Court Opinion

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Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-5-2002

In Re Linerboard
Precedential or Non-Precedential: Precedential

Docket No. 01-4535

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Recommended Citation
"In Re Linerboard " (2002). 2002 Decisions. Paper 552.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/552

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PRECEDENTIAL

       Filed September 5, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-4535

IN RE: LINERBOARD ANTITRUST LITIGATION
(MDL No. 1261)

WINOFF INDUSTRIES, INC.

v.

STONE CONTAINER CORPORATION; JEFFERSON
SMURFIT CORP.; SMURFIT-STONE CONTAINER CORP.;
INTERNATIONAL PAPER CO.; GEORGIA PACIFIC CORP.;
WEYERHAEUSER PAPER CO.; TEMPLE-INLAND INC.*;
GAYLORD CONTAINER CORP.*; UNION CAMP CORP.;
SIMPSON TACOMA KRAFT CO.; TENNECO, INC.;
TENNECO PACKAGING; PACKAGING CORPORATION
OF AMERICA
(D.C. Civil No. 98-cv-05055)

GENERAL REFRACTORIES COMPANY, ON BEHALF OF
ITSELF AND ALL OTHERS SIMILARLY SITUATED

v.

STONE CONTAINER CORPORATION
(D.C. Civil No. 99-cv-01341)

Stone Container Corporation, Jefferson Smurfit Corp.,
Smurfit-Stone Container Corp., International Paper Co.,
Georgia Pacific Corp., Weyerhaeuser Paper Co., Temple-
Inland, Inc.*, Gaylord Container Corp.*, Union Camp
Corp., Tenneco, Inc., Tenneco Packaging and Packaging
Corporation of America,

Appellants

(*Amended per Clerk’s Order dated 2/5/02)

Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Nos. MDL No. 1261, 98-cv-05055 & 99-cv-01341)
District Judge: Honorable Jan E. DuBois

Argued: July 19, 2002

Before: McKEE, FUENTES and ALDISERT, Circuit   Judges.

(Filed: September 5, 2002)

       Kenneth W. Starr (argued)
Christopher Landau
Kannon K. Shanmugam
Grant M. Dixton
Kirkland & Ellis
655 Fifteenth St., N.W.
Washington, D.C. 20005

Attorneys for Appellants
International Paper Company, Union
Camp Corporation, Weyerhaeuser
Company, Gaylord Container
Corporation, Tenneco, Inc., Tenneco
Packaging and Packing Corporation
of America

Barbara W. Mather (argued)
Pepper, Hamilton LLP
18th and Arch Streets
3000 Two Logan Square
Philadelphia, PA 19103-2799

Attorneys for Appellants
Jefferson-Smurfit Corp., Stone
Container Corp. and Smurfit-Stone
Container Corp.

                          2

Steven J. Harper
Steven C. Seeger
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601

Daniel B. Huyett
Matthew W. Rappleye
Stevens & Lee
111 North Sixth Street
Reading PA, 19603

Attorneys for Appellants
International Paper Company and
Union Camp Corporation

Douglas J. Kurtenbach
James H. Schink
Timothy A. Duffy
Barak S. Echols
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601

Ralph G. Wellington
Sherry Swirsky
Schnader, Harrison, Segal &
 Lewis LLP
1600 Market Street
Suite 3600
Philadelphia, PA 19103
Attorneys for Appellants
Weyerhaeuser Company, Gaylord
Container Corporation, Tenneco,
Inc., Tenneco Packaging and
Packaging Corporation of America

                           3

Edward M. Posner
Paul H. Saint-Antoine
Isabel C. Duffy
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103-6996

Attorneys for Appellant
Georgia Pacific Corporation

R. Mark McCareins
Dane A. Drobny
Michael J. Mayer
Andrew D. Shapiro
Winston & Strawn
35 West Wacker Drive
Suite 4200
Chicago, IL 60601

Attorneys for Appellants
Jefferson-Smurfit Corp., Stone
Container Corp. and Smurfit-Stone
Container Corp.

Richard C. Rizzo
Jennifer R. Clarke
Will W. Sachse
Donald C. Le Gower
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793

Attorneys for Appellant
Temple-Inland, Inc.

ATTORNEYS FOR APPELLANTS

                           4

Howard I. Langer (argued)
Sandals & Langer, LLP
One South Broad Street
Suite 1850
Philadelphia, PA 19107

Lead Counsel for All Appellees
Eugene A. Spector (argued)
Jeffrey J. Corrigan
William G. Caldes
Spector Roseman & Kodroff, P.C.
1818 Market St.
Suite 2500
Philadelphia, PA 19103

Michael J. Freed
Steven A. Kanner
William London
Much Shelist Freed Denenberg
 Ament & Rubenstein, P.C.
200 North LaSalle Street
Suite 2100
Chicago, IL 60601-1095

Attorneys for Appellees
General Refractories Company and
Co-Lead Counsel for Corrugated
Sheet Plaintiffs

Robert J. LaRocca
Kohn, Swift & Graf, P.C.
One South Broad Street,
 Suite 2100
Philadelphia, PA 19107

Attorney for Appellees
Oak Valley Farms, Inc., Garrett
Paper, Inc. and Local Baking
Products, Inc.

                           5

H. Laddie Montague
Martin Twersky
Berger & Montague, P.C.
1622 Locus Street
Philadelphia, PA 19103

Attorneys for Appellee
Garrett Paper, Inc.

Roberta D. Liebenberg
Donald L. Perelman
Fine Kaplan & Black
1845 Walnut Street, 23rd Floor
Philadelphia, PA 19103

Attorneys for Appellee
Local Baking Products, Inc.

W. Joseph Bruckner
Janelle K. Beitz
Lockridge Grindal Nauen PLLP
100 Washington Ave. South
Suite 2200
Minneapolis, MN 55401
       Attorneys for Appellees
       Oak Valley Farms, Inc., Garrett
       Paper, Inc. and Local Baking
       Products, Inc.

       Mark Reinhardt
       Mark Wendorf
       Reinhardt & Anderson
       First National Bank Building
       Suite E-1000
       332 Minnesota St.
       St. Paul, MN 55101

       Attorneys for Appellee
       Albert I. Halper Corrugated Box
       Company

       ATTORNEYS FOR APPELLEES

                                 6

OPINION OF THE COURT

ALDISERT, Circuit Judge:

This appeal by manufacturers of linerboard1 requires us
to decide if the district court erred in granting two motions
for class certification by groups of plaintiffs who brought
antitrust law suits alleging that the linerboard
manufacturers engaged in a continuing combination and
conspiracy in unreasonable restraint of trade and
commerce in violation of Section 1 of the Sherman Act, 15
U.S.C. S 1. Appellants contend that plaintiffs failed to
establish that the putative class met the requirements of
Rule 23(b)(3), Federal Rules of Civil Procedure, which
compel the court to:

       find[ ] that the questions of law or fact common to the
       members of the class predominate over any questions
       affecting only individual members, and that a class
       action is superior to other available methods for the
       fair and efficient adjudication of the controversy. 2

Appellants are represented through briefs and oral
argument by two groups of manufacturers, the
"International Paper Appellants"3 and the "Georgia Pacific
Appellants."4
_________________________________________________________________

1. Linerboard includes any grade of paperboard suitable for use in the
production of corrugated sheets, which are in turn used in the
manufacture of corrugated boxes and for a variety of industrial and
commercial applications. Corrugated sheets are made by gluing a fluted
sheet which is not made of linerboard, known as the corrugating
medium, between facing sheets of linerboard; corrugated sheets are also
referred to as containerboard. Appellants are major integrated
manufacturers and sellers of linerboard, corrugated sheets and
corrugated boxes.
2. In the posture of the case presented to us, Appellants are not ipsis
verbis challenging the district court’s determination that the putative
classes met the requirements of Rule 23(a).

