Chapter VII. Class Action Assertion of Indirect Purchaser Claims

• Pages: 151-209

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CHAPTER VII

CLASS ACTION ASSERTION

OF INDIRECT PURCHASER CLAIMS

Most—but by no means all—indirect purchaser claims are brought

as class actions. Consequently, the court will usually need to address

class certification issues early on. Indeed, many courts will bifurcate

discovery and require that the issue of class certification be decided

before any merits discovery is conducted.

Every jurisdiction’s class certification requirements are set forth

either in a court rule or statute. This Chapter focuses primarily on Rule

23 of the Federal Rules of Civil Procedure. Rule 23 not only governs

federal courts but also influences state courts in two ways. First, most

states have copied Rule 23 verbatim or with only minor changes as their

class certification rule. Second, most states, by judicial decision,

consider Rule 23 and federal court interpretations of Rule 23 as

persuasive in construing their own class certification rules if there are no

state decisions on point, which is often the case.526 Consequently, class

certification decisions under Federal Rule 23 are useful almost

everywhere if not in conflict with a forum state’s own decisional law.

Moreover, as discussed in Chapter IV, federal class action procedure is

likely to become increasingly prevalent in indirect purchaser cases

because of the expanded federal jurisdiction under the Class Action

Fairness Act of 2005 (CAFA).527

A. Class Certification under Rule 23

In most indirect purchaser cases plaintiffs seek class certification

under Federal Rule of Civil Procedure 23(b)(3).528 Under that rule, a

court cannot certify a case as a class action unless it finds that the four

prerequisites of Rule 23(a)—usually called numerosity, commonality,

526. See, e.g., Richmond v. Dart Indus., 29 Cal. 3d 462, 470 (1981); Vos v.

Farm Bureau Life Ins., 667 N.W.2d 36, 44 (Iowa 2003); Steele v. Sec.

Benefit & Life Ins., 226 Kan. 631, 636 (1979); In re S.D. Microsoft

Antitrust Litig., 657 N.W.2d 668, 672 n.4 (S.D. 2003).

527. Pub. L. No. 109-2, 119 Stat. 4 (2005).

528. Rule 23(b)(1) permits certification where the absence of a class would

create a risk of inconsistent obligations for the party opposing the class or

impair the rights of class members to protect their interests. Rule

23(b)(2) applies only to injunctive or declaratory relief.

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typicality, and adequacy of representation—are satisfied. In addition, the

court must also find that the tests of Rule 23(b)(3) (predominance of

common over individual questions and manageability of the case as a

class action) are met. The party seeking certification bears the burden of

showing that all of the prerequisites for class treatment are met.529

Rule 23(a) provides:

(a) Prerequisites to a Class Action. One or more members of a class

may sue or be sued as representative parties on behalf of all only if (1)

the class is so numerous that joinder of all members is impracticable,

(2) there are questions of law or fact common to the class, (3) the

claims or defenses of the representative parties are typical of the claims

or defenses of the class, and (4) the representative parties will fairly and

adequately protect the interests of the class.530

If all of those prerequisites are satisfied, then the court considers

whether the Rule 23(b)(3) tests are met:

(b) Class Actions Maintainable. An action may be maintained as a

class action if the prerequisites of subdivision (a) are satisfied, and in

addition:

* * *

(3) the court finds 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. The matters pertinent to the findings include: (A) the

interest of members of the class in individually controlling the

prosecution or defense of separate actions; (B) the extent and nature of

any litigation concerning the controversy already commenced by or

against members of the class; (C) the desirability or undesirability of

concentrating the litigation of the claims in the particular forum; (D)

the difficulties likely to be encountered in the management of a class

action.531

In indirect purchaser cases, numerosity and commonality are seldom

disputed. Occasionally, the defendant challenges the typicality of the

proposed class representative’s claims or whether the representative can

529. See In re Terazosin Hydrochloride Antitrust Litig., 220 F.R.D. 672, 679

(S.D. Fla. 2004); In re Methionine Antitrust Litig., 204 F.R.D. 161, 162

(N.D. Cal. 2001).

530. FED R. CIV. P. 23(a).

531. FED. R. CIV. P. 23(b)(3).

Indirect Purchaser Class Actions 153

adequately represent the proposed class. Almost always, class

certification turns on whether common questions will predominate over

those affecting only individual members of the proposed class and

whether the individual issues likely to be faced will make the case

unmanageable as a class action and, hence, not superior to other

available methods for the fair and efficient adjudication of the

controversy.

1. Timing of Class Action Determination

Until its amendment in 2003, Federal Rule of Civil Procedure

23(c)(1) directed district courts to determine class certification “as soon

as practicable after the commencement of the litigation.” Most state

class certification rules, which are based on Rule 23 or copy it exactly,

utilize the same standard. Consequently, once the complaint has been

answered, or a demurrer or motion to dismiss has been resolved, the

court and parties ordinarily will turn to class certification.

Some jurisdictions have adopted rules that require the plaintiff to file

a motion for class certification within a short time. For example, a local

rule of the King County Superior Court in Washington requires that class

certification motions be filed within 90 days after all defendants have

answered the complaint.532 The District of Columbia likewise requires

the plaintiff to move for class certification within 90 days after the

complaint is filed,533 whereas Michigan allows plaintiffs 91 days to file

their certification papers.534

Many courts, either by rule or practice, conduct case management

conferences at the outset of a putative class action and set deadlines for

filing class certification motions, briefs, supporting affidavits and

evidentiary materials. In California, for example, a rule of court

directing that motions for class certification “should be filed when

practicable,” permits the court to “establish a deadline for the filing of

the motion. . . . Any such deadline must take into account discovery

proceedings that may be necessary to the filing of the motion.”535

Rule 23 was amended on December 1, 2003, to replace the “as soon

as practicable” formulation with a requirement that the district court

decide “at an early practicable time” whether to certify the case as a class

532. KING CO. WASH. LOCAL RULE 23(b).

533. D.C. SUPER. CT. RULE 23-1(b)(1).

534. MICH. CT. RULE 3.501(B)(1)(a).

535. CAL. R. CT. 1854(b).