and gentlemen our first case for this morning will be clean products against international paper and others thank you did would have made pleas to court over he claimed eleven billion dollars in damages sought in this class action eighty percent are attributable to end products that differ widely from one another are ordered in a custom basis and are sold pursuant to individually negotiated contracts in different parts of the country there is no model on the table but could prove one a class white basis it causation between the electrical motion and any impact on  i think that's what the plaintiffs think you know however it's folded so to speak as long as it's its own designs there's a direct purchaser that's a way of conceptualizing the market if you had an oil conspiracy and everybody was buying directly from the oil producers it wouldn't matter that you could use oil to make lots of different things but you would not usually say that oil and refined gasoline are in the same job graphic and product market and part of the issue here is that market analyses are being offered that sort of assume a national market for all products that that even their experts concede does not exist because it's the finished product and you know the carriage cost makes it make it prohibitive to send them say more than one hundred two hundred fifty miles but the but the fundamental problem with you know the analyses is not that the theory might not be possible in the extreme abstract isn't that is that the models that they have placed on the table do not address any relevant question but are you focusing on relevant markets so much or are you focusing on your theory that the plaintiff's experts haven't shown common activity among the allegedly conspiring companies to raise the price of this containerboard we we of course dispute the allegation of pollution we think that a fair look at this market would have you looking at just what you saw in the text messaging case but for purposes of a this appeal we assume that that question could be decided on a common basis  probably your due i mean because obviously as you recall the text messaging based on your original record we held that more process had to go forward then when the record was filled out in the second text earlier one i think clasped certification in the case was accused that related to and so it was never an issue before this court but you know the problem here is the one that this court identified and marshall clinic which is to say if you have a model that  not trying to do that harris expressed really conceded that over the six and a half period of this conspiracy which spanned from two thousand and four through the great recession he had made no effort  demand and with which context they did not i was speaking of the testimony on impact there is a purported regression on damages that again ports the control for some of those factors it is important to understand that even the do not claim that that damage is a regression would possibly establish impact or individual damages to anyone but i will ask them that because it was my understanding that they said that some of the evidence overlaps and that the part from there and also in part from the reliance let's say the anchor point of this pulp and paper forty two pounds of craft but number let me say this which i think is extremely important up by the damage as you know regression before you get to the various and many i thought the logical failings it's important to understand that the input is prices that have been averaged out price changes that have been averaged out across all defendants and across all products so you take you take you know the prices of floor displays and telep boxes and you know the amazon book cartons and you average out all price changes for all of those products for the final category and you come up with an average price change intro was one of the input is an average of averages in effect you cannot use you know the regression to prove anything specifically about individual prices or individual damages and that's leaving aside all of the methodology failings i would make just one point in connection with that because you know i do believe that it is ok to use statistics in the courtroom they have to on cover of what the evidence is and what the facts are rather than to mask it and what the approach that wire did in his damages calculus is really mask the variability in price changes you have to wonder if there is though this general upward push in the prices i understand it for a particular averaging does change if you were focusing on an individual product what you would find their evidence seems to show that the trend  an analysis of what part of the market is selling it leaves out say so well it's made internally to our own to our own use and and in also most of what we do when you look at priceless cases you're dealing with a commodity that is really you know completely homogeneous rather than floor displays and amazon boxes and you are dealing with a price list that is held by the defendant himself and you can see claim that there were fifteen collusive price announcement six failed if you factor those so index two percent of them succeed right and by the hypothesis that the plank that offer but keep in mind that that necessarily means that although harris said that that meant that there were periods of part cartel instability there is no effort to account for the thousand of them for thousands of people who bought them periods of cartel instability there is no effort to sort of really factor the six failed price increases into their own correlation between the p p w index and the announcement could come back up that mean the interesting thing to me about the is that it's a public point of reference and you know cartels because they have to operate in the shadows like to have something that