Ninth Circuit En Banc Panel Reinstates District Court Decision Certifying Three Subclasses Of Purchasers In Packaged Tuna Price-Fixing Class Action Lawsuit
04/27/2022On April 8, 2022, the United States Court of Appeals for the Ninth Circuit, sitting en banc, affirmed an earlier district court order that certified three subclasses of tuna purchasers in a class action lawsuit alleging that defendants violated federal and state antitrust laws. Olean Wholesale Grocery Coop. Inc. v. Bumble Bee Foods LLC, No. 19-56514, 2022 WL 1053459 (9th Cir. Apr. 8, 2022).
Plaintiffs alleged that defendants colluded to artificially inflate the prices of their tuna products by engaging in various forms of anti-competitive conduct and therefore violated Section 1 of the Sherman Antitrust Act and California’s Cartwright Act. In April 2021, the United States Court of Appeals for the Ninth Circuit vacated a district court order certifying three classes in the lawsuit, finding that the district court erred in determining that plaintiffs had satisfied the predominance requirement of Federal Rule of Civil Procedure 23(b)(3) (the ruling is discussed in detail here) because the classes contained a significant number of uninjured class members. The three-judge panel held that to establish predominance with regard to common impact the number of uninjured class members must be, at most, “de minimis.”
Sitting en banc, the United States Court of Appeals for the Ninth Circuit rejected the Ninth Circuit panel decision and reinstated the district court’s order certifying the subclasses. The Court rejected a categorical rule that a class could not be certified when it contained more than a de minimis number of uninjured class members. For class certification purposes, the Court held that the key inquiry was whether common questions predominate over individual ones. While in some circumstances, the existence of uninjured class members may preclude a showing of predominance, the Court held that a strict rule prohibiting class certification due to uninjured class members was not appropriate. The Court then examined the district court’s analysis of plaintiffs’ and defendants’ expert reports. The Court acknowledged that defendants’ experts had identified numerous potential flaws in plaintiffs’ models that they planned to use at trial to show common impact across the class, including that plaintiffs’ model showed a significant number of uninjured class members when the pooled data that plaintiffs had used was disaggregated. And it further observed that defendants’ arguments may be persuasive to a jury. At the class certification stage, however, the Court held that plaintiffs need only provide a model potentially capable of showing impact to class members, not that plaintiffs will ultimately win at trial. The Court then held that the district court had applied an appropriate level of scrutiny to the competing expert reports and that there was no error in its decision to certify the classes.
Judge Lee, joined by Judge Kleinfeld, dissented, noting that the majority opinion allows district courts to certify a class even though potentially a third of the class members suffered no injury. As a point of policy, district courts should act as “gatekeepers” when resolving issues arising from Rule 23 requirements, since class action cases almost always settle once a court certifies a class. See Med. & Chiropractic Clinic, Inc. v. Oppenheim, 981 F.3d 983, 992 (11th Cir. 2020). Further, Judge Lee argued that the rejection of a de minimis rule creates a split with other circuits that have endorsed a de minimis rule — the D.C. Circuit has suggested that “5% to 6%” is the upper limit for a de minimis rule, In re Rail Freight Fuel Surcharge Antitrust Litig., 934 F.3d 619, 624-25 (D.C. Cir. 2019), while the First Circuit has suggested “around 10%,” In re Asacol Antitrust Litig., 907 F.3d 42, 47, 51-58 (1st Cir. 2018).
The en banc majority’s decision lowers the burden in some respects for plaintiffs to prove the requirements of Rule 23 and have their class certified. Given the broad implications, it would not be unexpected for defendants to request review by the Supreme Court.