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NJ Court Upholds Consumers' Rights by Rejecting Ascertainability 'Requirement' From Federal Courts on Class Action Issue

In a New Jersey State Court case captioned, Daniels v. Hollister, 2015 WL 2342917 (N.J. Sup. May 13, 2015), a panel of judges held that adopting the "doctrine of ascertainability" to toss a class action "would violate New Jersey's long-standing belief that rules governing class-action lawsuits should be liberally construed in order to offer the broadest possible protections to wronged customers."1 In this class action, plaintiffs received a $25 gift card when they purchased more than $75 in merchandise from a Hollister store. The lead plaintiff found that when he went to use the gift card just over a year after he had received it, the card had expired. He and the other plaintiffs allege that they were never given notification that the cards had expiration dates and that the gift cards themselves did not show any expiration date.2

The judicially created ascertainability doctrine refers to the notion that, in order for a class to be certified, the plaintiffs must be able to definitively identify all of the class members. This doctrine has become a popular tactic for corporations that are seeking to escape liability for their misdeeds defending class action claims. In rejecting the use of the doctrine as a means of destroying a class, the Daniels court disagreed with other courts, most notably the Third Circuit which, in Marcus v. BMW of North America, 687 F. 3d 583 (3d Cir. 2012), found that a "class must be currently and readily ascertainable based on objective criteria."3 The Daniels court made it clear that it does not believe that ascertainability should ever be considered in a class action and stated, "ascertainability must play no role in considering certification of a low-value consumer class action."4 The court also held that the ascertainability doctrine damages the rights of consumers and is a negative public policy that will not be adopted in New Jersey.

The defendant, Hollister, argued that, without the doctrine, which it believes is required under federal law, there was no way to properly determine the size of the class because a customer may have lost the gift card or given it away to a different potential customer. The court rejected the argument, holding that the class is not ascertainable due to Hollister's own actions, including not identifying the customers to whom it gave the gift cards. The court also queried that if "Hollister had identified and canceled $3 million worth of gift cards that had expired, 'Are not the many individuals still in possession of canceled gift cards easily ascertainable?'"5

As a result of several questionable judicial decisions, ascertainability has become a significant hurdle for class action plaintiffs in bringing class action claims in certain jurisdictions, including New Jersey federal courts. In addition, several courts in California and Florida have denied class certification in a number of cases because those courts found that the class would not be ascertainable. 6 There are a substantial number of courts, however, including the court in Hollister, that reject the requirement of demonstrating ascertainability because, inter alia, it eliminates consumers' ability to seek relief for claims without providing any reciprocal societal benefit.

The legal team at SFMS has significant experience litigating class action matters. If you have any questions regarding this subject or this posting, please contact Valerie Chang ([email protected]) or Michael Ols ([email protected]). We can also be reached toll-free at (866) 540-5505.

Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES:

1. http://www.njlawjournal.com/id=1202726356822/NJ-Court-Rejects-Federal-Approach-to-Class-Actions?slreturn=20150420105429

2. http://www.njlawjournal.com/id=1202726356822/NJ-Court-Rejects-Federal-Approach-to-Class-Actions?slreturn=20150420105429

3. http://www.njlawjournal.com/id=1202726356822/NJ-Court-Rejects-Federal-Approach-to-Class-Actions?slreturn=20150420105429

4. http://www.njlawjournal.com/id=1202726356822/NJ-Court-Rejects-Federal-Approach-to-Class-Actions?slreturn=20150420105429

5. http://www.law360.com/articles/655524/hollister-gift-card-class-survives-ascertainability-challenge

6. http://blogs.reuters.com/alison-frankel/2014/10/16/ascertainability-is-no-silver-bullet-in-class-action-defense/

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