RICHARD D. BENNETT, District Judge.
This case concerns an alleged price-fixing conspiracy in the market for titanium dioxide. Plaintiffs Haley Paint Company and Isaac Industries, Inc., and Intervening Plaintiff East Coast Colorants, LLC d/b/a Breen Color Concentrates (collectively, "Plaintiffs") claim that Defendants E.I. du Pont de Nemours & Co. ("DuPont"), Huntsman International LLC ("Huntsman"), Kronos Worldwide Inc. ("Kronos"), and Millennium Inorganic Chemicals, Inc. ("Millennium") (collectively, "Defendants") engaged in an unlawful conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, to fix, raise, or maintain the price of titanium dioxide in the United States.
Presently pending is Plaintiffs' Motion for Class Certification and for Appointment of Class Counsel (ECF No. 246). This Court has reviewed the record, as well as the pleadings and exhibits, and conducted a full-day class certification hearing on August 13, 2012. For the reasons that follow, Plaintiffs' Motion for Class Certification will be GRANTED.
I. THE PLAINTIFFS' FACTUAL ALLEGATIONS
The allegations contained in the Plaintiffs' Consolidated Amended Complaint (ECF No. 51) were fully set forth in this Court's previous Memorandum Opinion entered on March 29, 2011. See Haley Paint Co. v. E.I. du Pont de Nemours & Co., 804 F.Supp.2d 419 (D. Md. 2011) (denying Defendants' motion to dismiss complaint). That background is repeated here, in part, so as to provide context for the pending motion for class certification.
Defendants are the leading suppliers of titanium dioxide ("TiO
II. The Titanium Dioxide Market
As previously mentioned, Defendants are the market leaders in the production of TiO
A. Alleged Conspiracy to Fix Prices of Titanium Dioxide
It is alleged that on January 24, 2002, a TiO
In addition to conferences and trade meetings, Plaintiffs also allege that the conspiracy was furthered through industry publications and through conversations with industry consultants, customers, and others. Id. ¶ 51. "After having reached an unlawful agreement or understanding . . ., Defendants used consultants, customers, and others as conduits to signal or confirm intended pricing and other actions to each other." Id. These conversations and signals allowed Defendants to monitor the conspiracy and cut down on potential "cheating," whereby one participant could undercut the others by reducing their prices. Id. Plaintiffs also allege that Defendants privately discussed industry conditions and TiO
B. Titanium Dioxide Pricing
According to the Plaintiffs, in the face of declining demand, reduced costs, and increased production capacity, see ¶¶ 54, 69, 71, 74, 81-82, 84, 102, the price of TiO
Although the price increases were spaced out over five years, they increased in frequency in 2008. Plaintiffs allege that "over the course of approximately 14 weeks, from late May 2008 to early September 2008, Defendants and their co-conspirators announced three separate Titanium Dioxide price increases and at least two energy surcharges," and that these price increases were made amidst declining demand for TiO
In light of the market conditions for TiO
As a result of this alleged conspiracy, Plaintiffs contend that price competition in the sale of TiO
III. CLASS CERTIFICATION ARGUMENTS—FRAMING THE ISSUES
In Plaintiffs' Motion for Class Certification, they seek certification of the following class:
Pls. Class Mot. at 1, ECF No. 246. According to the Plaintiffs, "[t]his case is directly analogous to the legion of antitrust price fixing cases that federal courts have routinely certified as class actions." Pls.' Class Mem. at 2. In that regard, Plaintiffs maintain that all the Rule 23 requirements are satisfied, and in particular, the predominance requirement of Rule 23(b)(3) has been met insofar as "[t]he trial will focus almost entirely on proving that the Cartel Members formed a cartel and conspired to artificially inflate prices for titanium dioxide, that they were successful in raising prices to supra-competitive levels, and that, as a result of this conspiracy, Class members sustained injury and damages when they paid artificially-inflated prices on their purchases of titanium dioxide." Id. at 2-3.
