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.
On September 24, 2013, the Northern District of California certified a class of indirect purchasers in In re Cathode Ray Tube Antitrust Litig., No. 3:07-cv-5944 SC, 2013 WL 5391159 (N.D. Cal. September 24, 2013). The case was brought by indirect purchasers of products containing cathode ray tubes (CRTs) against CRT manufacturers alleging a global conspiracy to fix prices. In support of their motion for class certification (and specifically with respect to the predominance requirement of Rule 23(b)), the plaintiffs offered a damages model and expert testimony that “it is more probable than not that the cartel’s price increase impacted all, or nearly all, direct purchasers in a common way.” The defendants countered that running the model resulted in calculations of no impact for certain members of the class and therefore the model was unable to show impact to each individual class member. The Court relied on recent Supreme Court decisions on class certification for the proposition that “proving predominance does not require plaintiffs to prove that every element of a claim is subject to classwide proof: they need only show that common questions predominate over questions affecting only individual members.” The Court further held that “[w]hen an expert’s testimony relates to damages calculations in a class certification case, the district court must undertake a rigorous analysis of the expert’s opinions in the class certification context, such as whether the opinions are consistent with the liability case and whether they demonstrate that case’s proposed damages are measurable on a classwide basis.”
The Court found that the plaintiffs’ expert made a sufficient showing to meet the predominance requirement and that class certification was appropriate. Specifically, the Court found that the plaintiffs’ expert could establish that damages were measurable on a classwide basis, consistent with recent Supreme Court decisions, and that the plaintiffs’ expert demonstrated that “common influences on the price structure could be estimated using a formula, and by the same type of regression analysis, a very high percentage of sales prices could be determined by common variables. Therefore, [the expert’s] declaration show[ed] that proof of harm to direct purchasers could be proved without individual inquiry.” The Court also found that the expert was able to show that the pass-through rate to indirect purchasers was 100 percent.
The defendants’ main argument against plaintiffs’ proposed model was that it predicted no injury to individuals included in the class definition. The Court disagreed, however, and held that its concern was to determine whether the indirect purchasers “showed that there is a reasonable method for determining, on a classwide basis, the antitrust impact’s effects on the class members,” which the Court found to be “a question of methodology, not merit.” The Court cited other Supreme Court cases for the notion that none of the earlier cases changed the standard for class certification and none required a full merits analysis at the class certification stage. Thus, according to the Court, the indirect purchasers “need not prove, at the class certification stage, that every single class member was [...]