.
Sam’s Club contracted with National Electronics
Warranty Corporation (“NEW”) to sell extended warranty
products called Service Plans for various items sold in the
store. The Service Plans state NEW will not cover “products
sold ‘as-is’ including but not limited to floor models (unless
covered by a full manufacturer’s warranty on your date of
purchase) and demonstration models.” As indicated, Service
Plans will cover as-is items that still have their
manufacturers’ warranties, including “last one” items that are
sealed and brand-new, as well as some display items.1
1
Plaintiff contends no as-is items are covered by
manufacturers’ warranties at the time of sale. Br. on Behalf of
Appellee William Hayes at 6. The trial court did not make
explicit findings as to whether or which as-is items were
covered by manufacturers’ warranties at the time they were
sold. But the court’s decision to exclude as-is items covered
by manufacturers’ warranties from the class definition may
suggest that it concluded such items do exist. The record
appears to support that conclusion. See J.A. vol. II, A69 ¶ 16
(Patulak Decl.) (“‘[L]ast one’ items, particularly electronic
items, are often brand new, sealed items, that are marked as-is
to clear out remaining inventory. That the item was sold as-is
does nothing to void any manufacturer’s warranty.”); id. at
4
Plaintiff Hayes made two separate purchases of as-is
items. On each occasion, a Sam’s Club employee offered and
Hayes agreed to purchase a Service Plan for the as-is item. At
the time of his purchases, Hayes contends he was not told
whether the Service Plan would actually cover his as-is item.
On August 7, 2008, Hayes purchased an as-is power washer
for $100 along with a Service Plan that cost $5.26. There is
no evidence that Hayes was offered a refund for the Service
Plan or that he had problems with the product and sought to
have it serviced. On July 1, 2009, Hayes purchased an as-is
television set for $350 along with a Service Plan that cost
$39.85. After taking the television set home and discovering
it was missing certain pieces, he returned to the store. The
store eventually provided Hayes with a manual and remote. 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. Hayes declined.
On January 26, 2010, Hayes filed suit on behalf of
himself and all other persons who purchased a Service Plan
for an as-is product from Sam’s Clubs in New Jersey since
January 11, 2004. He asserted a violation of the New Jersey
Consumer Fraud Act, breach of contract, and unjust
enrichment. The trial court certified the following Rule
23(b)(3) class:
All consumers who, from January 26, 2004 to
A68, ¶ 7 (Patulak Decl.) (“Display items are sometimes
covered by their manufacturers’ warranty. It depends on the
terms and conditions of the manufacturer’s warranty.”).
5
the present, purchased from Sam’s Clubs in the
State of New Jersey, a Sam’s Club Service Plan
to cover as-is products. Excluded from the Class
are consumers whose as-is product was covered
by a full manufacturer’s warranty, was a last-
one item, consumers who obtained service on
their product, and consumers who have
previously been reimbursed for the cost of the
Service Plan.
The trial court found the class, under this amended
definition, fulfilled the requirements of Fed. R. Civ. P. 23.
Specifically, the court found the class was ascertainable
because members could be determined with reference to
objective criteria. The court found the class was sufficiently
numerous because Sam’s Club had records of 3,500 member
transactions during the class period that included both a price
override and the purchase of a Service Plan; the court
reasoned that if even 5% of those price overrides were for as-
is items that were ineligible for Service Plan protection, the
class would be sufficiently numerous. The court found that
common issues predominated over individualized issues
because the essential elements of each claim were susceptible
to common proof. In addition, the court found Hayes’
purchase of a Service Plan for the as-is power washer was a
proper basis for class certification but not his purchase of a
Service Plan for the as-is television set, since the Service Plan
for the television set was honored when Sam’s Club replaced
the missing remote. We granted Wal-Mart’s interlocutory
appeal under Fed. R. Civ. P. 23(f).
