On the heels of a DOJ investigation into alleged price-fixing by the packaged tuna industry, a number of purchasers filed putative class actions under federal and state antitrust statutes. Following MDL consolidation, the District Court certified three sub-classes: (i) direct purchasers, such as nationwide retailers and regional grocery stores; (ii) indirect purchasers who bought bulk-sized tuna products; and (iii) individual end purchasers.

Initially, a panel of the U.S. Ninth Circuit Court of Appeal vacated and remanded.  But, on rehearing en banc, the full Court reinstated the District Court’s certification order:

Initially, the Court of Appeal noted that: “A district court cannot decline certification merely because it considers plaintiffs’ evidence relating to the common question to be unpersuasive and unlikely to succeed in carrying the plaintiffs’ burden of proof on that issue….

“Nor can a district court decline to certify a class that will require determination of some individualized questions at trial, so long as such questions do not predominate over the common questions…. When individualized questions relate to the injury status of class members, Rule 23(b)(3) requires that the court determine whether individualized inquiries about such matters would predominate over common questions….

“Therefore, we reject the dissent’s argument that Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.”

The Court noted, at the same time, that “a court must consider whether the possible presence of uninjured class members means that the class definition is fatally overbroad. When a class is defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct, the class is defined too broadly to permit certification. In such a case, the court may redefine the overbroad class to include only those members who can rely on the same body of common evidence to establish the common issue. A court may not, however, create a ‘fail safe’ class that is defined to include only those individuals who were injured by the allegedly unlawful conduct. Such a class definition is improper because a class member either wins or, by virtue of losing, is defined out of the class and is therefore not bound by the judgment. But, ultimately, the problem of a potentially over-inclusive class can and often should be solved by refining the class definition rather than by flatly denying class certification on that basis.”

With respect to the particular regression model offered by the plaintiffs in this case, the Court of Appeal concluded that the District Court, after resolving each dispute between the experts, “acknowledged that the defendants’ critique of Dr. Mangum’s model could be persuasive to a jury at trial. But the district court recognized that at this stage of the proceedings, its task was to determine whether Dr. Mangum’s evidence was capable of showing class-wide impact, not to reach a conclusion on the merits of the DPPs’ claims. After weighing the evidence put forth by the DPPs, including the regression model, the correlation tests, the record evidence and the guilty pleas and admissions entered in this case, the district court concluded there was sufficient evidence to show common questions predominated as to common impact…. We conclude that the district court did not abuse its discretion in reaching this conclusion. The court conducted a rigorous analysis of the expert evidence presented by the parties. The district court did not err legally or factually in concluding that Dr. Mangum’s pooled regression model, along with other evidence, is capable of answering the question whether there was antitrust impact due to the collusion on a class-wide basis, thus satisfying this prerequisite of Rule 23(b)(3).”

The Court of Appeal then turned to the Defendants arguments that (1) the element of antitrust impact is capable of being established class-wide through common proof, and (2) that this common question predominates over individual questions. “To the extent that the Tuna Suppliers argue that pooled regression models involve improper ‘averaging assumptions’ and therefore are inherently unreliable when used to analyze complex markets, we disagree. In antitrust cases, regression models have been widely accepted as a generally reliable econometric technique to control for the effects of the differences among class members and isolate the impact of the alleged antitrust violations on the prices paid by class members. Further, Tyson Foods rejected any categorical exclusion of representative or statistical evidence. Therefore, any categorical argument that a pooled regression model cannot control for variables relating to the individualized differences among class members must be rejected. To the extent the Tuna Suppliers and the dissent raise the more focused argument that, in this case, the model’s output (estimating that the Tuna Suppliers’ conspiracy resulted in a 10.28 percent overcharge for the entire class) cannot plausibly serve as common evidence for all class members given the individualized differences among those class members, we again disagree. It is not implausible to conclude that a conspiracy could have a class-wide impact, even when the market involves diversity in products, marketing, and prices, especially where, as here, there is evidence that the conspiracy artificially inflated the baseline for price negotiations. As the Tenth Circuit explained, a district court could reasonably conclude that price-fixing would have affected the entire market, raising the baseline prices for all buyers. In other words, it is both logical and plausible that the conspiracy could have raised the baseline prices for all members of the class by roughly ten percent. The district court did not abuse its discretion in so concluding.”

“The Tuna Suppliers and the dissent next contend that the district court erred by failing to resolve a dispute between the parties as to whether 28 percent of the class did not suffer antitrust impact. Instead of resolving the dispute between the parties’ experts, the Tuna Suppliers claim, the district court improperly shifted the critical inquiry to the jury. In other words, the Tuna Suppliers argue that to satisfy Rule 23(b)(3)’s predominance requirement, plaintiffs must prove that all or nearly all class members were in fact injured by the alleged conspiracy, i.e., suffered antitrust impact….  The district court’s conclusion that the Tuna Suppliers could present Dr. Johnson’s critique at trial did not improperly shift the burden of determining whether the Rule 23(b)(3) prerequisites were met to the jury. The district court fulfilled its obligation to resolve the disputes raised by the parties in order to satisfy itself that the evidence proves the prerequisites for Rule 23(b)(3), which is that the evidence was capable of showing that the DPPs suffered antitrust impact on a class-wide basis. Reasonable minds may differ as to whether the overcharge Dr. Mangum calculated is probative as to all purchasers in the class, but that is a question of persuasiveness for the jury once the evidence is sufficient to satisfy Rule 23…. We need not consider the Tuna Suppliers’ argument that the possible presence of a large number of uninjured class members raises an Article III issue, because the Tuna Purchasers have demonstrated that all class members have standing here. A plaintiff is required to establish the elements necessary to prove standing with the manner and degree of evidence required at the successive stages of the litigation. Here, the district court concluded that the DPPs’ evidence was capable of establishing antitrust impact on a class-wide basis. Because antitrust impact – i.e., that the Tuna Suppliers’ collusion had a common, supracompetitive impact on a class-wide basis – is sufficient to show an injury-in-fact traceable to the defendants and redressable by a favorable ruling, the Tuna Purchasers have adequately demonstrated Article III standing at the class certification stage for all class members, whether or not that was required.”

 

Olean Wholesale Grocery Cooperative v. Bumble Bee Foods, 31 F.4th 651 (9th Cir. 2022) (en banc).