THE LATEST: Class Certification Denied – Indirect Purchases Fail to Substantiate Link between Higher Input Costs and Higher Product Prices

McDermott Will & Emery
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McDermott Will & Emery

[author: Matthew Evola]

Indirect purchaser plaintiffs’ motion for class certification in a lithium ion battery suit was denied for failing to show concrete evidence linking increased input costs to increased end-product prices; theoretical inference is not enough.

WHAT HAPPENED:

  • The US District Court for the Northern District of California denied a motion for class certification for a proposed class of indirect purchasers of lithium ion batteries. In re: Lithium Ion Batteries Antitrust Litigation, Case No. 13-MD-2420 (N.D. Cal. Mar. 5, 2018).
  • An expert witness for indirect purchaser plaintiffs (IPPs) calculated a 100 percent pass-through rate of price increases on lithium ion batteries to end use products, resulting in an estimated $573 million in damages for the proposed class (or approximately $1.7 billion in treble antitrust damages).
  • Defendants countered by arguing that the expert’s claim of pass-through of supracompetitive pricing was insufficiently substantiated because there was no direct connection between changing input costs and changing end-product prices. Simply put, there was no overcharge attributable to battery cost.
  • The court agreed and held that without more than theory about how much, if any, antitrust harm passed through to IPPs, class certification would be denied.

WHAT THIS MEANS:

  • In indirect purchaser cases, courts will focus on the pricing dynamics of the products actually purchased by the plaintiffs in relation to alleged cost increases of components of those products. Courts are concerned not only with the fact of pass-through, but also whether the overcharge caused prices to change to the plaintiffs and the class.
  • Future indirect purchaser plaintiffs hoping to get past the class certification phase must show concrete evidence, not merely theory, about pass-through of supracompetitive pricing. This will likely be difficult for end users in cases involving numerous inputs.

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