6
II.2
“[Class] certification is proper only if ‘the trial court is
satisfied, after a rigorous analysis, that the prerequisites of
Rule 23(a) have been satisfied.’ Frequently that ‘rigorous
analysis’ will entail some overlap with the merits of the
plaintiff’s underlying claim. That cannot be helped.” Wal-
Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)
(citations omitted) (quoting Gen. Tel. Co. of Sw. v. Falcon,
2
We have appellate jurisdiction under 28 U.S.C. § 1292(e)
and Fed. R. Civ. P. 23(f). Plaintiff asserted jurisdiction under
the Class Action Fairness Act, 28 U.S.C. § 1332(d). Neither
party contested subject matter jurisdiction before the trial
court. See Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006)
(“The objection that a federal court lacks subject-matter
jurisdiction may be raised by a party, or by a court on its own
initiative, at any stage in the litigation, even after trial and the
entry of judgment.” (citation omitted)). Although we cannot
help but note the relatively small value of plaintiff’s
purported loss in conjunction with the limited number of
putative class members, we decline to reach the issue of
jurisdiction here. The Supreme Court has instructed that it is
appropriate to reach class certification issues first, if they are
dispositive, because their resolution is “logically antecedent
to the existence of any Article III issues.” Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 612 (1997). Moreover, the
record on appeal is insufficient for us to determine that
plaintiff cannot meet the $5,000,000 amount-in-controversy
requirement to a legal certainty. See St. Paul Mercury Indem.
Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). If the class
is permitted to go forward on remand, CAFA jurisdiction
should be explored by the district court.
7
457 U.S. 147, 161 (1982)). “Factual determinations
supporting Rule 23 findings must be made by a
preponderance of the evidence,” In re Hydrogen Peroxide
Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008), and the
burden of proof rests on the movant, id. at 316 n.14. “A
party’s assurance to the court that it intends or plans to meet
the requirements is insufficient.” Id. at 318.
“We review a class certification order for abuse of
discretion, which occurs if the district court’s decision ‘rests
upon a clearly erroneous finding of fact, an errant conclusion
of law or an improper application of law to fact.’” Id. at 312
(quoting Newton v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 259 F.3d 154, 165 (3d Cir. 2001)). We review whether
an incorrect legal standard has been used de novo. Id.
III.
Wal-Mart asserts the trial court erred in certifying the
class because plaintiff failed to meet his burden of showing
(A) there is a reliable and administratively feasible method
for ascertaining the class, (B) the class is sufficiently
numerous to qualify for class action treatment, and (C) issues
common to the class predominate over issues affecting only
individual members. In part (D), we consider sua sponte
whether Hayes has constitutional standing to bring suit in this
case.
A.
The trial court found the class was ascertainable
because the amended definition specifies “‘a particular group
that was harmed during a particular time frame, in a particular
8
location, in a particular way,’” and uses objective criteria.
Hayes v. Wal-Mart, 281 F.R.D. 203, 210 (D.N.J. 2012)
(quoting Rowe v. E.I. Dupont De Nemours & Co., 262 F.R.D.
451, 455 (D.N.J. 2009)). The court explained that although
plaintiff need not “‘prove that class members have been
injured for purposes of defining the [class],’” id. (quoting
Rowe, 262 F.R.D. at 455), the amended definition nonetheless
excludes those individuals who have not suffered comparable
harm.
Wal-Mart asserts the trial court erred in failing to
consider whether it is administratively feasible to ascertain
the class. Wal-Mart argues the trial court will have to engage
in impractical mini-trials to determine if putative class
members fall within the class definition.
It is plaintiff’s burden to show that a class action is a
proper vehicle for this lawsuit. See Comcast Corp. v.
Behrend, 133 S. Ct. 1426, 1432 (2013) (“The class action is
an exception to the usual rule that litigation is conducted by
and on behalf of the individual named parties only. To come
within the exception, a party seeking to maintain a class
action must affirmatively demonstrate his compliance with
Rule 23.” (citations and quotation marks omitted)). As “an
essential prerequisite” to class certification, Marcus, 687 F.3d
at 592, plaintiff must show by a preponderance of the
evidence that the class is ascertainable. See In re Hydrogen
Peroxide, 552 F.3d at 320 (“Factual determinations necessary
to make Rule 23 findings must be made by a preponderance
of the evidence.”). In Marcus, we explained that
ascertainability is important because it “eliminates serious
administrative burdens . . . by insisting on the easy
identification of class members”; allows for the best notice
9
practicable, and thereby protects absent class members; and
protects defendants by clearly identifying the individuals to
be bound by the final judgment. 687 F.3d at 593 (quotation
marks omitted).
