On July 28, 2020, the Third Circuit in In re Suboxone (Buprenorphine Hydrochloride & Nalaxone) Antitrust Litigation, affirmed certification of a direct purchaser class, concluding that common evidence existed to prove the plaintiffs’ antitrust theory and resulting injury and that the proposed class representative, Burlington Drug Company, Inc., was an adequate class representative. The direct-purchaser plaintiffs alleged that the defendant drug manufacturer of the opioid-treatment drug, Suboxone, engaged in anticompetitive conduct that impeded the entry of generic versions of the drug into the market. Specifically, plaintiffs asserted that defendant “shifted the market” from Suboxone tablets to Suboxone film by the time generic tablets entered the market, thereby maintaining a monopoly and suppressing competition. According to plaintiffs, the defendant’s transition from tablets to film was coupled with six tactics to “eliminate demand for Suboxone tablets and to coerce prescribers to prefer film,” including making false statements about the safety of the tablets and withdrawing brand-name Suboxone tablets from the market. The plaintiffs argued that due to defendant’s anticompetitive conduct, they paid more for brand Suboxone products than they would have for generic tablets. The district court certified the class, and the Third Circuit granted the defendant’s petition for leave to appeal under Rule 23(f). First, the Third Circuit addressed defendant’s argument that plaintiffs did not provide...
In Suit Alleging Misleading Employment Rates, Third Circuit Rejects Class Certification Premised Upon Invalid Damages Theory
The Third Circuit recently affirmed a decision from the District Court of New Jersey denying class certification in an action alleging that Widener University School of Law defrauded its students by publishing and marketing misleading statistics about graduates’ employment rates. In its precedential opinion adjudicating plaintiffs’ interlocutory appeal pursuant to Fed. R. Civ. P. 23(f), the Third Circuit concluded that although the District Court misconstrued plaintiffs’ damages theory, the error was harmless because the Court would have nonetheless concluded that plaintiffs failed to satisfy the predominance requirement. This opinion, authored by Circuit Judge Chagares, is an example of defendants defeating class certification when plaintiffs cannot proffer a valid method of proving class-wide damages, as required by the U.S. Supreme Court in Comcast v. Behrend several years ago.
In Tyson Foods, Inc. v. Bouaphakeo, the Supreme Court of the United States definitively answered the question of whether statistical “representative evidence” may be used in class actions to establish that “questions of law or fact common to class members predominate over any questions affecting only individual members” pursuant to Rule 23(b)(3). According to the Court’s much-anticipated opinion, the answer is yes: “Its permissibility turns not on the form a proceeding takes – be it a class or individual action – but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”
Third Circuit Holds That Absent Class Members Need Not Show Standing and Reiterates Comcast’s Reiteration of Basic Rule 23 Principles
In a precedential opinion in Neale v. Volvo Cars of North America, the U.S. Court of Appeals for the Third Circuit held that putative class members need not establish Article III standing, and emphasized that the Supreme Court’s decision in Comcast v. Behrend, 133 S. Ct. 1426 (2013) “was not breaking any new ground” because “the predominance analysis was specific to the antitrust claim at issue.”
In Byrd v. Aaron’s Inc., the United States Court of Appeals for the Third Circuit added to, and clarified, its “quartet” of ascertainability cases to resolve the “apparent confusion in the invocation and application of ascertainability in this Circuit.” The plaintiffs in Byrd brought a class action claiming violations of the Electronic Communications Privacy Act of 1986 because laptop computers had “spyware” installed, which had captured a wide array of personal information from the users including photographs and screenshots of websites visited. Adopting the recommendation of the Magistrate Judge, the District Court denied class certification for failure to establish ascertainability, finding that the proposed classes were both “underinclusive” (i.e., did not include all individuals whose information was gathered) and overinclusive (not every computer user had data intercepted), and that it was insufficient to propose that “household members” be identified by public records. “Because the District Court confused ascertainability with other relevant inquiries under Rule 23,” it “erred in determining that the Byrds’ proposed classes were not ascertainable.”
Third Circuit Confirms That Challenged Expert Testimony Must Survive Daubert Challenges in Order to Demonstrate Conformity with Rule 23
Drawing upon its own precedent and that of the Supreme Court in Comcast v. Behrend, the Third Circuit recently held in In re Blood Reagents Antitrust Litig. that a district court must resolve any Daubert challenges to proffered expert testimony as part of its “rigorous analysis” of the requirements for class certification.
The Supreme Court has raised the class certification stakes yet again, holding in Halliburton v. Erica P. John Fund that defendants in securities class actions may rebut the fraud-on-the-market presumption of reliance at the class certification stage. Over the objections of Justices Thomas, Scalia, and Alito, the Court declined to toss out the presumption altogether.
In its much-anticipated opinion in Comcast Corp. v. Behrend, the United States Supreme Court continued its recent trend of requiring a more demanding standard for plaintiffs seeking class certification. Citing its notable opinion in Wal-Mart Stores, Inc. v. Dukes, the Court made clear that district courts must conduct a rigorous analysis of plaintiffs’ evidence before certifying a proposed class, including addressing questions that ultimately bear on the merits.