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: THE THIRD CIRCUIT COMES CLEAN
Your child’s Barbie that might cause lead poisoning, your iPod with a
battery that might stop working, your prescription pain-reliever that mightcause a heart attack, the pet food that may make your dog sick, yourToyota that may accelerate without warning, and the company that spon-sored your bar exam preparation course are all subjects of class actionlawsuits.1 Today, it is common for a consumer to receive notice in themail that, as a result of purchasing a defective product, the consumer maybe entitled to a small piece of a settlement from a class action lawsuit.2Class actions are “hot” with subjects ranging from product liability suitsagainst tobacco manufacturers to suits against airlines for flight delays.3 In
Barnaby J. Feder, Federal Panel Consolidates Vioxx Suits
, N.Y. TIMES, Feb.
17, 2005, at C1 (discussing consolidation of numerous class action lawsuits pend-ing against drug manufacturer Merck for alleged deaths caused by drug Vioxx);John Kell, Mattel Settles Suit Over Lead in China-Made Toys
, WALL ST. J., Oct. 14, 2009,available at
http://online.wsj.com/article/SB10001424052748704107204574473521425697710.html (discussing settlement of class action over lead in China-madetoys, including Barbie); Apple.com, Notice of Court Approval of Class Action Set-tlement Agreement, http://images.apple.com/ca/ipod/settlement/pdf/MTL_LAW-2134637-v1.pdf (last visited Oct. 15, 2010) (describing terms of iPod batterysettlement); BAR/BRI Class Action Litigation, http://www.barbri-classaction.com/barbri/default.htm (last visited Oct. 15, 2010) (discussing settlement of antitrustclass action litigation against BAR/BRI and Kaplan, two companies offering barreview courses in various states); Jeremy Korzeniewski, Class Action Suit Filed AgainstToyota over Sudden Acceleration Claims
, AUTOBLOG, Nov. 9, 2009, http://www.autoblog.com/2009/11/09/class-action-suit-filed-against-toyota-over-sudden-accelera-tion (announcing filing of class action lawsuit against Toyota on behalf of allToyota and Lexus owners with vehicles that unintentionally accelerated); LisaWade McCormick, Menu Foods Settles Pet Food Class Action
, CONSUMERAFFAIRS.COM,Apr. 2, 2008, http://www.consumeraffairs.com/news04/2008/04/pet_food_re-calls91.html (noting Menu Pet Foods settled class action over pet food that alleg-edly made dogs and cats sick).
J. Brendan Day, My Lawyer Went to Court and All I Got Was This Lousy
Coupon! The Class Action Fairness Act’s Inadequate Provision for Judicial Scrutiny overProposed Coupon Settlements
, 38 SETON HALL L. REV. 1085, 1085 (2008) (discussingclass action settlement notice that consumers received in mail regarding Firestonetires); AcmeTech.com, Netflix Class Action Suit Settlement, http://www.acmetech.
com/shopping/movies/netflix-class-action-suit.php (discussing Netflix class actionsettlement) (last visited Oct. 15, 2010); Saturn Owners Class Action Settlement,JUSTGOODCARS.COM (Apr. 17, 2009), http://www.justgoodcars.com/car-news-worldwide/auto-news-1940.html (discussing class action settlement that entitled Saturnautomobile owners to reimbursement for expenses incurred for replacement orrepair of transmissions).
Michael E. Solimine & Christine Oliver Hines, Deciding to Decide: Class
Action Certification and Interlocutory Review by the United States Court of Appeals UnderRule 23(f)
, 41 WM. & MARY L. REV. 1531, 1532 (2000) (discussing recent scholarly
a post-Enron world, with the Obama Administration’s commitment to en-forcing antitrust laws to ensure fair competition within the Americaneconomy, class actions against corporations will become a staple of theAmerican judicial system.4
A class action is “a lawsuit in which the court authorizes a single per-
son or a small group of people to represent the interests of a largergroup.”5 Class actions have two primary purposes: “(1) to accomplish judi-cial economy by avoiding multiple suits; and (2) to protect the rights ofpersons who might not be able to present claims on an individual basis.”6To this end, these actions provide an avenue of recovery for groups ofplaintiffs who otherwise would likely go uncompensated.7
A court’s decision on a certification motion is a pivotal moment in
class action litigation.8 Indeed, a decision to certify a class typically leadsto settlement of the case.9 Eighty-nine percent of certified class actions
interest in class actions covering variety of topics). Although recently gaining pop-ularity, class actions have played an important role in American litigation for de-cades. See generally
Brown v. Bd. of Educ., 347 U.S. 483, 486-87 (1954) (indicatingthat this seminal case, which led to desegregation of American schools, was initiallybrought as class action lawsuit).
4. See generally
T. Mark McLaughlin et al., United States
LITIGATION 2010, at 146 (2009), available at
http://www.mayerbrown.com/publica-tions/article.asp?id=8276&nid=6 (declaring “[p]rivate antitrust litigation in theUnited States continues to be robust” and discussing focus on antitrust litigationwithin today’s political climate).
5. BLACK’S LAW DICTIONARY 267 (8th ed. 2004).
6. Haley v. Medtronic, Inc., 169 F.R.D. 643, 647 (C.D. Cal. 1996).
7. See generally
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)
(opining that without aggregation of parties in class action lawsuits, small recov-eries inhibit most individuals from filing suit); Cotchett v. Avis Rent A Car Sys.,Inc., 56 F.R.D. 549, 552 (S.D.N.Y. 1972) (noting that “class actions may representthe only available means of redress for consumers whose claims are too small indi-vidually to render legal action economically feasible”); Arthur Oder, Note, What’sFair is Fair? A Comparative Look at Judicial Discretion in Fairness Review of Holocaust EraClass Action Settlement in the United States and Canada
, 17 CARDOZO J. INT’L & COMP.
L. 545, 547 (2009) (theorizing that without victories in class action lawsuits “Holo-caust survivor community would forever lose its chance for recovery”).
Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154,
167 (3d Cir. 2001) (observing that “irrespective of the merits, certification deci-sions may have a decisive effect on litigation”); Barry Sullivan & Amy KobelskiTrueblood, Rule 23(f): A Note on Law and Discretion in the Courts of Appeals
, 246F.R.D. 277, 278 (2008) (“Arguably the most critical stage in a class action is thepoint at which the court decides whether to certify the class.”); see also
Kevin Burke& Charles Manice, Certifiably Mad? Evolving Standards for Class Certification in Securi-ties Fraud Actions
, THE DEFENDER (Howrey LLP, New York, N.Y.), Spring 2009, avail-able at
http://thedefender.howrey.com/certifiably-mad-06-09-2009 (stating that“[c]lass certification increasingly has become a hotly contested issue in actions aris-ing under § 10(b) of the Securities Exchange Act of 1934”).
9. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310 (3d Cir.
2008) (recognizing that decision to certify class can “create unwarranted pressureto settle non-meritorious claims”); In re
Rhone-Poulenc Rorer, Inc., 51 F.3d 1293,1298 (7th Cir. 1995) (noting that based on enormous liability that could resultfrom adverse judgment in class action lawsuit, defendants “may not wish to roll
settle.10 Due to the likelihood of settlement of a certified class action,regardless of the claim’s merits, one court called settlement after class cer-tification a form of “judicial blackmail.”11 Conversely, denial of a classcertification motion often sounds the “death knell” of litigation for theplaintiffs and means that individual lawsuits are unlikely to remain via-ble.12 Because certification often determines the fate of a case, definingthe contours of class action certification standards is an important task forfederal circuit courts across the country.13
[the] dice” and therefore “will be under intense pressure to settle”); FED. R. CIV. P.
23 advisory committee’s note to the 1998 amendments (emphasizing class certifica-tion “may force a defendant to settle rather than incur the costs of defending theclass action and run the risk of potentially ruinous liability”); Steven Serajeddini,Note, Loss Causation and Class Certification
, 108 MICH. L. REV. 255, 256-57 (2009)(noting that successful class certification “impel[s] defendants to settle” securitiesfraud class actions); Adele Nicholas, Appeals Court Levels Class Action Playing Field
,INSIDE COUNS., Apr. 4, 2009, available at
http://www.insidecounsel.com/Issues/2009/April-2009/Pages/Appeals-Court-Levels-.aspx (calling defense of class actionpost-class certification like playing game of financial Russian Roulette). The Su-preme Court recently warned that class action litigation discovery costs can be sohigh as to force a defendant to settle an unmeritorious claim. See
Bell AtlanticCorp. v. Twombly, 550 U.S. 544, 558-59 (2007) (discussing enormous expense in-volved in antitrust discovery after class certification).