Marcus made clear that ascertainability entails two
important elements. First, the class must be defined with
reference to objective criteria. Id. Second, there must be a
reliable and administratively feasible mechanism for
determining whether putative class members fall within the
class definition. Id. at 593-94. We explained that “[i]f class
members are impossible to identify without extensive and
individualized fact-finding or ‘mini-trials,’ then a class action
is inappropriate.” Id. at 593; see also William B. Rubenstein,
Newberg on Class Actions § 3:3 (5th ed. 2011)
(“Administrative feasibility means that identifying class
members is a manageable process that does not require much,
if any, individual factual inquiry.”). We noted that other
courts have gone so far as to hold “that where nothing in
company databases shows or could show whether individuals
should be included in the proposed class, the class definition
fails.” Marcus, 687 F.3d at 593.
The plaintiffs in Marcus sued BMW and Bridgestone
for selling allegedly defective run-flat tires (RFTs). Id. at 588.
The class definition sought to capture owners and lessees who
purchased or leased new BMWs with original-equipment
Bridgestone RFTs from BMW dealerships in New Jersey and
whose tires had gone flat and been replaced. Id. at 592. We
found the proposed class raised “serious ascertainability
issues.” Id. at 593. In particular, lease and purchase records
from BMW dealerships were over-inclusive because they did
not document the brand of tire on each car leased or sold. Id.
10
And not all owners and lessees took their vehicles back to a
BMW dealer to have their tires replaced—hence repair
records were under-inclusive. Id. at 594. Remanding the case
to the district court, we said:
If Marcus attempts to certify a class on
remand, the District Court—adjusting the class
definition as needed—must resolve the critical
issue of whether the defendants’ records can
ascertain class members and, if not, whether
there is a reliable, administratively feasible
alternative. We caution, however, against
approving a method that would amount to no
more than ascertaining by potential class
members’ say so. For example, simply having
potential class members submit affidavits that
their Bridgestone RFTs have gone flat and been
replaced may not be “proper or just.” . . .
Forcing BMW and Bridgestone to accept as true
absent persons’ declarations that they are
members of the class, without further indicia of
reliability, would have serious due process
implications.
Id. (citation omitted) (quoting Xavier v. Philip Morris USA
Inc., 787 F. Supp. 2d 1075, 1090 (N.D. Cal. 2011)).
Because the able trial court here did not have the
benefit of Marcus’s guidance, it did not consider whether it
would be administratively feasible to ascertain class
members. In discussing numerosity, however, the court noted
that Sam’s Club had no method for determining how many of
the 3,500 price-override transactions that took place during
11
the class period were for as-is items. The court did not see
this as a barrier to class certification, reasoning that plaintiff
should not be hindered from bringing a class action because
defendant lacked certain records.
But the nature or thoroughness of a defendant’s
recordkeeping does not alter the plaintiff’s burden to fulfill
Rule 23’s requirements. Nor has plaintiff cited any statutory
or regulatory authority obligating Wal-Mart to create and
maintain a particular set of records. Cf. In re Hydrogen
Peroxide, 552 F.3d at 310 (explaining that even a district
court’s broad discretion to control proceedings “does not
soften the rule: a class may not be certified without a finding
that each Rule 23 requirement is met”). Rule 23’s
requirements that the class be administratively feasible to
ascertain and sufficiently numerous to warrant class action
treatment cannot be relaxed or adjusted on the basis of Hayes’
assertion that Wal-Mart’s records are of no help to him.
Given the trial court’s finding that Wal-Mart lacks
records that are necessary to ascertain the class, to be
successful on remand, plaintiff must offer some reliable and
administratively feasible alternative that would permit 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.3 Cf. id. at 319 (explaining that, in
3
Although these inquiries overlap with the merits, each of
these inquiries addresses an element of the class definition—
12
class action litigation, “‘[a] critical need is to determine how
the case will be tried’” (quoting Fed. R. Civ. P. 23 advisory
committee’s note, 2003 Amendments)). Based on the existing
record, plaintiff has not fulfilled this burden. But we will
nonetheless remand because plaintiff did not have the benefit
of our decision in Marcus when he submitted evidence of the
class’s ascertainability.
To summarize, plaintiff must show by a preponderance
of the evidence that there is a reliable and administratively
feasible method for ascertaining the class. See Marcus, 687
F.3d at 593-94; In re Hydrogen Peroxide, 552 F.3d at 307.
This petition for class certification will founder if the only
proof of class membership is the say-so of putative class
members or if ascertaining the class requires extensive and
individualized fact-finding.
