Speaker 1: You're listening to Bloomberg Law. I'm June Gralso in New
Speaker 1: York with Greg's Store in Washington, d C. Class actions
Speaker 1: are often a controversial area, and now the Ninth Circuit
Speaker 1: has widened the split among the circuit courts over one
Speaker 1: aspect of starting a class action. The case involved the
Speaker 1: natural labels on Western cooking oils. Consumers in eleven states
Speaker 1: claimed that label was false and misleading. But the question
Speaker 1: was how could all the members of the class be
Speaker 1: identified when consumers generally don't save grocery receipts might not
Speaker 1: even remember purchasing a particular cooking oil. The Ninth Circuit
Speaker 1: ruled the plaintiff's attorneys don't have to lay out a
Speaker 1: feasible plan to identify the class members at the time
Speaker 1: the class is being formed. That puts the Ninth Circuit
Speaker 1: in line with the sixth, seventh, and Eighth Circuits, but
Speaker 1: in conflict with the Third Circuit. Our guest is securities
Speaker 1: and class action attorney Mark Rifkin, a partner at Wolf Haldenstein. Mark,
Speaker 1: this is about what's called class certification. Will you start
Speaker 1: by explaining what that is and how this issue came up? Sure,
Speaker 1: I'd be pleased to do that. Early in a case
Speaker 1: that's brought us a class action, the court has to
Speaker 1: make a determination that the case is suitable to be
Speaker 1: maintained as a class action, that the point off is
Speaker 1: an appropriate representative of the class, and that the pointiff's
Speaker 1: lawyer is competent to represent the class as well. Because
Speaker 1: the case is brought on behalf of thousands or tens
Speaker 1: of thousands or even more people who are not present
Speaker 1: in court to represent themselves, so the court has to
Speaker 1: be satisfied that the representative plaintiff can proceed on behalf
Speaker 1: of everyone. And the court makes that determination following a
Speaker 1: specific set of rules that are set forth in the
Speaker 1: Federal Rules of Civil Procedure Rule twenty three. And in
Speaker 1: this case, the court looked at the rule and analyzed
Speaker 1: whether the district court properly followed the class certification Rule
Speaker 1: rule three in certifying the class to seed as a
Speaker 1: class action, and mark, how does this whole issue of
Speaker 1: ascertainability fit into that? Or let me ask it a
Speaker 1: different way, what what in this case did contagras claim
Speaker 1: that the plaintiffs needed to show at the certification stage?
Speaker 1: Sure the issue is this? The Third Circuit said that
Speaker 1: in order to have a class certified, in addition to
Speaker 1: meeting the specific requirements of Rule twenty three, the plaintiff
Speaker 1: also has to demonstrate during the class certification process that
Speaker 1: the absent members of the class, all those tens of
Speaker 1: thousands of people who bought in this case West and Oil,
Speaker 1: are reasonably identifiable through some means that the plaintiff identifies
Speaker 1: in the process of class certification. And the Ninth Circuit
Speaker 1: looked at that argument and disagreed and said that Rule
Speaker 1: twenty three does not have a special requirement for ascertainability.
Speaker 1: And and so the Court said, we're not going to
Speaker 1: create a new requirement. We think the we think we
Speaker 1: should apply Rule twenty three the way it was drafted.
Speaker 1: The Court went through a complex analysis of the legislative
Speaker 1: history of the rule and said, the rule covers these issues,
Speaker 1: and we don't need to create a whole new additional
Speaker 1: requirement for point offs. What was the argument that the
Speaker 1: Third Circuit made in saying that you have to identify
Speaker 1: the people up front. There were essentially three principal issues
Speaker 1: that the Third Circuit said the first. The first of
Speaker 1: those issues is the Court says that one of the
Speaker 1: reasons we go through the certification process, is to identify
Speaker 1: class members who are entitled to receive notice of appending
Speaker 1: class action so they can decide whether to participate in
Speaker 1: the class action or request exclusion to pursue their own
Speaker 1: individual claims. And the court says, if you can identify
Speaker 1: the members of the class easily, you can't send notice out.
Speaker 1: So that's one issue. And then Ninth Circuit disagreed and
Speaker 1: it said, no, you don't. Number one, the neither the
Speaker 1: rules nor general principles of federal law require UH that
Speaker 1: kind of mandatory individual notice to every conceivable member of
Speaker 1: the class. And the Court also said, then, in a
Speaker 1: consumer case like this, and this had to do with
Speaker 1: the labeling of West and brand UH cooking oils. Contagres
Speaker 1: sells Western oil and it markets and advertises them as
Speaker 1: a percent natural. The plaintiffs say, no, they're not add
Speaker 1: percent natural. And that's the essence of the dispute. And
Speaker 1: the Ninth Circuit says, in a case like this, in
Speaker 1: a consumer case like this, where any individuals damages are
Speaker 1: going to be extremely small, the real interest that any consumer,
Speaker 1: anyone consumer has in opting out and pursuing an individual
Speaker 1: claim for two or three or four dollars in damages
Speaker 1: or whatever it may be, is so remote as to
Speaker 1: be consequential. So we're not too worried about notice, well,
Speaker 1: Mark Mark at some point, uh they if the plaintiffs
Speaker 1: win this case, you know, there's going to have to
Speaker 1: be uh, you know, they're gonna have to ascertain who
Speaker 1: is entitled to the damages. What's the problem with with
Speaker 1: requiring the plaintiffs lawyers to say up front, and here's
Speaker 1: how we would do that, which which is what sort
Speaker 1: of sounds like what Knager was asking them to do.