that's out there in the public everybody can see it it's there whether it's an actual price list or whether it's something that you know and analytic index or some other thing strikes me as somewhat less important for the plaintiffs theory than that it's a public list of what's this benchmark  i am so glad that you asked me this question because i can answer it and also close you know the loop on the damages point i was making i mean i was making another point about the averaging of the price changes our experts did an analysis on a desegregated basis for customers suffer price decreases as increases you get all of that out of the analysis ones you average all of that and that's partly why i say that the damages regressions are useless and mask more than they reveal this chart actually is in the joint appendix for the purpose of answering the point that you were making just now which is that because most of this is done in an integrated basis and most of our customers buy end products what really is going on is that this chart measures the variability in price changes and makes them makes the point i think both a problem and order made the point that because this was impossible for you when you have this level of variability to really be sure that your polluter is actually doing what you think for most of these charts as dr point and i'm sorry dr ordover point  that out the variability in the price changes in the end product is higher than the amount of overcharge and so it will literally be titanic lee impossible for somebody who is trying to police the cartel to look at the absurd class actions i know the civil rules advisory committee is toiling away on this very subject at this point trying to distinguish between those things that would support the certification of a class on the one hand and those things that are merits determinations that are made on a class wide basis on the other hand is this a difficult task and it seems to me that district court thought that although these points may be borne out and maybe your clients have a very good point these are merits points i will answer it just by pointing out that although the district court extensively described what the plaintiff's expert court to say he really did fail in the duty to prevent it as actually looked over and we know up after walmart and comcast and certainly this court cases in zabol and the like that although you may not get into the marriage where the marriage sake you haven't only got into the marriage to the extent of ascertaining that the model being offered actually measure of the correct thing in park or if the shell there was a perfectly good model that would measure you know the underground benzene a contamination but it did not deal with all of the counterpoint as is the case here and if i want to leave you with one eye truth to point i will say two things all of these models are not robust when applied to other parts of the timeframe where there was not a conspiracy they deal answer they could not a way to measure now the district court looked at all these things and his there sure is a page fifty three is law you know the fight here is whether the models measure whether you know that the  models measure the effect of the collusion or market forces he believed that was a marriage question and that's why he did not vet the expert evidence that is comcast wal mart where you have to make sure that thank you your honor may it please the court elizabeth to present for rock tenancy p l c the certification order here is flawed for further and independent reason that flows directly from the application of settled circuit law and to the class claims that the plaintiffs chose to plead against rock ten following its discharge from bankruptcy the bankruptcy discharge order issued in june of twenty ten four months before the end of the class period and to avoid a bankruptcy injunction in these proceedings the point is conceded then as they do today and this is a page a sixty one sixty five sixty seven if their brief that the class claims as pled require a threshold showing that the the damages issue of joint and several by billy and on the other hand what the law of conspiracy requires which are essentially two things you have to join the conspiracy and you have to be aware of the scope of the see and sign on to that as well and i think i understood the district court to be saying that if the proofs showed that wrapped and never joined or as he put it rejoined the conspiracy after the bankruptcy discharge then there's no post just charged conduct ten is off the hook no problem but if rotten did rejoin the conspiracy after the discharge then you could then the next question would be was it aware of the scope of the conspiracy just under standard conspiracy law and you might use evidence from whatever period it's not liability so much as evidence to prove it's awareness so i think you're exactly right and maybe i can clarify this in the easiest way through this for purposes of this appeal i think what your honor just said if i understood it correctly is exactly correct the plaintiff concede and the district court recognized that there has to be a showing every post discharge going to trust violation before you even get to joint and several  joining the conspiracy after the discharge so what does that mean for class certification and this is what i would submit it means that means that to certify this class you have to have rule twenty three evidence not just assumptions or allegations but if you look at the district court's opinion at page sixty five he talks about assumptions and allegations of rejoining but what this court hearing is like an e mail or something you know saying well are we going to hear you know we're all going to raise prices tomorrow i can't remember quite what it said something outside now i'm glad to raise it let's look at the