Defendants argue that this case is not amenable to class treatment and contest certification of this class on the grounds that: (1) the named Plaintiffs have not satisfied the Rule 23(a) requirements of typicality and adequacy of representation; and (2) the Rule 23(b)(3) requirements of predominance cannot be met insofar as the Plaintiffs have set forth a flawed methodology for proving individual antitrust impact and damages on a class-wide basis. More specifically, Defendants argue that the named Plaintiffs' claims are not typical of the class because they are small purchasers of TiO
On the typicality and adequacy of representation prongs of Rule 23(a), Plaintiffs maintain that each named Plaintiff suffered the same injury—i.e., they paid artificially inflated prices for TiO
Accordingly, while each element of the Rule 23 class certification analysis will be addressed, this Court will focus on the issues most closely contested by the Defendants— typicality and adequacy of representation, and predominance of common issues.
THE LEGAL STANDARD FOR CLASS CERTIFICATION UNDER RULE 23 OF THE FEDERAL RULES OF CIVIL PROCEDURE
To obtain class certification, the Plaintiffs must meet all four requirements of Federal Rule of Civil Procedure 23(a), and at least one of the requirements of Rule 23(b). Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 423 (4th Cir. 2003). Here, Plaintiffs seek certification of the proposed class under Rule 23(b)(3), which requires that common questions of law predominate. "Class certification requires a finding that each of the requirements of Rule 23 has been met" by a preponderance of the evidence. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320 (3d Cir. 2008).
"The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, 131 S.Ct. 2541, 2550 (2011) (internal quotation marks and citation omitted). As recently noted by the Supreme Court in the Wal-Mart opinion, "Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common issues of law or fact, etc." Id. at 2551. In ruling on a class certification motion, a court must take a close look at the facts relevant to the certification question, even if those facts "tend to overlap with the merits of the case." Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 319 (4th Cir. 2006); accord Gariety v. Grant Thornton, LLP, 368 F.3d 356, 366 (4th Cir. 2004) ("[W]hile an evaluation of the merits is not part of a Rule 23 analysis, the factors spelled out in Rule 23 must be addressed through findings, even if they overlap with issues on the merits.").
The Supreme Court recently noted that "`sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question,' and that certification is proper only if `the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.'" Wal-Mart 131 S. Ct. at 2551 (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)) (emphasis added); see also Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978) ("[T]he class determination generally involves considerations that are `enmeshed in the factual and legal issues comprising the plaintiff's cause of action.'") (quoting Mercantile Nat. Bank v. Langdeau, 371 U.S. 555, 558 (1963)).
The "rigorous analysis" that must be undertaken in the class certification context extends to disputes between experts: "Resolving expert disputes in order to determine whether a class certification requirement has been met is always a task for the court—no matter whether a dispute might appear to implicate the `credibility' of one or more experts . .. ." In re Hydrogen Peroxide, 552 F.3d at 323-24. Of course, there are limits to a court's resolution of expert disputes, and "a court should only engage itself in statistical dueling of experts if such dueling presents a valid basis for granting or denying class certification." In re Rail Freight Fuel Surcharge Antitrust Litig., ___ F. Supp. 2d ___, 2012 WL 2870207, at *17 (D.D.C. June 21, 2012) (internal quotations, citations, and alterations omitted). As noted by the Third Circuit, "[t]hat weighing expert opinions is proper does not make it necessary in every case or unlimited in scope[,]" and "[r]igorous analysis need not be hampered by a concern for avoiding credibility issues; as . . . findings with respect to class certification do not bind the ultimate fact-finder on the merits. A court's determination that an expert's opinion is persuasive or unpersuasive on a Rule 23 requirement does not preclude a different view at the merits stage of the case." In re Hydrogen Peroxide, 552 F.3d at 324.
I. RULE 23(a) FINDINGS & CONCLUSIONS
As previously noted, Plaintiffs must first establish—by a preponderance of the evidence—the four requirements of Rule 23(a): numerosity, commonality, typicality, and adequacy of representation. Each will be addressed in turn.
Rule 23(a)(1) provides that one of the requirements to bring a class action is that the class be "so numerous that joinder of all members is impracticable." The Fourth Circuit has held that "[n]o specified number is needed to maintain a class action." Brady v. Thurston Motor Lines, 726 F.2d 136, 145 (4th Cir. 1984) (quoting Cypres v. Newport News Gen. & Nonsectarian Hosp. Ass'n, 375 F.2d 648, 653 (4th Cir. 1967)). This Court has previously noted that, generally speaking, "courts find classes of at least 40 members sufficiently large to satisfy the impracticability requirement." Peoples v. Wendover Funding, Inc., 179 F. R.D. 492, 497 (D. Md. 1998).