B.
The trial court found the class was sufficiently
numerous to warrant class action treatment. It reasoned that
since Sam’s Club has data showing approximately 3,500 price
override transactions for which a Service Plan was also
purchased, if even 5% of those price overrides were for as-is
items ineligible for Service Plan protection, the class would
be sufficiently numerous under Fed. R. Civ. P. 23(a)(1). Wal-
Mart argues there was no factual basis to infer the number of
class members and that the court engaged in impermissible
speculation to find the proposed class fulfilled the numerosity
the determination of each of these inquiries is therefore
essential to ascertain the class.
13
requirement. In fact, Wal-Mart asserts plaintiff failed to prove
that even a single person meets the class definition.4
Under Rule 23(a)(1), the class must be “so numerous
that joinder of all members is impracticable.”5 This
requirement assures “that class action treatment is necessary.”
Baby Neal v. Casey, 43 F.3d 48, 55 (3d Cir. 1994). Moreover,
“[a] party seeking class certification must . . . be prepared to
prove that there are in fact sufficiently numerous parties . . . .”
Dukes, 131 S. Ct. at 2551. Mere speculation as to the number
of class members—even if such speculation is “a bet worth
making”—cannot support a finding of numerosity. Marcus,
687 F.3d at 596.
The district court in Marcus engaged in an inquiry
similar to that by the court in the present case. The plaintiff in
Marcus submitted 29 of 582 nationwide complaints from
purchasers and lessees regarding BMWs with RFTs of any
brand, but did not specify whether, as the class definition
required, the complainants purchased or leased their cars in
New Jersey nor how many of the complainants had
Bridgestone-brand RFTs. Id. at 595-96. Despite the dearth of
4
Wal-Mart asserts Hayes does not meet the class definition
because he testified that he does not know if his power
washer came with a manufacturer’s warranty. J.A. vol. II,
A155 at 76:13-23. We take up this issue in Part D, infra.
5
While “[n]o minimum number of plaintiffs is required to
maintain a suit as a class action,” we stated on the facts of at
least one case that “generally if the named plaintiff
demonstrates that the potential number of plaintiffs exceeds
40, the first prong of Rule 23(a) has been met.” Stewart v.
Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001).
14
geographic- and brand-specific evidence, “the District Court
found that the New Jersey class met the numerosity
requirement because ‘it is common sense that there will be
more members of the class than the number of consumers
who complained—probably significantly more,’ and
‘common sense indicates that there will be at least 40.’” Id. at
596 (quoting Marcus v. BMW of N. Am., LLC, No. 08-5859,
2010 WL 4853308, at *3 (D.N.J. Nov. 19, 2010)).
We held the district court abused its discretion, stating:
Mere speculation is insufficient. Of course,
Rule 23(a)(1) does not require a plaintiff to
offer direct evidence of the exact number and
identities of the class members. But in the
absence of direct evidence, 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. Only then may the court rely on
“common sense” to forgo precise calculations
and exact numbers.
Given the complete lack of evidence
specific to BMWs purchased or leased in New
Jersey with Bridgestone RFTs that have gone
flat and been replaced, the District Court’s
numerosity ruling crossed the line separating
inference and speculation.
Id. at 596-97 (citations omitted).
15
Here, plaintiff did not fulfill his burden of supplying
circumstantial evidence specific to the products and problems
involved the litigation and instead premised his argument for
numerosity on improper speculation. The only concrete
numerical evidence presented to the court was that New
Jersey Sam’s Clubs had on record 3,500 transactions that
included both a price-override and the sale of a Service Plan.
But there is no factual basis for determining how many of
these 3,500 transactions included the purchase of a Service
Plan for an as-is item that was not a “last one” item and that
did not have a valid manufacturer’s warranty—the specific
product involved in this litigation. Nor was there evidence of
how many of these transactions involved Service Plans that
were not ultimately honored, either by service or refund—the
specific problem involved in this litigation. In short, the only
conclusion that can be drawn from the evidence presented to
the trial court is that the number of class members would be
equal-to-or-less-than 3,500 and equal-to-or-greater-than
zero.6 Within that range, we can only speculate as to the
number of class members.
