Class Certification Process Takes Center Stage in Price-Fixing Case

A recent court decision from The U.S. District Court for the Western District of New York provides guidance on the stringent class certification process and the need for “sound economic analysis” in price-fixing cases, Dheeraj Ram writes in an article for the Global Competition Review (GCR).

In Miami Products & Chemical Co et al. v Olin Corp et al., the Court denied the plaintiffs’ motion for class action certification in an antitrust case alleging price fixing for caustic soda, commonly known as lye. The plaintiffs were all industrial users of caustic soda, which is an essential component of products, or processes used to manufacture products, ranging from paper, soap and textiles to chemicals, pharmaceuticals, and aluminum.

The plaintiffs alleged that the defendant companies violated Section 1 of the Sherman Act by forming a cartel to increase prices over approximately three years, starting in August of 2015. Based on a highly technical analysis, their expert witness estimated that damages suffered by the plaintiffs during that period were $861 million.

The Court denied class certification on the grounds the plaintiffs failed to satisfy both the typicality and the predominance requirements for certification. That is, they failed to show the plaintiff claims were typical of the proposed class, or that individual issues would not “predominate” in the controversy.

The case came down to a battle of two experts, each armed with highly technical and seemingly rigorous studies. The Court carefully scrutinized both presentations. GCR notes that in denying the class certification motion, the Court noted an “incongruence” between two of the plaintiff expert’s analyses.

One takeaway, Ram writes, is that complex economic arguments presented by experts should be carefully reviewed for internal consistency. In addition, at a more general level, litigants should keep in mind that although the presentation may be mathematically correct, the “intuition” that lay behind it may be flawed, resulting in a presentation that fails to make an economic argument that will convince the court.

Read past Today’s General Counsel articles on antitrust matters here and here.