NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3629-13T3

VINCENT DANIELS, individually and on behalf of a class, APPROVED FOR PUBLICATION

Plaintiff-Respondent, May 13, 2015

v. APPELLATE DIVISION

HOLLISTER CO., a Delaware Corporation,

Defendant-Appellant.

____________________________________________

Argued October 21, 2014 – Decided May 13, 2015

Before Judges Fisher, Accurso and Manahan.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-2310-12.

Brian J. Murray (Jones Day) of the Illinois bar, admitted pro hac vice, argued the cause for appellant (Grossman, Heavey & Halpin, P.C., and Mr. Murray, attorneys; Richard A. Grossman, of counsel and on the briefs; Mr. Murray, on the briefs).

James Shedden (Shedden Law) of the Illinois bar, admitted pro hac vice, argued the cause for respondent (Flitter Lorenz, P.C., and Mr. Shedden, attorneys; Cary L. Flitter, Theodore E. Lorenz and Andrew M. Milz, of counsel and on the brief; Mr. Shedden and Vincent L. DiTommaso (DiTommaso Lubin, P.C.) of the Illinois bar, admitted pro hac vice, on the brief). The opinion of the court was delivered by

FISHER, P.J.A.D.

We granted leave to appeal an order granting class

certification1 to consider whether the trial judge correctly held

plaintiff was not required to show the class members are

"ascertainable." Although we doubt the "ascertainability"

doctrine adopted by some federal courts should ever be

incorporated into our jurisprudence, we conclude in this matter

of first impression that "ascertainability" must play no role in

considering the certification of a low-value consumer class

action and, therefore, affirm.

Plaintiff commenced this lawsuit on behalf of himself and

others similarly situated against defendant Hollister Co., a

clothing retailer with outlets throughout the United States.

1 Orders granting or denying class certification are not appealable as of right; an aggrieved party must move for leave to appeal pursuant to Rule 2:5-6(a). We recognize, however, that the decision to grant or deny class certification often has a profound effect on the litigation. Accordingly, we will hereafter, as a general matter, liberally indulge applications for leave to appeal: (1) "when a denial of class status effectively ends the case (because, say, the named plaintiff's claim is not of a sufficient magnitude to warrant the costs of stand-alone litigation)"; (2) "when the grant of class status raises the stakes of the litigation so substantially that the defendant likely will feel irresistible pressure to settle"; and (3) when permitting leave to appeal "will lead to a clarification of a fundamental issue of law." Waste Mgmt. Holdings, Inc. v. Mowbray,

(1st Cir. 2000); see also Blair v. Equifax Check Servs., Inc.,

, 834- 35 (7th Cir. 1999).

2 A-3629-13T3 Plaintiff alleges that in or around December 2009, defendant

conducted a promotion by which customers purchasing at least $75

of merchandise were given a $25 gift card for use in its stores

and on its website. Plaintiff alleges that even though these

transferable gift cards possessed "no expiration date,"

defendant voided all outstanding cards on January 30, 2010.

Plaintiff alleges a gift card, which stated it had "no

expiration date," was dishonored when presented by him at one of

defendant's stores in New Jersey on January 22, 2011.

Claiming in-store signs during the promotion asserted that

"$25 gift card expires 1/30/10," but also acknowledging some

cards expressly stated they had "no expiration date," and others

were silent in that regard, defendant admits that as January 30,

2010 approached it "sent emails to customers who had registered

their email addresses to remind them of the upcoming expiration

date." Notwithstanding defendant's factual assertions, we

review an order granting class certification by according

plaintiff "every favorable view" of the complaint. Iliadis v.

Wal-Mart Stores, Inc.,

(2007) (quoting Riley v.

New Rapids Carpet Ctr.,

(1972)); see also Lee

v. Carter-Reed Co.,

(2010); Int'l Union of

Operating Eng'rs. Local No. 68 Welfare Fund v. Merck & Co.,

(2007) (hereafter "Merck"). Accordingly, we

3 A-3629-13T3 proceed on the assumption that the facts contained in the

complaint are true and that, as of January 30, 2010, defendant

began and will continue to dishonor $25 gift cards given out in

December 2009 despite representations at the time that the gift

cards would not expire.

Our courts not only liberally indulge the allegations of

the complaint but also "liberally construe[]" Rule 4:32-1 in

favor of class certification.

