CITY SELECT AUTO SALES INC., a New Jersey corporation, individually and as the representative of a class similarly situated persons, Appellant
BMW BANK OF NORTH AMERICA INC.; BMW FINANCIAL SERVICES NA LLC; CREDITSMARTS CORP.
ARGUED: January 25, 2017
Appeal from the United States District Court for the District
of New Jersey (D.C. Civil Action No. 1-13-cv-04595) District
Judge: Honorable Noel L. Hillman
Phillip A. Bock, Esq. [ARGUED], Jonathan B. Piper, Esq.,
Bock, Hatch, Lewis & Oppenheim, LLC, Alan C. Milstein,
Esq., Sherman, Silverstein, Kohl, Rose & Podolsky, P.A.
Counsel for Appellant City Select Auto Sales, Inc.
L. DiClemente, Esq., Saul Ewing LLP, Raymond A. Garcia, Esq.,
Stroock & Stroock & Lavan LLP, Julia B. Strickland,
Esq. [ARGUED], Stroock & Stroock & Lavan LLP Counsel
for Appellees BMW Bank of North America, Inc., and BMW
Financial Services NA, LLC.
J. Gaynor, Jr. Esq., Robert A. Smith, Esq., Smith &
Doran, William B. Hayes, III, Esq. [ARGUED] Counsel for
Appellee Creditsmarts Corp
Jonathan D. Hacker, Esq., O'Melveny & Myers, Hannah
Y.S. Chanoine, Esq., Anton Metlitsky, Esq. Counsel for Amicus
Curiae The Chamber of Commerce of the United States of
America and the Grocery Manufacturers Association
Before: KRAUSE, SCIRICA, and FUENTES, Circuit Judges.
OPINION OF THE COURT
SCIRICA, CIRCUIT JUDGE.
Federal Rule of Civil Procedure 23(f) appeal, a New Jersey
automobile dealership contests the denial of class
certification of claims brought against the consumer
financing division of BMW and its contractor for junk faxes
allegedly sent in violation of the Telephone Consumer
Protection Act. The District Court denied class certification
on the sole ground that there was no reliable and
administratively feasible means of determining whether
putative class members fell within the class definition. We
will vacate and remand.
Creditsmarts Corporation operates an internet-based
"indirect business-to-business lending tree" that
helps independent car dealers connect customers with various
lenders. Dealers input customer information into
Creditsmarts's online portal, Creditsmarts forwards the
information to lenders based on the customer's credit
profile and the automobile to be purchased, and lenders may,
if appropriate, approve a loan for the customer. Creditsmarts
benefits dealers by providing customers with access to
financing options to facilitate sales and benefits lenders by
connecting them with potential borrowers at many small
BMW Bank of North America, Inc., and BMW Financial Services
NA, LLC (collectively "BMW") offer direct
automotive financing to customers through a division called
"up2drive." up2drive provides financing to
borrowers at independent car dealers for all makes and models
2012, BMW and Creditsmarts entered into a contract,
memorialized in a Master Professional Services Agreement and
a Marketing Agreement, under which BMW would offer up2drive
loans to borrowers at participating independent car dealers
through the Creditsmarts system. Creditsmarts agreed to
"establish electronic systems to permit customers to
communicate with up2drive through mutually agreed secure
lines of communication" and "process all
application forms using the minimum credit parameters
established by up2drive and the information obtained . . .
from the application form including the customer's credit
history, that will provide sufficient data to determine
whether the customer may qualify for any loan programs
offered . . . by up2drive." In exchange, Creditsmarts
would receive compensation from BMW for customers referred to
up2drive through its system. As part of the marketing
agreement, BMW agreed to provide "general institution
information (including logos or Trademarks) to be published
on the Vendor web site (Creditsmarts.com)."
number of occasions in late 2012, Creditsmarts used the
services of a fax broadcaster, WestFax, Inc., to fax
advertisements to independent car dealers. The advertisements
included the up2drive logo, identified BMW Bank of North
America, and stated "UpToDrive is looking for your
BUSINESS!!" A Creditsmarts employee used WestFax to
successfully send 5, 480 faxes on November 29, 2012; 5, 107
faxes on December 4, 2012; and 10, 402 faxes on December 27,
2012 (collectively "the BMW faxes").
each fax, the employee generated a list of recipients from
Creditsmarts's customer database. The customer database
contains dealership contact information, sometimes including
fax numbers, as well as information regarding the
dealership's relationship, if any, with Creditsmarts and
the date the dealership was added to the database. After
generating the recipient list from the customer database, the
employee uploaded the list and the advertisement to
Westfax's online portal. Westfax then broadcast the fax
to each recipient and billed Creditsmarts for each fax
successfully completed. Neither Creditsmarts nor Westfax
retained the lists of recipients of the BMW faxes.