Here, Plaintiffs assert that at least 700, and as many as several thousand TiO
Rule 23(a)(2) requires a question of law or fact common to the class. "A common question is one that can be resolved for each class member in a single hearing," and does not "turn[ ] on a consideration of the individual circumstances of each class member." Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 319 (4th Cir. 2006) (internal quotation marks and citation omitted). The Fourth Circuit has held that, "in a class action brought under Rule 23(b)(3), the `commonality' requirement of Rule 23(a)(2) is `subsumed under, or superseded by, the more stringent Rule 23(b)(3) requirement that questions common to the class predominate over' other questions." Lienhart v. Dryvit Systems, Inc., 255 F.3d 138, 147 n.4 (4th Cir. 2001) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 609 (1997)). Therefore, in the Fourth Circuit "[t]he common questions must be dispositive and overshadow other issues." Lienhart, 255 F.3d at 146. "Thus, the commonality requirement is relatively toothless in comparison with the related requirements of typicality and predominance." In re Puerto Rican Cabotage Antitrust Litig., 269 F.R.D. 125, 131 (D.P.R. 2010).
As the Supreme Court recently noted, "[c]ommonality requires the plaintiff to demonstrate that the class members have suffered the same injury." Wal-Mart, 131 S. Ct. at 2551 (internal quotations and citation omitted). Here, Plaintiffs allege a multi-year pricefixing conspiracy that led to all class members being subjected to artificially inflated prices for TiO
Plaintiffs have identified several questions that they assert are common to the class. Most notably, Plaintiffs maintain that the existence of the conspiracy is the central issue in this litigation. Defendants acknowledge this point in noting that "the commonality element of Rule 23(a) is satisfied because there is at least one common question—namely, whether the alleged conspiracy in fact existed." Defs.' Class Opp'n at 15, ECF no. 293. Accordingly, this Court finds by a preponderance of the evidence that the existence of the alleged conspiracy, standing alone, is sufficient to establish commonality. In other words, the Plaintiffs' claims "depend upon a common contention," and that common contention is "of a nature that is capable of classwide resolution—which means that its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart, 131 S. Ct. at 2551.
C. Typicality & Adequacy of Representation
Rule 23(a)(3) requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). Courts have recognized that the commonality and typicality requirements of Rule 23(a) tend to merge. "Both serve as guideposts for determining whether . . . the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected . . . ." Gen. Tel. Co. of the SW. v. Falcon, 457 U.S. 147, 157 n.13 (1982). As this Court has previously noted, the typicality requirement determines "whether a sufficient relationship exists between the injury to the named plaintiff and the conduct affecting the class, so that the court may properly attribute a collective nature to the challenged conduct." Bullock v. Bd. of Educ. of Montgomery County, 210 F.R.D. 556, 560 (D. Md. 2002) (citations omitted). The class representative "must be part of the class and possess the same interest and suffer the same injury as the class members." Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 338 (4th Cir. 1998). Essentially, the typicality requirement ensures that "only those plaintiffs who can advance the same factual and legal arguments may be grouped together as a class." Id. at 340. "The essence of the typicality requirement is captured by the notion that `as goes the claim of the named plaintiff, so goes the claims of the class.'" Deiter v. Microsoft Corp., 436 F.3d 461, 466 (4th Cir. 2006) (citing Broussard, 155 F.3d at 340).
The final prerequisite under Rule 23(a) is that the persons representing the proposed class must be able "fairly and adequately to protect the interests" of all members of the class. The adequacy inquiry under Rule 23(a)(4) "serves to uncover conflicts of interest between named parties and the class they seek to represent." Amchem, 521 U.S. at 625 (citing Falcon, 457 U.S. at 157-58 n.13.). As noted by the Fourth Circuit, for a conflict to defeat class certification, the conflict "must be more than merely speculative or hypothetical;" it "must be fundamental" and "go to the heart of the litigation." Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 430-31 (4th Cir. 2003) (internal quotations and citations omitted).