Gail E. Lees et al., Analysis & Perspective: 2009: First-Quarter Update on
Class Action Trends,
10 CLASS ACTION LITIG. REP. (BNA) 399, 401 (2009); see generally
Edward A. Purcell, Jr., The Class Action Fairness Act in Perspective: The Old and New inFederal Jurisdictional Reform
, 156 U. PA. L. REV. 1823, 1853 n.104 (2008) (stating thatcertified class actions are “two to five more times likely to settle than uncertifiedcases that contained class allegations”).
Castano v. Am. Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996) (discuss-
ing enormous pressure on defendants to settle any class action claim due to ex-treme risk defendants face if they lose at trial).
12. See Hydrogen Peroxide
, 552 F.3d at 310 (citation omitted) (acknowledging
that denial of certification may end lawsuit for potential plaintiffs); Serajeddini,supra
note 9, at 256-57 (noting failure to certify class usually means “plaintiffs willdrop the claim”). The “death knell doctrine” was an initial impetus for allowinginterlocutory appeal of class certification decisions. See
Alan J. Howard & Cary I.
Klafter, Applicability of a Class Action Dismissal: The “Death Knell” Doctrine
, 39 U. CHI.
L. REV. 403, 411-17 (1972) (discussing origin and meaning of “death knell doc-trine” in class action lawsuits).
Gibson, Dunn & Crutcher LLP, Year-End Update on Class Actions: Explo-
sive Growth in Class Actions Continues Despite Mounting Obstacles to Certification
10, 2009), http://www.gibsondunn.com/publications/Pages/Year-EndUpdateOnClassActions.aspx (discussing rising prominence of class action lawsuits in federalcourts during 2008). The Class Action Fairness Act of 2005 (CAFA) opened up thedoor to federal courts for diversity jurisdiction class actions, leading to an increasein the number of class action lawsuits filed in federal courts. See generally
LEE ET AL., FED. JUDICIAL CTR., IMPACT OF THE CLASS ACTION FAIRNESS ACT ON THEFEDERAL COURTS 1 (2008), available at
http://www.fjc.gov/public/pdf.nsf/lookup/cafa1108.pdf/$file/cafa1108.pdf (finding that “number of class actions based ondiversity of citizenship jurisdiction filed in or removed to the federal courts in-creased after CAFA’s effective date”); Richard L. Marcus, Assessing CAFA’s StatedJurisdictional Policy
, 156 U. PA. L. REV. 1765, 1788-1808 (2008) (discussing CAFAand trend towards litigation of class actions in federal instead of state courts).
With its recent decision in In re Hydrogen Peroxide Antitrust Litigation
the Third Circuit promulgated strict guidelines that district courts mustfollow when reviewing class action certification motions.15 This Casebriefexamines how the Third Circuit’s opinion redefined the evolving “rigor-ous analysis” required for determination of class certification motions andleveled the playing field for defendants opposing class certification.16 PartII of this Casebrief summarizes the requirements of Rule 23 of the FederalRules of Civil Procedure (Rule 23), which governs class certification, anddescribes Supreme Court jurisprudence in this area.17 Further, Part II ex-plores various federal courts’ interpretations of Rule 23.18 Part III ana-lyzes the Third Circuit’s reasoning in Hydrogen Peroxide
, detailing the in-depth process that a district court must follow when deciding motions forclass certification.19 Part IV illuminates the new challenges and concernsfacing plaintiffs seeking class certification and discusses new strategies fordefendants opposing class certification.20 Finally, Part V assesses HydrogenPeroxide
’s impact on class action certification within the Third Circuit andon other federal courts.21
14. 552 F.3d 305, 309 (3d Cir. 2008).
15. See id.
at 307 (clarifying class certification standards).
16. See infra
notes 98-116 and accompanying text (discussing new burdens for
plaintiffs seeking class certification in light of Third Circuit’s rigorous review stan-dard). According to the Supreme Court, a class action should be “certified if thetrial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a)have been satisfied.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982). TheThird Circuit’s opinion represents “an important reversal of the trend in the ThirdCircuit that favored plaintiffs seeking class certification.” See Third Circuit LevelsPlaying Field for Defendants Opposing Class Certification
, DECHERT ON POINT (DechertLLP), Jan. 2009, available at
http://www.dechert.com/library/Antitrust_31_01-09_Third_Circuit_Levels_Playing_Field.pdf. Prior to Hydrogen Peroxide
, defendants inthe Third Circuit faced an uphill battle in efforts to defeat class certification mo-tions. See
note 9 (explaining that before this decision, “corporatedefendants start[ed] the class certification stage of an antitrust case at a disadvan-tage” because “the standard for getting a class certified [was] low”); Gibson, Dunn& Crutcher LLP, supra
note 13 (noting that district court “imposed a relativelylight burden on plaintiffs” at class certification stage in compliance with previousThird Circuit precedent); see also In re
Indus. Diamonds Antitrust Litig., 167 F.R.D.
374, 378 (S.D.N.Y. 1996) (stating that “because of the important role that classactions play in the private enforcement of antitrust statutes, courts resolve doubtsabout whether a class should be created in favor of certification”).
17. See infra
notes 33-54 and accompanying text (discussing adjudication of
Rule 23 in Supreme Court and federal courts’ interpretations of Rule 23requirements).
18. See infra
notes 55-67 and accompanying text (summarizing Third Circuit
jurisprudence with respect to Rule 23 class certification before Hydrogen Peroxide
19. See infra
notes 81-91 and accompanying text (discussing Third Circuit gui-
dance to lower courts regarding requirements of Rule 23).
20. See infra
notes 92-116 and accompanying text (suggesting new litigation
strategies for plaintiffs and defendants in light of Third Circuit’s ruling).
21. See infra
notes 117-124 and accompanying text (identifying importance of
Rule 23 and Class Certification Requirements
Rule 23 governs class certification within federal courts.22 Rule 23(a)
requires the party moving to certify a class to demonstrate that the pro-posed class meets the requirements of numerosity, commonality, typicality,and adequacy of representation.23 Once the prerequisites of Rule 23(a)are satisfied, the party seeking class certification must demonstrate thatthe proposed class is of one of the three types enumerated in Rule23(b).24 Antitrust class actions, as well as most class actions seeking mone-tary damages, are typically brought under Rule 23(b)(3)’s “predominanceand superiority path.”25 Under this “path,” plaintiffs must demonstratethat “questions of law or fact common to class members predominate overany questions affecting only individual members, and that a class action issuperior to other available methods for fairly and efficiently adjudicatingthe controversy.”26
The issue of predominance decides the fate of many class certification
motions and is hotly contested at the certification stage.27 The SupremeCourt stated that a class should be certified only after the district court
FED. R. CIV. P. 23 (stating prerequisites for filing class action). State
courts generally have modeled their state procedural rules governing class actionsafter Rule 23. See, e.g.
, DE. SUPER CT. R. CIV. P. 23 (listing requirements for classaction certification in Delaware); N.J.R. CT. 4:32-2 (providing requirements forclass certification within New Jersey state courts); PA. R. CIV. P. 707 (governingmotions for certification of class action in Pennsylvania state courts).
FED. R. CIV. P. 23(a). A class can be certified only if:(1) the class is so numerous that joinder of all members is impracticable;(2) there are questions of law or fact common to the class; (3) the claimsof defenses of the representative parties are typical of the claims or de-fenses of the class; and (4) the representative parties will fairly and ade-quately protect the interests of the class.
FED. R. CIV. P. 23(b) (listing three types of class action lawsuits).
Linda P. Nussbaum & John D. Radice, The Evolving Challenges of Class
4 (Dec. 8, 2009) (on file with author) (noting “Rule 23(b)(3)’s pre-dominance and superiority path is the most common route to certification of ac-tions seeking damages”); see also
Jay Tidmarsh, Rethinking Adequacy of Representation,
87 TEX. L. REV. 1137, 1167 (2009) (stating “plaintiffs with injunctive claims will useRules 23(b)(1) and 23(b)(2)” instead of 23(b)(3)). Plaintiffs often seek to avoidhaving to pursue certification under Rule 23(b)(3) because the predominanceand superiority requirements are costly and difficult to prove. See Andrew Bradt,“Much to Gain and Nothing to Lose” Implications of the History of the Declaratory Judgmentfor the (b)(2) Class Action
, 58 ARK. L. REV. 767, 795-96 (2006) (discussing additionalbarriers facing Rule 23(b)(3) class at certification stage).