3. International Paper Co., Weyerhaeuser Paper Co., Gaylord Container
Corp., Union Camp Corp., Tenneco Inc., Tenneco Packaging Corp. of
America.
4. Georgia-Pacific Corp., Temple-Inland Inc., Jefferson-Smurfit Corp.,
Stone Container Corp. and Smurfit-Stone Container Corp.

                                7

After individual law suits were filed in the Northern
District of Illinois and the Eastern District of Pennsylvania,5
the cases were transferred by the Judicial Panel on
Multidistrict Litigation to the Eastern District of
Pennsylvania for coordinated and consolidated pretrial
proceedings.

The district court established two classes:

       All persons in the United States who purchased
       corrugated containers directly from any Defendant at
       any time during the period October 1, 1993 through
       November 30, 1995, but excluding Defendants, their
       respective parents, subsidiaries and affiliates and
       federal, state and local governmental entities and
       political subdivisions.

       *   *   *   *   *

       All individuals and entities who purchased corrugated
       sheets in the United States directly from any of the
       defendants during the class period from October 1,
       1993 through November 30, 1995, excluding the
       defendants, their co-conspirators, and their respective
       parents, subsidiaries and affiliates, as well as any
       government entities.

In re Linerboard Antitrust Litig., 203 F.R.D. 197, 203 (E.D.
Pa. 2001) (emphasis added). These classes are presented
before us as the "Box Appellees" and the "Sheet Appellees."

The district court concluded that the putative classes met
the requirements of Rule 23(a) and noted that:

       there is an overlap between the predominance
       requirement of Rule 23(b)(3) and the prerequisite of
       Rule 23(a)(2) that common questions exist. "The courts
       have repeatedly focused on the liability issues, in
       contrast to damage questions, and, if they found issues
       were common to the class, have held that Rule 23(b)(3)
       was satisfied." 4 NEWBERG ON CLASS ACTIONS, S 18-26.
_________________________________________________________________

5. A detailed history of the litigation, and action of the Judicial Panel on
Multi-District Litigation for coordinating and consolidating pre-trial
proceedings, is set forth in In re Linerboard Antitrust Litig., 203 F.R.D.
197 (E.D. Pa. 2001).
                                8

Id. at 214.

The court then decided that the putative classes had met
the requirements of Rule 23(b). The court determined first,
that plaintiffs presented sufficient evidence to support
claims that the conspiracy to raise the price of linerboard
correspondingly raised the price of corrugated products. It
went on to "conclude[ ] that plaintiffs’ allegations regarding
impact, like their allegations regarding conspiracy, will
focus the inquiry on defendants’ actions, not on individual
questions relating to particular class members." Id. at 220.

I.

The International Paper Appellants argue that the district
court erred in holding that Appellees have sufficiently
demonstrated that they will be able to prove common
impact at trial. In support of this major premise, they
contend that the court erred in applying a legal
presumption of impact and failing to apply rigorous
scrutiny to plaintiffs’ proffered impact evidence. They
contend also that the court erred in ignoring the individual
issues raised by plaintiffs’ claim of fraudulent concealment.

For their part, the Georgia Pacific Appellants argue that
the district court erred because here the existence of injury,
and hence potential liability, requires an inherently
individualized inquiry. Similarly, they argue that the court
erred in certifying classes because the existence of
fraudulent concealment also requires an inherently
individualized inquiry.

We review a district court’s grant of class certification
under an abuse of discretion standard. Newton v. Merrill
Lynch, Pierce, Fenner & Smith, 259 F.3d 154, 165-166 (3d
Cir. 2001).

       In Katz v. Carte Blanche Corp., 496 F.2d 747, 756-757
       (3d Cir. 1974) (in banc), we articulated the standard of
       review applicable to class action decisions. We must
       decide whether the 23(a) prerequisites have been met,
       whether the district court correctly identified the issues
       involved and which are common, and whether it
       properly identified the comparative fairness and

                                9

       efficiency criteria. If the court’s analysis on these
       points is correct, then, "it is fair to say that we will
       ordinarily defer to its exercise of discretion" embodied
       in the findings on predominance and superiority. Id.

Bogosian v. Gulf Oil Corp., 561 F.2d 434, 448 (3d Cir.
1977).
The district court had jurisdiction pursuant to 28 U.S.C.
SS 1331 and 1337(a). Pursuant to Rule 23(f), Federal Rules
of Civil Procedure, Appellants timely petitioned this court
for permission to appeal the district court’s September 4,
2001, Order. We granted the petition and allowed the
appeal by an order dated December 18, 2001, and now
affirm.

II.

In presenting their theory of antitrust liability, Appellees
averred that even though demand for linerboard was strong
and rising between 1989 and 1992, the manufacturers’
prices for linerboard had fallen; that the manufacturers
attempted to increase prices during 1991, 1992 and the
first half of 1993, but the price increase announcement did
not "stick" and, therefore, the manufacturers had to rescind
them. It was at this point in September 1993, plaintiffs
allege, that Roger Stone, president of Stone Container
Corporation, the largest corrugated paper manufacturer,
reported that "the past five years have been the only five-
year period (going back as far as the 1920’s) when the
containerboard industry has had consistently declining
prices. It’s never happened before, never happened in the
depression, but it’s happened these last five years." App. at
710.

According to plaintiffs, declining prices were attributed to
excess inventory or inventory overhang. They also
maintained that Stone Container masterminded a two-fold
plan among the manufacturers to lower the industry
inventory to a five-week supply for a 2.5 million ton
threshold, in order to implement price increases. The
Packaging Corporation of America stated in the fall of 1993:

       Weakness in containerboard pricing during the first
       half of 1993 was more supply-related than demand-

                                10

       related. Earlier this year, industry inventories of
       containerboard hovered above 2.9 [million] tons and
       nearly [six] weeks of supply, above the 2.5-2.6 [million]
       tons and 5.0-5.2 week range usually required to
       sustain a price increase.

App. at 1553.

The plan was two-fold. First, the manufacturers would
close their mills for "market downtime," thereby reducing
industry inventory at mills and box plants. Second, Stone
would purchase inventory from other manufactures while
idling its own mills. In implementing this conspiracy,
during late June and early July 1993, Roger Stone
conducted a telephone survey of his competitors. He
coordinated the industry-wide downtime and agreed to have
his company purchase a significant volume of linerboard
from its competitors rather than meet the requirements
from its own production. Stone took downtime of
approximately 180,000 tons of containerboard by shutting
six of its mills during the following weeks and months.