The typicality requirement "has been liberally construed by courts . . . [and] in the antitrust context, typicality will be established by plaintiffs and all class members alleging the same antitrust violations by defendants." In re Rail Freight, 2012 WL 2870207, at *26 (quoting Meijer, Inc. v. Warner Chilcott Holdings Co. III, Ltd., 246 F.R.D. 293, 301 (D.D.C. 2007)). Notwithstanding courts' liberal reading of the typicality requirement in price-fixing cases, Defendants maintain that the named Plaintiffs' claims are not typical of the putative class for several reasons. For example, Defendants argue that the named Plaintiffs' claims are not typical of the proposed class because they "(1) represent a very small portion of the total volume of titanium dioxide sold, (2) purchased a small number of the total titanium products offered by defendants, and (3) are located in narrow geographies." Defs.' Class Opp'n at 42.
This Court finds these arguments unavailing. As noted, to establish the typicality prong of Rule 23(a), "a class representative must be part of the class and possess the same interest and suffer the same injury as the class members." Deiter, 436 F.3d at 466. While some factual differences between the named Plaintiffs and the putative class may exist, they all seek the same relief: overcharge damages as a result of a price-fixing conspiracy in violation of Section 1 of the Sherman Act. See In re Polyester Staple Antitrust Litig., 2007 WL 2111380, at *10 (W.D.N.C. July 19, 2007) ("In determining whether the claims of the class representatives are typical of the class, the Court looks to the nature of the claims asserted (i.e, the legal theory) rather than any specific factual differences amongst class members.") (citations omitted, emphasis added). Because Plaintiffs' claims arose from the same alleged conduct, their claims are typical insofar as they will seek relief under the same legal theory and will "tend to advance the interests of the absent class members." Deiter, 436 F.3d at 466.
Defendants also argue that each named Plaintiff will not adequately represent the interests of the class because of specific disqualifying problems. For example, Defendants argue that because Plaintiff Isaac is a chemical wholesaler, it is unlike the majority of the putative class members that are in the business of manufacturing products using TiO
Notwithstanding these minor issues identified by the Defendants, this Court can discern no "fundamental" conflict that goes to the "heart of the litigation." Gunnells, 348 F.3d at 430-31. The thrust of the litigation will concern the Defendants' conduct and the existence of the alleged conspiracy. Accordingly, the named Plaintiffs and the putative class will "share common objectives and the same factual and legal positions," and therefore "have the same interest in establishing the liability of [Defendants]." Id. at 431. As such, this Court finds, by a preponderance of the evidence, that Plaintiffs have satisfied the typicality and adequacy of representation prongs of Rule 23(a).
II. RULE 23(b)(3) FINDINGS & CONCLUSIONS
Having determined that the Plaintiffs have satisfied Rule 23(a)'s requirements, the Court now turns Rule 23(b)(3) which requires a finding that common questions "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." Fed. R. Civ. P. 23(b)(3). "The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem, 521 U.S. at 623. Although the predominance inquiry of Rule 23(b)(3) is similar to the commonality requirement of Rule 23(a), the Fourth Circuit has held that the predominance requirement is "more stringent" than the Rule 23(a) requirement. Thorn, 445 F.3d at 319 (quoting Leinhart v. Dryvit Sys., Inc., 255 F.3d 138, 147 n.4 (4th Cir. 2001)); see also Amchem, 521 U.S. at 624 (the Rule 23(b)(3) criterion is "far more demanding" than the commonality requirement). In determining whether the Plaintiffs have satisfied their burden, this Court must conduct a "rigorous analysis" of the Rule 23(b)(3) requirements and the Plaintiffs' methodology for proving those requirements, and must act as finder of fact in the face of conflicting expert testimony. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 323-24. In order to meet the predominance prong of Rule 23(b)(3), a plaintiff must "demonstrate that the element[s] of [the legal claim] is capable of proof at trial through evidence that is common to the class rather than individual." Id. at 311. "Because the nature of the evidence that will suffice to resolve a question determines whether the question is common or individual, a district court must formulate some prediction as to how specific issues will play out in order to determine whether common or individual issues predominate in a given case." Id. (internal quotations and citations omitted).
With that standard in mind, the Court notes at the outset that, like many courts confronting class certification motions involving horizontal price-fixing claims, it is presented with a battle of the experts with regard to the predominance prong of Rule 23(b)(3). Both parties rely heavily on their respective—and diametrically opposed—expert declarations.
