On April 8, 2022, the U.S. Court of Appeals for the Ninth Circuit, sitting en banc, re-certified three classes of packaged tuna buyers, rejecting a Ninth Circuit panel-majority’s per se rule regarding a de minimis number of uninjured class members.1 We last wrote about the packaged tuna antitrust saga in May of 2021 when the panel decertified the classes of buyers.2 The panel-majority held that class plaintiffs must establish that “all (or nearly all)” putative class members were injured and that certification is improper where more than a de minimis number of class members suffered no injury.3 We opined at the time that “[i]f Olean in its current state is found to be the law of the Ninth Circuit, . . . plaintiffs will face yet another hurdle to certifying large, unwieldy classes . . . .” We now know this is not the case, at least for now.
The Ninth Circuit’s en banc opinion takes a more permissive approach. In seeking class certification, a plaintiff now need only provide evidence demonstrating that a common question is capable of class-wide resolution, not that the plaintiff will ultimately prevail on that question at trial.
Background and Procedural Update
In the underlying litigation, Plaintiff tuna purchasers alleged that defendants—several who plead guilty in parallel criminal actions—conspired to fix prices for packaged tuna. The district court certified three subclasses, finding that plaintiffs sufficiently demonstrated that they could prove class-wide impact through common evidence in view of their experts’ testimonies. Despite defendants’ rebuttal expert, the district court found plaintiffs’ experts reliable and ruled that defendants’ challenge was “ultimately a merits decision” for the jury.4 On appeal, a three-judge panel decertified the classes, holding that when a class contains more than a de minimis number of uninjured persons, a Rule 23(b)(3) class cannot be certified as the determination of class membership would predominate common questions.
Following the panels’ decision, a majority of non-recused active judges voted to vacate the panel decision and rehear the case en banc. More briefing followed, including from numerous amici.5
Majority En Banc Decision
Judge Ikuta, writing for an 8-2 majority, recertified the three subclasses, finding that plaintiffs met Rule 23’s requirements, specifically that a common question exists under Rule 23(a)(2), and that such common questions predominate over individualized issues under Rule 23(b)(3).
The court held that once a plaintiff has shown that a common question exists, a district court “is limited to resolving whether the evidence establishes that a common question is capable of class-wide resolution,” i.e., resolution in “one stroke.”6 In determining such, district courts need not resolve such questions on the merits. For example, in relying on expert evidence, the court stated that the critical question is whether each putative class member “could have relied on the expert evidence” had they pursued individual actions, not whether the expert evidence “in fact establishes that plaintiffs would win at trial.”7 The court did recognize, however, that in certain circumstances a “district court must also resolve disputes about historical facts  to determine whether the plaintiffs evidence is capable of resolving a common issue central to the plaintiffs’ claims.”8
The court also held (joining other circuits) that a plaintiff must prove Rule 23’s elements by a preponderance of the evidence.9 The court made clear that a plaintiff may only use admissible evidence to meet this burden.10 The court also ruled that Daubert and Rule 702 applies in full to expert evidence at the class certification stage.11 But even if expert evidence is found admissible and reliable under Daubert, the court held that district courts must also assess whether the evidence is capable of answering a common question in “one stroke.”12 The court recounted examples of inadequate expert evidence, such as where the evidence lead to “nonsensical results such as false positives,” “contained unsupported assumptions,” or “was inadequate to prove an element of the claim for the entire class.”13
Finally, the court split with the panel-majority’s decision, rejecting a per se rule prohibiting certification where a class may contain more than a de minimis number of uninjured class members.14 Rule 23(b)(3) requires only “that the court determine whether individualized inquiries about such matters would predominate over common questions,” the thus the court held that rule can be satisfied when a putative class contains uninjured class members.15 Rather than denying certification, the court suggested that district courts redefine problematic classes to remove uninjured members, stressing however that courts cannot “create a ‘fail safe’ class that is defined to include only those individuals who were injured.”16 The court also addressed Article III standing and the Supreme Court’s 2021 TransUnion LLC v. Ramirez decision.17 By showing class-wide antitrust impact, the court held, plaintiffs satisfied any such issue at the class certification stage, “whether or not that was required.”18 The court declined to further address whether the “possible presence of a large number of uninjured class members raises an Article III issue.”19 The court did, however, overrule its prior statement that “no class may be certified that contains members lacking Article III standing.”20
Judge Lee, joined by Judge Kleinfeld, dissented, stating that the majority decision “amounts to handing victory to plaintiffs” and “is akin to the NFL declining to review a critical and close call fumble during the waning minutes of the game unless and until the game reaches overtime (which, of course, will likely never occur if it does not decide the disputed call).”21 Indeed, Judge Lee stated that the “implications extend beyond to a wide sea of class action cases . . . [and] will unleash a tidal wave of monstrously oversized classes designed to pressure and extract settlements.”22
According to Judge Lee, the failure to address the uninjured-class-members amounts to legal error as “[s]imply put, a plaintiff cannot prove that common issues predominate if one out of three putative class members suffered no harm.”23 “By definition,” Judge Lee noted, “a class with 80% uninjured members cannot present a predominance of common issues because they have nothing in common with the remaining sliver of injured members.”24 Provided dueling experts on this issue, the district court was required resolve the battle of the experts to determine whether common issues will in fact predominate. “If we had to refrain from deciding the persuasiveness of an expert opinion used to show commonality, a plaintiff could prevail on class certification by merely offering a well-written and plausible expert opinion.”25
Judge Lee further argued that the majority opinion “needlessly” splits with the First Circuit’s Asacol decision and the D.C. Circuit’s Rail Freight decision.26 Those courts, Judge Lee stated, held that the predominance requirement was not met “because more than a ‘de minimis’ number [of class members] were uninjured.”27
Should the en banc majority’s decision stick, the decision has vast implications for class actions in the Ninth Circuit, and potentially beyond, raising the bar for plaintiffs in certain respects and lowering the bar in others. The key takeaways are as follows:
- The preponderance-of-the-evidence applies to meeting Rule 23’s requirements and plaintiffs must satisfy this burden with admissible evidence.
- District courts need only resolve whether plaintiffs’ evidence establishes that a common question is capable of class-wide resolution, not whether the evidence establishes that plaintiffs will prevail. In some circumstances, these questions overlap such that a district court will be required to resolve disputes over “historical facts” to determine whether evidence is capable of resolving a common issues.
- Daubert and Rule 702 applies to expert evidence supporting class certification. District courts must go beyond Daubert and Rule 702 to determine whether expert evidence also satisfies Rule 23’s requirements.
- There is no per se rule precluding certification of a class that includes more than a de minimis number of uninjured class members. Rather, district courts must determine whether individualized questions relating to injury would predominate over common questions, regardless of the number of uninjured class members. If a class definition is overbroad, district courts are encouraged to “redefine” the class definition rather than denying certification altogether, to weed out injured class members.
Defendants will likely request review from the Supreme Court, especially given the majority’s divergence on a per se de minimus injury rule from both the panel decision as well as potentially two other circuit courts. Indeed, this case could provide a vehicle for the Supreme Court to address the question it expressly did not reach in TransUnion “whether every class member must demonstrate standing before a court certifies a class.”28