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The Latest Decision on Expert Testimony at the Class Certification Stage

On September 26, 2013 by Schnader in Finance

By Stephen A. Fogdall

A judge in the United States District Court for the Northern District of California just entered an order in  In re Cathode Ray Tube Antitrust Litigation on an issue we follow on this blog:  the evaluation of expert testimony at the class certification stage.

The Cathode Ray Tube court granted a motion to certify a class of indirect purchasers who said that they had paid inflated prices due to the defendants’ alleged conspiracy to fix the prices of cathode-ray tube technology. At the same time, the court rejected the defendants’ Daubert challenge to the expert testimony the plaintiffs offered to establish antitrust injury on a class wide basis.

The defendants argued that the expert’s analysis was flawed because it utilized average prices instead of actual prices and was based on erroneous assumptions about the susceptibility of the industry to price-fixing. The court concluded that the defendants were asking for “a full-blown merits analysis, which is forbidden and unnecessary at the class certification stage.”

As we have previously discussed, the U.S. Supreme Court sent somewhat mixed signals this last term regarding the resolution of merits issues on a motion for class certification. On the one hand, the Court held in Behrend that “arbitrary” or “speculative” expert testimony could not support class certification even if the expert’s model would apply on a class wide basis. On the other hand, the Court held in Amgen, an alleged securities fraud case, that the plaintiffs need not establish materiality at the class certifications stage, but need only show that materiality could be established on a class wide basis at trial. Therefore, in one case the Court said that class wide applicability of proof would suffice for class certification, while in another case the Court said that flaws in the evidence could defeat class certification notwithstanding class wide applicability.

The Cathode Ray Tube court essentially put these decisions together and extracted this principle:  if a plaintiff’s expert testimony survives Daubert scrutiny and applies on a class wide basis, then class certification is appropriate.

We will continue to monitor decisions in this area to see if other federal courts adopt this same approach in the wake of Behrend and Amgen.

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