records of the this court's cases say straightforwardly at class right you need some proof evidence reproof that matches up to liability theory so what we need for class is rule twenty three proof that there was a post discharge a violation that means there was sixty one they said there were some interest c e o communications under text messaging it's the same type of all agog ballistic conduct that this court held lawful well that may open read this but if i may let's give them a just just a following  last point i really want to focus the court on is that doesn't end the inquiry right a discharge of a position or violation requires some class white proof of impact and the key point i would refer the court to on this is that they don't have that what they have post is charge and i'd refer the court to our brief at page twenty one and our reply brief at four we cite the de wire deposition where he admits he has no evidence of what your honor described the p p w movement he ascribes a zero value to that and exhibit three of his report responsible for the acts of your other conspirators even before you joined if you knew that that was a scope of the conspiracy and again on this record and it's just a narrow record issue if you look at people sixty seven of their brief they concede that the first thing you need is a post discharge violation because we have a bankruptcy discharge to put rock ten back on the court that's what you need they don't have it on the record it's just a simple fact and record issues are ok thank you very much that the issue of conspiracy is subject to common proof and is a common issue by itself that provide substantial support for the decision below with regards you have to say more just and if there was a concern a conspiracy was alleged it was alleged at the highest levels therefore coming proof you have to come forward i think with a showing that you could prove the conspiracy that you've alleged and your opponent suggests that they're just impact and their argument is that because the market is so varied the impact can't be shown on a common basis at least as to the final container where products they seem to concede impact with regard to the intermediate products but at least that at least with respect dr harris provided all of those all of those went to support the district court's finding that there was common evidence that would be used to show impact class why and i probably didn't order that  best way but let me start first of all with the the evidence that comes from the defendants themselves there was a great deal of evidence that they talked about that show that they expected that efforts to raise price that could effectively raise you index for example would certainly translate through in prices of finished finished products there were statements by temple and when executives for example there was presentations by smurfit stone to show that many of their that a vast majority of their sales are directly tied to the p p w index so there was an expression by the defendants themselves that that they expected that their efforts to raise prices would in fact have an impact market wide with respect to finished products as well as intermediate products so that's one that if you look at at the chart the mistress right of was showing us i mean my visual of it is is that it probably actually does some to be more on the increase side than on the decrease side but it's very up and down and is that the kind of proof that can show let's say over time  increase in price for these products it can and this goes to the other elements of the proof that were provided so there's the analysis of the market that dr harris provided and that completely consistent with this court cases and with basic understanding of the manner in which markets operate so he's just saying is as i remember i didn't read the whole thing but i certainly looked at it he's saying first of all this market susceptible to  looking at the various aspects of the market that's been talked about a lot they're very small number of players demand is relatively elastic on jokes about several things like that and he so something about impact but it's pretty they isn't i don't think it's bad your honor he actually says one thing that's that's i think it's fair to say is general and cuts across the market he says something else that's very specific to the way which transactions occur in this market the thing that he says that's fairly general as he says i understand as an economist that in a concentrated market if as as has been alleged and as the evidence he actually looked at the evidence and saw evidence to support it if there was an agreement to raise prices and that was supported by a restrictions on capacity that would lead to increases in price market wide and there's nothing controversial about that and again because the capacity goes you know flows downstream to all of the finished products it was perfectly reasonable for him to say i look at this market and i understand that if that if as i think they'll be able to do capacity they're closing plants down and in other ways restricting capacity during the period of a class at a time when demand is going up and so you would think that competitive actors in the market would be jumping up mt i do need to show i surely do need to show that there is an effect on prices because you're trying to get damages ultimately well i'm not sure we need a lot more than that to show impact your honor but there is a lot more and i want to i want to describe some of that there is the fact that he looked at the contracts in the market and he found that the concept is hundred sixty three of them or whatever those are the ones you that in discovery yes your honor and they were and they showed overwhelmingly that the actual transaction prices in those contracts were tied to the into public indices and again