City Select Auto Sales, Inc., received one of the faxes sent
on December 27, 2012. City Select alleges that it had no
preexisting business relationship with Creditsmarts or BMW
and that the fax was unsolicited.
30, 2013, City Select filed a complaint in the United States
District Court for the District of New Jersey asserting,
inter alia, a claim under the Telephone Consumer
Protection Act, 47 U.S.C. § 227, and a state law claim
for conversion based on the BMW fax. In addition to its
individual claim, City Select asserted claims under Federal
Rule of Civil Procedure 23 on behalf of a class of other car
dealers who received the BMW faxes. City Select sought
certification of a class defined as:
All auto dealerships that were included in the Creditsmarts
database on or before December 27, 2012, with fax numbers
identified in the database who were sent one or more
telephone facsimile messages between November 20, 2012 and
January 1, 2013, that advertised the commercial availability
of property, goods or services offered by "BMW Bank of
class certification discovery, City Select sought to compel
production of the Creditsmarts database. The database was not
preserved as of December 2012, but was preserved as of
February 2014. City Select avers that class members can be
identified from the 2014 database by determining those
customers who were added to the database before December 2012
and who had fax numbers listed in the database. But City
Select's motion to compel production of the Creditsmarts
database was denied.
District Court denied City Select's motion for class
certification on the sole ground that the proposed class
failed to meet our Circuit's ascertainability standard
because there was no reliable and administratively feasible
means of determining whether putative class members fell
within the class definition. City Select Auto Sales, Inc.
v. BMW Bank of N. Am., Inc., Civil Action No. 13-4595,
2015 WL 5769951, at *9 (D.N.J. Sept. 29, 2015); see Byrd
v. Aaron's Inc., 784 F.3d 154, 163 (3d Cir. 2015).
The Court concluded that "even though Plaintiff may be
able to identify the potential universe of fax recipients,
there is no objective way of determining which customers were
actually sent the BMW fax." City Select appealed.
District Court had jurisdiction under 28 U.S.C. §§
1331 and 1367. We granted plaintiff's petition for
interlocutory appeal from the District Court's order
denying class certification under Federal Rule of Civil
Procedure 23(f) and have jurisdiction under 28 U.S.C. §
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." In
re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312
(3d Cir. 2008) (internal quotation marks omitted). We review
the legal standard applied by the district court de
question presented in this appeal is whether the District
Court correctly determined that there was no reliable and
administratively feasible means of determining whether
putative class members were within City Select's proposed
class definition. Because we conclude the District Court
erred in its analysis of plaintiff's proposed method of
determining class membership, we will vacate and remand.
putative class action must satisfy the four requirements of
Federal Rule of Civil Procedure 23(a): numerosity,
commonality, typicality, and adequacy. See Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 613 (1997). In addition
to the Rule 23(a) requirements, a class action must be
maintainable under Rule 23(b)(1), (2), or (3). Only Rule
23(b)(3) is at issue in this case, which requires plaintiff
to meet the additional requirements of predominance and
superiority. Amchem, 521 U.S. at 615.
23(b)(3) class must also be "currently and readily
ascertainable based on objective criteria." Marcus
v. BMW of N. Am. LLC, 687 F.3d 583, 593 (3d Cir.
2012). To satisfy this standard, plaintiff must
show that "(1) the class is 'defined with reference
to objective criteria'; and (2) there is 'a reliable
and administratively feasible mechanism for determining
whether putative class members fall within the class
definition.'" Byrd, 784 F.3d at 163
(quoting Carrera v. Bayer Corp., 727 F.3d 300, 306
(3d Cir. 2013)). Plaintiff has the burden of making this
showing by a preponderance of the evidence, and the district
court must "undertake a rigorous analysis of the
evidence to determine if the standard is met."
