By Jay L. Himes[i]
These days, a plaintiff in the U.S. can expect to encounter a series of obstacles simply to get to the point of putting her evidence to a jury. Plaintiffs litigating antitrust (competition) claims, and those pursuing class actions, encounter even more than those faced by plaintiffs generally. Our would-be plaintiff has to be prepared to “win” multiple times. The obstacles on the road to trial include:
(1) meeting standing to sue requirements;
(2) pleading a “plausible” claim sufficient to withstand a motion to dismiss;
(3) demonstrating that her claim is suitable for class certification, something that
(4) also typically requires satisfying the court that her expert may testify at trial;
(5) withstanding the defendant’s summary judgment motion, and
(6) successfully opposing pre-trial motions in limine, sometimes used to truncate proof at trial.
The court may resolve these matters by granting the relief sought in some respects, while denying it in others. However, one or a series of rulings sufficiently adverse to the plaintiff can hamstring the case and make continued litigation infeasible—either because the nature of the case is too cabined or because the economics of litigation counsel against continued litigation, or both. And all this is just to get to trial where, of course, the plaintiff must win on the merits. After the trial, a losing defendant can further be expected to move to have the court over-turn the jury’s verdict, and if that doesn’t work, to appeal.
So, let’s look more closely at these pre-trial obstacles. My discussion here pertains to the U.S. federal courts, where the most significant antitrust class actions are filed. Bear in mind, as well, that these obstacles must be overcome within a body of substantive antitrust law, which has made it increasing challenging for plaintiffs to prevail.[ii]
- Standing to sue
Article III of the U.S. Constitution limits the jurisdiction of the federal courts to “cases” and “controversies.” Therefore, a plaintiff must have “constitutional” standing to sue, and that means satisfying three elements: “(1) that he or she suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief.”[iii] Constitutional standing is a prerequisite to proceeding, regardless of the nature of the claim.
After that comes more standing requirements that are applicable specifically to antitrust claims. The first antitrust-specific standing requirement is “antitrust injury.” Here, the plaintiff must show “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation.”[iv]
Next, we have the “efficient enforcer” aspect of standing, which requires a balancing of several factors. This idea comes from Associated General Contractors of California, Inc. v. California State Council of Carpenters.[v] While the phraseology of the factors can vary depending on the federal circuit involved, here is an illustration of the factors to be balanced: “(1) the directness or indirectness of the asserted injury, which requires evaluation of the chain of causation linking [the plaintiff’s] asserted injury and the [defendants’] alleged price-fixing; (2) the existence of more direct victims of the alleged conspiracy; (3) the extent to which [plaintiffs’] damages claim is highly speculative; and (4) the importance of avoiding either the risk of duplicate recoveries on the one hand, or the danger of complex apportionment of damages on the other.”[vi]
The first opportunity that a defendant usually has to test whether the plaintiff has pleaded a legally sufficient claim is on what’s called a motion to dismiss. This motion calls on the district (trial-level) court to decide whether the plaintiff has alleged a claim upon which relief may be granted if the facts alleged are proven. With this opportunity to test the complaint, defendants regularly rely on one or more of these standing doctrines in an effort to end the case at the outset. The “antitrust injury” and “efficient enforcer” doctrines are commonly litigated at this stage in the case. Many defense counsel may reason that it could be malpractice not to try to demonstrate that the plaintiff isn’t properly situated to pursue the claim at all—and so try they will, even where the likelihood of success is low.
As if that weren’t enough, only direct purchasers from a price-fixer are entitled to sue under federal antitrust law. Therefore, whether or not the plaintiff purchased directly with a defendant can also be controversial. For example, in Apple Inc. v. Pepper,[vii] the plaintiffs, who purchased apps for iPhones and iPads, alleged they were direct purchasers from Apple. Apple, however, argued that the direct purchasers were app developers who purchased distribution services from Apple, and that the app purchasers dealt directly with the developers, and only indirectly with Apple itself. Apple lost in the Supreme Court—but only after years of litigation in the lower courts. Similarly, healthcare antitrust cases, which often involve intricate flows of money, can raise indirect purchaser standing issues.