that's not something that ought to be controversial because it's in the defendant's own documents that when the p p w index goes up price of finished products goes up i think there's one of you know one of the executive said one hundred percent of the time and so but that again that's not all there is and so there's a question the variety of products really goes to the question of whether the class is sufficiently cohesive to go forward and i think in in this court's decision in the cohen case for example it talks about the fact that if you have a class that's defined so that you would think there's lots of people in this class who have not suffered impact that might be an issue that might be a problem and so what did the plaintiffs do to address that issue they put in the work that that dr dwyer did and dr dwyer did two things first of all he showed that the the when exclusively to damages when we're talking about that regression that he ran where he's taking the variables you know i think that we may have said something in our brief that suggested that suggested that and so mr estrada can be certainly under it's understandable that he would try to hold us to that but i actually think we made an error and go in saying that and if you actually look at what dr dwyer said what he said was that my damages estimate corroborate and provides further support for the finding of impact and i think that so i do i do think that the proper way to look at his damages study is that it does provide additional evidence to show that there was impact but to get back to the steps so we show through the looking at the w index and the way that it correlated with the announced price increases the defendants were in fact able to move the market and that's dramatic evidence because it's not just that you know there's an announcement of a price increase and you see a little blip so why is this different from text messaging to where the price of those individual non packaged text messages did in fact go up quite remarkably and yet we'll timidly signed there's not enough to go ahead well the the first answer is that text messaging was a case that was not about classification it was a case that was a in fact the class was stipulated to there and of and there was a summary judgment finding the facts are dramatically different between the two cases and text messaging there was no can there the price increases were widely spaced in time there was a a great deal of internal evidence with respect to the the reasons for that so without belaboring that because i think it goes to the issues that will come up that's at summary judgment the point is that in this case what the wire was able to get to do and again this is you know evidence piled on evidence it's you know and understandably what the defendants try to do in their brief is to try to pick apart the evidence and say well this isn't quite enough and it has these problems and you know we have risk for example didn't do an empirical regression and so now you can forget about harris and dwyer are you know didn't control for certain factors when he correlated the increases in prices with the increase in the p p w index so you can now forget about that and when he did the damages that doesn't count for showing impact but no that's not right and i do want to get to the point that i think is extremely revealing with respect to the cohesiveness of the class what what wired it is he said if if there was if  a member a member of the purported class suffered a price increase as a result of one of these price increases bounce they have impact and remember impact is not damages impact as some injury from the violations and he said i'm going to look at pair transactions wherever i can get a look at care transactions to see if there wasn't fact an impact on these transactions and he found that for ninety two percent of the class members accounted for ninety nine percent of the volume he could find that impact so there's trim and what he said weights from the pool that he's working from and what he says in his report which is important and which they have never  effectively counter is he says this cuts across all the defendants and all the products so it doesn't it's not a situation where they came back and said well no actually if you study the subset of transactions that involve partitions or displays you don't see they didn't do that and in fact when they tried to do it with respect to one product dr dwyer came back and said no you're actually wrong and you can see the even if you break it down that way you do see the impact  with respect to the tomato boxes so this is a situation where there was a tremendous amount of evidence to back up in pyrrhic really what after all is quite a commonsense conclusion which is that in a concentrated industry where there is price fixing where it's supported by a cap on on capacity and restrictions on capacity that you're going to be you're going to have a market wide impact were all or nearly all buyers are district judge talked about this was after all what what dr dwyer was doing was same i am showing you that i can prove damages on a class wide basis by using a regression that will eliminate that will control for other economically relevant factors and isolate the impact of the isolate the impact of the conspiracy with regard to and he broke it into two general groups of products intermediate container board products and the final container and he found he was able to estimate the damages with respect to those with respect to those products and estimate the damages could he or would he get the merit stage damages at the merits stage and so what the district or what the district court said is this satisfies the showing under rule twenty three b three and you know if there are reasons to believe that the damages need to be done and in a way that  you know there may be