On The Case

9th Circuit decertifies tuna price-fixing classes, clamps down on uninjured class members

Antitrust class action plaintiffs won a battle on Tuesday when the 9th U.S. Circuit Court of Appeals ruled in Olean Wholesale Grocery Co-op Inc v. Bumble Bee Foods LLC that three classes of packaged tuna fish purchasers were entitled to rely on their statistical model to establish that common issues predominated in their claims against the tuna companies.

But plaintiffs lost the war.

The 9th Circuit panel – Judges Andrew Kleinfeld, Andrew Hurwitz and Patrick Bumatay – decertified the three tuna purchaser classes suing Bumble Bee, StarKist Co, Chicken of the Sea International and other tuna packagers, concluding that U.S. District Judge Janis Sammartino abused her discretion by failing to pick between the two sides’ different statistical models on classwide injury.

The two models offered wildly different hypotheses on the percentage of class members who were affected by the alleged price fixing: Plaintiffs contended that nearly 95% of tuna purchasers had suffered an antitrust injury, but defendants said nearly 30% were uninjured. The 9th Circuit held that Sammartino should not have certified the class without resolving that discrepancy.

Even more significantly, the 9th Circuit staked out a clear position on the vexatious issue of class certification and uninjured class members. The appeals court explicitly held that trial judges may not certify classes that contain more than a minimal number of uninjured class members. The 9th Circuit cited similar rulings from other federal circuits in antitrust class actions, including the D.C. Circuit in 2019’s In re Rail Freight Fuel Surcharge Antitrust Litigation, which said the “outer limit” is 5% to 6%. In the 1st Circuit’s 2018 decision in In re Asacol, the appeals court overturned certification of a class in which 10% of class members were potentially uninjured.

The 9th Circuit’s tuna ruling did not set a bright-line standard for an acceptable percentage of uninjured class members, but I’m sure the ruling will nevertheless empower class action defendants, especially in antitrust cases that rely on statistical modeling to show the impact of price fixing, to argue that purchasers can’t be certified as a class because not all of them were injured. (It’s probably not a coincidence that the 1st, 9th and D.C. Circuit rulings on class certification and uninjured class members have all occurred in antitrust cases, in which plaintiffs are specifically required to prove antitrust injury in their pleadings.)

Bumatay, who wrote the opinion, said the threshold percentage “must be de minimus.” And if defendants are right that more than a quarter of the purchasers in the class were not injured, the opinion said, that’s clearly more than a minimal number. “If 28% of the class were uninjured,” the 9th Circuit concluded, “common questions of law or fact would not be shared by substantially all the class members, nor would they prevail in strength or pervasiveness over individual questions.”

In a potentially ominous footnote for class action plaintiffs, the 9th Circuit added that the presence of uninjured plaintiffs in certified classes “also raises serious standing implications under Article III” of the Constitution. “We are skeptical,” Bumatay wrote, that Article III permits certification of a class that includes “countless” unnamed class members who were not injured. But the 9th Circuit said it did not have to reach questions about constitutional standing because plaintiffs’ could not satisfy the class action rules.

Only Kleinfeld and Bumatay joined in the 9th Circuit’s conclusion that classes with more than a minimal percentage of uninjured class members cannot be certified. In a dissent, Hurwitz said the majority had effectively breached standard procedure to add a new provision to Rule 23.

“We should not legislate from the appellate bench based on our personal concerns with the class action device,” Hurwitz wrote. “Under the (class action) rule as currently written, we should instead leave fact-based decisions on predominance and case management to the sound discretion of the district courts.”

I emailed queries on the significance of the decision to the three plaintiffs lawyers who argued for tuna purchasers at the 9th Circuit: Christopher Lebsock of Hausfeld; Jonathan Cuneo of Cuneo Gilbert & LaDuca; and Thomas Burt of Wolf Haldenstein Adler Freeman & Herz. None of them got back to me.

Scott Nelson of Public Citizen, who filed an amicus brief in the case, said by email that the majority’s opinion is inconsistent with both the text of Rule 23 and 9th Circuit precedent on whether classes can be certified with more than a de minimus number of uninjured class members.

“The possibility that a more than de minimus number of class members may ultimately lose on the merits of their claims doesn’t mean that a class action is not the best and most efficient way of resolving a case,” Nelson said. “Even if it is possible that the defendants may ultimately succeed in showing that 28% of the class could not recover, a reasonable district court could still conclude that this case would benefit from being litigated as a class action because the common questions it undisputedly presents predominate over questions that are not common.”

It’s worth noting, as the 9th Circuit did in its opinion, that the major defendants have been targeted in a Justice Department antitrust case and have admitted price fixing.

Gregory Garre of Latham & Watkins argued at the 9th Circuit for the tuna defendants. A Latham spokeswoman said the firm would not provide a statement on the decision. Allen & Overy and Paul, Weiss, Rifkind, Wharton & Garrison also represent defendants in the case.

A spokesman for StarKist said the company was pleased with the decision decertifying the purchaser classes. StarKist’s statement noted that senior managers were unaware of the anticompetitive conduct of one employee several years ago but that in an acceptance of responsibility has reached out-of-court settlements with more than 75% of its direct purchasers.

“While we are pleased with this ruling and believe that the 9th Circuit’s decision will make it difficult for the class plaintiffs to certify classes on remand, StarKist remains willing to work to resolve these issues on a reasonable basis so as to avoid further protracted litigation,” the statement said.

The tuna cases will now return to Sammartino, the trial judge, to decide whether plaintiffs’ models show by a preponderance of the evidence that the class contains only a minimal number of uninjured class members.

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