Source: https://www.labaton.com/blog/duking-it-out-in-antitrust-price-fixing
Timestamp: 2019-04-23 22:27:28+00:00

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Three current and former female employees sought to represent a nationwide class of 1.5 million female employees of Wal-Mart, the largest private employer in the world. The plaintiffs alleged that Wal-Mart violated Title VII of the Civil Rights Act of 1964 by adopting and implementing a corporate policy of gender discrimination that denied female employees equal pay and opportunities for promotion. Wal-Mart had no express policy or practice of discrimination against women. Therefore, the plaintiffs had to offer evidence from which discrimination affecting the plaintiffs and the proposed class members could be inferred.
The United States District Court for the Northern District of California certified the class, and the Ninth Circuit Court of appeals, sitting en banc, largely affirmed.(7) The Supreme Court reversed on two grounds. First, a 5-4 majority held that the proposed class did not satisfy Rule 23(a)(2)'s requirement that class members share common claims. Second, a unanimous Court determined that the plaintiffs' claims for back-pay were improperly certified under Rule 23(b)(2), which covers injunctive and declaratory claims. The back-pay claims, the Court held, were not incidental monetary relief. Accordingly, due process requires that class certification be evaluated under Rule 23(b)(3), not under Rule 23(b)(2). We discuss here only the Court's commonality ruling. The Court's Rule 23(b)(2) discussion has no readily discernible application to antitrust cases.
The Supreme Court rejected the plaintiffs' attempt to demonstrate a common issue of company-wide gender discrimination through circumstantial evidence consisting of: (a) testimony from a sociologist on Wal-Mart's corporate culture; (b) testimony from a statistician, working in conjunction with a labor economist, on pay and promotion disparities in some of Wal-Mart's 3,400 stores; and (c) anecdotes from 120 of Wal-Mart's female employees.
Rule 23(b)(3), however, is where the strike lines regularly are drawn on class certification in antitrust cases. InDukes, the common question-whether Wal-Mart practiced gender discrimination-had to be inferred from ambiguous circumstantial evidence. On the other hand, in an antitrust case, the legal sufficiency of, for example, the plaintiff's price-fixing allegations will invariably be tested on a defense motion to dismiss. If the allegations are insufficient, the case will be dismissed, thereby obviating any class certification inquiry. If, however, the complaint passes muster, commonality itself will not be subject to genuine attack in the certification proceedings.
The existence of the price-fixing conspiracy, and the product overcharges resulting from it, present common questions that are susceptible of class-wide proof. As a leading class action commentator has observed, "[i]n an antitrust action on behalf of purchasers who have bought the defendants' products at prices that have been maintained above competitive levels by unlawful conduct, the courts have held that the existence of an alleged monopoly or conspiracy is a common issue that will satisfy the Rule 23(a)(2) prerequisite."(29) Put another way, commonality in a price-fixing case emerges with a clarity that just is not there in a case alleging employment discrimination based on circumstantial evidence of disparity among employee compensation or promotion.
Commonality under Rule 23(a)(2) can be thought of as an "on-off" element: either the case presents one or more common questions, or it does not. By contrast, predominance under Rule 23(b)(3) calls for a more fine-tuned assessment of the role of the common questions in the array of issues that the case raises, and in the relationship of the common issues to individual ones that might be raised.
Dukes did not address the requirement of predominance-much less did it brighten the analysis or heighten the evidentiary standard by which predominance must be shown. Because the Court did not enter this fray at all, on class certification antitrust plaintiffs and defendants will continue to duke it out.
1 The authors are, respectively, Partner and Associate, Labaton Sucharow LLP, New York City. Mr. Himes, also Co-Chair of the firm's Antitrust Practice Group, is the former Antitrust Bureau Chief, Office of the Attorney General of New York.
2 131 S.Ct. 2541 (2011).
3 See id. at 2549.
5 Id. at 2566 (internal quotations omitted).
6 Rule 23(b)(3) also requires that the class action be "superior to other available methods for fairly and efficiently adjudicating the controversy." However, in antitrust cases if predominance is shown, the additional "superiority" element is unlikely to be an obstacle. Also, for simplicity's sake, we discuss here only price-fixing cases. Monopolization cases are not, for purposes of our discussion, materially different.
7 Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137 (N.D. Cal. 2004), aff'd in part, remanded in part, 603 F.3d 571 (9th Cir. 2010).
8 Dukes, 131 S.Ct. at 2551 (citing Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982)).
9 417 U.S. 156, 177 (1974).
10 Dukes, 131 S.Ct. at 2552 n.6.
11 Id. at 2551 (internal quotations omitted).
16 Dukes, 131 S.Ct. at 2553 (internal quotations omitted).
18 Id. (internal quotations omitted).
19 Id. at 2554 (internal quotations omitted).
21 509 U.S. 579 (1993).
22 Dukes, 131S.Ct. at 2554. This is, however, a substantial issue that probably will reach the Supreme Court again. In a pre- Dukes opinion, the Seventh Circuit held that "when an expert's report or testimony is critical to class certification . . . the district court must perform a full Daubert analysis before certifying the class." Am. Honda Motor Co. v. Allen, 600 F.3d 813, 815 (7th Cir. 2010). However, in a post- Dukes ruling, the Eighth Circuit distinguishedAmerican Honda, concluding that defendant's "desire for an exhaustive and conclusive Daubert inquiry [at the class certification stage] . . . cannot be reconciled with the inherently preliminary nature of pretrial evidentiary and class certification rulings." In re Zurn Pex Plumbing Prods. Liab. Litig., No. 10-2267, --F.3d--, 2011 WL 2623342, at *5 (8th Cir. July 6, 2011).
23 Dukes, 131 S.Ct. at 255.
29 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 3.10 (4th ed. 2002).
30 See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008); In re Flash Memory Antitrust Litig., No. C 07-0086, 2010 WL 2332081, at *7 (N.D. Cal. June 9, 2010); see also Hal J. Singer, Economic Evidence of Common Impact for Class Certification in Antitrust Cases: A Two-Step Analysis, 25 ANTITRUST 34 (Summer 2011).
31 See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623-24 (1997) ("Even if Rule 23(a)'s commonality requirement may be satisfied ... the predominance criterion is far more demanding").
32 As Judge Posner has written:[A] class will often include persons who have not been injured by the defendant's conduct; indeed this is almost inevitable because at the outset of the case many of the members of the class may be unknown, or if they are known still the facts bearing on their claims may be unknown. Such a possibility or indeed inevitability does not preclude class certification . . . .
Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 677 (7th Cir. 2009), cert denied, Pac. Inv. Mgmt. Co. LLC v. Hershey, 130 S.Ct. 1504 (2010). See also In re Amaranth Natural Gas Commodities Litig., 269 F.R.D. 366, 385 (S.D.N.Y. 2010) (internal quotations omitted) ("the fact that damages must be calculated on an individual basis is no impediment to class certification").
33 No. 09-mdl-2007, 2011 WL 3204588 (C.D. Cal. July 25, 2011). The authors are among the co-lead counsel for the plaintiffs in the case.
34 In re Aftermarket Automotive, Defs.' Supplemental Br. re: Newly Decided Supreme Court Authority in Opposition to Plaintiffs' Motion for Class Certification, 9 (C.D. Cal. filed June 30, 2011).
35 In re Aftermarket Automotive, 2011 WL 3204588, at *4.

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