(quoting Delgozzo v. Kenny,

(App. Div.

1993)). In Varacallo v. Massachusetts Mutual Life Insurance

Co.,

(App. Div. 2000), we said that in

the context of consumer transactions, "class actions should be

liberally allowed . . . under circumstances that would make

individual actions uneconomical to pursue." In short, as the

Court made clear in Iliadis, "a class action 'should lie unless

it is clearly infeasible.'"

(quoting

).

In addition to this liberal approach, courts tasked with

determining whether a class should be certified must focus on

the Rule's purposes, which our Supreme Court described in the

following way:

Unitary adjudication through class litigation furthers numerous practical purposes, including judicial economy, cost- effectiveness, convenience, consistent

4 A-3629-13T3 treatment of class members, protection of defendants from inconsistent obligations, and allocation of litigation costs among numerous, similarly-situated litigants.

[Iliadis, supra,

.]

Of further importance is the Court's admonition that the

decision to certify a class should be guided by the policy that

favors an even playing field:

In such disputes, where the claims are, in isolation, "too small . . . to warrant recourse to litigation," the class-action device equalizes the claimants' ability to zealously advocate their positions. That equalization principle "remedies the incentive problem facing litigants who seek only a small recovery." [T]he class action's equalization function opens the courthouse doors for those who cannot enter alone.

[Ibid. (quoting In re Cadillac V8-6-4 Class Action,

(1983) and Muhammad v. Cnty. Bank of Rehoboth Beach, Del.,

(2006), certif. denied,

,

,

(2007)).]

In short, the class-action device's "'historic mission'" is

caring for "'the smaller guy.'"

(quoting Marvin E.

Frankel, Amended Rule 23 From a Judge's Point of View, 32

Antitrust L.J. 295, 299 (1966)).

There is no doubt that the certified class in question

consists of numerous individuals who have allegedly suffered

small injuries. In his written opinion, the trial judge noted

defendant's concession that "over $3,000,000 worth of $25 gift

5 A-3629-13T3 cards were voided." In fact, there is no dispute that all

requirements expressly mentioned in Rule 4:32-1(a) –

"numerosity, commonality, typicality, and adequacy of

representation,"

;

-25 – are present.

Defendant nevertheless argues class certification should

not have been permitted because of an element it claims is

embedded in the Rule's interstices – ascertainability. This

alleged implicit element, recognized by some federal courts in

construing Federal Rule of Civil Procedure 23, insists that "the

class must be currently and readily ascertainable based on

objective criteria." See, e.g., Marcus v. BMW of N. Am.,

L.L.C.,

(3d Cir. 2012).

In arguing the trial judge erred in granting class

certification, defendant contends that the defined class2 "fails

the ascertainability requirement and violates due process"

because defendant will have no ability "to test class

2 The order in question describes the class as: "Persons who possess [defendant's] promotional gift cards in hard copy stating 'no expiration date' that were issued as part of the 2009 promotion and that were voided by [defendant] on or after January 30, 2010, and persons who discarded such cards because they were told that the cards expired or had been voided, but not persons who received a refund of the expired balance on their cards, not persons who lost their cards, not persons who discarded their cards for reasons other than having been told that the cards expired or had been voided, and not persons who gave their cards to somebody else."

6 A-3629-13T3 membership," because "absent class members" will have no

"opportunity to opt-out," and because the preclusive effect of

any judgment will be unknowable and unenforceable. Defendant

claims our courts have recognized this doctrine but, even if

that were not so, we should now recognize and apply it. We

disagree on both scores.

We conclude, as did the trial judge, that our courts have

never viewed Rule 4:32-1 as requiring that a class be

"ascertainable" as a condition for certification. Defendant's

contrary argument relies on Iliadis, where, in a footnote, it is

stated that class certification:

presupposes the existence of a properly defined class. Thus, "[e]ven before one reaches the four prerequisites for a class action, there must be an adequately defined class." Richard L. Marcus & Edward F. Sherman, Complex Litigation: Cases and Materials on Advanced Civil Procedure 231 (4th ed. 2004). "[T]he proposed class must be sufficiently identifiable without being overly broad. The proposed class may not be amorphous, vague, or indeterminate and it must be administratively feasible to deter- mine whether a given individual is a member of the class." White v. Williams,

(D.N.J. 2002) (quotations and internal citation omitted).