(2) “Plausibility” of the Claim
I noted above that a motion to dismiss probes whether the plaintiff has pleaded a legally sufficient claim. That theoretical test has a significant gloss. It is not sufficient that the plaintiff’s claim may be conceivable. It also has to be “plausible”: “[f]actual allegations must be enough to raise a right to relief above the speculative level . . . .”[viii] In assessing “plausibility,” the lower courts are supposed to both (1) construe well-pleaded fact allegations and resolve competing inferences in favor of the plaintiff, and (2) refrain from imposing a “probability” test. But, at bottom, deciding what is or isn’t “plausible” leaves room for considerable decision-making discretion. “Plausibility” is, indeed, in the eyes of the beholder.
And, sometimes district courts consider not simply the “plausibility” of a particular claim, but instead the “plausibility” of individual allegations. For example, in one price-fixing case, the plaintiffs alleged that the conspiracy included: (1) coordinated price increases; (2) restrictions on input supplies; (3) non-competition and territorial allegations; (4) product swap agreements; and (5) coordinated output production and tying.[ix] The court reviewed the each set of allegations, finding some plausible (in whole or in part), and rejecting others. These individual plausibility rulings (along with other ruling on the motion) left the plaintiffs with a price-fixing conspiracy significantly narrowed from the one pleaded, although the case itself survived.
This sort of granular analysis of an antitrust complaint is hard to square with the Supreme Court’s instruction that “the character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole.”[x] Nevertheless, this approach to plausibility is not uncommon, and when undertaken, the allegations that remain can cabin the claim, and thus the scope of the case itself. The plaintiff can find itself with a case that, with the benefit of hindsight, it might have thought insufficient to pursue at all.
Plaintiffs’ antitrust cases often flounder at the motion to dismiss stage. But the courts often allow the plaintiff to re-plead the complaint—after which the motion to dismiss cycle repeats itself.
3 & 4. Class Certification and Challenging the Plaintiffs’ Expert
Many significant private antitrust cases are brought as class actions. This marks another litigation stage where the plaintiff is required to prove up its case. Some years back, the Supreme Court wrote that Federal Rule 23, under which class certification is litigated, does not “give a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.”[xi] Not long after, however, the Court emphasized that a class “may only be certified if the trial court is satisfied, after a rigorous analysis,” that Rule 23’s “prerequisites . . . have been satisfied.”[xii] In the years since, the tilt has been towards Falcon’s “rigorous analysis” approach. Rigorous analysis supplements the Supreme Court’s characterization of class litigation as “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.”[xiii]
In consequence, class certification is highly contentious. A plaintiff seeking certification must not only satisfy Rule 23’s requirements, but also present the underlying merits of their case to enable the court to determine whether Rule 23 has been satisfied. Defendants, in turn, dispute the facts and challenge the opinions and conclusions of the plaintiffs’ experts under Daubert v. Merrell Dow Pharma., Inc.[xiv] In Daubert, the Supreme Court instructed courts to resolve the admissibility of expert testimony by considering whether the expert’s methodology (1) has a testable hypothesis, (2) has been peer-reviewed, (3) has an acceptable rate of error, (4) is replicable, and (5) is generally accepted.[xv]
Plaintiffs, too, file Daubert motions, seeking rulings on the admissibility of opinions and conclusions of the defendant’s experts. Eminent experts offered by both sides are “Dauberted”—each side perhaps believing that the court may either be disinclined to limit one side’s expert evidence without also cutting down the other side’s, or refrain from curtailing either side’s proof at all.
Accordingly, class certification in antitrust cases does not come easy—or cheap. Evidentiary hearings where the plaintiff’s experts testify are common.[xvi] The plaintiff has the burden of satisfying the elements of class certification. Defendants therefore poke holes in, particularly, the evidence offered by the plaintiff’s expert. Criticism is relatively easy, and defendants have no interest in demonstrating how their criticism could be overcome to permit certification. Our U.S. approach to class certification runs counter to that endorsed in, for example, the United Kingdom and Canada, where there is no battle of experts.[xvii]
- Summary Judgment
Rule 56, Fed. R. Civ. P., provides, in pertinent part, that a court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Here, the court confronts the merits of the case directly, based on discovery conducted in the case (documents produced, pre-trial testimony, and party admissions, for example), often supplemented by statements sworn to under oath (affidavits or declarations). However, “issue identification, and not issue resolution,” is said to be the touchstone of summary judgment practice.[xviii]
Thus, the district court isn’t supposed to weigh the evidence. Rather, the test is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.”[xix] Moreover, in a typical price-fixing case, to survive summary judgment, the plaintiff must offer evidence “that tends to exclude the possibility that the alleged conspirators acted independently.”[xx]
In actual practice, summary judgment has “wiggle room.” The court must decide just how “one-sided” the evidence is, or whether inferences from the evidence offered may properly be made in favor of the plaintiffs and, if so, whether the jury could infer a violation.[xxi]
- Motions in Limine
A motion in limine is an application to the court to determine the admissibility of evidence, typically made on a date set by the court as the trial date approaches. Where there is a bonafide dispute over admissibility, resolving the matter beforehand facilitates trial proceedings. Trial time need not be devoted to arguing for or against introduction of evidence. Sometimes, success at trial may well turn on one side’s ability to introduce or exclude a particular piece of evidence, or various sources of proof that may be admitted only after a requisite foundation is first laid. Thus, as trial nears, parties often make many motions in limine raising different evidentiary issues. The court then either rules on admissibility or defers ruling pending proof offered at trial, which can clarify the issue presented.
