In virtually every antitrust class action, at the class certification phase the parties disagree about whether the proposed class includes uninjured members.
As we previously discussed, an uninjured named plaintiff lacks Article III standing and thus should not be able to maintain suit in federal court.1 But what happens if a proposed class includes members who lack standing because they were uninjured?
The U.S. Supreme Court has declined to answer this question.2 Other courts have come close to holding, as the U.S. Court of Appeals for the Eleventh Circuit did in Cordoba v. DirecTV LLC in 2019, that there is no need to "ensure that the class definition does not include any individuals who do not have standing before certifying a class" because such a rule might require certifying only fail-safe classes.
Ultimately, the court ruled on other grounds.3 Still others, like the U.S. Court of Appeals for the First Circuit in In re: Asacol Antitrust Litigation in 2018, have criticized requiring plaintiffs to prove each class member is injured before a class may be certified, insisting that to do so "would 'put the cart before the horse.'"4
Nevertheless, all courts agree that the presence of potentially uninjured class members results in a lack of predominance under Rule 23(b)(3) of the Federal Rules of Civil Procedure if the need to individually litigate injury to these class members outweighs common issues.
The courts seemingly disagree, however, over how many class members must appear to be uninjured before the court should decline to certify a proposed class.
This article discusses the primary competing views at the circuit-court level: those that require a case-by-case assessment of whether the existence of uninjured class members may defeat predominance; and those that adopt a bright line and decline to certify if the apparent number of uninjured class members is more than de minimis.
The U.S. Court of Appeals for the Ninth Circuit's recent en banc decision on this issue has created a circuit split, and subsequent opinions illustrate the disparate approaches courts seem to take across cases.
The Case-by-Case Approach to Evaluating Whether Uninjured Class Members Defeat Predominance
The Ninth Circuit has led the charge in requiring courts to assess the facts of each case when deciding whether the presence of uninjured class members raises a predominance defect.
In Olean Wholesale Grocery Cooperative Inc. v. Bumble Bee Foods LLC, a Ninth Circuit panel in 2021 vacated a decision certifying a class alleging price-fixing among packaged tuna suppliers, holding
that Rule 23(b)(3) is not satisfied if more than a de minimis number of class members appear to be injured.5
But the Ninth Circuit agreed to rehear Olean, and last year the en banc court rejected setting a de minimis threshold because Rule 23(b)(3) says nothing about such a threshold.6
Instead, it requires only a "rigorous analysis" to determine "whether the common question predominates" over individualized issues, "including individualized questions about injury or entitlement to damages."7
U.S. Circuit Judge Kenneth Lee dissented from the en banc majority in Olean, arguing that rejecting a de minimis rule creates a circuit split and "tilts the playing field in favor of plaintiffs" by inviting them to "concoct oversized classes stuffed with uninjured class members."8
Perhaps surprisingly, then, in March, the Ninth Circuit relied on Olean to vacate a certified class based on evidence that a small number of class members were uninjured, simply because it created the risk that individualized inquiry into the other class members may be necessary.
In Van v. LLR Inc., the plaintiffs alleged that more than 10,000 Alaskan consumers were charged sales tax when purchasing LuLaRoe brand clothing through over 72,000 separate transactions, even though no tax was due.9
LuLaRoe showed that 13,680 of the transactions involved retailer discounts, and on appeal argued that the district court overlooked evidence that at least 18 of these discounts were provided to offset the entire sales tax, rendering uninjured the class members involved in those transactions.10
Instead, the U.S. District Court for the District of Alaska decided that the defendants had shown only a de minimis number of class members were uninjured, and this showing presented no bar to certification.11
On appeal, the Ninth Circuit vacated that decision because evidence that at least 18 of the discounts were provided to offset the sales tax raised the "spectre" that inquiry into each of the 13,680 discounts might be necessary and "could potentially involve up to 13,680 depositions and months of trial."12
As a result, the Ninth Circuit held that the district court should have rigorously analyzed this evidence to determine "whether a class-member-by-class-member assessment of the individualized issue will be unnecessary or workable."13
In May, in Painters and Allied Trades District Council 82 Health Care Fund v. Takeda Pharmaceuticals Co., the U.S. District Court of the Central District of California certified a class for claims under the Racketeer Influenced and Corrupt Organizations Act and state consumer fraud laws, relating to allegations that Takeda and Eli Lilly conspired to conceal an association between use of Actos, a diabetes treatment, and bladder cancer.14