6
Plaintiff contends the trial court had before it evidence that
less than 40 of the 3,500 price-override transactions were
related to “last one” items. For this proposition, plaintiff relies
on Sam’s Club’s handwritten logs, which document the items
designated as-is and the reason for doing so. But the trial
court made no such finding on this point. Moreover, even if
less than 40 of the 3,500 price-override transactions were for
“last one” items, there is no evidence in the record addressing
how many of the 3,500 price-override transactions were for
other as-is items covered by manufacturers’ warranties at the
time of sale.
16
And contrary to plaintiff’s assertion, it was not
defendant’s burden to show how many of the 3,500 price-
override transactions occurred for a reason other than the
purchase of an as-is item. It was plaintiff’s burden to
demonstrate numerosity by a preponderance of the evidence.
Since plaintiff did not fulfill this burden, there was no basis to
infer that the class is sufficiently numerous to qualify for
class action treatment.
Speaking more generally, where a putative class is
some subset of a larger pool, the trial court may not infer
numerosity from the number in the larger pool alone. Accord
Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1267 (11th Cir.
2009) (finding the district court engaged in impermissible
speculation where it inferred numerosity for a Florida-only
class “without the aid of a shred of Florida-only evidence,”
but only evidence on a national scale). The trial court must
engage in a “‘rigorous analysis,’” Dukes, 131 S. Ct. at 2551
(quoting Falcon, 457 U.S. at 161), and find each of Rule
23(a)’s requirements met by a preponderance of the evidence,
In re Hydrogen Peroxide, 552 F.3d at 307, before granting
certification.
Similarly, the trial court cannot take a wait-and-see
approach to numerosity or any other requirement of Rule 23.
Certification may not be granted because the plaintiff
promises the class will be able to fulfill Rule 23’s
requirements, with the caveat that the class can always be
decertified if it later proves wanting. To certify a class in this
manner is effectively to certify the class conditionally, which
Rule 23 does not permit. See Fed. R. Civ. P. 23 advisory
committee’s note, 2003 Amendments (“A court that is not
satisfied that the requirements of Rule 23 have been met
17
should refuse certification until they have been met.”); In re
Hydrogen Peroxide, 552 F.3d at 319-20 (explaining the 2003
amendments to Rule 23 made clear that class certification
may not be granted on a tentative basis). The trial court must
“make a definitive determination that the requirements of
Rule 23 have been met before certifying a class.” In re
Hydrogen Peroxide, 552 F.3d at 320.
The evidence presented in the trial court was
insufficient to support a finding of numerosity. On remand,
plaintiff must show either direct or circumstantial evidence
specific to the problems and products involved in the
litigation so the trial court may determine whether there are in
fact sufficiently numerous parties to warrant class action
treatment. Without such evidence, plaintiff cannot prove
numerosity by a preponderance of the evidence.
C.
Wal-Mart reprises its ascertainability concerns under
the predominance framework, contending common issues do
not predominate over the individual inquiries necessary for
determining which of the 3,500 price-override transactions
involved the sale of as-is items, whether the as-items were
“last one” items or otherwise came with manufacturers’
warranties, and whether members who purchased Service
Plans for ineligible as-is items nonetheless received service or
refunds.
We have previously noted that the line dividing
ascertainability from predominance is blurry. See Marcus,
687 F.3d at 594 n.3 (“[A]scertainability problems spill into
the predominance inquiry . . . .”). But despite some overlap,
18
they remain separate prerequisites to class certification and
serve distinct purposes: the ascertainability requirement
focuses on whether individuals fitting the class definition may
be identified without resort to mini-trials, id. at 593, whereas
the predominance requirement focuses on whether essential
elements of the class’s claims can be proven at trial with
common, as opposed to individualized, evidence, In re
Hydrogen Peroxide, 552 F.3d at 311.
The individual inquiries that Wal-Mart has cited all
focus on whether putative class members fit the class
definition. Thus, we think Wal-Mart’s objection to
certification on the basis of these inquiries is better analyzed
under the ascertainability framework than the predominance
framework. And as stated above, we agree with Wal-Mart
that on remand the trial court must consider whether there is a
reliable and administratively feasible approach for resolving
the necessary inquiries.
Moreover, since ascertaining the class is logically
antecedent to determining whether issues common to the
class predominate over individual issues, we do not reach the
question of whether Hayes could satisfy Rule 23(b)(3)
predominance—a requirement “even more demanding than
Rule 23(a)” and “designed for situations ‘in which class-
action treatment is not as clearly called for.’” Comcast, 133 S.