further litigation over how damages are going to be proven at the merit stage see i think that this is something that concerns me as well about this because your opponent suggests that there are actually a number of points about the damages proof that are going to be difficult to handle on a class wide basis so just to tick a few off some people have signed release is other people have not  other kinds of defenses pertinent to some people and not to others and i'll pick up at this point on footnote sides in the reply brief which might be a little late to raise this but footnote suggests that you never proposed issues classes under twenty three c four and thus you forfeited any such argument i wonder what you had to say about that and i wonder whether you are actually proposing that this case should be tried as a class with respect to liability but not with respect to damages we are not we are not proposing that although i certainly the district judge indicated that he would revisit the question of exactly how damages would be proven as as appropriate and so i don't think this court needs would need to intervene at all with respect to that other than to note that the district judge  variation on an individual basis for damages is simply too great to do that i mean this is not a situation where you know everybody pays a fifteen dollar surcharge for the rental car see just give everybody fifteen dollars back when you're done with it this is a much more complex market well but your honor what the what the expert did is to make a reasonable estimate of the over charges that class members would have suffered on an aggregate basis and that's a perfectly reasonable way and as you know his first circuit pointed out it's it's it's inherent in the nature of the class action device that one of the things that's going to happen is that there's going to be a determination of damages for the class now to how does the defendant have the opportunity to raise these individual eyes defenses when this kind of aggregate numbers what's being talked about right i apologize because i skipped over the question that you asked about the contracts and i do want to address that head on with respect to that it is first of all there is only the defendants only pointed to thirty nine releases and some because first of all there was it was not clear that that would have a substantial impact on the damages that were going to be claimed if they even apply he found that they would not apply but he didn't wrong about the da release of but even if they were but even if the releases even if the releases might eventually be shown to apply to some extent it's it's completely appropriate for the district judge to entertain motion practice from the defendants to try to define who exact what is and isn't in this class and how would there be limitations on claims with respect to people who would remain in the class and that's something that the district court found he couldn't minister that's got to be at the core of a district court's discretion to determine that he has the ability through later motion practice to deal with issues of individual as contractual defend until you're saying these individual lives defenses could could be put in different categories they could if appropriate honor and the and the point is that if for example there were a need to to to carve some kinds of some people out of the class because of that sort of a defense that's something that can be raised an appropriate point  but this was brought up very late the contractual provisions were actually brought before the court fairly late in the process and again the actual we're talking about hundreds of thousands of potential members of the class and the number who are affected at least on the evidence that was put before the district court was really quite a small fraction of those and an even smaller fraction of the potential claims and so it was entirely  appropriate for the district judge to say this certainly doesn't suggest that there's that the class action mechanism is not is not superior in a circumstance now your aggregate damages do you view that as an absolute ceiling on recovery well that the aggregate to the way the aggregate damages were calculated it was a preliminary number so at the merit stage the expert will will provide it but if what was what was shown was here are the total class wide purchases and the estimated overflow so that would be the that would be the total class wide damages as i understand it now of course there are you don't think it would ever have to be a time that each individual member of class would have to somehow come up with a number based on that person the company whatever was on purchases on the market participation so so the allocation of allocation of the of the recovery that's something that happens all the time in class litigation and so there would be a claim administration process that would presumably put be put into place after recovery and but that not the only not a trial jury might be involved for the defendants is in the competition at this aggregate well that it would depend on how the how the defendants tried the case and how the how the case was tried so there certainly would be no there would be nothing to prevent the defendants from putting in an alternative damages calculation that would depend on a different approach to calculating the aggregate number or by breaking you know breaking it down that's what would be a trial merits issue as to how to calculate the classified damages but certainly it's frequently the case that what does occur in these cases is that the defendants will try the aggregate damages and come up with a number that then becomes the class wide recovery and then there's a claim allocation process and there's nothing there's nothing inconsistent with law in that approach i'm happy to address the separate issue