[Iliadis, supra,

n.2.]

This footnote, however, is inapposite. It simply emphasized the

need for a clear definition of the contours of the class; it

says nothing about whether the class members must be

7 A-3629-13T3 ascertainable before certification may be permitted. In fact,

the word "ascertainable" does not appear in the opinion.

Those federal courts that found "ascertainability" silently

residing within Federal Rule of Civil Procedure 23 so held

because they believed this judge-made doctrine: "eliminates

'serious administrative burdens that are incongruous with the

efficiencies expected in a class action' by insisting on the

easy identification of class members"; "protects absent class

members by facilitating the "'best notice practicable'" required

by federal rules; and "protects defendants by ensuring that

those persons who will be bound by the final judgment are

clearly identifiable."

(citations omitted). This "ascertainability" doctrine, however,

is different from the requirement that a class be properly

defined, as the Third Circuit recognized when it later held that

"the question of ascertainability" in Marcus was "analyzed . . .

separately from the question of whether the class was properly

defined." Shelton v. Bledsoe,

(3d Cir. 2015).

So, while defendant trumpets the Iliadis footnote as proof our

Supreme Court adopted "ascertainability" as a requirement for

class actions commenced pursuant to our own Rule, in fact, the

footnote's language is premised on the Court's examination of

what is required to properly define a class without imposing on

8 A-3629-13T3 plaintiff the obligation of then showing that all class members

are identifiable. Accordingly, we reject defendant's contention

that the "ascertainability" doctrine has already been recognized

by our courts.

We also dispense with the argument that we should hold the

"ascertainability" doctrine is implicitly contained within Rule

4:32-1.

First, as already observed, our Supreme Court has not

recognized the doctrine despite discussing the requirements for

class certifications at length in Lee, Merck and Iliadis.3

Nothing in those decisions remotely suggests that anything other

than the Rule's expressed requirements are relevant, and nothing

in those decisions suggests the Rule's requirements are to be

interpreted with anything other than liberality in favor of

certification.

Second, federal experimentation with the ascertainability

doctrine seems far from over and, indeed, this doctrinal wave

may have broken before ever cresting. Only a few circuits have

expressly adopted it,4 and the Third Circuit, which produced the

3 We observed earlier that the word "ascertainability" does not appear in Iliadis; the word also makes no appearance in either Lee or Merck. 4 See EQT Prod. Co. v. Adair,

(4th Cir. 2014); Little v. T-Mobile U.S.A., Inc.,

(continued)

9 A-3629-13T3 Marcus/Hayes/Carrera trilogy on which defendant relies,5 appears

quite unsettled. For example, in a case decided after the

trilogy, the court expressly held that "ascertainability is not

a requirement for certification of a (b)(2)[6] class seeking only

injunctive and declaratory relief."

. The final act of the trilogy – disagreement about

rehearing en banc in Carrera, supra,

, set forth in

Carrera v. Bayer Corp., No. 12-2621,

(3d Cir. May 2, 2014) – demonstrates further uncertainty about

the scope and application of the doctrine in class actions

brought pursuant to Federal Rule of Civil Procedure 23(b)(3),

the federal counterpart to Rule 4:32-1(b)(3), which applies

here. And the rollback of the doctrinal wave may be seen in an

even more recent opinion; in concurring in a judgment reversing

an order that denied certification on ascertainability grounds,

Circuit Judge Rendell observed that "the lengths to which the

majority goes in its attempt to clarify what our requirement of

(continued) (11th Cir. 2012); John v. Nat'l. Sec. Fire & Cas. Co.,

(5th Cir. 2007); In re Initial Pub. Offerings Sec. Litig.,

(2d Cir. 2006). 5 This trilogy consists of Marcus, to which we have already referred, Carrera v. Bayer Corp.,

(3d Cir. 2013), and Hayes v. Wal-Mart Stores, Inc.,

(3d Cir. 2013). 6 This abbreviation refers to Federal Rule of Civil Procedure 23(b)(2), the federal counterpart to Rule 4:32-1(b)(2).