A. The Titanium Dioxide Market—Findings of Fact
As will be discussed infra, in order for this Court to certify a class in this case, it must be satisfied that the Plaintiffs have set forth a plausible methodology for proving class-wide impact as a result of the alleged conspiracy. In other words, assuming the alleged conspiracy existed, Plaintiffs still must be able to show that each class member was injured, or "impacted" by that conspiracy through evidence that is common to the class as a whole. Generally speaking, this will require the Plaintiffs to show that the class members paid a higher price for TiO
Seemingly following the plaintiff-side class certification script
Following their own script,
Each of these TiO
Price increase announcements indicate coordinated behavior. After analyzing "more than ten years' worth of price increase announcements issued by the Cartel Members," Dr. Lamb concludes that "throughout the Class Period, the Cartel Members announced multiple nearly simultaneous price increases that applied across the board to all users of titanium dioxide, and to all products and grades of titanium dioxide sold by the Cartel Members." Lamb Report ¶ 29. Furthermore, Dr. Lamb concludes that these price increase announcements occurred close-in-time to meetings in which many of the cartel members participated. Accordingly, Dr. Lamb posits that "[w]hile [firms] can certainly announce price increases without coordination, it is hard to explain the same, or nearly the same, price increases being repeatedly announced nearly simultaneously by different firms supposedly acting independently." Id. ¶ 28. In support of his conclusions, Dr. Lamb presents a table summarizing the price increase announcements announced by the Defendants in this case. See id. at Table 2. Importantly, Dr. Lamb concludes that the price increase announcements "were efforts by the Cartel Members to confirm their cartel behavior and signal to each other and to their customers that price increases would be implemented and enforced market-wide." Id. ¶ 29.
In response, Defendants' expert, Dr. Burtis does not take issue with the existence of the price increase announcements, but rather, with the interpretation of those announcements. Specifically, Dr. Burtis maintains that the price increase announcements by Defendants are not necessarily evidence of collusion. Citing a textbook on industrial organization, Dr. Burtis contends that parallel pricing behavior is a natural consequence of competition in oligopolies, and therefore "it would be expected that a unilateral price increase announcement by one Defendant would influence the decisions of the other Defendants, and that a plausible response would be to announce similar price increases quickly." Burtis Report ¶ 117. Finally, Dr. Burtis argues that even if price increases were announced nearly simultaneously, there is no evidence that they were implemented in any uniform way. Id. ¶ 116.
This Court finds credible Dr. Lamb's conclusions that the Defendants implemented multiple nearly simultaneous price increases throughout the class period, and those price increases can be used to prove coordinated pricing. As noted, Dr. Burtis does not dispute the fact that the price increase announcements were made, but does dispute the inferences that can be drawn from those announcements.
2 Market Dominance by Defendants.
In Plaintiffs' Consolidated Amended Complaint, they allege that Defendants are the leading suppliers of TiO
Dr. Burtis does not directly contradict Dr. Lamb's assertions regarding the market power belonging to the alleged conspirators in this case. Instead, she argues that evidence exists showing that TiO
2 as a commodity-like product & competition based primarily on price
According to Dr. Lamb, TiO
Dr. Burtis and Defendants take great issue with Dr. Lamb's conclusion that TiO
Notwithstanding this, after reviewing all the evidence, Defendants' contention that titanium dioxide is not a commodity-like product is simply belied by their own characterization of the chemical. For example, in its 2006 Form 10-K,
Accordingly, while there is certainly some differentiation among TiO
Many buyers in the TiO
Dr. Lamb concludes that each cartel member maintains a large customer base and that there are numerous purchasers of TiO
High barriers to entry.
Next, Dr. Lamb concludes that there are high barriers to entry in the market for TiO
Stable or declining demand for titanium dioxide and excess production capacity
Dr. Lamb concludes that demand for TiO
While Dr. Burtis disputes Dr. Lamb's conclusion that these market factors constitute common proof of class-wide impact, she does not directly refute his underlying findings— that demand for TiO
In considering the Rule 23(b)(3) predominance requirement, "a court's rigorous analysis begins with the elements of the underlying cause of action." In re Rail Freight, 2012 WL 2870207, at *30. "If proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311.