After the plaintiffs moved for class certification, the parties filed supplemental briefs to address developing law, including the Ninth Circuit's decisions in Olean and Van.15
Among other things, the defendants argued that individualized analyses would be necessary to identify uninjured third-party payors in the class that would have paid for Actos irrespective of any fraud, or would have paid more for an alternative treatment if their patients had not taken Actos.16
In addressing this argument, the district court appeared to utilize a combination of the de minimis and case-by-case approaches. The court found the defendants could only dispute injury for 1.5% of the class based on the argument that third-party payors would have paid for Actos irrespective of the fraud, and concluded that this number was de minimis.17
The court then addressed whether individualized inquiry would be necessary to prove injury, before finding that available data would "obviate the need for an evidentiary hearing for each claim."18
Finally, with respect to the argument that patients might switch to more costly alternatives, the court reasoned that because only 4% of patients switched from Actos to an equivalent product, it was "extremely unlikely that any third-party payors would count as uninjured," and that at most defendants would only be able to use individualized evidence "to 'pick off the occasional class member here or there.'"19
The De Minimis Threshold for Finding that Common Issues Do Not Predominate
As the dissent in the en banc Olean decision noted, other circuits have adopted a de minimis threshold for determining when individualized issues will likely predominate over common ones.
In In re: Nexium Antitrust Litigation, for instance, the First Circuit concluded in 2015 that because the Supreme Court allows class members in securities fraud cases to prove reliance on a misrepresentation in trading securities by invoking a rebuttable presumption, it implicitly accepts that classes with some — but not many — uninjured members can be certified without violating Rule 23(b)(3) so long as "the presence of a de minimis number of uninjured members did not overwhelm the common issues for the class."20
The Nexium court collected prior decisions by the U.S. Courts of Appeals for the First, Second, Fifth, Seventh and Tenth Circuits affirming the certification of classes that may have contained a small number of uninjured members.21
But the Nexium court was also clear that even though a class could be certified without showing at the class-certification stage that every class member was injured, courts must be satisfied that " [u]ninjured members of the putative class would be identified in the liability proceedings later in the case."22
In other words, the existence of a de minimis number of uninjured class members is no bar to class certification provided that "those members can be weeded out at a later stage," although it must be possible to do so "using a common test rather than an individual ad hoc approach."23
More recent decisions have adopted the de minimis requirement, albeit without setting a bright-line rule for what number of uninjured class members would be de minimis.
In In re: Rail Freight Fuel Surcharge Antitrust Litigation, the U.S. Court of Appeals for the D.C. Circuit recognized in 2019 that the claims of uninjured class members "must be winnowed away as part of the liability determination," and presumed that district courts could certify classes where there were only a de minimis number of class members that required individualized proof of injury at trial —because the classwide evidence could not establish that they were injured.24
In that case, the U.S. District Court for the District of Columbia denied certification because the plaintiffs' expert's model purporting to prove that class members paid overcharges found that 2,037 of the 16,065 class members — about 12.7% — had negative overcharges.25
As the district court noted, this figure exceeded the 5%-6% that other decisions held would constitute "the outer limits of a de minimis number of uninjured members," and in absolute terms found that while it might be reasonable to remove a few uninjured members from a small class, "it would be far more difficult for a court to 'weed out' over 2,000 uninjured class members."26
The D.C. Circuit agreed that — whether in percentage or absolute terms — the proposed class should not have been certified because far more than a de minimis number of class members "would need individualized adjudications of causation and injury."27
Our View
Rather than picking one view over the other, we believe the goals of Rule 23 and judicial economy are best served by synthesizing the two approaches, similar to the approach in Painters.
In each case, the court should rigorously assess whether plaintiffs' classwide evidence assumes, or otherwise fails to prove, injury to some portion of the proposed class's members.