10 A-3629-13T3 ascertainability means, and to explain how this implicit

requirement fits in the class certification calculus, indicate

that the time has come to do away with this newly created aspect

of Rule 23 in the Third Circuit." Byrd v. Aaron's Inc., No. 14-

3050,

(3d Cir. Apr. 16, 2015).7

The concerns expressed by Circuit Judges Ambro and Rendell,

in Carrera and Byrd, respectively, seem more in tune with our

Supreme Court's description of the policies governing the class-

action device in

, Merck, supra,

, and Iliadis, supra,

, than

those that generated the ascertainability doctrine. Indeed,

their views are more in line with the guiding principle

7 We are mindful that Byrd and the opinions in favor of and against rehearing en banc in Carrera are not "published." Nevertheless, Rule 1:36-3, which prohibits our citation to "appellate opinions not approved for publication," except in defined circumstances, has not been understood as applying to unpublished opinions from other jurisdictions. The Rule's prohibition is based on the concept declared in the first sentence of Rule 1:36-3 that "unpublished opinion[s]" are not to be cited because they are not precedential. Because decisions of the federal courts of appeals are not binding on this court regardless of whether they are published, see In re Contest of Nov. 8, 2011,

(2012), we do not interpret Rule 1:36-3 as precluding our citation to unpublished opinions of the federal courts of appeals. Moreover, we cite to Byrd and Carrera not because we view them as either precedential or non- precedential but merely to shed light on a judicially-created doctrine that defendant believes should be transplanted in this jurisdiction. We find these unpublished federal decisions highly relevant in seeking an understanding of how or to what extent this doctrine is being applied elsewhere.

11 A-3629-13T3 described by the Supreme Court of the United States. "The

policy at the very core of the class action mechanism" was the

desire "to overcome the problem that small recoveries do not

provide the incentive for any individual to bring a solo action

prosecuting his or her rights" and the mechanism "solves this

problem by aggregating the relatively paltry potential

recoveries into something worth someone's (usually an

attorney's) labor." Amchem Prods., Inc. v. Windsor,

,

,

(1997)

(quoting Mace v. Van Ru Credit Corp.,

(7th

Cir. 1997)). Accordingly, we agree with the concurring and

dissenting judges in Carrera and Byrd that when the concept of

ascertainability is applied inflexibly it becomes a device that

serves to burden or eliminate nascent class actions without

providing any societal benefit.8 We find that this federal

doctrine as urged here imposes far too heavy a burden on class

certification where the purported injuries to class members are

8 In his dissent in Carrera, Circuit Judge Ambro, the author of Marcus, argued the panel had lost sight of the intended flexibility that gave birth to this judicially-created doctrine.

, at *6-9. We agree. It should not be overlooked that the class-action mechanism has equitable roots, see Hansberry v. Lee,

,

,

(1940);

, and the hallmark of equity is its flexibility, see Crane v. Bielski,

(1954); Thompson v. City of Atlantic City,

(App. Div. 2006), aff’d in part, modified in part,

(2007).

12 A-3629-13T3 so minimal as to preclude the likelihood they would be

individually asserted. Although we have misgivings about the

ascertainability doctrine's use at the certification stage in

any class action, we decline to consider its application in

cases other than those involving low value consumer class

actions because of the concept's novelty.

Ascertainability, as defined by defendant, is particularly

misguided when applied to a case where any difficulties

encountered in identifying class members are a consequence of a

defendant's own acts or omissions. Had defendant obtained the

identities of consumers when giving out $25 gift cards, the

problems it now offers as grounds for upending certification

would not exist. Allowing a defendant to escape responsibility

for its alleged wrongdoing by dint of its particular

recordkeeping policies – an outcome admittedly un-troubling to

some federal courts9 – is not in harmony with the principles

governing class actions. See

(Rendell, J., concurring) (recognizing that

"[w]ithout the class action mechanism, corporations selling

small-value items for which it is unlikely that consumers would

9 See

(observing, in referring to a number of unpublished district court opinions, "[s]ome courts have held that where nothing in company databases shows or could show whether individuals should be included in the proposed class, the class definition fails").

13 A-3629-13T3 keep receipts are free to engage in false advertising,

overcharging, and a variety of other wrongs without

consequence"). In the final analysis, "ascertainability" does

not benefit the chief goal of our court rules – the fair and

efficient administration of justice; the Third Circuit's

experiences suggest the doctrine is practically unworkable in

application and is being exploited by defendants in unsuitable

cases to evade liability. See Hughes v. Kore of Ind. Enter.,

Inc.,

(7th Cir. 2013) (recognizing that "when

what is small is not the aggregate but the individual claim . .