Ct. at 1432 (some quotation marks omitted) (quoting Dukes,
131 S. Ct. at 2558); see also Sullivan v. DB Invs., Inc., 667
F.3d 273, 297 (3d Cir. 2011) (“Parallel with Rule 23(a)(2)’s
commonality element, . . . Rule 23(b)(3)’s predominance
requirement imposes a more rigorous obligation upon a
reviewing court to ensure that issues common to the class
predominate over those affecting only individual class
19
members.”).
On remand, should the trial court determine that Hayes
has satisfied the requirements of Rule 23(a), it should
reevaluate whether the putative class satisfies the
predominance requirement.7
D.
In its brief, Wal-Mart draws our attention to Hayes’
statement in deposition that he does not know if either the
power washer or television set he purchased from Sam’s Club
came with a manufacturer’s warranty. Notably, the trial court
7
At this stage, we merely note that Hayes’ breach of contract
claim appears problematic. “To establish a breach of contract
claim, a plaintiff has the burden to show that the parties
entered into a valid contract, that the defendant failed to
perform his obligations under the contract and that the
plaintiff sustained damages as a result.” Murphy v. Implicito,
920 A.2d 678, 689 (N.J. Super. Ct. App. Div. 2007). In his
complaint, Hayes contends Wal-Mart breached the Service
Plan by not intending to perform its promise—apparently, the
promise to insure Hayes’ as-is product. Yet Hayes admits
that, by its very terms, the Service Plan excludes as-is
products from insurance coverage. Given this admission,
Hayes may have conceded that Wal-Mart followed the terms
of the Service Plan by intending not to insure the as-is
products explicitly excluded from Service Plan coverage.
Hayes has not reconciled these contrary positions or
explained how breach could be shown in a manner common
to the class. Indeed, his inconsistent positions may preclude
any possible common proof of breach.
20
excluded from the class definition any consumer who
purchased a Service Plan for an as-is product that was
covered by a full manufacturer’s warranty at the date of
purchase. The court reasoned that any such product would be
insured under the terms of the Service Plan.
It is axiomatic that the lead plaintiff must fit the class
definition. See, e.g., Bailey v. Patterson, 369 U.S. 31, 32-33
(1962) (“[Plaintiffs] cannot represent a class of whom they
are not a part.”). Although different courts have asserted
different origins for this axiom,8 they arrive at the same
conclusion: where the lead plaintiff does not fit the class
definition, the class may not be certified. Wal-Mart does not
contend we should consider Hayes’ admission under any
particular framework. In fact, Wal-Mart highlights Hayes’
admission in the context of numerosity—contending Hayes
has failed to show that even one class member exists. But in
addition to bolstering Wal-Mart’s numerosity argument, we
think Hayes’ admission draws into question his standing to
sue. See Schlesinger v. Reservists Comm. to Stop the War,
418 U.S. 208, 216 (1974) (“To have standing to sue as a class
representative it is essential that a plaintiff must be a part of
that class, that is, he must possess the same interest and suffer
the same injury shared by all members of the class he
represents.”).
8
For instance, courts have found the lead plaintiff did not
fulfill the “adequacy” requirement of Rule 23(a)(4), was not
similarly situated to those he sought to represent, or lacked
standing. See 7A Charles Alan Wright, Arthur R. Miller, &
Mary Kay Kane, Federal Practice and Procedure § 1761 (3d
ed. 2005) (collecting cases).
21
The Court of Appeals for the Second Circuit has
explained that
[s]tanding has both constitutional
dimensions rooted in Article III’s Case or
Controversy Clause and prudential dimensions
that are closely related to Art. III concerns but
[are] essentially matters of judicial self-
governance. The rule that a class representative
must be part of the class is one of prudential
standing, related to the broader principle that
the plaintiff generally must assert his own legal
rights and interests, and cannot rest his claim to
relief on the legal rights or interests of third
parties.
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d 91, 100-01 (2d Cir. 2007) (second alteration in
original) (citations, footnote, and quotation marks omitted).
But where the plaintiff’s ability to fall within the class
definition not only depends upon whether the plaintiff
sustained the same injury as the class, but also upon whether
the plaintiff sustained any injury at all, we find the issue of
the plaintiff’s constitutional standing also invoked.9
9
“Because constitutional standing is a jurisdictional
requirement, ‘[w]e are obliged to examine standing sua
sponte where standing has erroneously been assumed
below.’” Lewis v. Alexander, 685 F.3d 325, 338 n.10 (3d Cir.