If that classwide evidence fails to prove injury to more than a de minimis number of class members, then the court should decline to certify the class, because the need to present individualized proof of harm to these class members would likely predominate over litigation regarding common issues.28
By the same token, if defendants present a legitimate basis to contest whether they injured more than a de minimis number of class members, the court ordinarily should deny certification because "a class cannot be certified on the premise that [a defendant] will not be entitled to litigate its ... defenses to individual claims," according to the 2011 Supreme Court decision in Wal-Mart v. Dukes. 29
After all, according to the Rail Freight and Asacol matters, defendants have "Seventh Amendment and due process rights ... to present every colorable defense" at or before trial, including by challenging individual class members' claims at trial if necessary.30
Thus, even if plaintiffs' classwide proof could establish injury to all class members, once defendants contest that proof, the predominance inquiry cannot stop with consideration of plaintiffs' evidence alone, but must account for the extent to which individualized proof of injury — or lack thereof - will feature at trial.
In such cases, the plaintiffs then must offer a "reasonable and workable plan" for the defendant to press its "genuine challenges to allegations of injury-in-fact" at trial "in a manner that is protective of the defendant's constitutional rights and does not cause individual inquiries to overwhelm common issues," according to the Asacol matter.31
Plaintiffs can do so by showing that "a class-member-by-class-member assessment of the individualized issue will be [either] unnecessary or workable," according to Van v. LLR.32
Such an assessment may be unnecessary if, for example, plaintiffs show that defendants' arguments pertain to an identifiable subset of class members that can be removed from the class.33
And any individualized assessment would be workable in a case where defendants' main challenge to liability consists of aggregate proof as well, with only limited individualized challenges to an occasional class member.
For example, the 2016 Supreme Court case Tyson Foods Inc. v. Bouaphakeo34 involved a claim that employees were owed overtime pay for uncompensated time spent donning and doffing protective gear to work in meatpacking facilities, and the court held that plaintiffs could use representative evidence — the average donning and doffing time — to prove the time each class member spent donning and doffing the gear.
If the defendant only raised individual challenges to a handful of class members, and otherwise challenged liability only by arguing that the average donning and doffing time was less than plaintiffs' estimate, then a jury could decide liability to each class member — and determine which were uninjured — by reaching a verdict on the average donning and doffing time.
The jury could then apply it to the hours worked by each class member, while taking into account the few individual challenges the defendant presented: There would be no need for the jury to weigh reams of individualized proof.
Under those circumstances, the potential presence of uninjured class members at the time of certification would be no bar to certifying the class — even if the number was far more than de minimis — because common issues would predominate regardless of whether plaintiffs or defendants offered the correct estimate of average donning and doffing time.35
In sum, the de minimis threshold can be a useful shortcut to identifying which cases likely warrant denying certification, and which may require a more searching analysis.
But the touchstone must remain ensuring that plaintiffs present a manageable way to prove — and, if defendants raise credible arguments, to disprove — injury to each class member without litigation over individual issues outweighing litigation over the common ones.
1 "Challenging Standing in Antitrust Class Actions: Injury-in-Fact," Law360.com, https://www.law360.com/articles/1606633 (May 11, 2023). We also previously addressed two other common disputes over Article III standing in antitrust cases: (1) whether Article III prohibits certifying a class under the laws of states where no class representative was injured; and (2) whether the issue of Article III standing to bring claims on behalf of a class should be decided before or after ruling on class certification. Challenging Standing in Antitrust Class Actions: Rule 23," Law360.com, https://www.law360.com/articles/1687048/challenging-standing-in-antitrust-class-actions-rule-23 (June 9, 2023)); "Challenging Standing in Antitrust Class Actions: Timing," Law360.com, https://www.law360.com/articles/1699587 (July 14, 2023).
2 "We do not here address the distinct question whether every class member must demonstrate standing before a court certifies a class." TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2208 n.4 (2021). See also Van v. LLR, Inc., 61 F.4th 1053, 1068 n.12 (9th Cir. 2023) (declining to address this question but noting "the district court may be required to address the issue on remand").
3 Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1276-77 (11th Cir. 2019).
4 In re Asacol Antitrust Litig., 907 F.3d 42, 58 (1st Cir. 2018).
5 Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods, LLC, 993 F.3d 774, 792-93 (9th Cir. 2021), r'hg en banc granted by 5 F.4th 950.
6 Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods, LLC, 31 F.4th 651, 669 (9th Cir. 2022).