The manufacturers closed their mills between July and
December. By October 1993, they had concerted their
actions and had lowered total inventories to the desired
level of less than a five-week supply. A total of 435,000 tons
had been withdrawn from the market. Inventory reached "a
twenty-year low in terms of weeks of supply . . . ." App. at
733. In October 1993, Appellants successfully increased
their prices for containerboard and boxes for the first time
in more than two years. Each raised its container prices by
an identical amount. Subsequently, the major
manufacturers continued their pattern of taking substantial
downtime and implementing price increases. In late
November, less than two months after the successful
October 1 price increase, Stone announced another $30 per
ton increase to be effective on January 1, 1994, even
though analysts were not expecting another attempt to
raise containerboard prices until February or March of that
year. Other manufacturers joined, and the price increase
became effective in March 1994.

In April 1994, Appellants justified another
containerboard price increase citing low inventory. Between

                                11

the summer of 1993 and March 1995, seven
containerboard price increases were implemented in the
industry. Linerboard prices in the eastern United States
rose in six consecutive escalations from a low of around
$270 to $290 per ton in the third quarter of 1993 to $530
per ton by April 1995. Plaintiffs allege that the roughly 90%
recovery in prices resulted in a sharp resurgence in
industry profitability as the containerboard increases were
passed through in the form of finished box prices. Even the
most debt-laden industry players had returned to
profitability by the fourth quarter of 1994. App. at 1265.

Thus, plaintiffs’ theory of antitrust liability is based on
poly-syllogisms: (1) Prices in the marketplace are controlled
by the economic laws of supply and demand, to wit, if a
product is in short supply, the price will increase. During
the period in question, linerboard was in short supply.
Therefore, during this period, the price of linerboard
increased. (2) Closing down production will create a
shortage in supply and a corresponding price increase. The
linerboard manufacturers closed down production.
Therefore, the linerboard manufacturers created a shortage
in supply and a price increase.

III.

We address first, the contention that the court erred in
applying a presumption of impact, in order to demonstrate
that questions of law and fact common to the members of
the class predominate over any questions affecting only
individual members. The district court did apply such a
presumption, relying on the oft-quoted statement in
Bogosian, familiarly described as the "Bogosian short-cut":6

       If, in this case, a nationwide conspiracy is proven, the
       result of which was to increase prices to a class of
       plaintiffs beyond the prices which would obtain in a
       competitive regime, an individual plaintiff could prove
       fact of damage simply by proving that the free market
       prices would be lower than the prices paid and that he
       made some purchases at the higher price. If the price
_________________________________________________________________

6. See Affidavit of Dr. Robin Cantor, App. at 608-629.

                                12

       structure in the industry is such that nationwide the
       conspiratorially affected prices at the wholesale level
       fluctuated within a range which, though different in
       different regions, was higher in all regions than the
       range which would have existed in all regions under
       competitive conditions, it would be clear that all
       members of the class suffered some damage,
       notwithstanding that there would be variations among
       all dealers as to the extent of their damage. "[The]
       burden of proving the fact of damage under S 4 of the
       Clayton Act is satisfied by . . . proof of some damage
       flowing from the unlawful conspiracy . . . ." Zenith
       Radio [Corp. v. Hazeltine Research, Inc.], 395 U.S. [100,
       114 n.9 (1969)]. Under these circumstances, proof on
       a common basis would be appropriate. Even if the
       variation in price dynamics among regions or
       marketing areas were such that in certain areas the
       free market price would be no lower than the
       conspiratorially affected price, it might be possible to
       designate subclasses to conform with these variations.
       See In re Antibiotic Antitrust Actions, 333 F. Supp. [278,
       281 (S.D.N.Y. 1971)].

Bogosian, 561 F.2d 434, 455 (3d Cir. 1977) (emphasis
omitted).7

Appellants challenge the following determination of the
district court:
_________________________________________________________________

7. The panel was unanimous on this point. The dissent would have
affirmed the grant of summary judgment, contending that plaintiffs had
six years of discovery in order to decide on a theory of liability and
should not have been given additional time to do so.

       This is not a pro se case. Plaintiffs’ counsel are competent,
       experienced and, in fact, nationally renowned attorneys in the
       antitrust field . . . In my view [after six years], this case has long
       since passed the stage where anyone concerned--parties, lawyers, or
       judges--should have to speculate as to the theory of the litigation
       . . . Moreover, until the theory of the case is settled, it will not be
       known which facts are "relevant" facts. Facts are only relevant
       insofar as they support a valid legal theory.
Bogosian, 561 F.3d at 457 (Aldisert, J., dissenting).

                                 13

       Plaintiffs have shown that they plan to prove common
       impact by introducing generalized evidence which will
       not vary among individual class members. For
       example, plaintiffs contend that even though prices
       may have varied among regions, the alleged conspiracy
       caused these prices to rise throughout the country.
       Although the prices for corrugated sheets and boxes
       may have increased due to demand, because
       defendants allegedly conspired to reduce production of
       linerboard, the price was higher than it would have
       been under competitive conditions. Such allegations,
       supported by the evidence presented, are of the kind
       contemplated by the Third Circuit in Bogosian and
       Newton. See also, Lumco Indus.,[Inc. v. Jeld-Wen, Inc.],
       171 F.R.D. [168, 173 (E.D. Pa. 1997)].

       The Court recognizes that defendants dispute plaintiffs’
       allegations. However, at the class certification stage,
       "the Court need not concern itself with whether
       Plaintiffs can prove their allegations regarding common
       impact; the Court need only assure itself that Plaintiffs’
       attempt to prove their allegations will predominantly
       involve common issues of fact and law." Lumco Indus.,
       171 F.R.D. at 174. "Plaintiffs need only make a
       threshold showing that the element of impact will
       predominantly involve generalized issues of proof,
       rather than questions which are particular to each
       member of the plaintiff class." Id. (citing In re
       Disposable Contact Lens Antitrust Litig., 170 F.R.D. 524
       (M.D. Fla. 1996)). Therefore, the Court concludes that
       plaintiffs’ allegations regarding impact, like their
       allegations regarding conspiracy, will focus the inquiry
       on defendants’ actions, not on individual questions
       relating to particular plaintiff class members.

Linerboard, 203 F.R.D. at 220.

A strong argument can be made that the Bogosian
concept of presumed impact was properly applied here. The
economic laws of supply and demand run in tandem with
the tenets of logic. A reduction in supply will cause prices
to rise. A deliberate cut in supply, as alleged here, is a
deliberate interference with market forces. Coincident with
this interference with the normal market forces, linerboard

                                 14

prices in the eastern United States rose in six consecutive
price increases, from a low of around $270 to $290 per ton
in third quarter 1993 to $530 per ton by April 1995.
Reduced to its essence, what Appellants say is that there is
no correlation between the reduction in supply of
linerboard and the subsequent price increases. What they
really contend is that plaintiffs’ argument is anchored on
the familiar fallacy of post hoc propter hoc, the fallacy of
inferring causation from temporal succession only, a
reasoning from what happens in sequence is merely an
assumption of a causal connection.

