The Second Circuit recently rejected the "heightened" ascertainability requirement under Rule 23(b)(3), turning aside a challenge to a district court's certification of a securities fraud class action. Instead, the court chose to follow the Sixth, Eighth, and Ninth Circuits by adopting an ascertainability standard that only requires "that a class be defined using objective criteria that establish a membership with definite boundaries."

A district court certified two classes in the securities fraud case: one for claims based on the Exchange Act and one for claims based upon the Securities Act. Because the relevant debt securities were not traded on any U.S. exchange, putative class members could only assert claims if they acquired their securities in "domestic transactions." On appeal of the certification order, the defendants argued the classes failed to satisfy Rule 23's implicit "ascertainability" requirement (along with predominance) because putative class members had to establish that they acquired their securities in a domestic transaction.

The defendants had argued for a "heightened" ascertainability requirement in which the proposed classes had to be administratively feasible — over and above the baseline requirements of definiteness and objectivity.

The Second Circuit rejected that standard, finding that it was neither required by its prior decision in Brecher v. Republic of Argentina nor consistent with Rule 23. The court explained the Brecher opinion's reference to administrative feasibility was not strictly part of the court's holding and was not intended to create an independent ground for denying certification; rather, administrative feasibility was the purpose of the ascertainability requirements of definiteness and objectivity. Analyzing Rule 23, the court found that the administrative feasibility test facially duplicates the manageability component of superiority as well as risks overlapping with the predominance requirement.

The Second Circuit then criticized the district court's analysis of ascertainability as "not precisely consistent with" its newly-clarified standard, explaining that the lower court concentrated on feasibility concerns the Second Circuit has now decided are not controlling. Nonetheless it affirmed the lower court's certification order, concluding that the trial court findings demonstrate adherence to the appropriate ascertainability requirements. The class definitions included people who acquired certain securities within certain time periods via domestic transactions —criteria which were deemed sufficiently objective and definite.

In re Petrobras Sec., No. 16-1914 (2d Cir. July 7, 2017).

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