26. FED. R. CIV. P. 23(b)(3).
27. See, e.g.
, Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 594 (1997) (hold-
ing predominance requirement not met in asbestos case); Desai v. Deutsche BankSec. Ltd., 573 F.3d 931, 935 (9th Cir. 2009) (explaining that case involving ques-tions of predominance in securities fraud claim did not move beyond certificationstage for seven years).
conducts “a rigorous analysis” of the Rule 23 requirements.28 With thepromulgation of Rule 23(f) in 1998, parties gained the ability to appeal aclass certification decision before proceeding with the rest of a trial, whichpermitted appellate review of a district court’s decision to grant or denycertification.29 Although appellate courts retain broad discretion in deter-mining whether to grant review of a class certification decision, the draft-ers of Rule 23 emphasized that an interlocutory appeal should be grantedwhen “the certification decision turns on a novel or unsettled question oflaw, or when, as a practical matter the decision on certification is likelydispositive of the litigation.”30 When reviewing a district court’s decisionon class certification, a court of appeals applies an abuse of discretion stan-dard.31 Although the abuse of discretion standard accords deference tothe trial court, unclear class certification standards have caused federalappellate courts to routinely find that district courts abused their discre-tion in granting class certification.32
Unclear Certification Standards Emerge Within the Circuits
In the past, federal courts have struggled to reconcile confusing Su-
preme Court guidance on certification standards.33 Federal courts have
Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982) (opining that
without “rigorous analysis” court cannot properly define parameters of class).
FED. R. CIV. P. 23(f) advisory committee’s note to the 1998 amend-
ments (granting courts of appeals “unfettered discretion whether to permit [an]appeal” regarding class certification); William Kolasky & Kevin Stemp, AntitrustClass Actions: More Rigor, Fewer Shortcuts
, CLASS ACTION REP., Nov.-Dec. 2009, at 2,available at
http://www.wilmerhale.com/files/Publication/da664923-f9dd-4b75-bd1e-f43f8806d246/Presentation/PublicationAttachment/140b9324-0138-4f0a-b8f4-f9d108e1ce15/Kolasky_AuthorArticle.pdf (discussing how 1998 amendments al-lowed courts “to take a more active role in developing more consistent and coher-ent standards for class action certification”). Prior to 1998, class certificationdecisions could not be appealed until there was a judgment on the merits of thecase. See
Howard & Klafter, supra
note 12, at 407-11 (discussing problems with lackof ability to appeal class certification decisions and noting judge-made exceptionsto this rule that existed prior to 1998); see also
Carey M. Erhard, A Discussion of theInterlocutory Review of Class Certification Orders Under Federal Rule of Civil Procedure23(f)
, 51 DRAKE L. REV. 151 (2002) (discussing ability to appeal class certificationdecisions prior to and after enactment of Rule 23(f)).
30. FED. R. CIV. P. 23(f) advisory committee’s note. See also
Gutierrez v. John-
son & Johnson, 523 F.3d 187, 192 (3d Cir. 2008) (stating that “Rule 23(f)’s windowof review is deliberately small”).
31. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d Cir.
2008) (noting abuse of discretion “occurs if the district court’s decision rests upona clearly erroneous finding of fact, an errant conclusion of law or an improperapplication of law to fact” (internal quotations and citation omitted)).
Kolasky & Stemp, supra
note 29 (stating “sixty-six percent of [class cer-
tification] grants” were reversed from 1998 through 2008).
Ian Simmons, Alexander P. Okuliar & Nilam A. Sanghvi, Without Pre-
sumptions: Rigorous Analysis in Class Certification Proceedings
, 21 ANTITRUST 3 (2007),available at
http://www.omm.com/files/upload/Rigorousanalysis.pdf (discussingdivergent directives from Supreme Court regarding Rule 23 standards).
difficulty conducting a “rigorous analysis of certification elements withoutengaging in a preliminary inquiry about . . . the merits of the case.”34Courts traditionally have taken “a quick look” at the plaintiff’s certificationmotion, but have avoided conducting a searching inquiry into the plain-tiff’s evidence and factual allegations offered in support of the motion.35Recently, however, federal courts have started to engage in a more search-ing analysis at the certification stage.36
Liberal Certification Controls Under
Although Rule 23 provides standards for class certification and de-
notes that the party seeking class certification bears the burden of proof,the Rule itself does not provide guidance as to what showing is required tomeet that burden.37 In a 1974 case, Eisen v. Carlisle & Jacquelin
,38 the Su-preme Court established that the merits of a case should not be consid-ered when deciding a class certification motion.39 Some lower courtsinterpreted this ruling as a broad bar against weighing any evidence thatdealt with the merits of a claim.40 Additionally, courts interpreted Eisen
asa command to take all allegations contained in a plaintiff’s complaint astrue.41 Finally, following Eisen
, courts “resisted being drawn into a ‘battle
34. See id.
(noting that confusion prompted many federal courts to merely
engage in “superficial” review of facts determining class certification).
Nussbaum & Radice, supra
note 25 (determining traditional analysis is
“in accord” with local procedural rules that encourage plaintiffs to seek class certi-fication early in litigation process).
36. See In re
Initial Pub. Offering Secs. Litig., 471 F.3d 24, 29-31 (2d Cir. 2006)
(summarizing cases from various circuits where courts engaged in probing inquiryat certification stage).
37. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316 (3d Cir.
2008) (concluding that “little guidance is available on the proper standard of‘proof’ for class certification”). The burden of proof for class certification motionslies with the party seeking certification. See
Unger v. Amedisys Inc., 401 F.3d 316,320 (5th Cir. 2005) (stating that “party seeking certification bears the burden ofestablishing that all requirements of Rule 23 have been satisfied”).
38. 417 U.S. 156 (1974).
39. See id.
at 177 (“[N]othing in either the language or history of Rule 23 . . .
gives a court any authority to conduct a preliminary inquiry into the merits of asuit in order to determine whether it may be maintained as a class action.”).
40. See, e.g.
, Caridad v. Metro N. Commuter R.R., 191 F.3d 283, 291 (2d Cir.
1999) (quoting Eisen
and opining that “a motion for class certification is not anoccasion for examination of the merits of the case”); Shelter Realty Corp. v. AlliedMaint. Corp., 574 F.2d 656, 661 n.15 (2d Cir. 1978) (emphasizing that districtcourt judge “was prohibited from conducting an inquiry into the merits by theSupreme Court’s decision” in Eisen
); In re
Catfish Antitrust Litig., 826 F. Supp.
1019, 1033 (N.D. Miss. 1993) (declaring that “the court does not delve into themerits of plaintiffs’ substantive claims”); Steinmetz v. Bache & Co., 71 F.R.D. 202,204 (S.D.N.Y. 1976) (finding that “on this motion for class action determination,inquiry into the merits of plaintiffs’ claim is foreclosed”).
41. See Shelter
, 574 F.2d at 661 n.15 (emphasizing that “it is proper to accept
complaint allegations as true”); Blackie v. Barrack, 524 F.2d 891, 901, n.17 (9thCir. 1975) (noting that “[t]he court is bound to take the substantive allegations ofthe complaint as true”); Catfish
, 826 F. Supp. at 1033 (explaining that “in ruling
of the experts’ on the theory that only the trier of fact could determinewhat weight to give the experts’ conclusions.”42
More Rigorous Review of Class Certification Under
Just eight years after the Eisen
decision, the Supreme Court again
spoke on class certification standards in General Telephone Co. of the South-west v. Falcon
,43 an employment discrimination class action suit broughtunder Title VII of the Civil Rights Act of 1964.44 In Falcon
, the SupremeCourt noted— without addressing Eisen
—that “sometimes it may be neces-sary for the court to probe behind the pleadings before coming to rest onthe certification question.”45 Further, the Supreme Court emphasizedthat a class may be certified only “if the trial court is satisfied, after a rigor-ous analysis, that the prerequisites of [R]ule 23(a) are satisfied.”46 Manyfederal courts interpreted Falcon
as allowing a preliminary inquiry into themerits of a case at the certification stage.47 Additionally, various circuits
upon class certification motion, the substantive allegations contained in plaintiffs’complaint are accepted as true”); Mayo v. Sears Roebuck & Co., 148 F.R.D. 576,579 (S.D. Ohio 1993) (indicating that “for purpose of a class certification motion,a court must accept as true the allegations contained in the complaint”); Hardin v.
