By Jeffrey May, J.D.
Certification of class action claims with respect to an alleged conspiracy involving heavy truck manufacturers and transmission manufacturer Eaton Corporation were properly rejected, the U.S. Court of Appeals in Philadelphia has ruled. The complaining truck purchasers failed to demonstrate that class-wide evidence could prove antitrust impact, and they did not establish that common questions will predominate. However, dismissal of the individual claims was vacated because the lower court improperly ruled that there was no case or controversy as required by Article III of the Constitution (In re Class 8 Transmission Indirect Purchaser Antitrust Litigation, February 9, 2017, Greenaway, J.).
Class certification. The appellate court agreed that certification under Federal Rule of Civil Procedure 23 was properly denied. The truck purchasers alleged a conspiracy among manufacturers of heavy-duty trucks and Eaton to maintain Eaton’s monopoly in the heavy-duty truck transmissions market. According to the plaintiffs, the truck makers entered into "de facto exclusive dealing" agreements with Eaton under which they received lucrative loyalty rebates. These agreements were purportedly part of a conspiracy to foreclose a transmissions manufacturer competitor—ZF Meritor—who had separately sued Eaton for antitrust violations and prevailed. As a result of the alleged conspiracy, the purchasers claimed that they paid supra-competitive prices for Class 8 trucks and therefore the transmissions.
According to the district court, the plaintiffs failed to establish the threshold Rule 23(b)(3) predominance requirement that common evidence could prove that all or nearly all of the proposed class members, who were indirect purchasers of the transmissions, paid a higher price than they would have absent the alleged conspiracy. The appellate court agreed.
The lower court procedurally and substantively conducted a "rigorous analysis" of the purchasers’ theory of class-wide impact and available evidence, according to the appellate court. Rejected were the purchasers’ arguments that the district court abused its discretion by: considering certain "real-world [factors] surrounding th[e] complicated market" of Class 8 trucks; faulting their expert economist’s class-wide impact analysis for excluding certain data; or by failing to consider in its "rigorous analysis" their expert’s revised rebuttal report that included additional data.
The appellate court explained that, in order to support their theory of antitrust impact for purposes of Rule 23(b)(3), the plaintiffs had to demonstrate that common evidence could prove: (1) Eaton overcharged the truck manufacturers for Class 8 transmissions; (2) the truck manufacturers passed on this overcharge to direct purchasers; and (3) direct purchasers passed on the overcharge to the complaining purchasers. The district court had found that the plaintiffs failed to identify common evidence that any alleged overcharges were passed on to the indirect purchasers.
Case or controversy. The district court erred by dismissing the individual claims. The lower court had decided that, because the proposed class lacks representation, the case did not present a case or controversy under Article Ill. However, the purchasers had brought their claims "on behalf of themselves," and on behalf of the putative indirect purchaser class, and the lower court had earlier decided that the purchasers’ individual state antitrust claims were not subject to dismissal. Thus, dismissal of the individual claims was vacated.
The case is No. 15-3791.
Attorneys: Lee Albert (Glancy Prongay & Murray LLP) for Ryan Avenarius. Benjamin F. Holt (Hogan Lovells LLP) and Richard L. Horwitz (Potter Anderson & Corroon LLP) for Daimler Trucks North America LLC and Freightliner LLC. Brian P. Borchard (Kirkland & Ellis LLP) and Kelly E. Farnan (Richards, Layton & Finger, PA) for Navistar International Corp. and International Truck & Engine Corp.
Companies: Eaton Corp.
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