Wallach v. Eaton Corp.

837 F.3d 356

Mark S. Wallach, as Chapter 7 Trustee for the Bankruptcy Estate of Performance Transportation Services Inc., on behalf of the estate and all others similarly situated; Tauro Brothers Trucking Company ; Toledo Mack Sales & Service Inc.; JJRS LLC, Appellants

v.Eaton Corporation; Daimler Trucks North America LLC; Freightliner LLC; Navistar International Corporation; International Truck And Engine Corporation; Paccar Inc.; Kenworth Truck Company; Peterbilt Motors Company; Volvo Truck North America ; Mack Trucks Inc.; Navistar, Inc.

No. 15-3320

United States Court of Appeals, Third Circuit.

Argued: June 7, 2016

Opinion filed: September 14, 2016

Glen DeValerio, Esq., Berman DeValerio, One Liberty Square, Boston, MA 02109, Kyle G. DeValerio, Esq., Marc J. Greenspon, Esq., Berman DeValerio, 3507 Kyoto Gardens Drive, Suite 200, Palm Beach Gardens, FL 33410, Manuel J. Dominguez, Esq., Cohen Milstein, 2925 PGA Boulevard, Suite 200, Palm Beach Gardens, FL 33410, Richard A. Koffman, Esq., Emmy L. Levens, Esq. (Argued), Daniel H. Silverman, Esq., Cohen Milstein, 1100 New York Avenue, N.W., West Tower, Suite 500, Washington, DC 20005, Jessica Zeldin, Esq., Rosenthal Monhait & Goddess, 919 North Market Street, Suite 1401, Wilmington, DE 19801, Counsel for Appellants

Erik T. Koons, Esq., Joseph A. Ostoyich, Esq., Baker Botts, 1299 Pennsylvania Avenue, N.W., The Warner, Washington, DC 20004, Donald E. Reid, Esq., Morris Nichols Arsht & Tunnell, 1201 North Market Street, P.O. Box 1347, Wilmington, DE 19899, Benjamin F. Holt, Esq., John R. Robertson, Esq., Hogan Lovells, 555 Thirteenth Street, N.W., Columbia Square, Washington, DC 20004, John A. Sensing, Esq., Potter Anderson & Corroon, 1313 North Market Street, 6th Floor, Wilmington, DE 19801, Corey W. Roush, Esq., Pratik A. Shah, Esq. (Argued), James E. Tysse, Esq., Akin Gump Strauss Hauer & Feld, 1333 New Hampshire Avenue, N.W., Suite 400, Washington, DC 20036, Brian P. Borchard, Esq., Daniel E. Laytin, Esq., James H. Mutchnik, Esq., Kirkland & Ellis, 300 North LaSalle Street, Suite 2400, Chicago, IL 60654, Kelly E. Farnan, Esq., Richards Layton & Finger, 920 North King Street, One Rodney Square, Wilmington, DE 19801, Thomas L. Boeder, Esq., Cori G. Moore, Esq., Perkins Coie, 1201 Third Avenue, Suite 4900, Seattle, WA 98101, Jeffrey B. Bove, Esq., RatnerPrestia, 1007 Orange Street, Suite 205, Wilmington, DE 19801, Catherine S. Simonsen, Esq., Perkins Coie, 1888 Century Park East, Suite 1700, Los Angeles, CA 90067, Eric J. Weiss, Esq., 1066 Clifton Avenue, Clifton, NJ 07013, Daniel J. Boland, Esq., Michael J. Hartman, Esq., Jeremy D. Heep, Esq., Pepper Hamilton, 18th & Arch Streets, 3000 Two Logan Square, Philadelphia, PA 19103, M. Duncan Grant, Esq., Pepper Hamilton, 1313 Market Street, Suite 5100, P.O. Box 1709, Wilmington, DE 19899, Counsel for Appellees

Before: CHAGARES, KRAUSE, and SCIRICA, Circuit Judges

OPINION OF THE COURT

KRAUSE, Circuit Judge.

In this case, we are called upon to determine, among other things, the fount and contours of federal common law applicable to the assignment of federal antitrust claims and the reach of the presumption of timeliness for motions to intervene as representatives of a class. Consistent with the Restatement of Contracts and the doctrines undergirding federal antitrust law, we hold that an assignment of a federal antitrust claim need not be supported by bargained-for consideration in order to confer direct purchaser standing on an indirect purchaser; such assignment need only be express, and that requirement was met here. We also hold that the presumption of timeliness, that is, the presumption that a motion to intervene by a proposed class representative is timely if filed before the class opt-out date, applies not only after the class is certified, as we held in In re Community Bank of Northern Virginia , 418 F.3d 277, 314 (3d Cir. 2005), but also in the pre-certification context. Because the District Court failed to apply that presumption and the intervenors' motion here was timely considering the totality of the circumstances, we conclude the District Court abused its discretion in denying their motion to intervene on that basis. Accordingly, we will reverse and remand for proceedings consistent with this opinion.

