Expert testimony was at the heart of a recent appeal in the Third Circuit dealing with Rule 23(f) in an antitrust class action. At issues was whether that rule requires challenged expert testimony to be scrutinized under Daubert.
The plaintiffs were purchasers of blood donation compatibility products. The defendant was one of two companies alleged to have violated federal antitrust law by conspiring to fix the prices of those products. At a hearing to determine class certification, Plaintiffs relied in part on expert testimony to produce their antitrust impact analyses and damages models.
The District Court evaluated the expert testimony—with Defendant consistently challenging its reliability—and held that the testimony “could evolve to become admissible evidence” at trial. With this, Plaintiffs were deemed to have met Rule 23(b)(3)’s predominance requirement, as the trial court rejected the Defendant’s challenges to class certification.
On appeal, Defendant contended the trial court failed to rigorously scrutinize whether “questions of law or fact common to class members predominate over any questions affecting only individual members.” In particular, pointing to Comcast, the recent Supreme Court case, Defendant asserted the trial court erred by declining to address at class certification whether plaintiffs’ expert’s damages models were capable of producing just and reasonable damage estimates and by accepting plaintiffs’ theory as capable of proving class-wide antitrust impact from the price-fixing. Further, Defendant argued that under the class certification standard, the trial court should have scrutinized the plaintiffs’ expert’s testimony under Daubert.
The Third Circuit ordered the class certification vacated and remanded for reconsideration, holding that the Court’s “could evolve” formulation of the Rule 23 standard did not survive Comcast.
Citing the Third Circuit’s decision in In re Hydrogen Peroxide Antitrust Litigation, the Third Circuit explained that the “proper task” of the trial court is “to consider carefully all relevant evidence and make a definitive determination that the requirements of Rule 23 have been met before certifying a class.” Class certification, it noted, “requires a finding that each of the requirements of Rule 23 has been met,” and that factual determinations “must be made by a preponderance of the evidence.” Actual conformance with the Rule 23 requirements, rather than presumed conformance, remains necessary.
Thus, a district court is no longer permitted to issue a “conditional certification.” It must “make a definitive determination that the requirements of Rule 23 have been met before certifying a class.” As part of the “rigorous analysis,” the Supreme Court clarified in Comcast that “[a] party seeking class certification must affirmatively demonstrate his compliance” with Rule 23—meaning that those seeking certification must:
… be prepared to prove that there are, in fact, sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses, and adequacy of representation as required by Rule 23(a). The party must also satisfy through evidentiary proof at least one of the provisions of Rule 23(b).
The Third Circuit explained that expert testimony that is insufficiently reliable to satisfy the Daubert standard cannot “prove” that the Rule 23(a) prerequisites have been met “in fact,” nor can it establish “through evidentiary proof” that Rule 23(b) is satisfied. In the District Court, plaintiffs relied on expert testimony to produce most of their antitrust impact analyses and damages models, which they offered to demonstrate that common questions predominated over individual questions as required by Rule 23(b)(3).
Plaintiff argued that Defendant waived the opportunity to bring a Daubert challenge; however, Defendant consistently challenged the reliability of plaintiffs’ expert’s models and the sufficiency of his testimony to satisfy Rule 23(b)(3) at trial. Because of this, the Third Circuit left it to the District Court on remand to decide in the first instance which of Defendant’s reliability attacks, if any, challenged those aspects of plaintiffs’ expert testimony offered to satisfy Rule 23 and then, if necessary, to conduct a Daubert inquiry before assessing whether the requirements of Rule 23 have been met.
Citing Hydrogen Peroxide, the Third Circuit reasoned that opinion testimony “should not be uncritically accepted as establishing a Rule 23 requirement merely because the court holds the testimony should not be excluded, under Daubert or for any other reason.”
Here, the Third Circuit held that a plaintiff cannot rely on challenged expert testimony as evidence of class-action certification unless it also demonstrates that the expert testimony satisfies Daubert. Because the Third Circuit found that the District Court had no opportunity to consider the implications of Comcast and hold that (if applicable) a court must resolve any Daubert challenges to expert testimony offered to demonstrate conformity with Rule 23, it vacated the order and remanded the case.