The post hoc accusation is trumped, however, by the laws
of economics. If the facts do, in fact, support plaintiffs’
theory that "an individual plaintiff could prove fact of
damage simply by proving that the free market prices would
be lower than the prices paid and that he made some
purchases at the higher price[,]" Bogosian, 561 F.2d at 455,
this would be a demonstration of the laws of supply and
demand at work.

IV.

But there is more to this case than exclusive reliance on
the presumed impact theory. The district court used a belt
and suspenders rationale to support its conclusion that the
putative class had met its burden of showing impact. In
addition to relying on the Bogosian short cut, it credited the
testimony of plaintiffs’ experts, opinions that were
supported by charts, studies and articles from leading trade
publications. These experts suggested that advanced
econometric models could be effectively prepared to
establish class-wide impact.

A.

In reaching its decision, the district court made note of
plaintiffs’ expert Dr. John Beyer, who presented two
possible means of assessing impact on a class-wide basis--
multiple regression analysis, and the benchmark or
yardstick approach, which he described as methods of
showing "an antitrust impact by generalized proof." Affidavit
of Dr. John C. Beyer, App. at 673-675. See also , In re

                                15

Plastic Cutlery Antitrust Litig., No. CIV. A. 96-CV-728, 1998
WL 135703, at *7 (E.D. Pa. Mar. 20, 1998); In re Flat Glass
Antitrust Litig., 191 F.R.D. 472, 485-486 (W.D. Pa. 1999)
(identifying multiple regression analysis as a method of
proving impact).

Dr. Beyer made an extensive empirical investigation into
the behavior of linerboard and corrugated box prices over
time, which proved a basis for his opinion of common
impact. He stated that he had studied the structure of the
industry, including Appellants’ market power, geographical
overlap, the fungible nature of the products, the inelastic
demand and lack of a substitute. He found that "corrugated
container prices are strongly influenced by linerboard
prices." Because of these industry characteristics "all class
members would be impacted by higher corrugated
container prices." App. at 672.

Significantly, Dr. Beyer stated that he found that
linerboard and corrugated box prices were closely
correlated. He concluded that linerboard transaction prices,
as well as corrugated containerboard prices, behaved
similarly over time across different regions of the country
and across different types of linerboard. These findings,
sometimes referred to as "structure in pricing,"
demonstrated to Dr. Beyer that "[d]espite any variations in
particular boxes or customers, prices for all corrugated
containers would have responded over time to linerboard
price increases in a similar manner . . . ." Id. Based on this
qualitative analysis, he concluded that the "alleged
conspiracy would have had a common, class-wide impact,
and that all purchasers of corrugated containers would
have paid a higher price as a result of the conspiracy." Id.
at 673. We deem his conclusion to be significant because it
was supported by charts and studies.

In discussing these feasible approaches, which could be
used to provide quantitative methods for corroborating his
opinion on impact and for estimating damages, he
suggested as a potential benchmark, the potential prices
charged for linerboard during a competitive period when
there would be no effects of the conspiracy. He explained
that the necessary data was available to do the analysis
and described the types of data he would use. He discussed

                                16

also a multiple regression model "to isolate the effects of
various influences on corrugated container prices, thereby
allowing a determination of the impact of any one of the
variables, including, in this case, the impact of the
conspiracy." Id. at 674.

B.

The plaintiffs also presented an affidavit of Dr. Robin C.
Cantor who stated that "[b]ased on my analysis of the
pricing data and company records, I conclude that the
alleged unlawful conduct to raise linerboard prices would
have impacted all members of the proposed class through
higher corrugated sheet prices." App. at 612. We deem this
conclusion to also be extremely significant.

Such a conclusion was supported by relevant data. For
example, she indicated that the containerboard industry is
relatively concentrated and that during the relevant period,
77 percent of linerboard and 71 percent of the "corrugated
medium" was produced by the top ten firms and that
overall, 73 percent of containerboard production was
concentrated in the top ten firms. Id. at 614. She also
indicated that benchmark prices are published weekly in a
number of sources including "The Yellow Sheet," "Pulp and
Paper Week" and "Pulp & Paper’s North American Fact
Book," and that "[a]ccording to a Weyerhaeuser document,
‘linerboard is the industry’s indicator price.’ " Id. at 619. Dr.
Cantor recognized that "[c]orrugated boxes are the most
popular shipping containers in the world. Over 90 percent
of all products in the United States are shipped in
corrugated cardboard boxes." Id. at 623 (quoting the
American Forest and Paper Association website).
Emphasizing this dominance over the shipping industry,
Dr. Cantor remarked that:

       [t]he market began to turn in the third quarter of 1993
       when containerboard producers announced an
       estimated 400,000 tons of downtime to reduce
       linerboard and medium inventories just as box
       shipments began to pick up. [(quoting Linerboard:
       Prices Soar to Record Levels as Shortage Condition
       Prevail, PULP & PAPER WEEK, Vol. 69, No. 1 at 13).]

                                17

       The industry is gradually responding to the soft
       linerboard market by announcing significant downtime
       to be taken in the third quarter. Announcements to
       date of downtime by Stone, Temple-Inland, Union
       Camp, IP and [Packaging Corporation of America]
       amount to roughly 300,000-350,000 tons of production
       or 5.4% of the industry’s capacity during the three
       month period." [(quoting Linerboard Markets--Industry
       Report, Donaldson, Lufkin & Jenrette Securities,
       August 10, 1993).]

App. at 626.

She also indicated that there are several accepted
statistical or mathematical approaches that could be used
to determine the percentage or absolute overcharge due
because of the effect of a conspiracy to manipulate prices.
App. at 628. She suggested that "benchmarking," which
uses "competitive prices for other comparable products to
estimate the pattern of prices but-for the alleged
misconduct[,]" could be effectively employed in this
situation. Id. Another proffered model would"compare[ ]
prices during non-conspiratorial periods with product
prices during the alleged conspiracy," and yet a third
approach would use revenue, production and profit data to
derive prices that are consistent with "yardstick"
competitive performance levels.

Most significantly, she concluded:

       In sum, containerboard and corrugated sheet products
       exhibit sufficient characteristics and their sale and
       production exhibit sufficient economic conditions to
       control for product variations in a price analysis. In
       combination, these characteristics and conditions
       indicate that a price-fixing conspiracy would have a
       common impact on all members of the proposed class
       and that feasible methods can be used to estimate
       damages reliably on a class-wide basis.

App. at 629.

C.
Based on the foregoing, we conclude that the district
court did not err in determining that plaintiffs showed that

                                18

they could establish injury on a class-wide basis. Plaintiffs
produced affidavits of expert witnesses, Dr. Beyer and Dr.
Cantor, who effectively utilized supporting data, including
charts and exhibits, to authenticate their professional
opinions that all class members would incur such damages.
We decide that this was not a case where plaintiffs relied
solely on presumed impact and damages.