Speaker 1: Well in and of itself, there's nothing wrong with asking
Speaker 1: the plaintiff, do you have a mechanism for identifying class
Speaker 1: members at the end of the day, And and I
Speaker 1: suppose the courts analysis permits that to be done, but
Speaker 1: only within the context of the specific inquiry that's required
Speaker 1: under Rule twenty three. There's two parts to Rule twenty three.
Speaker 1: The first part says that the plaintiff has to identify
Speaker 1: for specific criteria for certification being a sufficient number of people.
Speaker 1: We call that moorosity, that they all share common interests.
Speaker 1: That's called commonality. That the pointiff's claim is typical of
Speaker 1: the claims of the absent class members, that it's the
Speaker 1: same kind of a claim and and that the pointiff
Speaker 1: is an adequate class representative. And the Ninth Circuit says,
Speaker 1: we're we're going to infer from the rule that the
Speaker 1: this is the limit of our inquiry. The second part
Speaker 1: of Rule twenty three has an additional requirement, and that's manageability.
Speaker 1: And the Ninth Circuit says that if you're going to
Speaker 1: consider this question of identifying class members, you should do
Speaker 1: so in the context of that inquiry, the manageability inquiry.
Speaker 1: Will it be possible to identify these class members without
Speaker 1: imposing such a burden on the court or on the
Speaker 1: litigants that it would be inappropriate to certify the class
Speaker 1: But that's within the delicate balance that the statute Rule
Speaker 1: twenty three itself puts in place, not a judicial creation.
Speaker 1: This this fifth element that the Third Circuit has suggested,
Speaker 1: this reasonable identifiabilities, uh element, So, Mark, what kind of
Speaker 1: impact does it have that the Ninth Circuit is now
Speaker 1: in line with the sixth, seventh, and Eighth Circuit and
Speaker 1: the Third Circuit is the outlier. I mean, is it
Speaker 1: going to go to the Supreme Court, or is it
Speaker 1: just easier in those circuits. Well, Junior asked a good question.
Speaker 1: It highlights the split between the circuits, the first, second,
Speaker 1: and third Circuit at one end of the spectrum having
Speaker 1: this additional requirement, and the sixth, seventh, eighth, and ninth
Speaker 1: circuits now having said no to the additional requirement. Uh.
Speaker 1: We often see cases go up to the Supreme Court
Speaker 1: when there is a split among the circuits. And and
Speaker 1: there was a split because already the sixth, seventh, and
Speaker 1: eighth circuits had rejected the Third Circuits approach a this case,
Speaker 1: I think number one highlights the difference. But number two
Speaker 1: it lends some weight to the view of the Seventh Circuit,
Speaker 1: which was the first circuit to say no to the
Speaker 1: Third Circuits requirement. And and I think it it does
Speaker 1: so in a in a very clear, very persuasive way,
Speaker 1: analyzing the language of the statute and applying what Justice
Speaker 1: Scalia would refer to as strict construction of rule Tree.
Speaker 1: We have just about three seconds left with the new
Speaker 1: Supreme Court coming up. You think it's going to be
Speaker 1: tougher on class actions? You know, I don't think so.
Speaker 1: I As you know I've said before, I think this
Speaker 1: Court has in recent years been fairly good for class certification,
Speaker 1: and I think it's likely that we'll see the same
Speaker 1: trend continue. I don't think there's going to be a
Speaker 1: sea change, but I think, um with with the new
Speaker 1: admitted station coming in, anything is possible. Thank you so much.
Speaker 1: It's always a pleasure to have you on. That's Mark
Speaker 1: rift In, a partner at Will Paul Denstein. He is
Speaker 1: a securities and class action attorney. Coming up on Bloomberg Law.
Speaker 1: Chief Justice John Roberts drops out of a case after
Speaker 1: hearing arguments because he discovered a possible conflict of interest
Speaker 1: from his stockholdings. Seems to be a pattern among the
Speaker 1: three justices who hold individual stocks. What about that pattern
Speaker 1: and should there be changes made. I'm June Groslo with
Speaker 1: Greg Store. That's coming up on Bloomberg Law. This is
Speaker 1: Bloomberg