In Divided En Banc Ruling, Ninth Circuit Holds That The Potential Presence Of Uninjured Class Members Does Not Defeat Class Certification

• Published date: 20 April 2022
• Subject Matter: Anti-trust/Competition Law, Litigation, Mediation & Arbitration, Antitrust, EU Competition , Class Actions, Personal Injury
• Law Firm: Jenner & Block
• Author: Alexander Smith and Kate T. Spelman

In April 2021, the Ninth Circuit issued its panel opinion in Wholesale Grocery Cooperative v. Bumble Bee Foods LLC, which held that the district court erred in certifying several classes of tuna purchasers in an antitrust class action because it failed to resolve the parties' dispute over whether the plaintiffs' class-wide damages model 'mask[ed] individualized differences' between putative class members. In reaching this conclusion, the Ninth Circuit held that a district court cannot certify a class unless it includes only a 'de minimis' number of uninjured class members. It also emphasized that the district court could not determine whether individualized issues predominated without first resolving the 'factual disputes as to how many uninjured class members are included in Plaintiffs' proposed class,' even if those disputes also bear on the merits. In April 2022, however, the Ninth Circuit issued a split en banc opinion in which it rejected the panel majority's 'de minimis' requirement and held that the district court did not err in certifying a class. The en banc opinion'which not only rejects a 'de minimis' standard, but also discourages district courts from resolving merits issues at the class certification stage' deprives defendants in the Ninth Circuit of a critical weapon to oppose the certification of overbroad classes.

The Ninth Circuit's Panel Opinion

Olean Wholesale arises from a long-running multidistrict litigation alleging that major tuna suppliers, who collectively sell over 80% of the tuna consumed in the United States, engaged in a price-fixing conspiracy that resulted in purchasers'including retail chains and other direct purchasers, indirect purchasers who bought tuna for food preparation or resale, and end consumers'paying inflated prices for tuna. When the purchasers moved for class certification, they sought to show class-wide antitrust injury through a regression model that attempted to demonstrate the average overcharge associated with the price-fixing conspiracy. The plaintiffs' expert concluded not only that the average purchaser was overcharged by 10.28% as a result of the alleged price fixing, but also that approximately 94.5% of purchasers were overcharged at least some amount. In contrast, the defendants' expert opined that this regression model was flawed because it relied on an average estimated overcharge for all purchasers, which falsely assumed that every purchaser was injured in the same way. When the defendants' expert conducted a regression analysis based on a 'unique overcharge coefficient' for over 600 individual class members, he concluded that only 72% of class member paid an inflated price'and that 28% of class members suffered no injury at all. Despite these objections, the district court granted the class certification motion. Although it agreed that the defendants' criticisms of the plaintiffs' damages model were 'serious' and 'could be persuasive to a finder of fact,' the district court nonetheless concluded that 'determining which expert is correct is beyond the scope' of a class certification motion and agreed that the plaintiffs' damages model was 'capable of showing' a class-wide antitrust injury.

A divided three-judge panel vacated the class certification order. Writing for the panel majority, Judge Bumatay'joined by Judge Kleinfeld'agreed that plaintiffs can use 'representative evidence' to satisfy Rule 23(b)(3)'s predominance requirement and establish class-wide injury, that the plaintiffs' statistical evidence was sufficiently tied to their theory of antitrust injury, and that their expert's use of 'averaging assumptions' did not defeat a finding of predominance. Nonetheless, Judge Bumatay noted that...