The Supreme Court, in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), set a high standard for class certification under Federal Rule of Civil Procedure 23 (“Rule 23”). Under Rule 23(a), the party seeking certification must demonstrate that: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. Rule 23. Additionally, the proposed class must satisfy at least one of the three requirements in Rule 23(b). Id. In determining whether these requirements are met, the Supreme Court has instructed district courts to conduct a “rigorous analysis,” which frequently “will entail some overlap with the merits of the plaintiff’s underlying claim.” Dukes, 131 S. Ct. at 2551.
Several Circuits also recognize an “implied requirement of ascertainability” in Rule 23. See, e.g., Brecher v. Republic of Argentina, 802 F.3d 303, 304 (2d Cir. 2015); Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012). In essence, among other things, a class must be “sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member.” Brecher, 802 F.3d at 24. A so-called “fail-safe” class is “one that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim,” and thus the existence of the claim “cannot be ascertained until the conclusion of the case, when liability is determined.” Zarichny v. Complete Payment Recovery Servs., 80 F. Supp. 3d 610, 623 (E.D. Pa. 2015); see also Erin L. Geller, The Fail-Safe Class as an Independent Bar to Class Certification, 81 Fordham L. Rev. 2769, 2775 (2013) (noting that “[c]ourts have recognized that class definitions are inadequate when the definition does not allow for an ascertainable class, finding it “axiomatic” that for a class action to be certified a class must exist”). For example, in Zarichny, plaintiffs’ putative TCPA class was comprised of individuals who received telephone calls initiated using an automatic telephone dialing system without the recipient’s “prior express consent,” which the court determined to be a “fail-safe” class. Zarichny, 80 F. Supp. 3d at 625.
Further, “[t]he class must…be defined in such a way that anyone within it would have standing.” Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006). Federal courts have recognized that, if a class definition is “so broad that it sweeps within it persons who could not have been injured by the defendant’s conduct, it is too broad.” Kohen v. Pac. Inv. Mgmt. Co. LLC & PIMCO Funds, 571 F.3d 672, 677 (7th Cir. 2009).
While not all courts agree on the treatment of these fail-safe classes, the Seventh Circuit recently issued a decision affirming the district court’s order denying class certification, in part because plaintiffs failed to define an ascertainable class. In McCaster v. Darden Rests., Inc., No. 15-3258, 2017 U.S. App. LEXIS 213 (7th Cir. Jan. 5, 2017), Plaintiffs Demiko McCaster and Jennifer Clark, employees at two different restaurants owned by Darden Restaurants, Inc., alleged that Darden failed to pay accrued vacation pay allegedly owed to them upon separation in violation of the Illinois Wage Payment and Collection Act (“IWPCA”). Plaintiffs’ proposed class definition consisted of all individuals subject to the vacation policy at issue “who did not receive all earned vacation pay benefits.” Id. at *5. The district judge rejected this definition because it described an improper fail-safe class. Upholding this decision, the Seventh Circuit agreed, holding that this definition “plainly turns on whether the former employee has a valid claim. That is a classic fail-safe class, and the district judge properly rejected it.” Id. at *10. Alternatively, plaintiffs’ fallback argument suggested removing the defective, fail-safe language from the class definition, which the district court also rejected, for failure to satisfy the requirements of Rule 23. The Seventh Circuit agreed that the alternative class definition failed to satisfy the commonality requirement under Rule 23. Plaintiffs failed to identify any unlawful conduct on defendant’s part that spanned the entire class and caused all class members to suffer the same injury. Rather, plaintiffs simply argued that some separated employees did not receive all the vacation pay that they were due under the applicable policy. The Seventh Circuit recognized that while that “may be true . . . establishing those violations (if there were any) would not involve any classwide proof.” Id. at *13. A copy of the McCaster opinion can be accessed here.
Decisions like McCaster highlight the critical importance of scrutinizing proposed class definitions, not only to ensure that they meet the explicit requirements of Rules 23(a) and 23(b), but also to ensure that they are not impermissible fail-safe classes. By failing to identify and reject such circular class definitions, courts and parties are placed in the unmanageable position of litigating class actions where the putative class members cannot be ascertained until the case has been fully litigated on the merits—a result that turns the Rule 23 process completely on its head.