Law360, New York (March 26, 2014, 12:55 PM ET) -- One year ago, on March 27, 2013, the U.S. Supreme Court issued its decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), overturning an order certifying an antitrust class action under Federal Rule of Civil Procedure 23(b)(3), which requires that questions of law or fact common to class members predominate over questions affecting only individual members.
The Supreme Court held that the plaintiffs’ expert’s damages model was unable to measure classwide damages attributable to the only theory of antitrust impact found viable by the district court. Because of this flaw in the damages model, individual damages calculations would overwhelm questions common to the class, and the class therefore could not be certified under Rule 23(b)(3).[1]
On remand, plaintiffs filed a new motion for class certification, slicing several years off the class period and limiting the geographic market to only five of the 18 counties in the Philadelphia area for which they originally sought certification.[2] The defendants opposed the motion and filed a new motion to exclude the opinions of plaintiffs’ expert. The court then granted plaintiffs’ unopposed request to stay the case while the parties conduct settlement discussions, which apparently are ongoing.[3]
It was not unexpected that class counsel in Comcast would narrow the class for which they sought certification, or that settlement discussions might take place after the Supreme Court’s decision. But what effect is Comcast having on class certification in other antitrust cases? That answer is that in some cases courts have applied Comcast to deny certification and/or class counsel have chosen to limit the scope of their alleged classes or their theories of classwide impact and damages. In other cases, however, courts have certified classes or effectively certified liability-only classes under Rule 23(c)(4), leaving the question of damages for another day. Thus, Comcast provides a useful tool to attack Rule 23(b)(3) certification, but class counsel have been working diligently to try to blunt it.
Some Interesting Decisions
Class certification decisions in antitrust and nonantitrust cases since Comcast have generally fallen into three groups: (1) decisions applying Comcast and denying class certification because Rule 23(b)(3) was not satisfied;[4] (2) decisions distinguishing Comcast and finding Rule 23(b)(3) was satisfied;[5] and (3) decisions certifying a liability-only class under Rule 23(c)(4) (“[w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues.”).[6] See generally, e.g., Jacob v. Duane Reade Inc., 293 F.R.D. 578 (S.D.N.Y. 2013) (describing these groups of decisions), appeal pending, No. 13-cv-3873 (2d Cir.).
The following are some illustrative post-Comcast decisions in price-fixing, reverse payment and compensation suppression cases.
Price-Fixing Cases
Decisions in price-fixing cases run the gamut from denying certification based on a flawed damages model to granting certification after reviewing expert reports.
The leading decision since Comcast is In re Rail Freight Fuel Surcharge Antitrust Litigation, in which a class of direct purchaser shippers alleged that they paid inflated shipping prices due to price fixing of fuel rate surcharges by four freight railroads.[7] The district court certified the class. On appeal, the defendants argued that plaintiffs’ expert submitted a damages model that led to false positives, i.e., the model detected damages not just as to the purported class members, but also as to a control group of shippers that could not have been harmed because they were operating under legacy contracts that pre-dated the alleged conspiracy.[8]
The D.C. Circuit concluded that it had “no way of knowing the overcharges the damages model calculates for class members is any more accurate than the obviously false estimates it produces for legacy shippers.”[9] Simply stated: “No damages model, no predominance, no class certification.”[10] The court vacated the district court’s order and remanded the case for reconsideration in light of Comcast, and the parties are filing supplemental briefs and expert reports regarding certification.[11] Rail Freight has prompted defense experts to focus on whether the plaintiffs’ expert’s damages model yields false positives or similar problems that may be fatal to certification.
The defendants’ success in Rail Freight was not repeated in In re Cathode Ray Tube (CRT) Antitrust Litigation, where the court adopted the interim special master’s (ISM) recommendation to certify a class of indirect purchasers, who allege that defendants engaged in a price-fixing conspiracy for cathode ray tubes used in televisions and computer monitors.[12] The ISM recommended certifying the class after accepting briefing directed to Comcast.[13]
The court adopted the ISM’s recommendation in full, declining to conduct a “full-blown merits analysis,” and ruling that Comcast did not “require[] putative class action plaintiffs to prove and calculate their damages at the class certification phase.”[14] The Ninth Circuit denied the defendants’ Rule 23(f) petition and the case is proceeding. The direct purchaser case, however, settled before the court ruled on that separate class certification motion; the order certifying the indirect purchaser class likely was a catalyst for settlement in the direct purchaser case.[15]
Given the different outcomes in cases such as Rail Freight and CRT, it is important to watch two pending appeals — In re Blood Reagents Antitrust Litigation, No. 12-4067 (3d Cir.), and In re Urethane Antitrust Litigation, 13-3215 (10th Cir.) — both of which were certified as class actions before Comcast was decided by the Supreme Court.
In Blood Reagents, the district court certified a class of direct purchasers who allege that defendants fixed prices of blood reagents.[16] The district court relied on the Third Circuit’s decisions in Comcast and In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), in ruling that the damages models “present[ed] a viable method of calculating damages using common proof,” and that they could “evolve to become admissible evidence.”[17]
In challenging certification on appeal, the remaining defendant argues that the district court’s analysis did not comport with the Supreme Court’s decision in Comcast, because it failed to address the reliability of the direct purchasers’ expert’s opinion regarding damages and Rule 23(b)(3). Plaintiffs argue that the case is distinguishable because it involves only one theory of liability and one damages model, and Comcast requires only that a damages model be sufficiently linked to an accepted theory of liability. The parties submitted letters addressing the D.C. Circuit’s decision in Rail Freight, and argument took place on Feb. 12, 2014.
In Urethane, the district court certified a class of direct purchasers of urethane chemicals.[18] The Tenth Circuit denied a Rule 23(f) petition and the case proceeded toward trial. In January 2013, just before trial, the remaining defendant filed a motion to decertify the class. Comcast came down in March 2013 and was addressed in the remaining briefing on the decertification motion. In May 2013 — after the jury rendered a verdict in favor of the class — the district court denied the motion to decertify the class, and that order is on appeal before the Tenth Circuit.[19]
One of the asserted grounds for decertification is that plaintiffs’ expert (who is the same expert in Comcast) failed in his model (as in Comcast) to disaggregate damages resulting from two theories of liability — that defendants engaged in price fixing and also allocated customers and markets. Plaintiffs’ response is that they abandoned their allocation theory at trial and the expert’s testimony went to their price-fixing claim. The defendant’s rejoinder is that what matters is that the models were designed to measure damages from both the alleged price fixing and customer/market allocation. Briefing on the appeal closed on March 7, and a hearing is currently set for mid-May, 2014.
Reverse Payment Cases
Two recent decisions in reverse payment cases suggest different approaches to class certification after Comcast. One decision certified a class of direct purchasers, but the other suggested Comcast might preclude class certification for end payors in certain circumstances.
In In re Nexium (Esomeprazole) Antitrust Litigation, the court certified a class of direct purchasers who alleged that drug manufacturers delayed the market entry of the generic version of the drug Nexium.[20] Defendants challenged plaintiffs’ damages model for using average overcharge calculations, arguing Rule 23(b)(3) was not satisfied because individualized inquiries into what purchasers paid were necessary to determine damages.[21]
The court rejected...
