Class Certification Procedure

• Pages: 91-127

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CHAPTER V

CLASS CERTIFICATION PROCEDURE

For many antitrust class actions, the court’s decision whether to

certify a class represents the most important decision in the litigation. If a

class is certified, the defendant has a strong incentive to settle, avoiding

the risk of a treble damage judgment to an entire class and saving

significant litigation expense. If certification is denied, class counsel

must evaluate whetherthe value of the class representatives’ and any

additional plaintiffs’ claims are enough to warrant continuing in

expensive antitrust litigation. Often, the denial of class certification

marks the effective end of the case.1Given the stakes, the class

certification process deserves significant attention from both plaintiffs

and defendants. This chapter addresses the substantive legal standards for

class certification as well as the procedural mechanisms for navigating

the class certification process, witha focus on how that process has

operated in previous antitrust cases.

A.Class Certification Motion Requirements

In antitrust class actions, just as in all class actions, plaintiffs must

meet the requirements of Rule 23 to obtain class certification. The

following chapter (Chapter VI) will analyze these requirements, which

include numerosity, commonality, typicality, and adequacy of

representation under Rule 23(a) and typically either the defendant acting

on grounds generally applicable to the class (for injunctive relief), or

predominance and superiority (for damages) under Rule 23(b).2This

1. Newton v. Merrill Lynch, Pierce, Fenner & Smith, 259 F.3d 154, 162 (3d

Cir. 2001)(“denying or granting class certification is often the defining

moment in class actions (for it may sound the ‘death knell’ of the

litigation on the part of plaintiffs, or create unwanted pressure to settle

unmeritorious claims on the part of the defendants)”).

2. As of this writing, the Rule 23 Subcommittee of the Civil Rules Advisory

Committee is contemplating certain amendments to Rule 23. The

Subcommittee has identified the following six “front burner” topics on

which it intends to focus: (1)frontloading; (2)excluding from immediate

appeal under Rule 23(f) preliminary approvals of class certification and

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chapter—and specifically this section—will take a more holistic

approach to the class certification requirements and focus on the level of

scrutiny and analysis required by the court at the class certification stage.

1.Historical Standards

Historically, courts deciding the class certification question refrained

from making any inquiry into the merits of the plaintiff’s claims. This

notion that certification analysis and merits analysis were to be treated

separately was articulated by the Supreme Court in 1974 in Eisen v.

Carlisle & Jacquelin: “We find nothing in either the language or history

of Rule 23 that gives a court any authority to conduct a preliminary

inquiry intothe merits of a suit in order to determine whether it may be

maintained as a class action.”3 “In determining the propriety of a class

action, the question is not whether the plaintiff or plaintiffs have stated a

cause of action or will prevail on the merits, but rather whether the

requirements of Rule 23 are met.”4

The Court departed somewhat from the language in Eisenin 1982,

when it explained in General Telephone Co. of the Southwest v. Falcon

that a class action “may only be certified if the trial court is satisfied,

after a rigorous analysis, that the prerequisites of Rule 23(a) have been

satisfied.”5The Court seemed to take an ambivalent stance on what that

rigorous analysis entailed, recognizing that “[s]ometimes the issues are

plain enough fromthe pleadings to determine whether the interests of the

absent parties are fairly encompassed within the named plaintiff’s claim,

and sometimes it may be necessary for the court to probe behind the

pleadings before coming to rest on the certification question.”6

Following the Court’s decision in Falcon, various circuit courts

seized on this language and emphasized opposing sides of the Court’s

statement. For example, the Ninth Circuit in Chamberlan v. Ford Motor

Co.rejected interlocutory review of a district court’s grant of class

orders regarding notice to the class about possible settlements;

(3)clarifying Rule 23(c)(2)(B) to state that Rule 23(e)(1) notice triggers

the opt-out period; (4)notice to unnamed class members; (5)handling

objections by class members to proposed settlements; and (6)criteria for

judicial approval of class-action settlements. SeeRule 23 Subcommittee

Report, at 88 (Nov. 5-6, 2015).

3. 417 U.S. 156, 177 (1974).

4. Id.at 178 (internal quotations and citation omitted).

5. 457 U.S. 147, 161 (1982).

6. Id.at 160.

Class Certification Proce dure

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certification and cited Falconfor the proposition that “[t]he Supreme

Court [ ] recognized over twenty years ago that a rigorous analysis does

not always result in a lengthy explanation or in-depth review of the

record.”7Conversely, the Seventh Circuit in a case called Szabo v.

Bridgeport Machines, Inc.granted interlocutory review and vacated a

district court’s order certifying a class, stating that “a judge should make

whatever factual and legal inquiries are necessary under Rule 23” even if

“the judge must make a preliminary inquiry into the merits.”8Most

circuit courts followed Szabo and emphasized the need for a rigorous

analysis to probe behind the pleadings and resolve merits issues relevant

to class certification.9

Prior to the Supreme Court’s more recent iterations of what the

rigorous analysis at class certification entails (discussed below), the most

prominent antitrust decision dealing with the issue was In re Hydrogen

Peroxide Antitrust Litigation.10There, the Third Circuit stated:

The following principles guide a district court’s class certification

analysis. First, the requirements set out in Rule 23 are not mere

pleading rules. . . . The court may delve beyond the pleadings to

determine whether the requirements for class certification are satisfied.

An overlap between a class certification requirement and the merits of a

claim is no reason to decline to resolve relevant disputes when

necessary to determine whether a class certification requirement is

met. . . . Because the decision whether to certify a class requires a

thorough examination of the factual and legal allegations, . . . the

court’s rigorous analysis may include a preliminary inquiry into the

merits, . . . and the court may consider the substantive elements of the

plaintiffs’ case in order to envision the form that a trial on those issues

would take . . . .11

The Third Circuit applied these principles in vacating a district court’s

order granting class certification. It made three critical findings with

respect to class certification requirements:

7. 402 F.3d 952, 961.

8. 249 F.3d 672, 676.

9. See, e.g., In reInitial Pub. Offerings Secs. Litig., 471 F.3d 24, 38-42 (2d

Cir. 2006); Newton v. Merrill Lynch, Pierce, Fenner & Smith, 259 F.3d

154, 166-67 (3d Cir. 2001); Gariety v. Grant Thornton, LLP, 368 F.3d

356, 366 (4th Cir. 2004); Blades v. Monsanto Co., 400 F.3d 562, 566-67

(8th Cir. 2005).

10. 552 F.3d 305 (3d Cir. 2008).

11. Id.at 316-18(internal quotations and citations omitted).