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Third Circuit Upholds Dismissal of Indirect Purchaser Class in Auto Transmission Case, Revives Individual Claims

On February 9, the US Court of Appeals for the Third Circuit upheld a ruling by the US District Court for the District of Delaware in In re: Class 8 Transmission Indirect Purchaser Antitrust Litigation that indirect purchasers of Class 8 transmissions did not meet the requirements for class certification. The Third Circuit found that only the individual claims may proceed in the case, overturning the district court’s dismissal of those claims.


In the case, indirect purchaser plaintiffs (IPPs) allege that there was a conspiracy among Eaton Corporation (Eaton) and a group of truck manufacturers to maintain a monopoly over the heavy-duty truck transmissions market. The truck manufacturers include Daimler Trucks North America LLC, Navistar International Corporation, Inc., PACCAR Inc. (through the Kenworth Truck Company and Peterbilt Motors Company divisions) and sister companies Volvo Trucks North America and Mack Trucks, Inc. IPPs allege that defendants entered into anticompetitive exclusive dealing agreements aimed at keeping Eaton’s largest competitor, ZF Meritor, out of the market. IPPs consist of parties who purchased trucks that contained Class 8 transmissions manufactured by Eaton.

Rule 23 of the Federal Rules of Civil Procedure governs class certifications and requires that 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 claims or defenses of the representative parties are typical of the claims or defenses of the class; and 4) the representative parties will fairly and adequately protect the interests of the class. In addition, Rule 23(b)(3) requires that the court find the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. On October 21, 2015, the district court denied class certification to IPPs because they didn’t meet the standard of Rule 23(b)(3).

The district court found that common issues did not predominate over issues affecting only individuals, and that the proposed class was not sufficiently cohesive. The court recognized that neither the presence of an individual inquiry in the case, nor individualized damages calculations, necessarily defeat the analysis. However, the IPPs’ varied positions when it came to calculating overcharges failed to pass muster. Examples include that certain resellers had an interest in proving they did not pass through an overcharge so they could recover all damages themselves, rebates for the transmissions sales were not applied uniformly to the class, and certain rebates may have offset the alleged overcharge altogether such that certain class members did not suffer an injury at all. The district court found that IPPs had not established common proof that all—or nearly all—class members suffered antitrust injury in the form of higher prices than they otherwise would have paid, following the standard set forth in Hydrogen Peroxide. IPPs were not required to prove antitrust impact at the class certification stage, but must show that impact would at least be capable of proof at trial through common evidence. The district court found that IPPs did not meet this showing.

IPPs appealed the decision and argued that the district court abused its discretion by failing to conduct a “rigorous analysis” of IPPs’ arguments and evidence for class certification. The US Supreme Court has long held that district courts must conduct a “rigorous analysis” of the requirements of Rule 23 before certifying a class, a principle reaffirmed by the Comcast decision in 2013. (we previously reported on the Comcast decision and its effect on certification in antitrust cases.)

In an opinion submitted in September 2016, but only filed last week, the Third Circuit denied this appeal and agreed with the district court’s denial of class certification. The Third Circuit agreed with the district court that IPPs failed to show that class-wide evidence could prove antitrust impact, so common questions did not predominate over any questions affecting only individual members. Specifically, in its analysis of IPPs arguments and evidence, the Third Circuit agreed with the district court that the analysis and report by IPP’s expert were insufficient to demonstrate overcharges and class-wide impact for pass-through costs because his sales data was so limited and his analysis was based on less than 1 percent of total truck sales from the class.

Moving Forward

Though the Third Circuit agreed with the dismissal of the motion for class certification, effectively ending the class claims, it also found that the district court erred in dismissing the individual claims. The district court pointed to IPPs’ request to withdraw and substitute certain class representatives, filed the same day as the motion for class certification, as “potential upheaval” a full four years into litigation that called into question whether class representatives could fairly and adequately protect the interests of the class. The district court then concluded that “because the proposed class lacks representation, the case does not present a case or controversy under Article III.”

However, the Third Circuit clarified that there is no case or controversy when the parties “lack a legally cognizable interest in the outcome,” but here IPPs brought their claims explicitly in the complaints both on behalf of the putative indirect purchaser class and “on behalf of themselves” as individuals, so the district court erred in dismissing all of the claims when the errors existed only with class certification. Therefore, the Third Circuit vacated only the portion of the order dismissing the individual claims, reviving them and remanding to the district court for further proceedings.

© 2020 McDermott Will & EmeryNational Law Review, Volume VII, Number 47


About this Author

Stefen Meisner Attorney McDermott Will Emery

Stefan M. Meisner is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office.  Stefan is co-chair of the Firm’s Electronic Data Management, Privacy & Discovery group.

202 756 8344
Ashley McMahon, Mc Dermott Law Firm, Antitrust and Regulatory Attorney

Ashley (Lee) McMahon focuses her practice on regulatory and antitrust matters.

Lee also maintains an active pro bono practice and assisted in winning political asylum for a client. As a law clerk for the Parole Division of the DC Public Defender Service, she represented clients before the US Parole Commission at probable cause, short-term intervention for success (SIS) and final revocation hearings, and won release for clients.

Lee spent nearly four years as a paralegal before law school, where she provided assistance at trials, hearings, and depositions involving a range of issues including employment, environmental, malpractice, white-collar, and False Claims Act litigation.