In commenting on plaintiffs’ submissions, the district
court referred to the teachings of Newton for the proposition
that this court does not require plaintiffs to have selected a
particular econometric model for demonstrating impact (or
proving damages) at the class certification stage. In In re
Corrugated Container Antitrust Litig., 80 F.R.D. 244 (S.D.
Tex. 1978), the identical situation was presented to that
court where plaintiff had identified two generally accepted
methodologies, which he planned on using to determine
impact and damages. Relying heavily on Bogosian , the
court accepted that contention and certified the class. Id. at
251-252. Without explicitly so stating, the district court,
like the Corrugated Container court, did not require the
experts to pick one particular method over another at the
class certification stage, recognizing that the certification
stage is early in the overall litigation process. Linerboard,
203 F.R.D. at 219.

Accordingly, we reject the contention that plaintiffs did
not demonstrate that sufficient proof was available, for use
at trial, to prove antitrust impact common to all the
members of the class.

V.

A significant portion of Appellants’ briefing, and a major
emphasis at oral argument, was that the factual allegations
alleged here track precisely the factual scenario in Newton,
and therefore, the district court erred in not following the
holding of Newton and denying class certification. At oral
argument, counsel for Appellants referred to Newton as
"provid[ing] the guide for resolution in this case" and
referred to a single sentence contained therein that
constituted, in his formulation, a "teaching[that] holds with
respect to both of our submissions today."8 That passage
_________________________________________________________________

8. Counsel: Let me, if I may, begin with this Court’s decision in
       Newton, which we believe provides the guide for

                                19

reads as follows: "If proof of the essential elements of the
cause of action requires individual treatment, the class
certification is unsuitable." Newton, 259 F.3d at 172 (citing
Binder v. Gillespie, 184 F.3d 1059, 1063-1066 (9th Cir.
1999) (upholding class decertification where presumption of
reliance and loss unavailable), cert. denied, 528 U.S. 1154
(2000)).

We have several problems with this argument. In and of
itself, the quotation can be interpreted as the obverse of
Rule 23(b)(3), Federal Rules of Civil Procedure, in the sense
that "if any questions affecting individual members"
predominate over "questions of law and fact," class
certification is unsuitable. Clearly, if proof of the essential
elements of the cause of action require individual
treatment, then there cannot be a predominance of
"questions of law and fact common to the members of the
class."

Equally important, the quotation at issue must be
considered in the precise context in which it was used in
Newton. It formed the final sentence of a paragraph in
which we discussed permissible presumptions proof of
reliance and injury in securities cases. Having cited a
number of cases upholding presumptions of reliance in
Rule 10b-5 claims, we stated that where a presumption of
_________________________________________________________________

       resolution in this case.

       * * * * *
       And I would like to guide the Court . . . to the language
       in Newton. And if you will indulge me, I’m going to quote
       one sentence. . . . If proof, if proof of the essential
       elements of the cause of action requires individual
       treatment, then class certification is unsuitable.

       Now, that teaching holds with respect to both our
       submissions today. [Co-counsel] has been speaking
       about causation or impact or injury. It also goes to proof
       of the essential elements of fraudulent concealment, the
       second part of our submission today.

Transcript of Oral Argument in In re Linerboard Antitrust Litig., No. 01-
4353 (before the Court of Appeals for the Third Circuit, recorded in
Philadelphia, Pennsylvania, July 19, 2002, at 16-17).

                                  20

reliance and loss was not available, as in Binder, it would
be necessary for each plaintiff to prove the essential
elements of the cause of action, and, if so, class
certification would be unsuitable. Newton, 259 F.3d at 172.
In Binder, the court affirmed the denial of class
certification, stating that "[t]he district court reasoned that
the class would have to satisfy the reliance element through
a presumption; otherwise individual questions of reliance
would predominate over questions common to the class."
Binder, 184 F.3d at 1063.

A.
We consider it useful to identify the precise flashpoint of
controversy at stake in Newton. Roscoe Pound taught us
that the judicial process distinguishes discrete functions in
the appellate decisional process: (1) finding or choosing (or
creating) the law where the dispute is over the choice of the
controlling legal precept; (2) if there is no dispute as to its
selection, a disagreement over its interpretation; and (3)
where there is agreement on the precept and its
interpretation, the sole question is the application of the
law to the facts, which Pound described as "[a]pplication of
the abstract grounds of decision to the facts of the
particular case."9 The precise holding in Newton was that
the facts common to the members of the class did not
predominate. No new legal precept was created; no new
nuance of interpretation was forthcoming. It was merely the
application of ruling case law in this court to the facts of
that case.

The process of justifying a court’s decision always
requires application of a legal precept to a particular factual
situation. The application may be purely mechanical, as it
is in most cases. If the facts are similar to those in an
earlier case announcing a rule of law, the doctrine of
precedent becomes operative. Where there is no quarrel
over the choice and interpretation of the legal precept, here
Rule 23(b)(3), the root controversy usually is traced to a
value judgment of whether there is sufficient similarity
_________________________________________________________________

9. Roscoe Pound, The Theory of Judicial Decision, 36 HARV. L. REV. 940,
950-951 (1923).

                                21

between the fact situations under comparison. Edward R.
Levi amply described this kind of assessment when he
stated: "[t]he scope of a rule of law, and therefore its
meaning, depends upon a determination of what facts will
be considered similar. . . . The finding of similarity or
difference is the key step in the legal process."10 To predict
a court’s actions in a precept-application controversy,
therefore, requires a prediction of what facts in the
compared cases a given court, at a given time, will deem
either material or insignificant. The facts considered
material are "adjudicative facts," described by Hart and
Sacks as "facts relevant in deciding whether a given general
proposition is or is not applicable to a particular situation."11

B.

For Appellants’ argument to prevail, therefore, they must
demonstrate that the facts in Newton are substantially
similar to the facts in the case at bar, what logicians call
inductive reasoning by analogy, or reasoning from one
particular case to another. To draw an analogy between two
entities is to indicate one or more respects in which they
are similar and thus argue that the legal consequence
attached to one set of particular facts may apply to a
different set of particular facts because of the similarities in
the two sets. Because a successful analogy is drawn by
demonstrating the resemblances or similarities in the facts,
the degree of similarity is always the crucial element. You
may not conclude that only a partial resemblance between
two entities is equal to a substantial or exact
correspondence.

Logicians teach that one must always appraise an
analogical argument very carefully. Several criteria may be
used: (1) the acceptability of the analogy will vary
proportionally with the number of circumstances that have
been analyzed; (2) the acceptability will depend upon the
number of positive resemblances (similarities) and negative
_________________________________________________________________

10. Edward H. Levi, Introduction to Legal Reasoning, 15 U. Chi. L. Rev.
501, 501-504 (1948)

11. HENRY HART & ALBERT SACKS, THE LEGAL PROCESS 384 (tent. ed.
               1958).

                                22

resemblances (dissimilarities); or (3) the acceptability will be
influenced by the relevance of the purported analogies.
IRVING M. COPI & KEITH BURGESS-JACKSON,INFORMAL LOGIC 166
(3d ed. 1996); Arthur L. Goodheart, Determining the Ratio
Decidendi of a Case, 40 YALE L.J. 161, 179 (1930); JOHN H.
WIGMORE, WIGMORE’S CODE OF THE RULES OFEVIDENCE IN TRIALS
AT LAW 118 (3d ed. 1942); JOHN STUART MILL, A SYSTEM OF
LOGIC RATIOCINATIVE AND I NDUCTIVE 98-142 (8th ed. 1916) ("Two
things resemble each other in one or more respects; a
certain proposition is true of one; therefore it is true of the
other.").

