Antitrust claims can successfully navigate last decade’s reforms. As market concentration intensifies, especially in the technology sector, it is crucial for class counsel to adequately represent plaintiffs and bring antitrust class actions to safeguard their rights.
In the January 23, 2024 edition of The Legal Intelligencer, Edward Kang wrote, “Collective David Against Corporate Goliaths: Named Plaintiffs’ Standing in Antitrust Class Actions.”
Class action cases make it possible for consumers to band together and defend their interests collectively in cases where it might be impractical to defend them individually. Recently, many legal scholars claimed that the cascade of legislative and judicial reforms has hobbled antitrust class actions, making them harder to plead, certify and litigate. However, class actions continue to be the mainstay of antitrust enforcement, exceeding government actions by more than 25 to one. Between 2005 and 2020, the number of judicial approvals of settlements grew, on average, 10.31% every year; the number of approved settlements exceeding $100 million increased three-fold between 2012 and 2020.
Antitrust claims can successfully navigate last decade’s reforms. As market concentration intensifies, especially in the technology sector, it is crucial for class counsel to adequately represent plaintiffs and bring antitrust class actions to safeguard their rights. Practitioners should be aware of what legal claims are more likely to successfully clear the main procedural hurdles, one such being the issue of standing.
Article III Standing and Class Certification
Often perceived as one of the rising barricades at the procedural gates for an antitrust class action lawsuit, the issue of standing is receiving increasing focus. It is common for a small group of named plaintiffs to start antitrust class actions, alleging that a widespread monopoly has raised prices for a particular product, affecting downstream purchasers throughout the country. An interesting issue arises in class action cases asserting claims under a variety of similar state laws, of whether standing principles—which govern who gets to sue, and for what causes—require that there be a named plaintiff with a purchase or transaction in each of the states whose laws are at issue. The threshold question of standing in such cases typically comes to the forefront during motions to dismiss when defendants seek dismissal of claims in states where no named plaintiff has made a purchase or conducted a transaction.
The standing doctrine arises from the Article III limitation that federal courts may only decide cases and controversies. To meet the constitutional requirements, a plaintiff must show that he suffered an injury-in-fact; that there is a causal connection between the injury and the challenged action of the defendant; and that the injury may be redressed by a favorable decision. In class action cases, the standing inquiry focuses on the class representatives. To bring a class action claim, plaintiffs must certify the class by satisfying the requirements of Federal Rule of Civil Procedure 23. This includes the requirements outlined in Rule 23(a), such as numerosity, typicality, commonality, and adequacy, in addition to fulfilling at least one of the subsections under Rule 23(b). A majority of antitrust class actions are initiated under Rule 23(b)(3), which introduces two additional requirements: superiority and predominance. Between 2005 and 2020, courts granted the largest number of class certifications in the U.S. Courts of Appeal for the Second, Third and Ninth Circuits. In other jurisdictions, the odds of class certification drop from 49.9% to an average of 37.5%.
The Circuit Split on the Issue
Courts have split on the question of whether named plaintiffs have Article III standing to represent a class asserting claims in states where they had no transaction and thus suffered no injury-in-fact. The First, Second, Fourth, and Sixth Circuits have addressed this precise issue. Among them, the majority found that if the named plaintiffs can establish Article III standing for their state law claims, the issue of their ability to represent absent class members, whose claims are based on other states’ laws, becomes a matter of adhering to the criteria outlined in Rule 23.
In In re Asacol, 907 F.3d 42 (1st Cir. 2018), the First Circuit considered the issue as one of representative standing: “Courts generally focus not on whether the putative representative independently satisfies Article III standing, but rather on whether that party qualifies under the applicable law as a representative of the one who does have standing.” Thus, the court held that there was no requirement that the named plaintiff’s claims be identical to the claims of each class member, and that the “Article III focus in class actions” is on the named plaintiffs’ incentives to adequately litigate the class members’ claims, which is a question to be decided under Rule 23.
Similarly, in Langan, the Second Circuit found that class actions brought under Rule 23 result in efficiencies of cost, time, and judicial resources. Further, the court reasoned that “it rarely happens that the circumstances surrounding one plaintiff’s claim end up being identical to the claims of another putative class member let alone all of the others.” See Langan v. Johnson & Johnson Consumer, 897 F.3d 88 (2d Cir. 2018). Thus, the court held that “as long as the named plaintiffs have standing to sue the named defendants, any concern about whether it is proper to include out-of-state, nonparty class members with claims subject to different state laws is a question of predominance under Rule 23(b)(3), not a question of ‘adjudicatory competence’ under Article III.”
In Mayor, the Fourth Circuit similarly held that the ability of a named plaintiff to bring claims on behalf of a class implicated statutory standing, not constitutional standing. See Mayor & City Council of Balt. v. Actelion Pharmaceuticals, 995 F.3d 123 (4th Cir. 2021). The court found that the claims that plaintiffs made on behalf of the class members in states where the plaintiffs did not make a purchase should not be stricken. Rather, those claims should be analyzed in the context of Rule 23: whether the named plaintiffs’ claims raise “questions of law or fact common to the class,” are typical, or raise predominance problems. See Mayor & City Council of Balt. v. Actelion Pharmaceuticals, 995 F.3d 123 (4th Cir. 2021).
The Sixth Circuit disagrees. In Fox, the Sixth Circuit rejected the lower court’s class certification, reasoning that because the named plaintiff lacked standing to file an individual lawsuit against all defendants, he could not gain standing to bring claims against all defendants by invoking Rule 23 and filing a class action. See Fox v. Saginaw County, Michigan, 67 F.4th 284, 296 (6th Cir. 2023).
Lower Courts Remain Divided
While the issue may be settled in the above-mentioned circuits, district courts’ views vary widely. How the courts frame the issue might predict the outcome. Courts that permit plaintiffs to pursue state law claims from jurisdictions where they did not allege injury-in-fact view the named plaintiffs as asserting claims solely under their own state laws. Simultaneously, they seek to represent absent class members whose claims arise under similar state laws. As the court articulated in In re Bayer, whether the named plaintiffs have standing to bring suit under each of the state laws alleged was “immaterial” because they were not bringing those claims on their own behalf but are solely seeking to represent other similarly situated consumers in those states. See In re Bayer Combination Aspirin Products Marketing & Sales Practices Litigation, 701 F. Supp. 2d 356 (E.D.N.Y. 2010). In contrast, when courts view the named plaintiffs themselves as asserting claims under multiple state laws, they tend to find that named plaintiffs are mandated to have facially valid claims in all the states.
Despite the challenges associated with litigating the issue of standing, practitioners can successfully navigate through this obstacle by employing sound legal strategies. In light of the decisions in Asacol, Langan, and Mayor, class counsel’s arguments against the necessity of named plaintiffs’ constitutional standing in each state are likely to be taken more seriously. Plaintiffs are more likely to succeed in their arguments if they present the issue as one where the named plaintiffs are solely seeking to represent other similarly situated consumers in states where the named plaintiffs did not suffer an injury. This strategic framing may enhance the viability of their claims and influence the court’s interpretation of the standing requirements in the context of class actions.
Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at firstname.lastname@example.org.
Reprinted with permission from the January 23, 2024 edition of “The Legal Intelligencer” © 2024 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or email@example.com.