Antitrust Law Daily Wrap Up, TOP STORY—D. Del.: Exclusive dealing class action dismissed for lack of representation, (Oct 22, 2015)

By Greg Hammond, J.D.

A group of Class 8 truck purchasers’ exclusive dealing and monopolization claims were dismissed by the federal district court in Wilmington, Delaware, because the proposed class lacked representation and therefore did not present a case or controversy under Article III. The decision to dismiss the case was granted following the court’s denial of class certification, in which it determined that the class failed to satisfy the adequacy and predominance requirements of Federal Rules of Civil Procedure 23(a) and 23(b)(3) (In re Class 8 Transmission Indirect Purchaser Antitrust Litigation, October 21, 2015, Robinson, S.).

Eaton Corp. manufactures transmissions for Class 8 trucks—which include fire trucks, garbage trucks, and long-distance freighters. The plaintiffs in this action are indirect purchasers of Eaton’s transmissions. Specifically, the plaintiffs claim that Eaton entered into exclusive dealing agreements with a number of Original Equipment Manufacturers, including Freightliner, Navistar, International, PAACAR, Kenworth, Peterbilt, Volvo, and Mack. The agreements purportedly drove Eaton’s competitor, ZF Meritor, out of the market, thereby expanding Eaton’s monopoly, causing indirect purchasers of Eaton’s transmissions to pay higher prices and resulting in less choice and decreased innovation. The truck purchasers, who claim violation of 20 state antitrust laws and two state unfair competition laws, moved for class certification and to substitute various parties as class representatives.

Adequacy. The court first denied class certification, finding that the truck purchasers failed to demonstrate that the adequacy requirement of Rule 23(a) was satisfied with regard to class representatives. In particular, the court noted that the California and Kansas class representatives were no longer able to participate in the action, and that such a “potential upheaval in class representation” prevented the court from finding that the proffered class representatives or their proposed substitutions could fairly and adequately protect the interests of the class.

Predominance. With regard to predominance, the court determined that the threshold issue was whether the plaintiffs provided sufficient common evidence to prove that Eaton overcharged its direct purchasers. The plaintiffs’ expert damages model did not comprise common proof that Eaton overcharged the direct purchasers, the court concluded, finding that the expert’s analysis used assumptions based on “a modicum of data” that did not fully represent Eaton’s transmission sales during the class period.

The court also found that the plaintiffs failed to identify common evidence that any alleged overcharges were passed on to the indirect purchasers of Class 8 truck transmissions. The truck pricing market is complicated, according to the court, given that each truck is unique and highly-customized for different uses, manufacturing costs vary by tens of thousands of dollars, and some transmissions have been sold and then resold. This complex distribution chain therefore frustrated the process of determining the amount of pass-through on a transmission based on the price of a truck.

Given the court’s determinations concerning adequacy of class representatives and the truck purchasers’ inability to demonstrate that common issues predominate, the motion for class certification was denied. The court additional concluded that because the proposed class lacks representation, the case did not present a case or controversy under Article III. The action was therefore dismissed.

The case number is 1-11-cv-00009-SLR.

Attorneys: Ian Bifferato (Bifferato LLC) for plaintiffs. Donald E. Reid (Arsht & Tunnell) for Eaton Corp. Richard L. Horwitz (Potter, Anderson & Corroon, LLP) for Daimler Trucks North America LLC. Kelley E. Farnan (Layton & Finger, PA) for Navistar International Corp. Jeffrey B. Bove (Novak Druce Connolly Bove Quigg LLP) for Kenworth Truck Co., PAACAR Inc., Peterbilt Motors Co., and Navistar International Corp. M. Duncan Grant (Pepper Hamilton LLP) for Mack Trucks Inc. and Volvo Trucks North America.

Companies: Eaton Corp.; Daimler Trucks North America LLC; Freightliner LLC; Navistar International Corp.; International Truck and Engine Corp.; PAACAR, Inc.; Kenworth Truck Co.; Peterbilt Motors Co.; Volvo Trucks North America; Mack Trucks, Inc.

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