Harshbarger, 814 F. Supp. 703, 706 (N.D. Ill. 1993) (stating that “[i]n evaluatingthe motion for class certification, the allegations in support of certification aretaken as true”).
42. Kolasky & Stemp, supra
43. 457 U.S. 147 (1982).
44. See id.
(discussing facts giving rise to class action lawsuit). Although Falcon
was the next major Supreme Court case related to class action certification stan-dards, in 1978 the Court did make passing mention of certification standards in asecurities fraud case. See
Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.12(1978) (“Evaluation of many of the questions entering into determination of class[certification standards] . . . is intimately involved with the merits of the claim.”(quoting 15 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE 485n.45 (1976))).
, 457 U.S. at 160.
46. See id.
at 161 (citing concerns about potential unfairness to potential class
members bound by class certification judgments as support for requirement ofsubstantial analysis at certification stage). Although the Supreme Court explicitlystated that the rigorous analysis applies to Rule 23(a) requirements, courts haveinterpreted this statement as applying with equal force to the requirements of Rule23(b). See In re
Initial Pub. Offering Secs. Litig., 471 F.2d 24, 33 n.3 (2d Cir. 2006)(stating there is “no reason to doubt that what the Supreme Court said about Rule23(a) requirements applies with equal force to all Rule 23 requirements, includingthose set forth in [R]ule 23(b)(3)”).
47. See, e.g.
, Oscar Private Equity Invs. v. Allegiance Telecom, Inc., 487 F.3d
261, 266 (5th Cir. 2007) (“A district court still must give full and independentweight to each Rule 23 requirement, regardless of whether that requirement over-laps with the merits.”); Initial Pub. Offering Secs. Litig.
, 471 F.3d at 32 (noting that“[s]ome overlap with the ultimate review on the merits is an acceptable collateralconsequence that courts must perform when determining whether Rule 23’s re-quirements have been met . . . .”); Gariety v. Grant Thorton, LLP, 368 F.3d 356,366 (4th Cir. 2004) (emphasizing that “while an evaluation of the merits . . . is notpart of a Rule 23 analysis, the factors spelled out in Rule 23 must be addressedthrough findings even if they overlap with the issues on the merits”); Szabo v.
subsequently determined that plaintiffs’ allegations should not necessarilybe accepted as true at the class certification stage.48 Circuits also con-cluded that some inquiry into the weight of expert testimony should beconducted.49
In 1997, the Supreme Court once again discussed the requirements of
Rule 23 in affirming decertification of a class of plaintiffs in Amchem Prod-ucts v. Windsor
.50 In Amchem
, the Supreme Court instructed lower courtsto take a “close look” to determine whether plaintiffs had met Rule23(b)(3)’s predominance and superiority requirements.51
In 2003, the Advisory Committee for the Federal Rules of Civil Proce-
dure, with Chief Judge Anthony Scirica, author of the Hydrogen Peroxide
opinion, as a member, amended the standard in Rule 23 for the timing ofruling on class certification from “as soon as practicable” to “at an earlypracticable time.”52 Revised Rule 23, in conjunction with the Supreme
Bridgeport Machs., Inc., 249 F.3d 672, 677 (7th Cir. 2001) (observing that “noth-ing in . . . Rule 23 . . . prevents the district court from looking beneath the surfaceof the complaint”); Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 298 (1stCir. 2000) (reasoning that some inquiry into merits is necessary “in order to deter-mine whether common or individual issues predominate in a given case”); Adam-son v. Bowen, 855 F.2d 668, 677 n.12 (10th Cir. 1998) (recognizing that “meritsmay become intertwined with proper consideration of other issues germane towhether the case should be certified as a class action”).
Unger v. Amedisys Inc., 401 F.3d 316, 321 (5th Cir. 2005) (holding, in
securities fraud class actions where plaintiff pleads reliance based on efficient mar-ket hypothesis, court “may not simply presume the facts in favor of an efficientmarket”); Gariety
, 368 F.3d at 359 (opining that reliance on “mere assertions” byplaintiffs is insufficient for required “rigorous analysis” of Rule 23); Tardiff v. KnoxCounty, 365 F.3d 1, 4-5 (1st Cir. 2004) (noting that “it is sometimes taken forgranted that the complaint’s allegations are necessarily controlling, but class ac-tion machinery is expensive and . . . the court has the power to test disputed prem-ises early on . . . .”); Szabo
, 249 F.3d at 675 (“The proposition that a district judgemust accept all of the complaint’s allegations when deciding whether to certify aclass cannot be found in Rule 23 and has nothing to recommend it.”).
49. See, e.g.
, Blades v. Monsanto Co., 400 F.3d 562, 575 (8th Cir. 2005) (noting
at certification stage court may need to solve “expert disputes concerning the im-port of evidence concerning the factual setting . . . .”); West v. Prudential Secs.,Inc., 282 F.3d 935, 938 (7th Cir. 2002) (concluding “a district judge may not duckhard questions by observing each side has some support” and emphasizing thatjudge may need to resolve disputes between competing experts at certificationstage).
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 629 (1997) (affirming
Third Circuit’s decision to decertify class certified by district court because classfailed to meet Rule 23(b)(3) requirements).
51. See id.
at 615-17 (reflecting on policies behind class action mechanism).
52. See Proposed Amendments to the Federal Rules of Civil Procedure
LITIGATION.COM, http://www.classactionlitigation.com/rule23ProposedAmend-ments.pdf (illustrating changes made to Rule 23 via 2003 amendments). The Advi-sory Committee comments to the Rule 23 revisions in 2003 also compelled courtsto consider conducting a more searching inquiry into the merits at certificationstage. See
FED. R. CIV. P. 23(c)(1)(A) advisory committee’s note to the 2003
Court’s instruction to take a “close look” at allegations during certifica-tion, prompted many circuits to seriously examine the merits of claims atthe certification stage.53 For instance, in light of the amendments to Rule23, the Second Circuit changed course and rejected the reasoning of itsearlier cases, which had allowed minimal standards of proof for Rule 23elements, and refused to examine expert opinions at the class certificationstage.54
The Third Circuit’s Approach Before
Prior to Hydrogen Peroxide
, plaintiffs and attorneys “generally viewed
[the Third Circuit] as one of the most plaintiff-friendly circuits in thecountry for antitrust class actions.”55 The Third Circuit explicitly heldthat Eisen
did not prohibit an inquiry into the merits of a case at the certifi-cation stage.56 The Third Circuit also stated that in class certification mo-tions, plaintiffs’ complaints are not deemed as uncontroverted truth, anddefendants can present evidence to undermine plaintiffs’ claims.57 Never-theless, courts within the Third Circuit have been reluctant to conduct asearching inquiry into plaintiffs’ allegations at the certification stage, er-ring on the side of allowing certification.58 Specifically, the Third Circuit
amendments (“[I]t is appropriate to conduct controlled discovery into the ‘mer-its’, limited to those aspects relevant to making a certification decision on an in-formed basis.”).
53. See, e.g.
, In re
Initial Pub. Offering Secs. Litig., 471 F.3d 24, 41 (2d Cir.
2006) (listing new standards for district courts in light of more in-depth analysis ofmerits at certification stage); In re
PolyMedica Corp. Secs. Litig., 432 F.3d 1, 5-6(1st Cir. 2005) (citing cases in which circuit courts encouraged examination ofmerits of case and pleadings at certification stage).
54. See Initial Pub. Offerings
, 471 F.3d at 39-40 (stating that “obviously [the
court] can no longer continue to advise district courts that ‘some showing’ ofmeeting Rule 23 requirements will suffice and that ‘findings’ are required, or thatan expert’s report will sustain a plaintiff’s burden so long as it is not ‘fatallyflawed’ ”) (citations omitted).
55. Kolasky & Stemp, supra
note 29. One of the reasons the Third Circuit was
viewed as plaintiff-friendly was because Third Circuit courts would allow class certi-fication to be granted on a tentative basis, even if it was unclear that the plaintiffscould meet the Rule 23 requirements. See generally In re
School Asbestos Litig., 789F.2d 996, 1011 (3d Cir. 1986) (granting district court wide discretion to grant certi-fication and potentially decertify class later if plaintiffs did not demonstrate thatRule 23 requirements were met).
Newton v. Merill Lynch, Peirce, Fenner & Smith, Inc., 259 F.3d 154,
167-69 (3d Cir. 2001) (stating that Supreme Court’s decision in Falcon
demon-strated Court moving away from merits-prohibition in Eisen
and further emphasiz-ing that “[s]ince Eisen
was decided, the nature of class actions and how they arelitigated have undergone a sea change”).