2012) (alteration in original) (quoting Adarand Constructors,
Inc. v. Mineta, 534 U.S. 103, 110 (2001)), cert. denied, 133 S.
Ct. 933 (2013).
22
To have constitutional standing, “[a] plaintiff must
always have suffered ‘a distinct and palpable injury to
himself’ that is likely to be redressed if the requested relief is
granted.” Gladstone Realtors v. Vill. of Bellwood, 441 U.S.
91, 100 (1979) (citation omitted) (quoting Simon v. E. Ky.
Welfare Rights Org., 426 U.S. 26, 41 n.22 (1976)). “It is the
fact, clearly established, of injury to the complainant—not to
others—which justifies judicial intervention.” McCabe v.
Atchison, Topeka, & Santa Fe Ry. Co., 235 U.S. 151, 162
(1914). “[I]f none of the named plaintiffs purporting to
represent a class establishes the requisite of a case or
controversy with the defendants, none may seek relief on
behalf of himself or any other member of the class.” O’Shea
v. Littleton, 414 U.S. 488, 494 (1974).
In this case, the issue of whether Hayes fits the class
definition overlaps with the issue of whether he suffered an
injury. Hayes only meets the class definition if the as-is
power washer he purchased was not covered by a
manufacturer’s warranty.10 Similarly, Hayes only incurred an
injury—e.g., being defrauded or paying for a valueless
product—if the as-is product for which he purchased a
Service Plan was explicitly excluded from Service Plan
coverage, since, importantly, Hayes does not contend that he
ever sought service on his power washer and was denied.
Thus, if Hayes has a valid manufacturer’s warranty, he not
10
We agree with the trial court that Hayes’ purchase of a
Service Plan for his television set cannot form the basis for
class certification because it was honored when Sam’s Club
replaced the missing remote. Sam’s Club also offered to
refund Hayes the cost of that Service Plan, but Hayes refused
to accept the refund.
23
only falls outside the class definition, but he also has a valid
Service Plan and therefore has not been injured.
Presently, Hayes does not know if he has a valid
manufacturer’s warranty. As a result, we do not know if his
suit presents an Article III case or controversy. On remand, if
the trial court certifies the class, it must determine whether
Hayes falls within the amended class definition and sustained
an injury.11 If Hayes does not fall within the class definition
11
See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992) (“The party invoking federal jurisdiction bears the
burden of establishing [the elements of standing]. Since they
are not mere pleading requirements but rather an
indispensable part of the plaintiff’s case, each element must
be supported in the same way as any other matter on which
the plaintiff bears the burden of proof, i.e., with the manner
and degree of evidence required at the successive stages of
the litigation.”); see also Mortensen v. First Fed. Sav. & Loan
Ass’n, 549 F.2d 884, 891 (3d Cir. 1977) (“Because at issue in
a factual 12(b)(1) motion is the trial court’s jurisdiction—its
very power to hear the case—there is substantial authority
that the trial court is free to weigh the evidence and satisfy
itself as to the existence of its power to hear the case. . . .
[T]he existence of disputed material facts will not preclude
the trial court from evaluating for itself the merits of
jurisdictional claims. Moreover, the plaintiff will have the
burden of proof that jurisdiction does in fact exist.”); Apex
Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 444 (7th
Cir. 2009) (explaining that because federal “jurisdiction
cannot be conferred by consent of the parties, if the facts
place the district court on notice that the jurisdictional
24
and has no injury, the case must be dismissed.12
IV.
On the existing record, this class does not survive the
ascertainability and numerosity requirements as articulated by
Marcus. But because plaintiff did not have an opportunity to
address these requirements in the trial court, we will vacate
the certification order and remand for further proceedings
consistent with this opinion.
allegation probably is false, the court is duty-bound to
demand proof of its truth” (quotation marks omitted)).
12
Substitution of the lead plaintiff could only occur if there
were multiple lead plaintiffs. Rubenstein, Newberg on Class
Actions § 2:8 (“[I]f a case has only one class representative
and that party does not have standing, then the court lacks
jurisdiction over the case and it must be dismissed.”).
25