Expert Allowed at Class Certification Stage in Egg MDL

February 5, 2015

Saranac Hale Spencer, The Legal Intelligencer

The grocery stores and restaurants that have alleged price-fixing among the country’s major egg producers can present an economist as an expert witness while they seek to get class certification, the federal judge handling the case has ruled.

U.S. District Judge Gene E.K. Pratter of the Eastern District of Pennsylvania announced the decision in an opinion in In re Processed Egg Products Antitrust Litigation.

Since 1993, when the U.S. Supreme Court issued the standards to which expert witnesses are to be held in its decision in Daubert v. Merrell Dow Pharmaceuticals, district courts have played the role of gatekeeper, ensuring that expert witnesses offer reliable scientific evidence to the courts.

It is less than crystal clear how those standards are to be applied at the class certification stage.

“A threshold question is whether, and to what extent, Daubert applies at the class certification stage,” Pratter wrote. “Although there is no definitive Third Circuit precedent on point, the general consensus appears to be that the court should subject expert witnesses to Daubert scrutiny at the class certification stage of the litigation.”

She cited to two major cases in Pennsylvania federal courts in recent years—In re Chocolate Confectionary Antitrust Litigation, which was in the Middle District of Pennsylvania, and In re Flonase Antitrust Litigation, which was also in the Eastern District—as well as dicta from the U.S. Supreme Court’s 2011 decision in Wal-Mart v. Dukes for support.

The issues examined in a Daubert hearing for an expert about class certification are likely to overlap with substantive issues to be weighed in the ultimate decision, Pratter explained.

“That is because the reliability of the means of proving classwide impact frequently factors into the predominance determination in antitrust class actions,” she said.

Referring to the proposed expert, Gordon Rausser, Pratter said, “The court need not find that Dr. Rausser’s methods are, by themselves, sufficient to show, say, a common impact or that there is a reliable means of proving damages on a classwide basis—only that his methods are reliable and useful to the questions to be addressed at class certification. Therefore, though some extent of overlap is inevitable, deeming Dr. Rausser’s expert testimony admissible under Daubert does not preclude the court from denying class certification.”

The defendants in the case, the egg producers, had argued that Rausser’s model for prices in the egg market wouldn’t pass the standard set by the U.S. Supreme Court in its 2013 decision in Comcast v. Behrend, which came out of the Eastern District of Pennsylvania.

There, the Supreme Court cited to Dukes, which had rejected a class certification for more than a million women who alleged that Wal-Mart maintained a system of gender discrimination in its pay and promotion policies.

In the Comcast decision, the majority of the divided Supreme Court had ruled the model the plaintiffs had offered to the trial court in order to show their common injury, that Comcast’s practice of excluding competitors had resulted in higher costs for cable subscribers, didn’t actually satisfy the federal rule requiring predominance of an issue in order to get class certification.

When the Third Circuit upheld the district court’s opinion, it had ruled that at the certification stage, plaintiffs need not “tie each theory of antitrust impact to an exact calculation of damages.”

However, the Supreme Court disagreed. Class determination, the majority said, quoting from an earlier case, “generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s cause of action. It is clear that, under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis.”

The egg producers tied their argument to a similar idea.

“Defendants argue that Dr. Rausser’s regression, which models price, not supply or flock size, does not fit the plaintiffs’ theory that defendants conspired to reduce the supply of egg-laying hens,” Pratter said. “Defendants argue that in light of the Supreme Court’s decision in Comcast, the failure to closely tie the model exhibiting damages to the theory of the injury makes the model unreliable.”

Rausser had defended his method by arguing that “the evidentiary record shows a constraint on the growth of supply, so he does not need a model to demonstrate it—his model just measures the extent to which it caused prices to go up as a way of showing classwide impact,” Pratter said.

She agreed with the plaintiffs that Comcast wouldn’t bar Rausser’s model at this point in the litigation.

“Without making any pronouncements about the ultimate ability of direct purchaser plaintiffs to clear the Comcast bar, the court notes simply that, for Daubert purposes at least, the model proposed by Dr. Rausser is reliable and fits the case,” Pratter said.
Read more: http://www.thelegalintelligencer.com/id=1202716338076/Expert-Allowed-at-Class-Certification-Stage-in-Egg-MDL#ixzz3QsmYHnmz

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