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THE LATEST: Class Certification Denied – Indirect Purchases Fail to Substantiate Link between Higher Input Costs and Higher Product Prices

Indirect purchaser plaintiffs’ motion for class certification in a lithium ion battery suit was denied for failing to show concrete evidence linking increased input costs to increased end-product prices; theoretical inference is not enough.

  • The US District Court for the Northern District of California denied a motion for class certification for a proposed class of indirect purchasers of lithium ion batteries. In re: Lithium Ion Batteries Antitrust Litigation, Case No. 13-MD-2420 (N.D. Cal. Mar. 5, 2018).
  • An expert witness for indirect purchaser plaintiffs (IPPs) calculated a 100 percent pass-through rate of price increases on lithium ion batteries to end use products, resulting in an estimated $573 million in damages for the proposed class (or approximately $1.7 billion in treble antitrust damages).
  • Defendants countered by arguing that the expert’s claim of pass-through of supracompetitive pricing was insufficiently substantiated because there was no direct connection between changing input costs and changing end-product prices. Simply put, there was no overcharge attributable to battery cost.
  • The court agreed and held that without more than theory about how much, if any, antitrust harm passed through to IPPs, class certification would be denied.
  • In indirect purchaser cases, courts will focus on the pricing dynamics of the products actually purchased by the plaintiffs in relation to alleged cost increases of components of those products. Courts are concerned not only with the fact of pass-through, but also whether the overcharge caused prices to change to the plaintiffs and the class.
  • Future indirect purchaser plaintiffs hoping to get past the class certification phase must show concrete evidence, not merely theory, about pass-through of supracompetitive pricing. This will likely be difficult for end users in cases involving numerous inputs.

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Third Circuit Upholds Dismissal of Indirect Purchaser Class in Auto Transmission Case, Revives Individual Claims

On February 9, the US Court of Appeals for the Third Circuit upheld a ruling by the US District Court for the District of Delaware that indirect purchasers of Class 8 transmissions did not meet the requirements for class certification. The Third Circuit found that only the individual claims may proceed in the case. The opinion is significant because it reaffirms the difficulty indirect purchaser plaintiffs face when attempting to certify a class.

Read the full article here.

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Judge Ends Indirect Purchaser Plaintiffs’ Case in Refrigerant Compressors

Last week, on April 8, 2014, the District Court for the Eastern District of Michigan dismissed the remaining claims of indirect purchaser plaintiffs (IPPs) in the ongoing Refrigerant Compressors litigation.  In re: Refrigerant Compressors, Case No. 2:09-md-02042 (E.D. Mich. April 8, 2014).  Almost exactly one year ago, the court dismissed most of the IPPs’ claims, mainly on the basis that the IPPs lacked antitrust standing to bring them.  In re: Refrigerant Compressors, Case No. 2:09-md-02042, Doc. 343  (E.D. Mich. April 9, 2013).  As a result of that decision, the IPPs’ case was limited to claims based on only two state statutes seeking damages against manufacturers of fractional compressors used in refrigeration devices, based on sales that occurred in only those two states.  The court’s decision dismissing the last two state claims was brief and resulted from a stipulation among the IPPs and those particular manufacturers to dismiss the claims.  The parties have not filed their agreement with the court, and it is not publicly available.   

Significantly, the court dismissed the IPPs’ claims with prejudice, eliminating these IPPs’ ability to refile their claims.  This order now ends the indirect purchaser litigation with respect to these IPPs in the refrigerant compressors litigation five years after the IPPs filed their initial complaint, but before the parties reached discovery.  It is unclear whether this agreement will bar any future claims by other potential indirect purchasers.  Typically, when a class plaintiff settles a litigation prior to the actual certification of a class, the parties seek to certify a settlement class.  By certifying a settlement class, the settlement becomes binding on all of the absent class members who do not opt out.  Accordingly, a settlement with a class of plaintiffs will bar any future litigation by members of that same class.  Here, there is no certification of a settlement class.  Therefore, it is possible that other indirect purchasers may be able to bring claims against these defendants in the future.

The court also ordered each party to bear its own costs and legal fees.  The court explicitly noted no one should consider its order and stipulation as an admission of liability against any defendant.  Such an order and stipulation likely means that the parties agreed to a settlement.  It is unclear whether the settlement involves some small payment to the IPPs or whether there was no payment, which is possible if the parties felt that the costs to all parties of litigating the case vastly exceeded the plaintiffs’ potential damages.

This settlement shows that if a defendant can eliminate a significant number of indirect purchasers’ state claims, the indirect purchaser plaintiffs may be more likely to settle prior to engaging in expensive discovery.  However, defendants should still consider moving the court to certify a settlement class in order to bar any future claims from all indirect purchasers.

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