For Appellants to draw a proper analogy, they had the
burden in the district court, as they do here, of showing
that the similarities in the facts of the two cases outweigh
the differences. They cannot do so, for two significant
reasons. First, in Newton it was clear that not all members
of the putative class sustained injuries; here, all members
sustained injuries because of the artificially increased
prices. Secondly, in Newton there were hundreds of millions
of stock transactions involved, thus making the putative
class extremely unmanageable; here, an astronomical
number of transactions is not present. The classes are
manageable.

We reversed the district court’s determination of class
certification in Newton because it involved a putative
securities class action in which purchasers of stocks
charged that their broker-dealers breached their duty to
execute trades on the most favorable terms reasonably
available. Newton, 259 F.3d at 161-163. The gravamen of
the complaint was that their brokers could have received a
better price for securities had they used a computer system
other than the central National Best Bid and Offer system
("NBBO"). The evidence disclosed that on some occasions,
the NBBO price was better than on other computer
systems, at times, the prices were the same, and at other
times, the NBBO price was worse than on other systems.
Id. at 177-180. Under those circumstances, we concluded
that not every class member was injured by the failure of
the brokers to find the best possible price. Id. at 187-188.

Critical to our determination of whether class certification
was proper, we noted that in determining how to execute a

                                23

client’s order, a broker-dealer must take into account order
size, trading characteristics of the security, speed of
execution, clearing costs, and the cost and difficulty of
executing an order in a particular market. Id. We were very
specific in this respect:

       These factors would appear to vary from class member
       to class member and, for each class member, from
       trade to trade. Whether a class member suffered
       economic loss from a given securities transaction
       would require proof of the circumstances surrounding
       each trade, the available alternative prices, and the
       state of mind of each investor at the time the trade was
       requested. This Herculean task, involving hundreds of
       millions of transactions, counsels against finding
       predominance.

       *   *   *   *   *

       The alleged injuries in Newton arise out of the
       execution of hundreds of millions of trades, not a
       single act of fraudulent conduct. The distinct facts
       among the hundreds of thousands of plaintiffs
       involving hundreds of millions of trades will determine
       whether securities violations occurred. Because
       plaintiffs’ claims will require an economic injury
       determination for each trade, we hold the putative
       class fails to satisfy the predominance requirement.

Id. at 187, 190.

Contrasting the Newton facts with those in the case at
bar, here there was no evidence that the individuals and
entities who purchased corrugated containers or corrugated
sheets from Appellants during the relevant two-year period
had participated in hundreds of millions of commercial
transactions. More important, the Newton court was staring
a situation in the face where they would necessarily
examine every stock purchase or sale because not every
member of the putative class was injured. By direct
contrast, with certain limited exceptions relating to
purchasers whose contracts were tied to a factor
independent of the price of linerboard, all purchasers of
corrugated sheets and boxes were injured. They were all

                                24
affected by the increased price of linerboard that reflected
in the price paid by plaintiffs.

For the foregoing reasons, we conclude that we cannot
accept the analogue so vigorously urged by Appellants
because the negative resemblances (dissimilarities) between
Newton and the case at bar seriously outweigh the positive
resemblances (similarities).

VI.

The Court’s decision in Illinois Brick Co. v. Illinois, 431
U.S. 720 (1977), bans Clayton Act lawsuits by persons who
are not direct purchasers from the defendant antitrust
violator. Appellants argue that the district court should
have denied class certification, under the teachings of
Illinois Brick, because members of the proposed classes
purchased corrugated sheets or boxes, of which linerboard
was a mere ingredient, and did not purchase linerboard per
se. Appellees respond, as they did in the district court, that
the facts here come within the purview of our decision and
rationale in In re Sugar Indus. Antitrust Litig. , 579 F.3d 13
(3d Cir. 1978), in which we held that the purchasers of
candy made by the sugar manufacturers were not barred
from bringing suit under the S 1 of the Sherman Act, 15
U.S.C. S 1, and S 4 of the Clayton Act, 15 U.S.C. S 15.

We posed the question succinctly: Does Illinois Brick bar
suit by a plaintiff who purchases directly from the alleged
offender, but buys a product which incorporates the price-
fixed product as one of its ingredients? We held that there
was no bar.

Our reasoning began with an explication of the rationale
behind Illinois Brick:

       The Court grounded its conclusion on several bases,
       including the possibility of exposing the defendant to
       multiple liability and the evidentiary complexities that
       would arise in apportioning the overcharge among
       those in the chain who had suffered injury. The Court
       also expressed concern that if the direct purchaser
       could not make a full recovery of the overcharge, the
       wrongdoer would be able to keep some of the fruits of

                                25

       its illegality. Based on this reasoning, the Court held
       that the plaintiff, which purchased a completed
       building, was not permitted to sue the manufacturer of
       concrete block which had been incorporated into the
       structure.

In re Sugar, 579 F.3d at 17.

We then explained why this rule would not apply to the
purchasers of candy made with the price-fixed sugar:

       As the defendants here point out, the product which
       plaintiff purchased competes not with sugar, but with
       other candy, and more than one ingredient determines
       the price. To this extent, there will be some additional
       complications underlying the damage claims. However,
       this must not be allowed to obscure the fact that the
       plaintiff did purchase directly from the alleged violator.
       True, the price-fixed commodity had been combined
       with other ingredients to form a different product. But
       just as the sugar sweetened the candy, the price-fixing
       enhanced the profits of the candy manufacturers. The
       situation is the same as if the general contractor which
       sold the building to the plaintiff in Illinois Brick were
       the manufacturer of the concrete block which went into
       the structure. In that situation, the concern which the
       Supreme Court expressed about the proration of
       overcharge among a number of entities in the chain
       would not have been present.

       Nor is that problem of allocation among various
       distributors present in the case sub judice. Plaintiff is
       a direct purchaser and, therefore, entitled to recover
       the full extent of the overcharge.

Id. at 17-18.

In the case at bar, the district court met this issue head-
on, and we agree completely with its analysis. It
emphasized that the putative class plaintiffs purchased
corrugated sheets or boxes directly from Appellants, and,
like the candy in In re Sugar, which contained allegedly
price-fixed sugar, the corrugated sheets and boxes contain
linerboard that was subject to an agreement on output,
which is equivalent to a price-fixing agreement. Accordingly,

                                26

the putative class members are direct purchasers and are
entitled to recover the full amount of any overcharge. See
Gen. Leaseways v. Nat’l Truck Leasing Ass’n, 744 F.2d 588,
594-595 (7th Cir. 1984) ("An agreement on output also
equates to a price-fixing agreement. . . . [If] firms restrict
output directly, price will . . . rise in order to limit demand
to the reduced supply. . . . [R]educing output, and dividing
markets have the same anticompetitive effects.").

