Northern District Of California Certifies Class Of Direct Purchasers In Latest Development In Long-Running Cathode Ray Tube Price-Fixing Saga
08/16/2022On August 1, 2022, Judge John S. Tigar of the United States District Court for the Northern District of California certified a class of direct purchasers in a long-running antitrust action alleging that manufacturers of cathode ray tubes conspired to fix prices in violation of Section 1 of the Sherman Act. The Court certified the class after concluding that plaintiffs’ claims were typical of the class and the sole defendant who has not settled with plaintiffs failed to identify any individualized issues that would predominate over issues common to the proposed class.
With respect to the typicality requirement, defendant argued that the proposed class representatives lacked Article III standing because they did not purchase any finished products from defendant or any entity that was owned or controlled by it. The Court rejected this argument, finding that under the Supreme Court’s decision in Illinois Brick, it was sufficient for plaintiffs to show that they purchased from an entity owned or controlled by any member of the alleged price-fixing conspiracy, and not necessarily directly from the named defendant. In other words, as the Court recognized in certifying a related action, “nothing in Illinois Brick displaces the rule of joint and several liability, under which each member of a conspiracy is liable for all damages caused by the conspiracy’s entire output.”
Defendant also argued that the proposed class representatives were atypical of the class because of their purchasing patterns, arguing that plaintiffs “purchased only small quantities at standardized prices, whereas absent class members purchase[d] large quantities under individually negotiated prices.” The Court recognized that “overwhelming disparities” in the purchasing procedures between the proposed class representatives and the rest of the putative class can defeat a finding of typicality if the class representatives do not have appropriate incentives to establish antitrust violations on behalf of the entire class. However, relying on prior decisions from the same litigation, the Court rejected this argument and concluded that this case was distinguishable from those in which courts had found such “overwhelming disparities,” including because there was “extrinsic evidence of harm” here in the form of guilty pleas and criminal investigations and because the products at issue were fungible and not customized.
The Court also concluded that issues common to the class would predominate over any individualized issues, finding that “in price-fixing cases like this one, courts have repeatedly held that the existence of the conspiracy is the predominant issue and warrants certification, even where significant individual issues are present.” Moreover, the Court found that the report and testimony of plaintiffs’ economic expert established that antitrust impact and damages could be established on a class-wide basis. As to price impact, although defendant made numerous criticisms of the expert, including that his opinions regarding price-targeting were inaccurate and his regression models only established correlation between target and actual prices and not causation, the Court concluded that these criticisms went to the weight of the testimony and not whether it was capable of establishing class-wide antitrust impact. And as to class-wide damages, the Court rejected defendant’s objections that the expert’s damages analysis failed to account for the fact that it included products that were not the subject of the alleged conspiracy, that it failed to consider the impact on damages of certain regulations imposing mandatory price floors, and that it covered a time period longer than defendants could have been part of the alleged conspiracy, again finding that defendant’s arguments went to the weight of the testimony rather than admissibility.