The Third Circuit recently clarified in important ways its ascertainability standard for class actions under Rule 23 in a case that arose from the efforts of an auto finance company to generate business by marketing efforts directed at automobile dealers.  The decision reflects two key findings:  (1) that defendants who argue a class is not ascertainable – i.e., that it is not administratively feasible to identify class members – must produce information in their possession regarding putative class members during discovery; and (2) that affidavits from class members, by themselves, do not satisfy the ascertainability standard, but can suffice when combined with other records.

The genesis of the dispute is a 2012 agreement between Creditsmarts, an internet-based “indirect business-to-business lending tree” that helps independent car dealers connect various lenders with potential customers, and BMW Bank of America, Inc. and BMW Financial Services, LLC.  BMW offers automotive financing to customers through its “up2drive” division, which provides borrowers with financing at independent car dealers, regardless of make or model.  The parties agreed that BMW would use the Creditsmarts system at participating independent dealers to offer up2drive loans to borrowers.  Creditsmarts agreed “to establish electronic systems to permit customers to communicate with up2drive through mutually agreed secure lines of communication” and to “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, BMW would compensate Creditsmarts for customers referred through the up2drive system.

In late 2012, Creditsmarts used a fax broadcaster, WestFax, Inc., to fax advertisements to independent dealers, touting the up2drive program.  The advertisements included BMW’s up2drive logo and identified BMW Bank of North America as the sender.  Creditsmarts used WestFax to send 5,480 faxes in late November 2012, 5,107 faxes in early December, and another 10,402 faxes in late December, using a list created from Creditsmart’s customer database.  City Select Auto Sales, a recipient of one of the faxes, brought a putative class action against the three parties, arguing that the unsolicited faxes represented a violation of the Telephone Consumer Protection Act.

The database formed the lynchpin of the parties’ arguments on class certification.  Class plaintiffs moved to compel production of the database, while Creditsmarts resisted, arguing that the database included more entries than the number of BMW faxes sent in 2012.  Plaintiff’s motion to compel production of the database was denied and the district court found that the plaintiff’s proposed class failed to meet the ascertainability standard of Rule 23, because there was no reliable and administratively feasible way to determine whether putative class members received faxes during the three 2012 fax blasts.

The Third Circuit vacated the district court’s decision and remanded for further findings after production of the database.  The court further found that none of its previous decisions foreclosed the possibility that the plaintiff could support a class with affidavits combined with information from the Creditsmarts database, and that the only factual determination necessary for class membership was whether a given dealership in the database received a fax from Creditsmarts on one of the three 2012 dates.

The case is City Select Auto Sales, Inc. v. BMW Bank of North America, Inc., et al., Civil Action No. 1-13-cv-04595 (D.N.J.).