Opinion ID: 789495
Heading Depth: 1
Heading Rank: 5

Heading: Analysis and Ruling to Affirm

Text: 33 In our review, parts of the extensive evidence produced in this case demonstrate that not every member of the proposed classes can prove with common evidence that they suffered impact from the alleged conspiracy. The ability to use common evidence to show impact on all class members cannot always be assumed. See, e.g., Alabama v. Blue Bird Body Co., 573 F.2d 309, 326-28 (5th Cir.1978). 34 Here damages to all class members must be shown to justify the class action. The district court noted, and appellees emphasize, the following: 35 (1) Since individual seed varieties can be used only in particular geographies, the characterization of list prices as national is misleading and does not reveal a nationwide approach to pricing; 36 (2) List prices for each of the hundreds of individual seed varieties were set in reference to local competitive circumstances; 37 (3) List prices differed [from] variety to variety, and sometimes differed from region to region for a single variety; 38 (4) List-price premiums varied significantly as well, and frequently were substantially lower than the Monsanto technology fee; 39 (5) Many discounts on seeds were anything but formulaic — Syngenta alone had over 150 seed discount programs, and regional sales representatives were authorized to negotiate ad hoc discounts in the field, frequently involving free goods; and 40 (6) Heavy and variable discounting led to wide variation in the prices that farmers actually paid, and widespread examples of Pioneer and Syngenta seeds being sold at zero or near-zero premiums. 41 Appellants challenge the district court's conclusion that the element of conspiracy, the violation of the antitrust laws necessary to recover treble damages under the Clayton Act, could not be proved on a classwide basis with evidence common to the class. The district court's single-sentence explanation of its holding is that, The dynamics of this localized industry make it highly unlikely that the existence and workings of the alleged conspiracy could be shown through common proof. J.A. at 76 (emphasis added). 42 The district court appears to have held that to prove the conspiracy element, plaintiffs must prove not only the existence of an agreement, but also that defendants actually performed the actions they agreed upon. If it did, it erred. The mere act of agreeing to raise prices, even if the undertaking agreed upon is wholly nascent or abortive, violates the prohibition of conspiracies in restraint of trade of section one of the Sherman Act. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n. 59, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). If the existence of the agreement is proven, the conspiracy is proven. See FED. JURY PRAC. & INSTR. § 150.20. 43 The performance of the obligations defendants undertook by virtue of the agreement is not a separately treated element of a conspiracy claim but goes rather to the element of resultant injury. See Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1054-55 (8th Cir.2000). Performance of a price-fixing conspiracy necessarily implies injury. Cf. Socony-Vacuum, 310 U.S. at 218, 60 S.Ct. 811. 44 Evidence that appellees entered into a conspiracy that would affect all class members would perforce be evidence common to all class members for proving the conspiracy. See In re Linerboard Antitrust Litig., 305 F.3d 145, 163 (3d Cir.2002); see also 6 HERBERT B. NEWBERG & ALBA CONTE, NEWBERG ON CLASS ACTIONS § 18:28 (4th ed.2003). However, proof of conspiracy is not proof of common injury. 45 We affirm the district court's holding that appellants cannot prove classwide injury with proof common to the class. 46 The district court's discussion of this issue cites the following reasons: (1) farmers buying GM seeds often received varying discounts from the list prices, so each farmer would have to prove separately that he paid an actual transaction price that was supra-competitive; (2) the market for seeds is highly individualized, requiring particularized evidence to determine the competitive price that would have prevailed in the locality of any individual farmer; (3) prices for GM seeds varied widely, and some farmers paid negligible premiums or no premiums at all for GM seeds, as compared with corresponding non-GM seeds; (4) plaintiffs' expert did not show that the fact of injury could be proven for the class as a whole with common evidence. 5 47 We rely on the second, third, and fourth of these holdings. The wide variation in list prices among hybrids and the pricing of some GM hybrids with zero or negligible list price premiums, as compared with corresponding non-GM hybrids, would require the purchasers of some hybrids to prove injury through evidence that would vary according to individualized market conditions and thus would not be shared in common with the rest of the proposed classes. 6 For the above stated reasons, we affirm the denial of class certification. 48 The district court's memorandum and order does not distinguish between list prices and transaction prices, or between list premiums and transaction premiums. The court noted that in addition to instances in which list prices were discounted, there were cases in which there were no premiums at all. It is clear from our review of the record that the district court was presented with undisputed evidence not only that list prices among hybrids varied greatly, but that in a substantial number of cases, where GM hybrids existed alongside corresponding non-GM hybrids, the list prices showed negligible list-price premiums, and in some cases no list premiums at all. Therefore we take the district court's statement that some farmers in fact paid no premium at all to refer in part to cases in which corresponding list prices showed no list-price premium for GM seeds. 49 To prove that the members of the proposed classes were injured by paying supra-competitive prices for GM corn and soybean seeds, each plaintiff must be able to present evidence from which a jury could reasonably infer that the competitive price was less than the price the plaintiff paid. Appellants proffered to the district court certain circumstantial evidence that they have now in hand (even without full merits discovery) that is common to all members of the proposed classes. Appellants' evidence consists of, for instance, Monsanto's projection that, absent collusion, its technology fees would be competed away in the course of four years, combined with evidence showing that in fact the fees were not competed away; financial records of Pioneer and Syngenta quantifying average GM seed premiums for their own sales close in amount to Monsanto's technology fees; documents from appellees indicating that they had given thought, in devising the agreement, to creating techniques to ensure that the agreed-upon premiums would be genuine and effective; documents showing that appellees were able to estimate the premiums (not publicly identified) which their co-conspirators had put into place. 