Johnston v. HBO Film Mgmt., 265 F.3d 178, 186 (3d Cir. 2001) (not-
ing that complaint allegations do not need to be presumed as true where “allega-tions are unsupported, and in some instances, rebutted, by a well-developedrecord”).
Kahan v. Rosenstiel, 424 F.2d 161, 169 (3d Cir. 1970) (opining that
“the interests of justice require that in a doubtful case . . . any error . . . should becommitted in favor of allowing the class action”).
recognized that private enforcement of antitrust laws is essential, and man-dated district courts in antitrust litigation to grant class certification whenin doubt.59
In certain antitrust cases, the Third Circuit allowed plaintiffs to enjoy
a presumption of class-wide impact.60 In Bogosian v. Gulf Oil Corp.
,61 a1977 antitrust case, the Third Circuit stipulated that a price-fixing conspir-acy in antitrust actions could be presumed to have a market-wide effect,satisfying the plaintiff’s requirement of demonstrating class-wide impactunder Rule 23.62 This presumption of economic impact in price-fixingcases is known as the “Bogosian
short-cut” and is applied in the Third Cir-cuit and in various other circuits.63
Relying on the Third Circuit’s opinion in In re Linerboard Antitrust Liti-
,64 district courts within the Third Circuit refused to consider oppos-ing expert testimony at the certification stage.65 In Linerboard
, the courtexplained that plaintiffs do not enjoy a strict presumption of impact whenthere is an allegation of price-fixing.66 Nonetheless, as long as plaintiffsoffer an expert opinion to support the impact claim, they benefit from a
Cumberland Farms, Inc. v. Browning-Ferris Indus., 120 F.R.D. 642, 645
(E.D. Pa. 1988) (recognizing that “private enforcement of antitrust laws is a neces-sary supplement to government action,” and thus concluding “when a court is indoubt as to whether or not to certify a class action, the court should err in favor ofallowing the class”). Similar reasoning underlies the favoring of class certificationin securities class actions. See Kahan
, 424 F.2d at 169 (discussing policy reasonsfavoring class certification in securities fraud class actions).
Bogosian v. Gulf Oil Corp., 561 F.2d 434, 449-50 (3d Cir. 1977) (al-
lowing presumption of impact in cases involving alleged horizontal price-fixing).
61. 561 F.2d 434 (3d Cir. 1977).
62. See id.
at 455 (stipulating that once plaintiffs established that there was
nationwide conspiracy to raise prices, economic injury to all potential class mem-bers could be presumed).
63. See, e.g.
, In re
Linerboard Antitrust Litig., 305 F.3d 145, 152 (3d Cir. 2002)
shortcut); In re
Rubber Chems. Antitrust Litig., 232 F.R.D. 346,352 (N.D. Cal. 2005) (same); In re
Carbon Black Antitrust Litig., No. Civ.A.03-10191-DPW, 2005 WL 102966 at *15 & n.16 (D. Mass. Jan. 18, 2005) (same); In re
Mercedez-Benz Antitrust Litig., 213 F.R.D. 180, 188 (D.N.J. 2003) (same); In re
Wirebound Boxes Antitrust Litig., 128 F.R.D. 268, 373 (D. Minn. 1989) (same); Inre
Alcoholic Beverages Litig., 95 F.R.D. 321, 327 (E.D.N.Y. 1982) (same).
64. 305 F.3d 145 (3d Cir. 2002).
Steven Bizar, Thomas P. Manning & Landon Y. Jones, Bogosian,
Hydrogen Peroxide, LAW 360, Feb. 10, 2009, available at
http://www.buchananingersoll.com/media/pnc/9/media.2289.pdf (noting that “districtcourts following Linerboard
. . . rarely considered in depth the opinions of defenseexperts opposing class certification and made no effort to resolve factual disputespresented by conflicting expert opinions”). This was the approach the districtcourt followed in Hydrogen Peroxide
. See In re
Hydrogen Peroxide Antitrust Litig.,240 F.R.D. 163, 171 (E.D. Pa. 2007) (stating that factual disputes about experttestimony are questions for jury), vacated
, 552 F.3d 305 (3d Cir. 2008).
66. See Linerboard
, 305 F.3d at 155 (refusing to allow direct presumption of
impact without some evidence to support plaintiffs’ claims).
presumption that they satisfy the Rule 23 burden, regardless of the qualityof the expert testimony.67
BLEACHING CLEAN THE MUDDY WATERS OF CLASS CERTIFICATION
Recognizing the lack of clarity in the application of Rule 23 require-
ments, the Third Circuit promulgated explicit guidelines for districtcourts to use when deciding class certification motions.68 In an opinionby Chief Judge Scirica, the court addressed three major issues concerningclass certification standards under Rule 23: (1) the appropriate standardof proof for class certification; (2) whether factual and legal questionstouching on the merits of the case need to be resolved at the certificationstage; and (3) whether district courts should consider opposing expert tes-timony to discredit the testimony of a plaintiff’s expert witness.69
The District Court Skips to the Rinse Cycle
In the Eastern District of Pennsylvania, a group of direct purchasers
of hydrogen peroxide moved to certify a class action lawsuit against vari-ous chemical manufacturers alleging that the manufacturers committedan antitrust violation by engaging in a price-fixing conspiracy.70 The de-fendants did not contest that the plaintiffs met the requirements for classcertification under Rule 23(a), but instead focused their argument on theplaintiffs’ failure to satisfy the requirements of Rule 23(b)—specificallywhether “questions of law or fact common to class members predominateover any questions affecting only individual members.”71
67. See id.
(noting that plaintiffs offered expert testimony to support applica-
tion of Bogosian
presumption). This is often referenced as the “belt-and-suspend-ers” framework to proving impact—the belt being that all plaintiffs were impactedby price fixing conspiracy with the suspenders being an expert opinion “supportedby charts and studies.” See
Bizar et al., supra
note 65 (discussing belt-and-suspend-ers approach in Third Circuit).
68. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316 (3d Cir.
2008) (observing that “little guidance is available on the subject of the properstandard of ‘proof’ for class certification”).
69. See id.
at 307 (stating that “in this appeal [the court] clarif[ies] three key
aspects of certification procedure”). Commentators opine that the court also re-solved if there was a presumption of impact in antitrust cases. See
Paula Render &Andrea Renaldi, Bogosian’s Legacy Uncertain in Wake of Recent Third Circuit Decisionin
Hydrogen Peroxide, ABA ANTITRUST NEWSLETTER, Mar. 2009, available at
http://www.jonesday.com/files/Publication/d3e34c9d-97bb-4f11-8264-c59fdb3160bf/Presentation/PublicationAttachment/c3ca3982-61f7-45bf-909e-97f1bfb63be0/Bogosian.pdf (discussing impact of Third Circuit’s decision on Bogosian
short-cutpresumption for antitrust class actions).
70. See Hydrogen Peroxide
, 240 F.R.D. at 167-68 (discussing historical back-
ground of events giving rise to lawsuit).
71. See id.
at 169-72 (stating that although defendants did not contest ele-
ments of Rule 23(a), court would briefly address these elements).
In its Rule 23(b) analysis, the district court defined the limits of in-
quiry into the merits of the case at the class certification stage.72 Althoughit determined that “some inquiry” into the merits was proper at the certifi-cation stage, the court noted that, under Third Circuit precedent, it wasobliged to “limit that inquiry to the minimum necessary.”73 Thus, thecourt refused to weigh disparities between the plaintiffs’ and defendants’claims to determine if the plaintiffs’ evidence was “more or less crediblethan defendants’.”74
Next, the court determined that class-wide impact could be presumed
in this case under the “Bogosian
short-cut,” which held that if plaintiffsallege a price-fixing conspiracy, a presumption is created that each plain-tiff had purchased the product at the artificially increased price.75 Moreo-ver, the court rejected the defendants’ contention that in order to certify aclass the plaintiffs must prove that each member was in fact injured by theantitrust violation.76 Finally, the court refused to address the defendants’motion to exclude the testimony of the plaintiffs’ expert regarding eco-nomic impact and damages.77 The court emphasized that it was “not per-mitted . . . to weigh the relative credibility of the parties’ experts” at thecertification stage.78
After certification, the defendants filed a petition for interlocutory
appeal of the certification decision under Rule 23(f); the Third Circuit
72. See id.
at 169-70 (noting that conflicting Supreme Court decisions in this
73. See id.
74. See id.
(opining that at certification stage plaintiffs merely needed to show
that their attempt “to prove their allegations will involve common issues of fact andlaw”).