VII.

This is not a securities case. It is an antitrust case
involving allegations that several United States
manufacturers of linerboard engaged in a continuing
combination and conspiracy in unreasonable restraint of
trade and commerce in violation of S 1 of the Sherman Act,
15 U.S.C. S 1. It is well settled that "[a]ny action to enforce
any cause of action under section 15, 15a, or 15c . . . shall
be forever barred unless commenced within four years after
the cause of action accrued." 15 U.S.C. S 15b.

Appellants contend that Appellees’ claims are timed-
barred because most of the class period--from October
1993 to November 1995--ended more than four years
before the filing of the sheet and box complaints in May
1999. Appellees agree on the time period, but respond that
the four-year statute of limitations should be tolled under
the doctrine of fraudulent concealment because they had
no knowledge of the alleged conspiracy or of any facts that
might have led to the discovery thereof in the exercise of
reasonable diligence. They contend that it was not until
approximately February 25, 1998, when the Federal Trade
Commission issued a press release, a complaint and a
proposed consent decree against Appellant Stone Container
Corporation, describing certain facets of anti-competitive
conduct, that they became aware of Appellants’
misadventures.

A.

Although S 15b mandates a four-year statute of
limitations for civil antitrust actions, it is well established
that the doctrine of fraudulent concealment tolls the

                                27

limitation period when a plaintiff ’s cause of action has been
obscured by the defendant’s conduct.

       [I]n order to establish the applicability of the doctrine,
       an antitrust plaintiff must show three things: (1)
       fraudulent concealment; (2) failure on the part of the
       plaintiff to discover his cause of action notwithstanding
       such concealment; and (3) that such failure to discover
       occurred [notwithstanding] the exercise of due care on
       the part of the plaintiff.

70 A.L.R. FED. 498 (1984).

Where an action implicating fraudulent concealment is
sought to be brought in a class posture, we must decide
whether the required elements of proof are too
individualized to permit such treatment.

"It generally has been recognized that the question of
concealment by [an] antitrust defendant is a common
question, subject to being uniformly resolved on behalf of
all members of the class." In re Flat Glass , 191 F.R.D. at
487 (citing In re NASDAQ Market-Makers Antitrust Litig.,
169 F.R.D. 493, 519 (S.D.N.Y. 1996); In re Fine Paper
Antitrust Litig., 82 F.R.D. 143, 154-155 (E.D. Pa. 1979)).
"However, the question of discovery of the cause of action
by a plaintiff presents an individual question." Id.
"Similarly, the issue of due diligence seemingly raises an
individual question." Id. "Thus, the broad issue of
fraudulent concealment presents both common and
individual issues; therefore, the determination whether an
antitrust action involving fraudulent concealment may
proceed as a class action turns upon which aspect of the
issue may be considered to predominate." Id. (citing Hedges
Enters., Inc. v. Cont’l Group, Inc., 81 F.R.D. 461, 476 (E.D.
Pa. 1979)).
The cumulative experience of the judiciary has not been
uniform in this regard. Some courts have regarded the
issue of concealment to predominate, and have held that
class certification is permissible, even though some
individual questions are present. Other courts have
considered individual questions to be too pervasive to
permit it to be handled as a class matter. In this judicial

                                28

circuit, there has been a division of authority, with some
cases supporting each view.12

B.

Appellants argue that common issues of proof do not
predominate with respect to the fraudulent concealment
issue and that therefore a class action is not the
appropriate vehicle for deciding Appellees’ claims.
International Paper Appellant’s Brief at 38-43. They suggest
that fraudulent concealment involves a "two-pronged"
inquiry--a concealment by the defendant and plaintiff ’s
actual knowledge of it or failure to use due care to discover
it--and cannot be established unless both prongs are
satisfied. In asserting their position, they rely on the
language of the Court of Appeals for the Fourth Circuit:
"when the defendant’s affirmative defenses (such as . . . the
statute of limitations) may depend on facts peculiar to each
plaintiff ’s case, class certification is erroneous." Broussard
v. Meineke Disc. Muffler Shops, Inc., 155 F.3d 331, 342 (4th
Cir. 1998) (alteration in original) (internal quotation marks
omitted); see also, Chevalier v. Baird Sav. Ass’n, 72 F.R.D.
140 (E.D. Pa. 1976); In re Anthracite Coal Antitrust Litig., 78
F.R.D. 709 (M.D. Pa. 1978); Krehl v. Baskin-Robbins Ice
Cream Co., 78 F.R.D. 108 (C.D. Cal. 1978).

They argue that a number of Appellees are barred from
asserting a fraudulent concealment defense to the statute
of limitations because they either had prior knowledge of
_________________________________________________________________

12. In some cases, the courts held that common questions
predominated, and that class actions therefore were permissible. See In
re Flat Glass, 191 F.R.D. 472 (W.D. Pa. 1999); In re Sugar Indus.
Antitrust Litig., 73 F.R.D. 322 (E.D. Pa. 1976); Hedges Enters., Inc. v.
Cont’l Group, Inc., 81 F.R.D. 461 (E.D. Pa. 1979); In re Fine Paper
Antitrust Litig., 82 F.R.D. 143 (E.D. Pa. 1979); In re Glassine &
Greaseproof Paper Antitrust Litig., 88 F.R.D. 302 (E.D. Pa. 1980). On the
other hand, other Third Circuit District Court cases have expressed the
view that questions relating to fraudulent concealment in antitrust class
actions do not present sufficiently common issues as to permit class
action treatment. See Chevalier v. Baird Sav. Ass’n, 72 F.R.D. 140 (E.D.
Pa. 1976); In re Anthracite Coal Antitrust Litig., 78 F.R.D. 709 (M.D. Pa.
1978); Wolfson v. Artisans Sav. Bank, 83 F.R.D. 547 (D. Del. 1979);
Susquehanna v. H & M, Inc., 98 F.R.D. 658 (M.D. Pa. 1983).

                                29
the conspiracy, or did not act with the requisite due
diligence, emphasizing that this sort of inquiry is highly
personal and is susceptible only to individualized proof
and, therefore, inappropriate for class treatment. 13
_________________________________________________________________

13. Appellants introduced evidence that "each of the five named plaintiffs
stands in a unique position with respect to fraudulent concealment that
will have to be individually adjudicated if that plaintiff is to recover."
International Paper Appellant’s Brief at 46. They refer to Lisa Garrett,
president of Garrett Paper, who testified that she was "sure" that
something illegal was afoot when Garrett Paper’s prices for corrugated
boxes increased during the alleged class period, that she "plain as day
told [her] salesman that" Appellants were fixing prices, and that she
knew such activity was illegal. International Paper Appellant’s Brief at
46-47.

