On August 16, the D.C. Circuit held in a high-profile antitrust MDL involving railroad shippers that the plaintiffs failed to satisfy Rule 23(b)(3)’s predominance requirement because their expert’s damages model calculated that 12.7% of the proposed class may have suffered no injuries.

• The plaintiffs, who used railroads to transport freight, sued the nation’s four largest freight railroads under the Sherman and Clayton Acts, alleging that the railroads conspired to fix certain fuel surcharges. The plaintiffs sought to represent a class of over 16,000 shippers who were allegedly harmed by this price-fixing conspiracy. The litigation, which comprises eighteen consolidated antitrust actions, is one of the longest-running MDLs in the United States.
• The plaintiffs used regression models in an attempt to establish injury, causation, and damages on a class-wide basis. The district court ultimately declined to certify the class because the models inflated damages, were overinclusive, and assessed “negative overcharges” (and therefore no injury) for 2,037 members of the proposed class. The plaintiffs filed an interlocutory appeal, and the D.C. Circuit affirmed.
• On appeal, the D.C. Circuit focused on the 12.7% of the class that sustained negative overcharges. The court held that, even assuming there could be a de minimis number of uninjured plaintiffs in a class, the district court did not abuse its discretion in concluding that the 2,037 uninjured members exceeded any allowable threshold.
• The court also rejected the plaintiffs’ argument that the uninjured members were a de minimis portion of the class because their shipments made up less than one percent of the railroads’ revenue, determining that predominance assesses whether causation and injury can be proved through common evidence—not how much the defendants profited from any wrongdoing.
  • The D.C. Circuit’s decision exposes potential flaws in statistical models that plaintiffs may use to establish causation and injury on a class-wide basis. Additionally, it may provide another potential vehicle for the Supreme Court to decide issues that have divided the circuits for years: Can a court certify classes containing uninjured members? And, if so, must plaintiffs prove that the proportion of uninjured members is de minimis or otherwise establish a manageable process for culling out those who have suffered no damages?
  • The Supreme Court has previously signaled an interest in taking up these issues but has not yet had occasion to resolve them. See Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1050 (2016) (recognizing that “the question whether uninjured class members may recover is one of great importance” but holding it was “premature” to resolve the issue because petitioner had abandoned it on appeal).

The case is In re: Rail Freight Fuel Surcharge Antitrust Litigation, and you can read more here.