In the summer of 2007, Julie Grimes went to the movies. And, presumably to avoid the line at the box-office register, she used the self-service kiosk. But when she looked at her receipt, she noticed that the machine had printed more than the last five digits of her credit card. For most patrons, this would be unremarkable. For some careful patrons, it might be grounds for shredding the receipt instead of just throwing it away. For Ms. Grimes, it was a violation of the Fair and Accurate Credit Transaction Act (FACTA), and a class action lawsuit, Grimes v. Rave Motion Pictures, 2010 U.S. Dist. LEXIS 12894 (N.D. Ala. Jan. 12, 2010).
FACTA (as amended, after Congress recognized it had become a source of no-injury class actions) prohibits a company from “willfully” printing a credit card receipt with too many digits or an expiration date.
Ms. Grimes sought to certify a class consisting of:
All persons to whom the Defendants provided an electronically printed purchase receipt at the point of sale or transaction, in a transaction occurring after December 4, 2006, which receipt displayed more than the last five digits of the person’s credit and/or debit card number; said class seeks only statutorily defined damages as set out in 15 U.S.C. § 1681; said class excludes anyone who has incurred actual damages as defined in said statute; said class excludes anyone who has filed a similar individual action against the Defendants, judicial officers of the United States and State of Alabama and counsel for the parties in this action.
The trial court decided that this proposed class was not ascertainable. Ascertainability is a threshold inquiry for a class action: it asks whether, by looking at the class definition, an individual could tell whether she was a class member. One of the largest concerns in ascertainability inquiries is what courts have termed “merits-based” classes, where the class is defined by reference to the ultimate merits of the case. (For example: “Everyone who lost money because of Acme Corp’s fraudulent sale of Road Runner traps.” If the trial determines there was no fraud, there is no class.)
Most courts that have declined to certify merits-based classes have relied on technical explanations of the Rule 23 requirements. But the Grimes court came up with a simple, powerful explanation of why merits-based classes are a bad idea:
Courts do not delve into the merits of individual claims at the class certification stage. To do so would allow the prospective class representative "to obtain a determination on the merits of the claims advanced on behalf of the class without any assurance that a class action may be maintained." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974). Thus, class certification is not appropriate if the court is called on to engage in individualized determinations of disputed fact in order to ascertain a person’s membership in the class.
The use for defendants should be pretty clear: when challenging a merits-based class, tie the definition problem into the standard for certification.