Once again, however, the plaintiff may be called on to argue the merits of their case. Indeed, “in recent years courts have grown increasingly wary of litigants’ improper use of motions in limine to decide substantive, non-evidentiary issues.”[xxii] Attempting to litigate a dispositive issue under the guise of a motion in limine mis-uses the process. As one Court of Appeals has emphasized: “a mechanism already exists in civil actions to resolve non-evidentiary matters prior to trial—the summary-judgment motion. Allowing a party to litigate matters that have been or should have been resolved at an earlier stage not only allows those dissatisfied with the court’s initial ruling a chance to relitigate, but also deprives their opponents of the procedural protections that attach at summary judgment.”[xxiii]
An antitrust plaintiff who overcomes these pre-trial obstacles will then have the opportunity to try her case on the merits. Trials are inherently unpredictable, of course. The benefits, particularly in antitrust class actions, can be substantial, but the plaintiff could still lose and gain nothing at all.[xxiv]
[i] Jay L. Himes is Senior Counsel at Labaton Sucharow LLP and a former co-chair of the firm’s Antitrust Practice Group. Before joining the firm, he was the Antitrust Bureau Chief, Office of the Attorney General of New York.
[ii] See, e.g., Ohio v. American Express Co., 138 S.Ct. 2274 (2018); Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007); Continental TV, Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977).
[iii] Thole v. US Bank N.A., 140 S. Ct. 1615, 1618 (2020).
[iv] Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977).
[v] 459 U.S. 519 (1983).
[vi] Gelboim v. Bank of Am. Corp., 823 F.3d 759, 778 (2d Cir. 2016) (quotation marks omitted).
[vii] 139 S.Ct. 1514 (2019).
[viii] Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). See also Ashcroft v. Iqbal, 556 U.S. 662 (2009).
[ix] In re Florida Cement and Concrete Antitrust Litig., 746 F. Supp. 2d 1291 (S.D. Fla. 2010).
[x] Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699 (1962).
[xi] Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974).
[xii] Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982).
[xiii] Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013).
[xiv] 509 U.S. 579 (1993).
[xv] Id. at 593-94. See also Fed. R. Evid. 702 (codifying Daubert).
[xvi] See, e.g., Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011) (four-day evidentiary hearing and 32 expert reports submitted), certification rev’d, 569 U.S. 27 (2013).
[xvii] See, e.g., Mastercard Inc. v. Merricks,  UKSC 51; Pioneer Corp. v. Godfrey, 2019 SCC 42.
[xviii] Repp v. Webber, 132 F.3d 882, 890 (2d Cir. 1997).
[xix] Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
[xx] Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986).
[xxi] See, e.g., Kleen Products LLC v. Georgia-Pacific LLC, 910 F. 3d 927 (7th Cir. 2018) (analyzing the evidence and affirming summary judgment for the defendants).
[xxii] John M. Losinger & Cynthia M. Vera, A Guide to the Proper Use of Motions in Limine in Civil Litigation (Sep. 30, 2020), https://www.americanbar.org/groups/litigation/committees/business-torts-unfair-competition/practice/2020/guide-to-motions-in-limine-civil-litigation/.
[xxiii] Louzon v. Ford Motor Co., 718 F. 3d 556, 561 (6th Cir. 2013) (discussing authorities).
[xxiv] Compare In re Urethane Antitrust Litig., 768 F.3d 1245, 1252 (10th Cir. 2014) (jury award against defendant of $400,049,039, trebled to $1,060,847,117), with In re Nexium (Esomeprazole) Antitrust Litig., 842 F.3d 34 (1st Cir. 2016) (affirming jury verdict for defendant).