7 Id.
8 Id. at 691-92.
9 Van v. LLR, Inc., 61 F.4th 1053, 1058-59 (9th Cir. 2023).
10 Id. at 1068.
11 Id.
12 Id. at 1069.
13 Id. Circuit Judge Christen's concurrence noted that the district court apparently did not even consider the exhibit showing that eighteen of the discounts were provided for the purpose of offsetting the entire sales tax charged. Id. at 1071-72. In a similar vein, the dissent in the en banc Olean decision argued that the district court there failed to rigorously analyze evidence that up to 28% of class members were uninjured and instead seemed to hold that such analysis was unnecessary once it concluded that the plaintiffs' expert had offered admissible evidence, despite contrary Ninth Circuit and Supreme Court precedent. See Olean, 31 F.4th at 688-89 (Lee, J., dissenting) (explaining that Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir. 2011) vacated an order certifying a class and "chastised the district court for not 'judging the persuasiveness of the evidence presented' and 'ending its analysis of the plaintiffs' evidence after determining such evidence was merely admissible," while Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011) required district courts to "decide whether the plaintiffs have 'proven that there are in fact . . . common questions of law or fact,' even if it means assessing the persuasiveness of the expert opinions"). See also West v. Prudential Sec., Inc., 282 F.3d 935, 938 (7th Cir. 2002) (recognizing that if courts decline to resolve disputes between competing experts at the class-certification stage they are effectively delegating "judicial power to the plaintiffs, who can obtain class certification just by hiring a competent expert").
14 Painters v. Takeda Pharm. Co. Ltd., 2023 U.S. Dist. LEXIS 111918, at *6 (C.D. Cal. May 24, 2023).
15 Id. at *6-7.
16 Id. at *29-36.
17 Id. at *32.
18 Id. at *33.
19 Id. at *35.
20 In re Nexium Antitrust Litig., 777 F.3d 9, 23-24 (1st Cir. 2015) (discussing Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258 (2014)). The Supreme Court has been careful to note that the Basic presumption in Rule 10b-5 securities class actions does not relieve plaintiffs of their burden to prove predominance; instead, even to invoke the presumption plaintiffs must prove (before certification) that the prerequisites for invoking the presumption exist, including publicity, materiality, and market efficiency and timing. Halliburton, 573 U.S. at 275-76.
21 Nexium, 777 F.3d at 25 & nn.21-22 (citing, among others, Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 296 (1st Cir. 2000), Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 107-08 (2d Cir. 2007), Mims v. Stewart Title Guar. Co., 590 F.3d 298, 308 (5th Cir. 2009), Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir. 2009), and DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1198 (10th Cir. 2010)).
22 Nexium, 777 F.3d at 25.
23 Id. at 24 n.20.
24 In re Rail Freight Fuel Surcharge Antitrust Litig. - MDL No. 1869, 934 F.3d 619, 624 (D.C. Circ. 2019).
25 In re Rail Freight Fuel Surcharge Antitrust Litig., 292 F. Supp. 3d 14, 137 (D.D.C. 2017).
26 Id. at 137-38.
27 Rail Freight, 934 F.3d at 624-25.
28 See, e.g., Rail Freight, 934 F.3d at 625. What constitutes a de minimis number of uninjured class members will depend on the size of the proposed class. If a class of, say, 50 members required individualized proof of harm to 10% of its members, the need for additional, individualized litigation as to 5 members may not necessarily cause individualized issues to overwhelm common ones. But if a class of 500,000 required individualized proof of harm to just 1% of its members, the need for 5,000 individual mini-trials almost certainly would do so.
29 Wal-Mart, 564 U.S. at 367.
30 Rail Freight, 934 F.3d at 625; Asacol, 907 F.3d at 53.
31 Asacol, 907 F.3d at 58.
32 Van, 61 F.4th at 1069.
33 If the identities of the class members who are susceptible to an individualized challenge to liability cannot be determined, however, class certification should be denied because the need to identify which class members are uninjured "will predominate and render an adjudication unmanageable." Asacol, 907 F.3d at 53-54.
34 Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442 (2016).
35 Of course, Tyson Foods was not an antitrust case, and the representative evidence held to be sufficient there for idiosyncratic reasons dealing with the particular claims at issue likely would not pass muster in an antitrust suit, where a plaintiff's decision to rely on averages to prove class-wide injury may improperly "yield[] false positives" or "mask[] uninjured class members by using an 'averaging' mechanism to allocate injury across the class." In re Aluminum Warehousing Antitrust Litig., 336 F.R.D. 5, 49 (S.D.N.Y. 2020).
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