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Antitrust laws are enforced by the government (civilly and criminally) and by private litigants. White collar attorneys, therefore, closely follow developments in civil antitrust cases, as these developments often presage criminal enforcement. One such civil antitrust issue that currently bears close attention is the 3rd U.S. Circuit Court of Appeals’ recent acceptance of interlocutory appeals in two cases where district courts certified antitrust classes. The 3rd Circuit appears poised to issue an important decision concerning the standards controlling class certification in antitrust cases. Given the prevailing trend in this area, it is perhaps likely that the 3rd Circuit will instruct district courts to assess critically competing evidence at the class certification stage, thereby raising the bar for plaintiffs to gain class certification. In In re Plastics Additives Antitrust Litigation and In re Hydrogen Peroxide Antitrust Litigation, the defendants challenged the certification of the plaintiff classes, invoking the U.S. Supreme Court’s statement that courts should undertake “rigorous analysis” of plaintiffs’ motions for class certification. The trial courts, however – Judges Stewart Dalzell and Legrome D. Davis – certified the plaintiff classes and refused, in the case of Hydrogen Peroxide, “to make judgments about . . . whether [plaintiffs'] evidence is more or less credible than defendants’ [evidence],” and in the case of Plastics Additives, “to balance the credibility of the parties’ experts.” These cases perfectly exemplify the battles typically waged in the preliminary stages of class action antitrust suits. These battles are fueled by the fact that the federal district courts are generally all over the board on how stringently they will assess competing evidence at class certification stage. The same Supreme Court case, Amchem Products Inc. v. Windsor, is routinely cited by district courts both for and against the proposition that in antitrust cases judges should employ a presumption in favor of class certification. In addition to satisfying the four general prerequisites for class certification (numerosity, commonality, typicality and adequacy of representation), class action plaintiffs must show that questions of law or fact common to the class predominate over questions affecting individual members. This so-called predominance issue is often strenuously contested. For example, in a price fixing case, the plaintiffs must show that common questions of fact predominate, including common questions concerning the impact of the unlawful activity and the damages incurred by the plaintiffs. It is no surprise, therefore, that defendants regularly advocate that courts should carefully scrutinize the plaintiffs’ proposed classwide evidence on these issues. Plaintiffs, for their part, argue that the court should certify a class whenever the plaintiffs demonstrate the existence of a conspiracy to fix prices, with no need to show that the conspiracy had classwide impact. How stringently a court reviews this competing evidence supporting these arguments directly impacts the likelihood of class certification. The 3rd Circuit has previously spoken on how strenuously a district court should weigh competing evidence at antitrust class certification stage. Indeed, in Hydrogen Peroxide, Dalzell cited Newton v. Merrill Lynch, in which the 3rd Circuit advised district courts that “a preliminary inquiry into the merits is sometimes necessary to determine whether the alleged claims can be properly resolved as a class action.” Dalzell then looked to In re Linerboard Antitrust Litigation, which the 3rd Circuit decided subsequent to Newton, which instructed that such a preliminary inquiry should not involve weighing the credibility of the parties’ evidence. Specifically, Linerboard explained that “the court need not concern itself with whether plaintiffs can prove their allegations. . . . [T]he court need only assure itself that plaintiffs’ attempt to prove their allegations will predominantly involve common issues of fact and law.” Based on this instruction, Dalzell approved class certification without weighing competing evidence. Dalzell implied that his decision might have been different if he were bound by the 2nd Circuit’s recent decision in In re Initial Public Offering S ecurities Litigation. In that case, which involved allegations of fraud in connection with a series of initial public offerings, the 2nd Circuit reviewed cases across the circuits for guidance in clarifying the standard of proof that plaintiffs have to meet to obtain class certification. The 2nd Circuit ultimately held that district courts must resolve factual disputes and determine whether the plaintiffs make out class requirements, even if such requirements overlap with the merits of the case. While district courts may limit discovery and argument on class certification, the 2nd Circuit instructed that “a district judge is to assess all of the relevant evidence at the class-certification stage” and declined to follow the suggestion that “a district judge may not weigh conflicting evidence . . . just because [the class certification requirement] is identical to an issue on the merits.” Initial Public Offering, along with cases from other circuits examined by the 2nd Circuit, constitute an emerging standard requiring district judges to “make a preliminary inquiry into the merits” and “resolve the disputes before deciding whether to certify [a] class,” as the 7th Circuit noted in Szabo v. Bridgeport Machines Inc. Such resolution of factual disputes includes “the resolution of expert disputes concerning the import of evidence,” according to the 8th Circuit in Blades v. Monsanto. Not bound by such precedent, however, Dalzell and Davis refused to weigh the credibility of the parties’ evidence. In Plastics Additives, Davis explained that defendants’ arguments challenged “the weight to be ascribed to [the expert's] testimony, a contestation that requires resolution by the finder of fact at trial, rather than by this court at the class certification stage.” Davis also noted that defendants did not file a Daubert motion to exclude the testimony of plaintiffs’ expert, which some district courts view as the only option for attacking an expert’s opinion at the class certification stage. The 3rd Circuit may use the interlocutory appeals in Plastics Additives and Hydrogen Peroxide to conform 3rd Circuit jurisprudence with other, stricter jurisdictions. Until it does, however, district courts within the 3rd Circuit will continue to apply the existing, less stringent standards. For example, earlier this month, Judge John R. Padova in Behrend v. Comcast Corp. certified an antitrust class after refusing to consider evidence that he deemed concerned the weight to be accorded to the plaintiffs’ expert. Antitrust practitioners, therefore, will await the 3rd Circuit Opinions in Plastics Additives and Hydrogen Peroxide with great anticipation. DAVID M. LAIGAIE, a partner at Dilworth Paxson, heads the corporate investigations and white collar group. His areas of practice include antitrust, health care fraud, securities fraud, tax fraud, export violations, pharmaceutical marketing fraud, municipal corruption, defense procurement fraud and public finance fraud. He regularly conducts internal corporate investigations. He can be reached at 215-575-7168 or [email protected]. BRODY C. STEVENS, an associate in Dilworth Paxson’s corporate law department, graduated from the University of Pennsylvania Law School in 2006. He is a 2002 graduate, magna cum laude, from Boston College and he studied for a year in Germany on a Fulbright fellowship. He can be reached at 215-575-7290 or [email protected].

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