Class Should Not Be Certified Where It Includes Material Number Of Uninjured Class Members
This case involved allegations by rail shippers – i.e., the railroads’ customers – that the railroads conspired to fix rate-based fuel surcharges, which are imposed when the price of fuel rises above a certain price. The “direct purchaser” plaintiffs sought certification under Rule 23(b)(2). Although their request was granted, the D.C. Circuit vacated that certification order and remanded for further proceedings, expressing concern with “the damages model’s propensity towards false positives” and stressing “a hard look at the soundness of statistical models that purport to show predominance.” In re: Rail Freight Fuel, 934 F.3d at 621-22. On remand, following additional discovery and expert reports, the court denied certification, finding the predominance requirement was not satisfied. In re: Rail Freight Fuel Surcharge Antitrust Litig., 292 F. Supp. 3d 14 (D.D.C. 2017). Plaintiffs filed a timely petition for permission to appeal pursuant to Rule 23(f), which was granted by the D.C. Circuit.
The D.C. Circuit affirmed, concluding that the plaintiffs’ damages model could not satisfy Rule 23(b)(3)’s predominance requirement. Instead, the model could only show (1) injury as a result of the purported conspiracy and (2) a causal connection between defendants’ purported conduct and injury for 87.3% of the class. 934 F. 3d at 623-24. The inability to provide common proof of injury for 12.7% of the class meant that plaintiffs could not show predominance. Id. Rejecting plaintiffs’ contention that they did not have to show that all class members were injured, the court emphasized that “uninjured class members cannot prevail on the merits, so their claims must be winnowed away as part of the liability determination.” Id. at 624. Plaintiffs had no method for identifying and winnowing the uninjured class members short of individual trials, and thus could not show a basis for certification. Id.