I. Background

Appellants seek to certify and represent a class of Class 8 truck purchasers to challenge an alleged conspiracy to monopolize among their immediate suppliers and those further up the market chain.¹ The relevant market can be envisioned as a three-layer cake, with parts manufacturers at the top, Original Equipment Manufacturers (OEMs) in the middle, and Class 8 truck consumers at the base. Parts manufacturers are companies that make component parts of trucks, such as the transmissions at issue in this case. These companies sell their products to OEMs, which, in turn, take orders from the customers to build trucks customized to the customers' needs. OEMs offer what are called “data books,” which list the various options for each part; the customer chooses among the parts and options; and the OEM sources the parts from the manufacturers and uses them to build the truck then sold to that consumer.

Eaton Corporation—a parts manufacturer—has long been a near monopolist in the market for supplying Class 8 truck transmissions. In 1989, a company called ZF Meritor² emerged as a competitor, offering transmissions that truck customers could select from the OEMs' data books. According to Appellants, Eaton sought to sideline ZF Meritor and retain its hold on the market by conspiring with the OEMs to oust ZF Meritor from the market. It purportedly did so by entering Long Term Agreements with the OEMs that would offer increasingly large rebates on Eaton transmissions based on the percentage of transmissions a given OEM purchased from Eaton as opposed to ZF Meritor. The OEMs allegedly embraced this plan because, while they would benefit directly from rebates, they could pass on any increase in the price of Eaton's transmissions to their customers downstream, reaping extra profits without suffering detriment from monopoly-level prices. Per Appellants, the Long Term Agreements had their intended effect, ultimately forcing ZF Meritor to shutter in 2003 and giving Eaton an iron grip on the market for Class 8 truck transmissions.

But not without repercussions. In 2006, ZF Meritor sued Eaton for antitrust violations and won. See ZF Meritor, LLC v. Eaton Corp. , 696 F.3d 254 (3d Cir. 2012) (affirming the jury's verdict against Eaton). Separately, a group of indirect purchasers (i.e., customers who bought trucks from OEMs' immediate customers) brought a class action against Eaton; that case was dismissed after the district court undertook a full class certification analysis pursuant to Federal Rule of Civil Procedure 23, though an appeal is pending. See generally In re Class 8 Transmission Indirect Purchaser Antitrust Litig. , 140 F.Supp.3d 339 (D. Del. 2015). And we now confront on appeal the suit brought on behalf of the OEMs' customers—i.e., “direct purchasers” of the Class 8 trucks—against both the OEMs and Eaton for damages arising from the alleged monopolization conspiracy.³ Wallach v. Eaton Corp. , 125 F.Supp.3d 487, 492 (D.Del. 2015).

Appellants here fall into two categories, each of which presents a different issue on appeal: those that brought suit as putative class representatives and those seeking to intervene to serve in that role. In the first group, the relevant party for purposes of appeal is Tauro Brothers Trucking Company (“Tauro”), the putative class representative that the District Court determined lacked standing.⁴ Tauro never directly purchased a Class 8 truck from the OEMs, but rather purchased trucks from R&R—a company that was a direct customer of the OEMs and that expressly assigned Tauro its direct purchaser antitrust claims stemming from the alleged conspiracy between the OEMs and Eaton.⁵ Before the District Court, Appellees challenged the propriety and effect of this assignment, urging that it is invalid for lack of bargained-for consideration and that Tauro lacks standing to bring this suit or serve as a class representative. The District Court agreed and dismissed Tauro from the suit.

In the second group are Toledo Mack Sales and Service, Inc. and JJRS, LLC, both of which directly purchased trucks from the OEMs. Concerned after Appellees sought to dismiss Tauro for lack of standing that Tauro could be dropped from the suit, thereby leaving no named representative, Toledo Mack and JJRS filed motions under Federal Rule of Civil Procedure 24 to intervene as putative class representatives.⁶ The District Court denied those motions, holding that neither entity had moved to intervene in a timely manner.

Having ejected the named plaintiff on standing grounds and foreclosed intervention by Toledo Mack and JJRS, the District Court dismissed the case in its entirety on August 31, 2015, concluding that the motion for class certification must be denied for want of a case or controversy necessary to sustain federal jurisdiction under Article III of the United States Constitution. On appeal, Appellants argue that (1) consideration is not required for a valid assignment of antitrust claims, and (2) the District Court abused its discretion in denying Toledo Mack and JJRS's motions to intervene. For the reasons that follow, we agree with these arguments and conclude that the case should be remanded for further proceedings consistent with this opinion.⁷

II. Standards of Review⁸

We first review the District Court's decision that Tauro lacked standing⁹ de novo , with deference to its factual findings unless clearly erroneous. White–Squire v. U.S. Postal Serv. , 592 F.3d 453, 456 (3d Cir. 2010). We review the District Court's denial of Toledo Mack and JJRS's Rule 24 motions as untimely for abuse of discretion, Halderman v. Pennhurst State Sch. & Hosp. , 612 F.2d 131, 134 (3d Cir. 1979), which occurs where a “...