Carrera, 727 F.3d at 306; see In re Hydrogen
Peroxide, 552 F.3d at 318. However, plaintiff need not
"be able to identify all class members at class
certification-instead, a plaintiff need only show that
'class members can be identified.'"
Byrd, 784 F.3d at 163 (quoting Hayes v. Wal-Mart
Stores, Inc., 725 F.3d 349, 355 (3d Cir. 2013))
(emphasis in Byrd).
articulated three principal rationales for this standard.
First, "ascertainability and a clear class definition
allow potential class members to identify themselves for
purposes of opting out of a class." Carrera v. Bayer
Corp., 727 F.3d 300, 306 (3d Cir. 2013). "Second,
it ensures that a defendant's rights are protected by the
class action mechanism, " id., and that
"those persons who will be bound by the final judgment
are clearly identifiable, " Marcus, 687 F.3d at
593. Finally, "it ensures that the parties can identify
class members in a manner consistent with the efficiencies of
a class action." Carrera, 727 F.3d at 307.
examination of the various factual circumstances in which we
have analyzed the ascertainability standard helps to
demonstrate its contours. We first addressed this standard in
Marcus, in which plaintiff proposed a class of New
Jersey purchasers of BMW vehicles equipped with
"run-flat tires" that had "gone flat and been
replaced" during the class period. 687 F.3d at 592. This
definition presented several serious ascertainability issues.
First, the vehicles in question were manufactured by a
foreign subsidiary who was not a party to the action and thus
defendant did not have access to records of which vehicles
were equipped with the defective tires. Id. at 593.
Second, dealerships regularly replaced the run-flat tires
with regular tires, and plaintiff did not present a method of
obtaining records from individual dealerships. Id.
at 593- 94. Finally, plaintiff limited the class to
purchasers of BMWs whose tires had "gone flat and been
replaced" and did not propose a method of determining
who met this part of the class definition. Id. at
594. Because plaintiff left the answer to each of these
questions to "potential class members' say so,
" we remanded to the District Court to consider
"the critical issue of whether the defendants'
records can ascertain class members and, if not, whether
there is a reliable, administratively feasible
Hayes v. Wal-Mart Stores, Inc., we considered claims
brought by a putative class of New Jersey retail discount
club customers who purchased goods with extended warranties.
725 F.3d at 352. Plaintiff's proposed class definition
included all customers who purchased a "Service Plan to
cover as-is products" but excluded any customers 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."
Id. at 353. We noted that this class definition
required a number of separate factual inquiries to determine
class membership: "(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." Id. at
356. We remanded so that plaintiff could propose reliable and
administratively feasible methods of answering these
questions without requiring "extensive and
individualized fact-finding." Id.
Carrera, the District Court certified a class
composed of all purchasers of a particular over-the-counter
diet supplement over several years in the state of Florida.
727 F.3d at 304. Defendants in that case were the drug
manufacturers, and thus did not have access to any retailer
records that could have established which customers purchased
the drug during the requisite time period. Id.
Plaintiff proposed using "retailer records of online
sales and sales made with store loyalty or rewards
cards" combined with affidavits from potential class
members. Id. But plaintiff had not sought, nor
obtained, the proposed records during class discovery.
Id. at 308-09. We determined that it was
inappropriate to certify the class without further inquiry
into the nature and extent of the available records, and
remanded in part for this purpose. Id. at 309. In
addition, we noted that, even if the proposed records did
exist, there was no evidence that a "single purchaser,
" let alone the whole class, could be identified using
them. Id.. For these reasons, among others, we
remanded so that plaintiff could conduct additional discovery
into whether there was a reliable and administratively
feasible means of determining class membership. Id.
recently, in Byrd we considered claims brought by
people who leased computers with spyware that was installed
and activated without their consent. 784 F.3d at 160. The
class definition included both the lessees and their
household members. Id. Defendants kept detailed
records enabling identification of the lessees. Id.
at 169. We concluded that identification of the household
members was unlikely to pose "serious administrative
burdens that are incongruous with the efficiencies expected
in a class action." Id. at 170 (quoting
Marcus, 687 F.3d at 593). We explained "[a]ny
form used to indicate a ...