75. See id.
at 173 (citing In re
Linerboard Antitrust Litig., 203 F.R.D. 197, 217
(E.D. Pa. 2001)) (applying Bogosian
presumption of impact in price-fixing case).
Other courts in the Third Circuit have also applied the Bogosian
short-cut. See, e.g.
,Lumco Indus. v. Jeld-Wen, Inc., 171 F.R.D. 168, 173 (E.D. Pa. 1997) (applyingpresumption).
76. See Hydrogen Peroxide
, 240 F.R.D. at 174 n.14 (noting that injury-in-fact
must be proven, but not at certification stage; rather, at certification stage “all[plaintiffs] need demonstrate . . . is that antitrust impact on each member is sus-ceptible to proof by predominantly common evidence”).
77. See id.
at 170 (concluding that exclusion of expert opinion at certification
stage requires “that the opinion is . . . junk science”). In class certification hear-ings expert testimony is critical to assessing the Rule 23(b)(3) requirement of pre-dominance. See
Heather P. Scribner, Rigorous Analysis of the Class Certification Expert:The Roles of
Daubert and the Defendant’s Proof
, 28 REV. LITIG. 71, 72 (2008) (observ-ing that plaintiffs often have expert witnesses to opine “that the case’s materialfacts, which would seem to require individualized inquiries from each class mem-ber, can instead be proven through a common formula on behalf of the entireclass”).
78. See Hydrogen Peroxide
, 240 F.R.D. at 171 (opining that “it is of no moment
to . . . resolution of a Daubert
motion” if defense expert reaches different conclu-sion than plaintiffs’ expert).
granted this petition.79 The core issue on appeal was whether the plain-tiffs had satisfied Rule 23(b)’s predominance requirement.80
The Third Circuit Applies an Acid Test and Bleaches Clean
In Hydrogen Peroxide
, the Third Circuit defined the procedure that
lower courts must follow in deciding class certification motions.81 First,the court clarified that plaintiffs must prove factual determinations sup-porting Rule 23 requirements by a preponderance of the evidence.82 Thecourt emphasized that class certification necessitates a “rigorous analysis”and, therefore, that a mere threshold showing that Rule 23 requirementsare met is insufficient.83 Rejecting the district court’s determination thatthe plaintiffs’ “intention to prove a significant portion of their casethrough factual evidence and legal arguments common to all class mem-bers” would be sufficient to prove predominance, the court noted that“actual, not presumed conformance with the Rule 23 requirements [is]necessary.”84
Second, the Third Circuit held that “the [district] court must resolve
all factual or legal disputes relevant to class certification, even if they over-lap with the merits—including disputes touching on the cause of ac-tion.”85 The court attempted to reconcile lower courts’ misinterpretationsof the Supreme Court’s ruling in Eisen
, noting that the decision is “bestunderstood to preclude only a merits inquiry that is not necessary to deter-mine a Rule 23 requirement.”86
Third, the Third Circuit held that a district court must “consider all
relevant evidence and arguments,” which includes “expert testimony,whether offered by a party seeking class certification or by a party oppos-
79. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 309 (3d Cir.
2008) (stating that Third Circuit has jurisdiction over case under Rule 23(f)).
Rule 23(f) states “[a] court of appeals may permit an appeal from an order grant-ing or denying class-action certification.” FED. R. CIV. P. 23(f).
80. See Hydrogen Peroxide
, 552 F.3d at 310 (noting defendants did not contest
that plaintiffs met requirements of Rule 23(a)).
81. See infra
notes 82-91 and accompanying text (analyzing Third Circuit’s in-
structions to district courts regarding class certification motions).
82. See Hydrogen Peroxide
, 552 F.3d at 320 (noting preponderance of evidence
standard requires court to “find that the evidence more likely than not establishedeach fact necessary to meet the requirements of Rule 23”).
83. See id.
at 318 (stating “a party’s assurance . . . that it intends or plans to
meet the requirements [of Rule 23] is insufficient”).
84. See id.
at 321-22 (opining that court should not conduct “tentative” analy-
sis and should “encourage development of a record sufficient for informed analy-sis” prior to ruling on certification motion).
86. See id.
at 317 (emphasizing that “a contested requirement is not forfeited
in favor of the party seeking certification merely because it is similar to or evenidentical to one normally decided by a trier of fact”).
ing it.”87 The court emphasized that “weighing conflicting expert testi-mony at certification stage . . . may be integral to the rigorous analysis Rule23 demands.”88
Finally, the Third Circuit addressed the so-called “Bogosian
for antitrust suits alleging price-fixing.89 Reiterating that “actual, not pre-sumed conformance with Rule 23 requirements is essential,” the courtheld that this presumption of impact conflicts with the 2003 amendmentsto Rule 23.90 Although the Third Circuit did not explicitly overrule the“Bogosian
short-cut,” the court determined that the presumption is not suf-ficient to fulfill a plaintiff’s burden of proof regarding common impact.91
IMPACT OF THE “HYDROGEN BOMB” ON THE JUDICIAL LANDSCAPE
The Third Circuit’s Hydrogen Peroxide
decision is consistent with other
federal circuits that have started to apply a more rigorous standard of re-view to class certification motions.92 The decision is significant because itdefines the contours of a Rule 23 class certification analysis in three impor-tant ways.93 First, the Third Circuit’s explicit mandate that district courtsresolve all factual disputes, even those dealing with the merits of the case,
88. See id.
at 323 (citing cases from various other circuits that emphasize im-
portance of resolving expert disputes at class certification stage).
89. See id.
at 325-26 (discussing presumption of antitrust impact).
90. See id.
at 326 (citation omitted) (noting that 2003 amendments to Rule 23
require “careful, fact-based approach, informed, if necessary, by discovery” whichwould not be possible if class-wide impact were presumed merely based on plain-tiffs’ allegations of price-fixing).
Render & Renaldi, supra
note 69 (explaining that the “Third Circuit
did not overturn Bogosian
92. See In re
Initial Pub. Offering Secs. Litig., 471 F.3d 24, 41-42 (2d Cir. 2006)
(rejecting earlier opinions and stating court “can no longer continue to advisedistrict courts that some showing of meeting Rule 23 requirements will suffice andthat findings are required, or that an expert’s report will sustain a plaintiff’s bur-den so long as it is not fatally flawed”); Szabo v. Bridgeport Machs., Inc., 249 F.3d672, 678 (7th Cir. 2001) (inviting lower court to “pierce the allegations of thecomplaint” and examine obstacles that may block class certification).
James C. Martin & Colin E. Wrabley, Third Circuit Clarifies Key Aspects of
, LEGAL INTELLIGENCER, Mar. 9, 2009, available at
reedsmith.com/library/search_library.cfm?FaArea1=CustomWidgets.content_view_1&cit_id=24013 (opining “because of its clarification of principles controllingmotions for class certification, [Hydrogen Peroxide
] may well turn out to be the mostinfluential” decision in class certification jurisprudence); Michelle Doolin et al.,Third Circuit Clarifies the “Rigorous Analysis” Inquiry District Courts are to Conduct inDeciding Motion for Class Certification
, CLIENT ALERTS (Cooley LLP), Feb. 18, 2009,http://www.cooley.com/58932 (calling opinion “one of the most important deci-sions in class action litigation in several years”). Although Hydrogen Peroxide
is simi-lar to other circuit court opinions that applied more rigorous review, the opinionis unique in the level of detailed guidance it provides lower courts and its in-depthanalysis of expert testimony at the certification stage. See
Richard A. Ripley & MarkJ. Glueck, In re
Hydrogen Peroxide Antitrust Litigation Bleaches Clean the Class Certi-fication Standard
, ANTITRUST SOURCE, Feb. 2009, available at
org/antitrust/at-source/09/02/Feb09-Ripley2-26.pdf (distinguishing Third Cir-
at the certification stage should cause plaintiffs’ attorneys to reconsiderthe timing of their certification motions.94 Second, the Third Circuit’sinvitation to district courts to resolve “battles of the experts” invites a newinterplay between a Daubert
motion and opposition of certification, andgives defendants new strategic options when filing a motion to oppose cer-tification.95 Finally, in light of the Third Circuit’s rejection of the “Bogo-sian
short-cut,” plaintiffs must now explore new methods of proving class-wide impact under Rule 23(b) in antitrust cases.96
Merits Inquiry Presents New Barrier for Plaintiffs
The Hydrogen Peroxide
decision mandated that district courts consider
all factual disputes necessary to determine if the requirements of Rule 23are met, even if these disputes touch on the merits of the case.97 Thismandate increases the plaintiff’s burden of proof for class certification.98With district courts now delving deeper into the pleadings to determine ifRule 23 requirements are met, attorneys seeking to certify a class shouldrethink the appropriate timing of a certification motion.99 In light of the“rigorous analysis” given to certification motions, prudent plaintiffs’ attor-neys will ensure that there is a sufficient factual record to support the Rule23 requirement of class-wide impact prior to filing a certification motion;this often will mean that plaintiffs’ attorneys should file motions for classcertification only after preliminary discovery, as opposed to the typicalpractice of filing a motion for certification early in the litigation.100 Addi-
cuit’s opinion from recent opinions dealing with class certification in Seventh, Sec-ond, and First Circuits).
