International Law

Class Certification Denied in Plastics Additives Price Fixing Case

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The federal district court in Philadelphia has refused to grant class certification to two groups of direct purchasers of certain types of plastics additives used to manufacture or process plastics because the complaining purchasers failed to demonstrate that individual injury was capable of proof by evidence common to the proposed classes.

Because the plaintiffs' price fixing claims would require individual treatment, class certification was unsuitable, the court found.

The plaintiffs sought certification of two subclasses: purchasers of organotin heat stabilizers (tins) and purchasers of epoxidized soybean oil (ESBO). Four other groups of products that were originally at issue were no longer at issue because the plaintiffs settled their claims with respect to these products against the defendants.

The plaintiffs claimed that the remaining class members were impacted by the alleged conspiracy because they paid higher prices for tins and/or ESBO than they would have in the absence of the conspiracy. However, the plaintiffs could not demonstrate impact common to the class.

The court rejected the four methods that they proposed:

(1) the defending manufacturers' pricing behavior, including references to list prices and price increase announcements;

(2) an economics expert's questionable opinion that the characteristics of the tins and ESBO markets were vulnerable to a price fixing conspiracy;

(3) the expert's analysis of the pricing structure in these markets, suggesting that every purchaser would have been impacted by the conspiracy because prices moved similarly over time; and

(4) the expert's market-wide regression analysis, which was not indicative of individual impact.

The decision demonstrates the hurdles facing antitrust plaintiffs attempting to satisfy the requirements for certification under Rule 23 of the Federal Rules of Civil Procedure.

An earlier order certifying a class in the case was vacated by the U.S. Court of Appeals in Philadelphia, and the lower court was instructed to revisit the certification request and apply the standard set forth in the Third Circuit's 2008 In re Hydrogen Peroxide Antitrust Litigation decision (2008-2 Trade Cases ¶76,453).

The lower court said that in its earlier order ?in line with what we believed to be common practice at the time, we declined to balance the credibility of the parties? experts on the issue of the predominance of common evidence demonstrating impact.?

Citing the Hydrogen Peroxide decision, the court explained that, in order to determine whether the requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure were met, it would need to "delve beyond the pleadings" and "resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits."

The decision is In re Plastics Additives Antitrust Litigation, 2010-2 Trade Cases ¶77,159.

Full post as published by Trade Regulation Talk on September 15, 2010 (boomark / email).