Class Action Assertion of Indirect Purchaser Claims

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CHAPTER VII

CLASS ACTION ASSERTION

OF INDIRECT PURCHASER CLAIMS

Most, but not all, indirect purchaser claims are brought as class

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

certification issues in indirect purchaser suits.

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.1

Consequently, class certification decisions under Rule 23 are useful

almost everywhere if not in conflict with a forum state’s own

decisional law. Moreover, as discussed in Chapter IV, the Class

Action Fairness Act of 20052 is now eight years old and has had the

predicted effect: most (but still not all) indirect purchaser cases are

litigated in federal court.3

1. See, e.g., Richmond v. Dart Indus., 629 P.2d 23, 28 (Cal. 1981); Vos

v. Farm Bureau Life Ins., 667 N.W.2d 36, 44 (Iowa 2003); In re S.D.

Microsoft Antitrust Litig., 657 N.W.2d 66 8, 672 n.4 (S.D. 2003);

Steele v. Sec. Benefit & Life Ins., 602 P.2d 1305, 1390-10 (Kan.

1979).

2. 28 U.S.C. §§ 1332(d), 1453, 1711–15.

3. See, e.g., In r e Flonase Antitrust Litig., 815 F. Supp. 2d 867, 871 n.5

(E.D. Pa. 2011) (finding jurisdiction over indirect purchaser antitrust

class action proper under the Class Action Fairness Act of 2005); In

re OSB Antitrust Litig., 2007 U.S. Dist. LEXIS 56617, at *6 (E.D.

Pa. 2007) (same); Moniz v. Bayer A.G., 447 F. Supp. 2d 31 (D.

Mass. 2 006) (same); see a lso In re Graphics Processing Units

Antitrust Litig., 253 F.R.D. 478, 500 (N.D. Cal. 2008) (noting that

the number of indirect purchaser class actio ns that have been heard in

federal courts has increased since the passage of the Class Action

Fairness Act of 2005).

194 Indirect P urchaser Litigation Ha ndbook

A. Wal-Mart Stores v. Dukes, Amgen, Inc. v. Connecticut

Retirement Plans & Trust Funds, and Comcast Corp. v.

Behrend

Prior to the U.S. Supreme Court’s 2011 decision in Wal-Mart

Stores v. Dukes,4 courts had begun a pronounced move toward a

more “rigorous analysis”5 when deciding whether to certify a class

under Federal Rule of Civil Procedure 23.6 Although not involving

antitrust claims, Dukes is still considered a pivotal recent decision

setting forth the requirement that courts engage in a rigorous analysis

when deciding whether to certify a class under Federal Rule of Civil

Procedure 23. The Supreme Court ’s recent decisions in Dukes,

Amgen, Inc. v. Connecticut Retirement Plans & Trust Funds7 and

4. 131 S. Ct. 2541 (2011).

5. Id. at 2551 (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147,

161 (1982)).

6. See In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir.

2008) (requiring district court to resolve all factual and legal disputes

and consider all relevant evidence, including expert testimony, in

deciding whether to certify a class, even this inquiry overlaps with

the merits); In r e New Motor Vehicles Can. Export Antitrust Litig.,

522 F.3d 6, 17 ( 1st Cir. 2008) (requiring rigorous analysis of Rule 23

prerequisites and finding it improper “to put blinders on as to an i ssue

simply because it implicates the merits of the case”); In re Initial

Public Offerings Sec. Litig. (“In re IPO”), 471 F.3d 24 (2d Cir. 2006)

(requiring a “definitive assessment of Rule 23 require ments,” and

resolution of relevant factual disputes); Unger v. Amedisys Inc., 401

F.3d 316, 321-22 (5th Cir. 2005) (requiring courts to ana lyze class

certification through the use of “rigorous, though preliminary,

standards of proof”); Blades v. Monsanto Co., 400 F.3d 562, 566-67

(8th Cir. 2005) (requiring cou rts to look beyond the pleadings when

determining class certification, and potentially resolving factual

disputes which may overlap with the merits of the case); Szabo v.

Bridgeport Machs., 249 F.3d 672, 675-76 (7th Cir. 2001) (requiring

“whatever factual and legal inquiries are necessary under Rule 23,”

as well as resolution of these disputes prior to deciding whether to

certify the class). See also Robert J. Katerberg & Adam Linkner, The

Impact of Wal-Mart and Concepcion on Antitrust a nd Consumer

Protection Class Actions: A Brief Survey of Recent Developments in

the Lower Courts, ANTITRUST PRACTITIONER, June 2012, at 2; Aidan

Synnott & William B. Michael, The Implications of Wal-Mart v.

Dukes for Federa l Antitrust Class Actions, CPI ANTITRUST

CHRONICLE, August 2011, http://www.paulweiss.com/

media/109909/cpi-aug11.pdf; Steven E. Bizar & Allison Khaskelis,

Wal-Mart v. Dukes: A Non-Event for Antitrust Defendants,

ANTITRUST, Fall 2011, at 25.

7. 133 S. Ct. 1184 (2013).

Indirect P urchaser Class Actions 195

Comcast Corp. v. Behrend8 clarified the specific requirements for

antitrust class actions, particularly when assessing the role a

classwide damages model plays in class certification.

1. Dukes Background

In Dukes, former and current Wal-Mart employees brought a

putative class action lawsuit, alleging they were denied equal pay or

promotions on the basis of their gender in violation of Title VII of the

Civil Rights Act of 1964.9 Plaintiffs sought declaratory and

injunctive relief as well as backpay and punitive damages.10 In a 5-4

decision, the Supreme Court reversed the decision to certify a class of

1.5 million current or former female employees, declaring that the

Ninth Circuit misapplied the commonality standard under Rule

23(a)(2) and improperly found that plaintiffs met the requirements

for Rule 23(b)(2) pertaining to injunctive and declaratory relief.

The plaintiffs alleged that Wal-Mart subjected female employees

to discrimination by virtue of its policy to give broad discretion to

store managers in making pay and promotion decisions.11 In

concluding that the plaintiffs failed to meet Rule 23(a)(2)’s

requirement that “there are questions of law or fact common to the

class,” the Court stressed that “[c]ommonality requires the plaintiff to

demonstrate that the class members ‘have suffered the same

injury.’”12 This is distinct, the Court noted, from showing “merely

that they have all suffered a violation of the same provision of law.”13

Moreover, to satisfy Rule 23(a)(2), the plaintiffs’ claims “must

depend upon a common contention” that is “of such a nature that it is

capable of classwide resolution.”14 In other words, “[w]hat matters to

class certification . . . is not the raising of common ‘questions’—even

in droves—but rather, the capacity of a classwide proceeding to

generate common answers apt to drive the resolution of the

litigation.”15

For a plaintiff attempting to meet this burden, the Court

emphasized that “Rule 23 does not set forth a mere pleading

8. 133 S. Ct. 1426, 1432 (2013).

9. Dukes, 131 S. Ct. at 2547.

10. Id.

11. Id.

12. Id. at 2550-51 (citing Gen. Tel. Co. o f the Sw. v. Falcon, 457 U.S.

147, 157 (1982)).

13. Id. at 2551.

14. Id.

15. Id. (quoting Richard A. Naga reda, Class Certification in the Age of

Aggregate Pr oof, 84 N.Y.U. L. REV. 97, 132 (2009)).