Reversing the earlier decision of a three-judge panel, the U.S. Third Circuit, sitting en banc, upheld a nationwide class settlement of antitrust claims by indirect purchasers of diamonds, even though some of those purchasers lived in States where arguably no recovery was available under Illinois Brick and its progeny. “‘Because we are presented with a settlement class certification, we are not as concerned with formulating some prediction as to how variances in state law would play out at trial, for the proposal is that there be no trial.’ Choice-of-law issues in nationwide class actions are rarely so uncomplicated that one can delineate clear winning and losing arguments at an early stage in the litigation; the legal uncertainty resulting from the complicated choice-of-law issues would unduly complicate the process for establishing predominance under Rule 23. There is no ‘claims’ or ‘merits’ litmus test incorporated into the predominance inquiry beyond what is necessary to determine preliminarily whether certain elements will necessitate individual or common proof…. To adopt the position of the dissent and the objectors is to introduce a Rule 12(b)(6) inquiry as to every claim in the class before a class may be certified. But Rule 23 makes clear that a district court has limited authority to examine the merits when conducting the certification inquiry. A court may inquire whether the elements of asserted claims are capable of proof through common evidence, but lacks authority to adjudge the legal validity or soundness of the substantive elements of asserted claims. Put another way, a district court may inquire into the merits of the claims presented in order to determine whether the requirements of Rule 23 are met, but not in order to determine whether the individual elements of each claim are satisfied. Were we to mandate that a class include only those alleging ‘colorable’ claims, we would effectively rule out the ability of a defendant to achieve ‘global peace’ by obtaining releases from all those who might wish to assert claims, meritorious or not. We need not take judicial notice of the fact that plaintiffs with non-viable claims do nonetheless commence legal action. Here, in an effort to avoid protracted litigation and future relitigation of settled questions in federal and state courts across numerous jurisdictions, De Beers pursued a global settlement and demanded a release of potential damage claims in all fifty states. From a practical standpoint, achieving global peace is a valid, and valuable, incentive to class action settlements. Settlements avoid future litigation with all potential plaintiffs – meritorious or not. If the dissent’s position were adopted, there would be no settlements, collusive or otherwise. First of all, litigating whether a claim is ‘colorable’ and defending who is in and who is not in the class would be an endless process, preventing the parties from seriously getting to, and engaging in, settlement negotiations. And, as discussed above, the ‘individualized’ nature of the task would doom the class certification process from the outset. Second, since releases would necessarily be limited to the qualifying class members, those ultimately excluded would no doubt go right back into court to continue to assert their claims. No defendants would consider settling under this framework, for they could never be assured that they have extinguished every claim from every potential plaintiff.” Sullivan v. DB Investments, Inc., 667 F.3d 273 (3d Cir. 2011) cert. denied, 132 S. Ct. 1876 (2012), reh’g denied, 132 S. Ct. 2451 (2012).
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