To establish an antitrust violation, a plaintiff must prove three elements: (1) a violation of the antitrust laws—here, Section 1 of the Sherman Act; (2) individual injury resulting from that violation; and (3) measurable damages. See 15 U.S.C. § 1; Deiter v. Microsoft Corp., 436 F.3d 461, 467 (4th Cir. 2006). However, at the class certification stage, Plaintiffs need only show by a preponderance of the evidence that these elements are "capable of proof at trial through evidence that is common to the class rather than individual to its members." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311-12 (emphasis added). Each element is addressed in turn.
i. Violation of Antitrust Law
Plaintiffs allege that Defendants conspired to fix the price of TiO
The Court now turns to the real crux of Defendants' opposition to class certification—that is, whether the Plaintiffs can prove the elements of common impact and damages on a class-wide basis.
The second element the Plaintiffs will need to establish is that the class members suffered injury from the alleged price-fixing conspiracy.
To meet their burden, therefore, Plaintiffs must show, using evidence common to the class, that class members paid a higher price for TiO
400 F.3d at 566 (citations omitted).
As is often the case in horizontal price fixing cases, Plaintiffs here seek to show this element is capable of common proof by comparing a hypothetical "but-for" price—i.e., the price that would have been paid in the absence of the conspiracy—with the prices actually paid by the Plaintiffs during the Class Period. See In re EPDM Antitrust Litig., 256 F.R.D. 82, 88 (D. Conn. 2009). In this kind of but-for comparison, prices are analyzed in a scenario that is "free of the restraints and conduct alleged to be anticompetitive." In re Rail Freight, 2012 WL 2870207, at *41 (quoting Blades v. Monsanto, Co., 400 F.3d at 569. If Plaintiffs can show that they paid a higher actual price than the but-for price using evidence common to the class, they have met their burden on the impact element.
As the Rail Freight court recently summarized, there are various methods by which plaintiffs may prove that common evidence is capable of proving impact:
In re Rail Freight, 2012 WL 2870207, at *41 (internal quotations and citations omitted).
Plaintiffs in this case seek to prove impact by way of all the enumerated methods above—they proffer class-wide evidence in the form of: (1) industry characteristics tending to show that the TiO
In arguing that common evidence exists to show impact on a class-wide basis, Plaintiffs rely heavily on the fact that defendants announced multiple nearly simultaneous price increase announcements throughout the class period. Plaintiffs argue that these price increase announcements amount to common proof insofar as they served to raise prices for TiO
Having reviewed the submissions and the parties' arguments, this Court concludes that the evidence of the nearly simultaneous price increase announcements, in conjunction with the structural factors present in the TiO
Next, the Plaintiffs argue that class-wide impact can be demonstrated by showing that the prices actually paid by TiO
DANIEL L. RUBINFELD, REFERENCE GUIDE ON MULTIPLE REGRESSION 305-06 (Fed. Judicial Ctr., 3d ed. 2011).
In his report, Dr. Lamb explains the variables used in his regression analysis to isolate the effect of the cartel on prices for TiO
In re EPDM Antitrust Litig., 256 F.R.D. at 100.
In short, this Court finds that Dr. Lamb's regression analysis accurately reflects the characteristics of the titanium dioxide industry, and the facts in this case. While his model may not be perfect,
In re Amaranth Natural Gas Commodities Litig., 269 F.R.D. 366, 385 (S.D.N.Y. 2010). Accordingly, this Court concludes that Dr. Lamb's multiple regression model is "capable" of proving class-wide impact at trial "through evidence that is common to the class rather than individual to its members." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311-12. Defendants will be free to attack the probativeness of that model or its perceived shortcomings as they see fit.
As previously noted, "[b]ecause the nature of the evidence that will suffice to resolve a question determines whether the question is common or individual, a district court must formulate some prediction as to how specific issues will play out in order to determine whether common or individual issues predominate in a given case." Id. (internal quotations and citations omitted, emphasis added). It does not take a crystal ball to predict the way this case will play out at trial—Plaintiffs will overwhelmingly rely on common evidence to prove the existence of a price-fixing conspiracy. Accordingly, "[c]ommon questions predominate where `even if each Class Member . . . were to bring suit individually, each plaintiff would have to allege and prove virtually identical facts.'" In re EPDM Antitrust Litig., 256 F.R.D. at 103 (quoting In re Merrill Lynch & Co. Research Reports Sec. Litig., 246 F.R.D. 156, 165 (S.D.N.Y. 2007).