Similarly, Appellants contend that Appellee Oak Valley was also aware
of the price increases and allegedly told Stone Container that "you’d
better lower your box prices," though Oak Valley is uncertain whether
that conversation took place during the class period. International Paper
Appellant’s Brief at 47. They emphasize that Oak Valley testified that it
"accepted the increases in the matter of course and never really
questioned it." Id. They assert also that although Local Baking now says
it had no knowledge during the alleged class period of changes in the
average market price for corrugated products, or of any downtime taken
by linerboard manufacturers, Local Baking has testified that it was told
by Appellant Stone Container that prices were increasing because of a
decrease in linerboard. They refer to the testimony of David Halper,
president of Alfred I. Halper Corrugated Box Co., Inc., who testified that
he was aware of the increased prices that Appellants had charged Halper
during the class period, and that he had even complained to Appellants
about the increases. Appellants argue that Halper has no greater
knowledge today about the existence of a conspiracy than he did during
the alleged class period.

Finally, they note that General Refractories sold all of its operating
assets in 1994, in the middle of the class period and years before any
complaint was ever filed in this case. They state that there were no
communications, other than invoices, between Appellants and General
Refractories during the class period, and that General Refractories could
not identify any facts discovered after the class period that led to filing
its complaint, and in particular none that led to the naming of entities
other than Stone Container as defendants. International Paper
Appellant’s Brief at 48-49. And, in contrast to Garrett Paper and Halper,
Appellants contend that General Refractories does not appear to have
had any suspicion of wrongdoing during the alleged class period based
on price increases for corrugated sheets.

                                30

To be sure, certain determinations involving the
fraudulent concealment defense to the statute of limitations
will require individualized proof, which might vary among
the assorted Appellees. However, most courts have refused
to deny class certification simply because there will be
some individual questions raised during the proceedings. In
rejecting the rationale in Broussard, the Court of Appeals
for the First Circuit determined:

       Although a necessity for individualized statute-of-
       limitations determinations invariably weighs against
       class certification under Rule 23(b)(3), we reject any
       per se rule that treats the presence of such issues as
       an automatic disqualifier. In other words, the mere fact
       that such concerns may arise and may affect different
       class members differently does not compel a finding
       that individual issues predominate over common ones.
       As long as a sufficient constellation of common issues
       binds class members together, variations in the
_________________________________________________________________

It is Appellants’ case that the factual complexities relating to these five
named plaintiffs underscores the inherently individualized nature of a
fraudulent concealment analysis. Appellants insist that the named
Appellees would have to prove, among other things: (1) that Garrett
Paper’s conceded awareness of alleged illegality does not qualify as
actual "discovery;" (2) that Garrett Paper’s considered inaction in the face
of such awareness qualifies as "due diligence;" (3) that Garrett Paper’s
asserted small size excuses its inaction; (4) that none of the other named
Appellees knew or had reason to know about the alleged illegality in the
exercise of due diligence, even though some of them complained about
the price increases whereas others were not even aware of those
increases; (5) that something was "fraudulently concealed" from all
putative class members, even though some of them have conceded that
they are aware of no more incriminating facts now than they were during
the alleged conspiracy; (6) that unique relationships do not affect the
due-diligence inquiry; (7) that named Appellees who claimed not to have
known of Stone Container’s downtime exercised "due" diligence, when
such downtime was widely publicized in the industry at the time; (8) that
General Refractories, which went out of business in the middle of the
class period, is held to a due-diligence standard even after that point;
and (9) that alleged oral misrepresentations made to some named
Appellees but not others, regarding the reasons for the price increases
does not affect the due-diligence analysis. Id. at 49-50.

                                31

       sources and application of statutes of limitations will
       not automatically foreclose class certification under
       Rule 23(b)(3). See 5 JAMES WM. MOORE ET AL., MOORE’S
       FEDERAL PRACTICE P 23.46[3] (3d ed. 1999).
       Predominance under Rule 23(b)(3) cannot be reduced
       to a mechanical, single-issue test.

Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 296
(1st Cir. 2000). We accept this reasoning as more
persuasive than that espoused by the Court of Appeals for
the Fourth Circuit in Broussard.

Notwithstanding the individual determinations that will
undoubtedly arise at trial, common issues of concealment
predominate here because "the inquiry necessarily focuses
on defendants’ conduct, that is, what defendants did rather
than what plaintiffs did." In re Flat Glass , 191 F.R.D. at
488. Key questions will not revolve around whether
Appellees knew that the prices paid were higher than they
should have been or whether Appellees knew of the alleged
conspiracy among Appellants. Instead, the critical inquiry
will be whether "defendants successfully concealed the
existence of the alleged conspiracy, which proof will be
common among the class members in each class." Id.14 It is
the fact of concealment that is the polestar in an analysis of
fraudulent concealment. It is the camouflage that demands
attention, the cover up, the acts of obscuring or masking.
These allegations of proof are all common to the
defendants, not the plaintiffs. It is not the conspiracy of the
defendant that is relevant on the issue of tolling the statute
of limitations, it is the act of concealing the conspiracy.
_________________________________________________________________

14. See, e.g., Abramovitz v. Ahern , 96 F.R.D. 208, 218 (D. Conn. 1982)
(issue of whether fraudulent concealment would toll the statute of
limitations was common to all class members); In re Plywood Antitrust
Litig., 76 F.R.D. 570, 586 (E.D. La. 1976) ("fraudulent concealment
issues appear to be generally common to all members in each class"); In
re Sugar, 73 F.R.D. at 348; In re Fine Paper , 82 F.R.D. at 154-155 ("The
key question on the issue of fraudulent concealment will relate to
whether defendants successfully concealed the existence of the alleged
conspiracy, and the proof of this contention [what defendants did] will
necessarily be common among the class members.").

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C.

Moreover, any individualized facts of fraudulent
concealment may be adjudicated in the same fashion and
at the same time as individual damages issues. As a
leading treatise on class actions explains: "Challenges
based on the statute of limitations, fraudulent concealment,
releases, causation, or reliance have usually been rejected
and will not bar predominance satisfaction because those
issues go to the right of a class member to recover, in
contrast to underlying common issues of the defendant’s
liability." NEWBERG & CONTI, NEWBERG ON CLASS ACTIONS S 4.26
(3d ed.)

Many courts faced with similar circumstances have
certified class status with the expectation that individual
questions concerning fraudulent concealment can be
resolved at a later damages phase. See In re Flat Glass, 191
F.R.D. at 488 (citing In re Fine Paper, 82 F.R.D. at 154-155)
("[B]ifurcation of this litigation into liability and damage
segments remains an option if the predominating elements
of the question of fraudulent concealment do not prove
susceptible to generalized proof."). See also , In re Indus.
Diamonds Antitrust Litig., 167 F.R.D. 374, 385 (S.D.N.Y.
1996) (Individualized issues raised in fraudulent
concealment should be considered when court addresses
each putative class member’s damage claim.); Town of New
Castle v. Yonkers Contracting Co., 131 F.R.D. 38, 43
(S.D.N.Y. 1990) (holding that individualized claims and
defenses on statute of limitations issue can be adjudicated
in separate determinations of damages).
Accordingly, we hold that common issues of fraudulent
concealment predominate.

*   *   *   *   *

We have considered all contentions presented by the
parties and conclude that no further discussion is
necessary.

The judgment of the district court will be affirmed.

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A True Copy:
Teste:

         Clerk of the United States Court of Appeals
         for the Third Circuit

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