94. See infra
notes 96-100 and accompanying text (concluding that plaintiffs
may want to wait to file certification motions later in litigation after there is timefor preliminary discovery).
95. See generally
David L. Hanselman, Jr. & Jennifer Smulin Diver, Opposing
Class Certification with a One-Two Punch
, NAT’L L. J., Apr. 20, 2009, available at
http://www.mwe.com/info/pubs/daubert.pdf (discussing impact of Daubert
motion atcertification stage).
96. See generally supra
notes 89-91 and accompanying text (summarizing per-
mitted use of Bogosian
presumption in antitrust cases in Third Circuit).
97. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316 (3d Cir.
2008) (noting that “overlap between a class certification requirement and the mer-its of a claim is no reason to decline to resolve relevant disputes”).
98. See id.
at 321 (rejecting notion that plaintiffs merely need to show inten-
tion to prove elements of Rule 23 and opining that plaintiff’s burden is not “leni-ent one”); see also
R. Bruce Allensworth, Andrew C. Glass & David D. Christensen,Putting the Rigor in Rigorous: The Third Circuit Clarifies Plaintiffs’ Burden of Proof inSeeking Class Certification
, NEWSSTAND (K&L Gates LLP), Feb. 13, 2009, http://www.
klgates.com/newsstand/Detail.aspx?publication=5316#_edn1 (stating HydrogenPeroxide
“heralds a welcomed bolstering of the standard of proof that plaintiffsmust satisfy”).
Nussbaum & Radice, supra
note 25 (observing that filing motion for
certification early in litigation “now has substantial pitfalls”).
Ripley & Glueck, supra
note 93 (concluding that plaintiffs should wait
until evidentiary record is “sufficiently robust to support fact finding” of Rule 23elements to file certification motion). Waiting to file class certification motion
tionally, in light of the deeper inquiry into Rule 23 requirements, defenseattorneys should consider opposing class certification in each case andshould no longer readily stipulate to class certification.101 The impact ofHydrogen Peroxide
is already evident within the Third Circuit, where plain-tiffs have sought to withdraw their early filed certification motions, optinginstead to wait to re-file the motions after further discovery.102
Battle of the Experts Provides Defendants with New Strategies
’s invitation to district courts to weigh competing ex-
pert testimony will incentivize both plaintiffs and defendants to use experttestimony to support class certification briefs.103 Defense attorneys inclass action lawsuits often file motions to exclude plaintiffs’ expert testi-mony under the standards set forth by the Supreme Court in Daubert v.
Merrell Dow Pharmaceuticals
.104 After Hydrogen Peroxide
, however, a districtcourt’s ruling on a Daubert
motion does not prevent a probing inquiry into
until later is consistent with the 2003 amendments to Rule 23, which changed in-structions for the timing of class certification motions to reflect additional time fordiscovery. See
FED. R. CIV. P. 23 advisory committee’s note to the 2003 amend-ments (“The requirement that the court determine whether to certify a class ‘assoon as practicable after commencement of an action’ is replaced by requiringdetermination ‘at an early practicable time.’ ”).
Yang v. Odom, 392 F.3d 97, 100 (3d Cir. 2004) (discussing instance
where defendants stipulated to class certification and district court “rejected thestipulation” because “parties had failed to make an appropriate showing that therequirements of Rule 23 had been satisfied”). Although post-Hydrogen Peroxide
de-fendants are less likely to stipulate to class certification, if defendants feel thatplaintiffs can meet the Rule 23 requirements after discovery, prudent defendantsmay still consider stipulating to class certification because the initial discovery forclass certification motions can be costly for both parties. See
Mark P. Szpak & AnneE. Johnson, Class Certification in the United States: the Rise of Rigor Among the FederalCircuits
, CLASS ACTION DEFENSE Q., June 2009, at 49, 53, available at
ropesgray.com/files/Publication/973b8d4a-48fd-4688-b7c4-22c8d31ea47d/Pres-entation/PublicationAttachment/308f0887-91f2-43dd-8791-23ce4e291f6c/RopesGray_Article_SzpakAndJohnsonExamineStricterStandardsForClassActionSuits.pdf(discussing discovery costs pre-class certification and impact on defendants).
Nussbaum & Radice, supra
note 25 (discussing Flonase antitrust litiga-
tion in which Eastern District of Pennsylvania judge allowed plaintiffs to withdrawtheir motion for class certification in light of Hydrogen Peroxide
103. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 313-15 (3d
Cir. 2008) (analyzing and weighing opposing parties’ expert testimony on issue ofpredominance).
Daubert v. Merrell Dow Pharm., 509 U.S. 579, 589-95 (1993) (discuss-
ing standard for admission of expert testimony in federal courts). In Hydrogen Per-oxide
, the defendants sought to exclude plaintiffs’ expert testimony under Daubert
,but this motion was denied at the district court level and was not challenged onappeal. See In re
Hydrogen Peroxide Antitrust Litig., 240 F.R.D. 163, 171 (E.D. Pa.
2007) (discussing requirements for assessing Daubert
motion at class certificationstage).
whether an expert’s testimony establishes a Rule 23 requirement.105 TheThird Circuit emphasized that expert opinion “calls for rigorous analysis”and “is especially important to bear in mind when a party opposing certifi-cation offers expert opinion.”106 Thus, in a case where one party relies onexpert testimony to meet the burden of proving Rule 23 elements, theother party seeking to oppose class certification can file a Daubert
motionto exclude the expert testimony at the certification stage in conjunctionwith a motion to oppose class certification.107 This enables defendants touse the Daubert
brief to raise technical arguments against expert testimonythat can complement arguments made in the motion to oppose class certi-fication.108 Even if a Daubert
motion to exclude expert testimony fails atthe certification stage, it may nevertheless expose serious flaws in a plain-tiff’s expert’s methodology and influence the court’s decision oncertification.109
On the other hand, plaintiffs need to support expert testimony with
greater factual specificity in order to win the battle of the experts against adefense expert who will likely critique the methods used by the plaintiffs’experts.110 Specifically, in antitrust litigation, plaintiffs can no longer relyon expert testimony that a proposed method will adequately illustrateclass-wide impact; instead, plaintiffs’ experts should use factual market-specific data for the market at issue and apply the proposed method ofanalysis to demonstrate class-wide impact.111
105. See Hydrogen Peroxide
, 552 F.3d at 323 (emphasizing that district court’s
ruling that expert’s testimony meets Daubert
requirements does not indicate thattestimony should be “uncritically accepted as establishing a Rule 23 requirement”).
Hanselman & Diver, supra
note 95 (discussing benefits and drawbacks
of filing Daubert
motion in conjunction with motion to oppose class certification).
108. See id.
(calling strategy of filing motion to oppose class certification in
conjunction with Daubert
motion to exclude expert testimony “one-two punch” andnoting that even if Daubert
motion is denied, argument made in Daubert
motion“could help persuade the court to deny certification”).
Rhodes v. E. I. Du Pont de Nemours & Co., 253 F.R.D. 365, 374
(S.D.W.V. 2008) (denying class certification after holding hearing on admissibilityof expert testimony and citing defendant’s persuasive arguments and expert testi-mony as impacting decision to deny class certification).
Nussbaum & Radice, supra
note 25 (opining that “greater factual
grounding of expert reports will allow plaintiffs to avoid the critique that theoreti-cal models are insufficient to demonstrate class-wide impact”); Ripley & Glueck,supra
note 93 (observing that “Hydrogen Peroxide
places heightened emphasis ondeveloping the facts by which experts are able to opine about” Rule 23requirements).
