Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ohio: Foam makers unable to upset class certification in price fixing suit, (Jul 22, 2015)

By Jeffrey May, J.D.

A class of millions of consumers who purchased consumer products containing foam manufactured by defendants in a price fixing action will not be decertified, the federal district court in Toledo, Ohio, has decided. Remaining defendants in the long-running class action suit unsuccessfully argued for decertification on the grounds that the class of indirect purchaser plaintiffs (IPPs) did not satisfy the commonality and ascertainability requirements for class certification. The manufacturers also failed to convince the court that the IPPs “have no workable model to calculate damages [owed] to individual IPP Class members” (In re Polyurethane Foam Antitrust Litigation, July 21, 2015, Zouhary, J.).

The court certified an IPP class consisting of “[a]ll persons or entities in . . . [30 different states and District of Columbia] who purchased [carpet underlay, bedding, and upholstered furniture products] containing flexible polyurethane foam . . ., not for resale, which were manufactured, produced or supplied by Defendants or their unnamed co-conspirators from January 1, 1999 to the present.”

Commonality. The IPPs' claims based on violation of 15 different state consumer protection and unfair competition laws did not justify decertification of the class, the court ruled. The defending manufacturers argued that the commonality requirement of Rule 23 of the Federal Rules of Civil Procedure was not met because “no ‘one law’ will apply to that class and, worse, the Court will have to engage in individualized fact-finding to determine which state’s law applies to each individual class member’s claim.” Further, they asserted that “the various States’ consumer protection statutes differ radically,” such that they “cannot be addressed in a single multi-state class.”

The court noted a number of cases in which multi-state classes asserting violations of multiple state laws had been certified. Moreover, the choice-of-law analysis was simple, according to the court. It was presumed that the law of the state where the class member purchased foam-containing product would apply.

In addition, the "relatively minor or immaterial” differences between the 15 state consumer protection and unfair competition laws would not overwhelm common issues, in the court's view. As an example, the court noted that, while the statutes of limitations varied, the differences were irrelevant, because alleged fraudulent concealment tolled the applicable statutes of limitations.

Ascertainability. Noting that the Sixth Circuit does not demand that class action plaintiffs prove the “ascertainability” requirement “implicit rather than explicit in Rule 23,” the district court found unconvincing the defendants' arguments that ascertainability was lacking. The court identified two prongs of the ascertainability inquiry: (1) whether the class is defined with reference to objective criteria; and (2) whether there is a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.

The defendants focused on the second prong. The court was not swayed by the defendants' argument that the “IPPs in this case cannot simply look at a sales receipt, a product instruction manual, or the product itself and ‘presently ascertain’ from those sources whether the product contains flexible polyurethane foam manufactured, produced, or supplied by one of the Defendants.”

In light of the defendants' domination of the U.S. flexible polyurethane foam market, it was “highly unlikely that foam comprising an IPP consumer’s bedding, furniture, or carpet underlay product purchased in one of the 30 class states was not manufactured by one of these Defendants.” Moreover, a practicable process to ascertain who was and was not a member of the IPP class existed.

Workable damages model. Lastly, the court disagreed with the manufacturers' contention that the IPPs lacked a workable model to calculate damages. The defendants contended that, even if it were possible to determine the gross amount of overcharges for foam paid by the entire IPP class, it was not possible to determine how much of that gross amount was attributable to a given mattress, couch, or carpet underlay owned by an individual IPP. However, the fact that allocation of aggregate damages to individual plaintiffs might be laborious, or less than perfectly accurate, did not fatally undermine predominance or the propriety of class certification, according to the court.

Attempts at appellate review. The motion to decertify followed the defending manufacturers' failed effort to obtain appellate review of the April 2014 class certification order. After class certification, a number of defendants settled. The non-settling defendants sought appellate review. In September 2014, the U.S. Court of Appeals in Cincinnati denied the manufacturers’ petition for permission to appeal the certification of two groups of plaintiffs: the IPPs and direct purchaser plaintiffs.

An effort to win U.S. Supreme Court review also failed. In a petition for certiorari, which was denied on March 2, the manufacturers asked the Court to consider certification in the “gargantuan” class action. The manufacturers contended that the two classes could collectively include hundreds of millions of American consumers and businesses, seeking more than $9 billion in treble damages. They argued that the Sixth Circuit and three other circuits had defied the High Court’s March 2013 decision in Comcast Corp. v. Behrend (133 S.Ct. 1426, 2013-1 Trade Cases ¶78,316). In Comcast, the U.S. Supreme Court concluded that a class of cable television subscribers was improperly certified to pursue antitrust claims against the cable provider and held that the plaintiffs’ damages model fell short of establishing that damages were capable of measurement on a class-wide basis. The manufacturers contended that the “manifestly erroneous view of Comcast—under which damages issues are treated as irrelevant to the predominance analysis and cannot preclude class certification under Rule 23(b)(3)—dictated the district court’s class certification analysis in this case.”

This is Case No. 1:10 MD 2196.

Attorneys: Kimberly A. Conklin (Kerger & Hartman), and Lori A. Fanning (Miller Law) for Indirect Purchaser Class. James H. Walsh (McGuire Woods) and Kendall Millard (Barnes & Thornburg) for Defendants Liaison Counsel.

Cases: Antitrust OhioNews