The final element Plaintiffs will have to prove at trial is that they suffered "measurable damages." In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 311. In contrast to the "impact" prong of the Rule 23(b) analysis, which asks only "whether the plaintiffs were harmed," the damages prong asks "by how much." In re EPDM Antitrust Litig., 256 F.R.D. at 88. At the class certification stage, Plaintiffs must show, by a preponderance of the evidence, that they will be able to prove damages using common proof. In re Rail Freight, 2012 WL 2870207, at *74.
In this case, Plaintiffs argue that common proof of damages exists in in the form of Dr. Lamb's regression analysis. Dr. Lamb contends that his regression method is "a standard economic method [ ] that is capable of being used to compute aggregate damages to the class as a whole." Lamb Report ¶ 114. Briefly, he uses his regression analysis to arrive at a seven percent overcharge during the course of the alleged conspiracy (i.e., prices for TiO
As the well-developed economic literature on cartels, relied on by Plaintiffs for their "impact" argument, makes clear, certain structural factors in an industry make collusion more attractive or more feasible. At the same time, however, that same literature teaches that one cannot assume an illegal price-fixing agreement would damage each class member in the same manner. That is because those very same structural factors that encourage collusion also encourage "cheating" by co-conspirators, thereby rendering individual damage amounts different among the members of a class. This theory, first enunciated by Nobel laureate George Stigler in A Theory of Oligopoly, 72 J. Pol. Econ. 44, 46 (1964), is well-established in the antitrust context. See, e.g., RICHARD A. POSNER, ANTITRUST LAW 60-69 (2d ed. 2001). As demonstrated by Stigler, the empirical evidence indicates that even where a horizontal price-fixing agreement has been reached, that agreement will likely result in a range of impacts across the class. 72 J. Pol. Econ. At 46.
The Fourth Circuit has consistently held that "average" or "aggregate" damages are not an appropriate measure of damages in an antitrust case. For example, in Windham v. Am. Brands, Inc., the court stated, "[t]he language that Congress used in [the Antitrust statute] . . . leaves no room for awarding damages to some amorphous `fluid class' rather than, or in addition, to one or more actually injured persons. It likewise does not permit any person to recover damages sustained not by him, but by someone else who happens to be a member of such class." 565 F.2d 59, 66 (4th Cir. 1977) (quotations and citation omitted). While individual issues do not predominate for the purposes of this Court's "impact" analysis, individual issues certainly overshadow common issues with respect to damages. For example, as the Defendants have clearly shown, some level of individual negotiation took place between buyers and sellers of TiO
The need to inquire into individual damage calculations, however, is not an impediment to class certification. As summarized by the Fourth Circuit, a damages inquiry necessarily requires individual proof:
Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 427-28 (4th Cir. 2003). Given the inherent difficulties in assessing individual damages questions in this type of case, the Court notes that it has several options with which to consider damages at a future date. As discussed by the Second Circuit, there are at least five methods to deal with the individual damages inquiry:
In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 141 (citations omitted). Indeed, the Fourth Circuit in the Gunnells case reiterated its previous admonition to "take full advantage of the provision in [Rule 23(c)(4)] permitting class treatment of separate issues . . . to reduce the range of disputed issues in complex litigation." 348 F.3d at 426 (quoting In re A.H. Robins Co., Inc., 880 F.2d 709, 740 (4th Cir. 1989)).
Accordingly, while there exist numerous individual questions of damages, that is not enough to defeat class certification, and one or more of the above-listed methods may need to be utilized as this case progresses. See Gunnells, 348 F.3d at 427 ("class certification `provides a single proceeding in which to determine the merits of the plaintiffs' claims, and therefore protects the defendant from inconsistent adjudications.'") (quoting 5 Moore's Federal Practice § 23.02 (1999)).
The final requirement of Rule 23(b)(3) is that this Court must determine that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). "In deciding whether certification of a class is superior to other trial methods, the Court considers whether the resolution of common issues advances the litigation as a whole, as opposed to leaving a large number of issues for case-by-case adjudication." In re Polyester Staple Antitrust Litig., 2007 WL 2111380, at *31 (W.D.N.C. July 19, 2007) (internal quotation and citation omitted). Here, the Defendants have not specifically argued that the superiority prong has not been met, and this Court concludes that because common issues predominate, class action treatment is superior to other available methods of adjudicating the Plaintiffs' claims. In short, class treatment will "achieve economies of time, effort, and expense, and promote . . . uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about undesirable results." Amchem, 521 U.S. at 615.