50 Given the facts of this case, however, the above evidence suggesting that appellees adhered to a price-fixing agreement that raised the average price of GM seeds does not make the case — which appellants must make in order to certify the proposed classes — that appellees' adherence extended to hundreds of list prices. It is undisputed that there were many hybrids of both corn and soybean seeds, and that list prices varied widely among hybrids, for both general types. For corn seeds, in many cases a GM hybrid had a corresponding non-GM hybrid. Because no pricefixing conspiracy is alleged as to non-GM hybrids, such pairings establish clear listprice premiums for the GM corn hybrids. Appellees submitted to the district court, and appellants did not dispute, that some GM corn hybrids had zero or negligible listprice premiums. While a negligible or zero list premium may not conclusively establish the absence of price inflation as to the hybrid at issue, such a premium presents very different factual issues, and requires different proof, than do list premiums that approximate Monsanto's technology fee. 51 The undisputed presence of negligible and zero list premiums indicates that if appellees performed their agreement, their performance was not across the board, but extended to some list prices and not to others. Consequently, to show injury from price inflation, each plaintiff would need to present evidence that the list prices of the seeds he purchased, not just some or even most of the hundreds of list prices on appellees' price lists, were inflated. Evidence that appellees performed their agreement so as to raise the average price of GM seeds, without inflating all list prices, might suffice to make a case that list prices in a certain higher range were inflated. Nonetheless it is clear that some potential class members would require particularized evidence showing that the specific list prices pertinent to them were included in any performance of appellees' agreement to inflate prices. 52 Appellants have neither proffered common evidence that they have now in hand nor identified any type of common evidence that may yet be discovered which could show injury to purchasers of GM seeds with negligible or zero list premiums. Given appellants' lack of any other type of common evidence, the district court did not abuse its discretion in concluding that some proposed class members would be forced to fall back on a comparison of actual list prices to hypothetical competitive prices. The court did not abuse its discretion in concluding that, because of the variety of hybrids and the varying factors affecting list prices, the construction of hypothetical competitive prices would require evidence that varied among hybrids and perhaps across geographical pricing regions. The evidence showed the presence of individualized market conditions, which would require individualized, not common, hypothetical markets — thus individualized, not common, evidence. 53 GM soybean seeds, unlike corn seeds, generally did not have corresponding non-GM hybrids, and clear list premiums therefore cannot be determined for them. Given the similarities in pricing and marketing between the GM corn and soybean seeds, however, the district court did not abuse its discretion in treating the two alike. 7 54 The district court concluded that appellants' expert did not show that injury could be proven on a classwide basis with common proof. While a persuasive expert opinion is not the sine qua non of class certification, see, e.g., In re Linerboard Antitrust Litig., 305 F.3d at 151-53, we affirm this holding as well. Appellants' expert did not show that other common evidence could fill the gap in proof of classwide injury that is left by appellants' evidence that appellees performed their price-fixing agreement as to some (but not all) list prices. 8 55 Appellants argue on appeal that the district court improperly resolved disputes between the parties' experts that go to the merits of the case. We have stated that in ruling on class certification, a court may be required to resolve disputes concerning the factual setting of the case. This extends to the resolution of expert disputes concerning the import of evidence concerning the factual setting — such as economic evidence as to business operations or market transactions. While the district court's language may have been overbroad in places, we believe the district court's findings as to the experts' disputes were properly limited to whether, if appellants' basic allegations were true, common evidence could suffice, given the factual setting of the case, to show classwide injury. 9 56 Appellants' expert trained his analysis on the overall picture, showing that common evidence could establish that appellees maintained an inflated average price for GM seeds. In doing so, he explained how wide price variation could be consistent with the faithful implementation of a price-fixing conspiracy. He did not demonstrate, though, as he needed to, that class members could use common evidence to show inflation through the whole range of list prices. 57 The expert suggested five potential benchmarks for measuring damages, which appellants argue could be used also to prove injury. By estimating a competitive price against which to compare the actual price, such a benchmark would be useful also to prove the fact of injury. While appellants correctly state that they are not required to settle on any particular benchmark for measuring damages at the class-certification stage, see In re Linerboard Antitrust Litig., 305 F.3d at 154-55, if they propose to use such a method to prove injury, they must show that it could work to prove classwide injury with common evidence. Appellants' expert, in opining on the utility of these benchmarks, did not demonstrate how they could prove inflation through the whole range of list prices for GM seeds.