with respect to rock time if that would be healthy i think you should say something that brad can because their view is that to hold that release as i understand it is to hold them liable for anything that happened before the bankruptcy discharge date would be in contravention of the scope of the bankruptcy discharge right and i think that your honor's questions really did and other questions from from the court did get right to that to the reason that that's not accurate as i understood what you first of all that the quick answer is that if rock town continued to participate in the conspiracy post discharge that's a new legal wrong post discharge for which they spare the same liability in their opening brief they said look we should be treated like a new entrant we agree and a new entrant that had knowledge of the past conspiracy the enter the conspiracy post bankruptcy would certainly be subject to liability for the full scope of the conspiracy and its impact reasonably foreseeable to then yes your honor and so that is the same burden that if there is a violation posted charge that's the same burden that rock ten will bear and it's as i as i understood their brief what they said is well no you actually don't have to just show a violation of the antitrust laws post this charter but you have to show separate impact and separate damages all occurring post discharge and that is inconsistent with core conspiracy law and unsupported by anything in the ba then the impact and damages aspects can be proven by either preach or post as charge yes or events correct unless the court ask questions let me ask you this if the injury this is on this liable if if if as the conditions for liability are under conspiracy law are satisfied yeah sure and if further debt injuries were caused then the new comer would be liable and through joint and several liability he would be liable for damages caused before he joined the conspiracy that year your view but if the injury is a separate element of the claim can we go back in time and find the injury from a time before he  quick answer is yes the remember the discharge what what my from what my friend said was you have to show a violation post discharge and i agree but it's important not to confuse the elements of the cause of action with the violation the government could prosecute a price fixer irrespective of any impact on anybody and so if there was an agreement to fix prices a continuation of a participation that conspiracy post june thirtieth two thousand and ten then rock town violated the antitrust laws and then the question of what the recover what the scope of their liability is for damages is governed by court conspiracy law and the so the impact on the damages flow from the conspiracy and it's never been the law that an individual defendant can say well you know  didn't actually join the price fixing conspiracy until this date and there and even though i knew about what was going on before and i joined the conspiracy i should only have it going forward that's you know this court's decision and half ago and other cases squarely rejects that version you know that's sort of a defense to say liability should damages liability in this single case that supports what he's asking the court to do here the court is exactly right he concedes you have to have a post discharge into trust violation impact is an element this is not a government case it is a private and to trust suit impact is required and the fifth doesn't have a case the joint several case it has nothing to do with the intersection of bankruptcy and that's what's so critical here what mr potter is asking the court to do that no court has done and many have resisted like travel agent say you cannot reach back and borrow you can't rob peter to pay paul question before the court that was not in have a co at all there was no bankruptcy discharge so the question before the court today is how do you reconcile these two bodies of law right you don't let one run roughshod over the other you reconcile them by saying let's apply class or law they  that in a private into trust case they need impact post discharge their experts disclaimed it this is dwyer three and five and so on that simple basis we say they haven't met it all right thank you very much mr strat  impact can't be proven on a on a classified basis if you'll read it was a man like the facts to i was a great admirer of his and a friend and so i think that we don't want to go too far with what right he cites for that proposition you know the robinson case from the fifth circuit the new england canadian export card case is to the same effect we've cited them both and and what is important by those cases is that the court assumed that they had been an effort to fix something that could actually be determined which i guess would be the analog will of the wanted people w index but the existence of negotiations made it impossible to tell the extent of the pastoral and i mills heinz people who can cut a deal and drive a bargain and so you know the assumption that you could sort of assume that everything will be passed on rather than as a record says that many many clients even those who had a reference to the p p w index were refused to take the increase cannot be accepted by assertion and at face value may i finish please the other point i wanted to to say is that even today the theory has changed and they have taken a concession that i actually think was well taken because it was correct to begin with but this is an example of the complexity of the issues in this case and how really devastatingly unfair it was that despite multiple requests for a hearing on these complex issues in which we disagree virtually with everything the mr penner said today this case was ruled on by basically accepting that the the few of their experts not mentioning any of the devastating criticisms of