III. ADDITIONAL ISSUES
Rule 23(c)(1)(C) of the Federal Rules of Civil Procedure provides simply that "[a]n order that grants or denies class certification may be altered or amended before final judgment." Fed. R. Civ. P. 23(c)(1)(C). This Court has previously stated that "[a] district court has `broad discretion in determining whether the action may be maintained as a class action,' . . . and so long as the court considers the proper criteria, it is permitted to exercise such discretion." Doe v. Lally, 467 F.Supp. 1339, 1345 (D. Md. 1979) (citations omitted). As this court previously held, "[a] federal district court possesses the same broad discretion in determining whether to modify or even decertify a class." Wu v. MAMSI Life & Health Ins. Co., 256 F.R.D. 158, 162 (D. Md. 2008) (citing Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)). In fact, a federal district court judge has an affirmative obligation to ensure that the class membership remains at all times consistent with the underlying facts and procedural posture of the case. See Richardson v. Byrd, 709 F.2d 1016, 1019 (5th Cir. 1983) ("Under Rule 23 . . . the district judge must define, redefine, subclass, and decertify as appropriate in response to the progression of the case from assertion to facts."); Chisolm v. TranSouth Fin. Corp. 194 F.R.D. 538, 544 (E.D. Va. 2000) ("[T]he Court is duty bound to monitor its class decision and, where certification proves improvident, to decertify, subclassify, alter, or otherwise amend its class certification.").
Here, in opposing class certification, the Defendants have raised several additional issues that do not fit neatly into the previously discussed Rule 23 categories. For example, Defendants claim that many members of the putative class entered into contracts with Defendants that contain mandatory arbitration provisions, forum-selection clauses, and jury waiver provisions. Neither party briefed these issues extensively, and they were only briefly addressed at the August 13 class certification hearing. Because it is unclear to what extent the putative class members have this type of contractual provision, and to what extent the Defendants will seek to uphold those agreements, this Court concludes that "the possible arbitration [or other contractual bar] of some class members does not, by itself, defeat class certification." In re Rail Freight Antitrust Litig., 2012 WL 2870207, at *28 (internal quotation and citation omitted).
Accordingly, to the extent certain putative class members' contracts render them atypical of the class as a whole, this Court will exercise its discretion to amend its class certification Order as necessary.
IV. RULE 23(g)—APPOINTING CLASS COUNSEL
Pursuant to the 2003 amendments to Rule 23, the qualifications and experience of Plaintiffs' counsel are now considered under Rule 23(g). Rule 23(g)(1) provides that "a court that certifies a class must appoint class counsel." Fed. R. Civ. P. 23(g)(1). In appointing class counsel, a court must consider:
Id. This Court has already appointed the following interim co-lead class counsel: Gold Bennett Cera & Sidener LLP; Leiff, Cabraser, Heimann & Bernstein LLP; and the Joseph Saveri Law Firm. See Amended Case Mgmt. Order, ECF No. 326. Those law firms, with the addition of Eric L. Cramer of Berger & Montague, P.C. and Linda Nussbaum of Grant & Eisenhofer, P.A. have been appointed members of the Plaintiffs' Executive Committee. See Case Mgmt. Order, ECF No. 106. Finally, Paul Mark Sandler of Shapiro Sher Guinot & Sandler has been appointed Liaison Counsel. See id. As noted by the Plaintiffs:
Pls. Class Mem. at 41-42.
Defendants do not object or disagree with the Plaintiffs' characterization of their representation. This Court has reviewed the Rule 23(g)(1) requirements, and concludes that Plaintiffs' proposed co-lead counsel are well qualified to represent the class in this case. Accordingly, those counsel listed above will be appointed class counsel.
For the reasons stated above, this Court finds by a preponderance of the evidence that the Plaintiffs have established each necessary element of Rule 23 of the Federal Rules of Civil Procedure. Accordingly, Plaintiffs' Motion for Class Certification and for Appointment of Class Counsel (ECF No. 246) will be GRANTED. A separate Order follows.