Donald Hawthorne & Margaret Sanderson, Rigorous Analysis of Eco-
nomic Evidence on Class Certification in Antitrust Cases
, 24 ANTITRUST 1, 55, 59 (2009),available at
http://crai.com/uploadedFiles/Publications/Rigorous-Analysis-of-Eco-nomic-Evidence-on-Class-Certification-in-Antitrust-Cases.pdf?n=7511 (emphasizing“success of plaintiffs and their experts in convincing a court to certify a class willdepend significantly on the care that plaintiffs have taken to analyze case factswithout relying on unsubstantiated presumptions or easily challenged hypotheses”and discussing various cases where plaintiffs’ experts failed in light of rigorous
Rejection of the “
Bogosian Short-Cut” Forces Plaintiffs
After the Hydrogen Peroxide
court explicitly rejected any presumption
in favor of class certification based on the type of action, plaintiffs’ attor-neys can no longer rely on courts’ tendency to readily certify classes inantitrust and securities fraud litigations.112 Thus, plaintiffs’ attorneysneed to bolster the substance of evidence supporting class certification toensure that without any presumptions, there is adequate proof of eachRule 23 requirement.113 In the antitrust context, this requires that plain-tiffs provide more than allegations of price-fixing to prove common im-pact; rather, such allegations must be supported through statistical analysisfrom an expert witness.114 Although plaintiffs can still invoke Bogosian
toillustrate that price-fixing typically impacts all purchasers, bare claims ofprice-fixing—without expert testimony offering supporting analysis of thespecific product market at issue—will lead to denial of class certifica-tion.115 Defendants can benefit from the court’s new rigorous review bypresenting expert testimony to specifically undermine and disprove thecommon impact of price-fixing allegations.116
The Third Circuit’s decision has significantly impacted district courts’
analysis of class certification motions.117 District courts are now giving se-
review by district courts); see also
James F. Nieberding & Robin A. Cantor, PriceDispersion and Class Certification in Antitrust Cases: An Economic Analysis
, 14 J. L.
ECON. 2, 61, 62 (2007) (observing that “[o]ften the determination of whether [theplaintiff’s expert] can truly deliver on a methodology to demonstrate antitrust im-pact through class-wide proof is the determining factor in a court’s predominancedecision”); Ripley & Glueck, supra
note 93 (discussing new challenges facing plain-tiffs’ experts at class certification stage).
112. See In re
Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 322 (3d Cir.
2008) (concluding court should not “relax its certification analysis, or presume arequirement of certification is met” simply because court wants to encourage pri-vate enforcement of antitrust or securities laws).
Render & Renaldi, supra
note 69 (stating that new analysis of Rule 23
will force “plaintiffs to present more than mere ‘conclusions’ or ask the court tomake ‘assumptions’ in the face of deficient evidence”).
114. See In re
Linerboard Antitrust Litig., 305 F.3d 145, 153 (3d Cir. 2002)
(emphasizing that Bogosian
presumption of impact was properly invoked, but wasalso supported by expert testimony supplemented with “charts, studies, and articlesfrom leading trade publications” as well as “advanced econometric models”).
Weisfeld v. Sun Chem. Corp., 210 F.R.D. 136, 143 (D. N.J. 2002) (de-
nying class certification because plaintiffs relied on Bogoasian
and on “naked con-clusions” of class-wide impact and failed to offer anything to “bolster . . .
conclusions” contrary to support provided in Linerboard
116. See Hydrogen Peroxide
, 552 F.3d at 313-14 (discussing defense expert’s
claims that plaintiffs would not be able to prove impact through commonevidence).
117. See In re
Plastics Additives Antitrust Litig., Nos. 07-2159, 07-2418, 2009
U.S. App. LEXIS 2177 (3d Cir. Jan. 27, 2009) (remanding case for further pro-
rious scrutiny to competing expert opinions at the class certificationstage.118 Other jurisdictions have adopted portions of the Third Circuit’sapproach in Hydrogen Peroxide
Commentators opine that the Third Circuit’s stringent review stan-
dards for class certification are likely “ripe for export to other circuits.”120Hydrogen Peroxide
is in line with recent Supreme Court jurisprudence thatencourages lower courts to conduct a thorough examination of claimsearly in the litigation process.121 Additionally, the Third Circuit’s rulingbrings the circuit in line with an increasing number of other circuits thatare engaging in a more stringent review of claims at the certificationstage.122 The Hydrogen Peroxide
decision will also likely influence other cir-cuits because Chief Judge Anthony Scirica, who was involved with the revi-
ceedings consistent with Hydrogen Peroxide
opinion after district court refused toweigh competing expert testimony at class certification stage).
McDonough v. Toys R Us, Inc., 638 F. Supp. 2d 461, 479 (E.D. Pa.
2009) (weighing each party’s expert testimony and concluding that plaintiffs’ ex-pert’s damages calculations were “most persuasive” and would give “reasonable es-timate of damages”); Lewis v. Ford Motor Co., CA No. 09-164, 2009 WL 2355744 at*4 (W.D. Pa. July 30, 2009) (determining that in light of Hydrogen Peroxide
, courtcannot not disregard defense expert who opined that class proposed included carowners whose cars did not have allegedly defective suspension system at issue inthis potential products liability class action).
119. See, e.g.
, Reed v. Advocate Health Care, No. 06 C 3337, 2009 WL 3146999
at *5 (N.D. Ill. Sept. 29, 2009) (citing Hydrogen Peroxide
for premise that experttestimony on impact must be examined in antitrust cases at certification stage); Inre
HealthSouth Corp. Sec. Litig., 257 F.R.D. 260, 272 (N.D. Ala. 2009) (adoptingpreponderance of evidence standard for plaintiffs’ burden of proof in securitiesfraud class action case); Jackson v. Unocal Corp., No. 09CA0610, 2009 WL 2182603at *5 (Colo. Ct. App. July 23, 2009) (engaging in battle of experts at certificationstage).
Cindy D. Hanson & John P. Jett, Good News For Opponents of Class
Certification, LAW 360, Aug. 25, 2009, http://www.law360.com/company_articles/4248/17?start_page=11 (discussing importance of Hydrogen Peroxide
opinion withinThird Circuit and beyond); see also
Linda Mullenix, Hydrogen Bomb
, RECORDER, Feb.
11, 2009, available at
http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202428088834&slreturn=1&hbxlogin=1 (opining that Hydrogen Peroxide
opinion is “likely tohave a tremendous impact on all class litigation”); Nicholas, supra
note 9 (discuss-ing potential influence of decision and opining it “will apply in TICO, ERISA andConsumer Fraud Act cases”); Martin & Wrabley, supra
note 93 (stating “it is un-likely that the influence of Hydrogen Peroxide
will stop at the Third Circuit’s bounda-ries” and concluding “parties moving and opposing class certification would dowell to keep the Third Circuit’s analytical framework in mind”).
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1940-41 (2009) (stating “mere [alle-
gations pleaded as] conclusions are not entitled to the assumption of truth”); BellAtlantic Corp. v. Twombly, 550 U.S. 544, 545-46 (2007) (discussing costs of anti-trust discovery and cautioning courts to thoroughly examine factual allegations ofpleadings early in litigation).
122. See In re
Initial Pub. Offerings Secs. Litig., 471 F.3d 24, 27 (2d Cir. 2006)
(inviting district courts to examine Rule 23 requirements at certification stage evenif intertwined with merits of case); Szabo v. Bridgeport Machs., Inc., 249 F.3d 672,675-76 (7th Cir. 2001) (holding that district court must resolve factual and legaldisputes at certification stage and emphasizing that court does not need to takecomplaint’s allegations as truth).
sion of Rule 23, wrote the opinion and provided a pragmatic and detailedexplanation of class certification requirements.123 Ultimately, for practi-tioners on both sides of class action lawsuits in federal and state courtsacross the country, developing a complete factual record at the certifica-tion stage and utilizing expert testimony is a prudent plan of attack be-cause courts seem increasingly likely to apply a more rigorous review toclass action certification motions.124
note 120 (noting significance of opinion in part due
to Chief Judge Scirica’s role as chairman of Standing Committee on Rules of Prac-tice and Procedure, on Advisory Committee on Civil Rules, and chairman of Judi-cial Conference Working Group on Mass Torts).
124. See generally
Jeffery J. Greenbaum & Stuart M. Feinblatt, Hydrogen Perox-
ide: The Third Circuit’s “Acid Test” for Class Certification
, METROPOLITAN CORP.
COUNS., Mar. 31, 2009, available at
php?artType-view&artMonth=April&artYear=2009&EntryNo=9576 (assessing“number of practical consequences” Hydrogen Peroxide
decision has on certificationstandards within Third Circuit).
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