A federal appeals court has vacated class certification in a suit claiming extended warranties by retailer Sam's Club were worthless.
The plaintiff failed to show that the proposed class is sufficiently numerous and that class members can be easily ascertained, the U.S. Court of Appeals for the Third Circuit held in Hayes v. Wal-Mart Stores Inc., 12-2522.
The Aug. 2 ruling relied on the court's decision in Marcus v. BMW of North America, 687 F.3d 583 (2012), which held that Fed. R. Civ. P. 23 requires a party show by a preponderance of the evidence that class membership can be readily determined.
In the case at hand, William Hayes bought a $100 power washer, with a $5.26 service plan, and later a $350 37-inch television, with a $39.85 service plan. Both products were labeled as-is, and offered at reduced prices, at Sam's Club in Williamstown.
Hayes later discovered that the TV's manual and remote control were missing. The store gave him those items but said he should not have been sold the service plan because the TV was not covered.
Sam's Club service plans generally do not cover products sold as-is, unless the item is covered by a manufacturer's warranty.
Hayes was offered a refund for the plan cost but declined.
In January 2010, Hayes sued on behalf of all consumers who bought a service plan for an as-is product from Sam's Club in New Jersey since January 2004. He asserted violations of the Consumer Fraud Act, breach of contract and unjust enrichment.
U.S. District Judge Jerome Simandle granted certification in March 2012, finding the class met the ascertainability requirement because buyers could be determined by objective criteria.
He also found the class sufficiently numerous because Sam's Club records showed 3,500 transactions that included a price override, done when as-is items are sold, and purchase of a service plan.
Simandle reasoned that even if 5 percent of those transactions were for as-is items ineligible for service plans, the class would be sufficiently numerous.
He also found that the purchase of the power washer was a proper basis for class certification but the purchase of the TV was not because the service plan was honored when the missing remote was replaced.
Wal-Mart, Sam's Club's parent, was granted leave for an interlocutory appeal. It claimed Hayes failed to show that a reliable method of ascertaining class membership existed and that the class is sufficiently numerous.
On appeal, Judges Anthony Scirica, Thomas Ambro and Julio Fuentes said that "where nothing in company databases shows or could show whether individuals should be included in the proposed class, the class definition fails."
The Marcus plaintiffs sued BMW and Bridgestone over allegedly defective tires, but records did not indicate which cars were sold with those tires.
Forcing BMW and Bridgestone to accept as true car owners' declarations that they are class members would have "serious due process implications," the Marcus court said.
The Hayes panel remanded for limited fact-finding on whether a reliable way for ascertaining class membership is available.
The petition for certification "will founder if the only proof of class membership is the say-so of putative class members or if ascertaining the class requires extensive or individualized fact-finding," Scirica wrote for the panel.
The appeals court also said that the plaintiff did not fulfill the numerosity requirement. On remand, he must show direct or circumstantial evidence so the trial court may determine whether there are enough parties to warrant class action, Scirica wrote.
The lawyer for Wal-Mart, John Papianou, of Montgomery, McCracken, Walker & Rhoads in Philadelphia, declines to comment.
Plaintiff lawyers Daniel Lapinski of Wilentz, Goldman & Spitzer in Woodbridge, and James Shah of Shepherd, Finkelman, Miller & Shah in Collingswood, did not return calls.