. that's the type of case in which class action treatment is

most needful[,]" and emphasizing that a class action "has a

deterrent as well as a compensatory objective").

In rejecting the applicability of the "ascertainability"

doctrine when certifying class actions when members are numerous

consumers with small injuries, we are guided by the very reason

the class-action mechanism was created. As Justice Albin

expressed for the Court in Lee:

At times, a large number of individuals may have valid claims related to consumer fraud or some other wrong, but those claims in isolation are "too small . . . to warrant recourse to litigation." The perpetrator of that fraud or wrong also may be a corporate entity that wields enormous economic power. A class action permits "claimants to band together" and, in doing so, gives them a measure of equality against a corporate

14 A-3629-13T3 adversary, thus providing "a procedure to remedy a wrong that might otherwise go unredressed." In short, the class action is a device that allows "an otherwise vulnerable class" of diverse individuals with small claims access to the courthouse. In addition, a class action furthers other policy goals, including "judicial economy," "consistent treatment of class members," and "protection of defendants from inconsistent [results]."

[

(citations omitted).]

As noted earlier, the class-action device was intended to

empower "the smaller guy,"

, who

lacks either the incentive to sue for a small recovery or the

strength to take on a corporate giant in litigation. This has

been the predominant theme of all our Supreme Court's decisions

in this field. We therefore decline the invitation to water

down – if not eliminate – the availability of the class-action

device to low-value consumers by appending an onerous

requirement that serves no equitable purpose and cannot be

located in Rule 4:32-1.

Even if ascertainability was relevant to some degree at

this stage and in this case, we would find it poses no obstacle

to class certification.10 Defendant offers the specter of

10 Defendant has raised legitimate concerns about the preclusive effect of a final judgment in class actions when class membership is uncertain. These concerns, however, are outweighed at the certification stage by the benefits provided by class (continued)

15 A-3629-13T3 "extensive and individualized fact-finding or 'mini-trials'" in

identifying class members, or that membership might ultimately

be determined solely on the basis of the purported member's "say

so."

. This seems to us at

most a matter of concern at the claims administration stage, not

a ground for rejecting class certification. And even then, the

argument does not pose a very compelling ground for

decertification. See

(observing

that "[d]enial of class status due to manageability concerns is

disfavored and, 'in view of the public interest involved in

class actions, should be the exception rather than the rule'"

(citations omitted)). The record on appeal does not suggest

that future identification problems cannot be overcome through

the application of some ingenuity, if necessary. Instead, the

record reveals that defendant identified and canceled over

$3,000,000 worth of gift cards. Are not the many individuals

still in possession of cancelled gift cards easily

ascertainable? Is there a need for objective evidence other

than a member's presentation of such a card? To be sure, the

other part of the defined class – those individuals who

discarded a $25 gift card "because they were told that the cards

(continued) status, at least in the low value consumer class actions we address.

16 A-3629-13T3 expired or had been voided" – may need to show more, perhaps

through submission of an affidavit; it has not been shown,

however, how such a process unfairly hampers the defense. See

Boundas v. Abercrombie & Fitch Stores, Inc.,

(N.D. Ill. 2012).

To demand more of plaintiff at this stage is to impose

nothing other than an artificial barrier to the court's ability

to render justice in a situation that suggests – in assuming, as

we must,11 the truth of plaintiff's allegations – that defendant

defrauded or deprived thousands upon thousands of a benefit once

extended. Consumers may very well have purchased more than $75

of defendant's merchandise because of the lure of a $25 gift

card, and this bargain was arguably snatched away by defendant's

unilateral cancellation of the gift card at a later date. The

class-action device was created not only to allow compensation

for such small wrongs but also to deter future wrongdoing in the

marketplace.

.

11 To be clear, we only assume for present purposes what it is that plaintiff alleges. Defendant has suggested a number of factual grounds that may eventually demonstrate it engaged in no wrongdoing. This, however, is neither the time nor the place to resolve their dispute.

17 A-3629-13T3 The order granting class certification is affirmed and the

matter remanded for further proceedings. We do not retain

jurisdiction.

18 A-3629-13T3