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INTRODUCTION

Workers classified as independent contractors do not enjoy the legal benefits of the employment relationship, including the protection of wage and hour laws, an entitlement to workers’ compensation or unemployment benefits, or access to the National Labor Relations Act’s (“NLRA”) framework for collective bargaining.³3. The NLRA explicitly excludes “independent contractors,” 29 U.S.C. § 152(3), while federal wage-and-hour protections under the Fair Labor Standards Act (FLSA) are limited to “employees.” See 29 U.S.C. § 206(a) (setting a federal minimum wage for employees); id. § 207(a) (setting maximum hours for employees). Unemployment and workers’ compensation benefits are typically administered through state law, and while states vary in their approach to classifying workers, they all limit benefits to workers classified as employees. See Independent Contractor Classification, Practical Law Practice Note 4-503-3970, State and Local Tests; see also generally Brishen Rogers, Employment Rights in the Platform Economy: Getting Back to Basics, 10 Harv. L. & Pol’y Rev. 479, 484–96 (2016) (discussing the employee-independent contractor distinction’s ramifications for Uber and Lyft drivers); Catherine L. Fisk, Sustainable Alt-Labor, 95 Chi.-Kent L. Rev. 7, 15–16 (2020) (noting how misclassification of workers as independent contractors through the courts has resulted in a loss of substantial employee benefits for those workers).Show More Another possible consequence of independent contractor status is antitrust liability: While employees may engage in otherwise-illegal concerted action as part of a labor dispute, according to one theory of the “labor-dispute exemption,” independent contractors can be sued, enjoined, and forced to pay treble damages to the companies they work for if they organize to demand higher wages and strike.⁴4. See Brief for the United States and the Federal Trade Commission as Amici Curiae at 8, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“Independent contractors, as horizontal competitors, may not collude to set the price for their services.”); 15 U.S. Code § 15(a) (authorizing treble damages in private suits); infra Part I.Show More Platform workers in the ride-hailing industry are currently considered independent contractors under federal labor law, and thus if they go on strike or exert collective pressure on platform companies, they may face liability under the antitrust laws.⁵5. NLRB Advice Memorandum, Uber Technologies, Inc. Cases 13-CA-163062, 14-CA-158833, and 29-CA-177483 (Apr. 16, 2019) (uber drivers are classified as independent contractors under the prevailing standard based on Supershuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019)); but see Order Granting Review and Notice and Invitation to File Briefs, The Atlanta Opera, Inc., Case 10-RC-276292 (Dec. 27, 2021) (inviting parties and amici to submit briefs addressing whether the Board should reconsider the Supershuttle standard).Show More

In 2016, a group of Puerto Rican jockeys formed a labor organization to protest the terms under which they were hired by the horse owners and the owner-operator of a racetrack.⁶6. Confederación Hípica v. Confederación de Jinetes Puertorriqueños (Jinetes), 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023).Show More The jockeys organized a strike, and the horse and racetrack owners sued. The District Court found that the jockeys had violated antitrust law by acting in concert to restrain trade and could not benefit from the labor-dispute exemption because of their independent contractor status.⁷7. Id. at 312.Show More In April 2022, the First Circuit reversed, extending the statutory labor-dispute exemption beyond the legal employment relationship for the first time.⁸8. Id. at 314. Strictly speaking, what was new in this case was extending the exemption to alleged independent contractors without finding any employee-employer relationship indirectly at issue; courts have included independent contractors in the exemption in some limited circumstances involving industries in which independent contractors compete with legal employees. See infra note 22 and accompanying text. The First Circuit also did not take a position on the jockeys’ status, rejecting a doctrinal framework that would require a finding of employee status before applying the exemption. See infra Part II.Show More

The rule the court articulated—that any dispute over wages is a labor dispute, regardless of whether or not it is between employees and employers—opens the door to labor organizing in the gig economy, an important opportunity for workers in a growing sector.⁹9. See Lawrence F. Katz & Alan B. Krueger, The Rise and Nature of Alternative Work Arrangements in the United States, 1995–2015, 72 ILR Rev. 382, 383 (2019) (“[T]he percentage of workers engaged in alternative work arrangements—defined as temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers—rose from 10.7% in February 2005 to somewhere in the 12.6 to 15.8% range in late 2015.”); Monica Anderson, Colleen McClain, Michelle Faverio & Risa Gelles-Watnick, Pew Rsch. Ctr., The State of Gig Work in 2021, at 11 (2021), https://www.pewresearch.org/internet/2021/12/08/americans-experiences-earning-money-through-online-gig-platforms [https://perma.cc/LYM9-YNUJ] (“About one-in-ten adults (9%) have earned money doing gig platform work in the past 12 months.”).Show MoreBut it’s unclear just how far it opened the door: Replacing a categorical test based on employee classification with the hazy distinction between wages and prices allows courts to construe the exemption as broadly or as narrowly as they like.

I. The Statutory Labor-Dispute Exemption Before Jinetes

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade.”¹⁰10. 15 U.S.C. § 1.Show More The Act was originally passed to fight rising corporate monopolies,¹¹11. See Apex Hosiery Co. v. Leader, 310 U.S. 469, 492–93 (1940) (“[The Sherman Act] was enacted in the era of ‘trusts’ and of ‘combinations’ of businesses and of capital organized and directed to control of the market by suppression of competition in the marketing of goods and services, the monopolistic tendency of which had become a matter of public concern.”); Standard Oil Co. v. United States, 221 U.S. 1, 50 (1911) (“[T]he main cause which led to the legislation was the thought that it was required by the economic condition of the times; that is, the vast accumulation of wealth in the hands of corporations and individuals.”).Show More but courts—eager to suppress the nascent labor movement—relied on the vague language of the Sherman Act to issue injunctions against strikers, picketers, and any form of labor action involving violence, social pressure, or even “moral intimidation.”¹²12. Vegelahn v. Guntner, 44 N.E. 1077, 1077 (1896); see Loewe v. Lawlor (Danbury Hatters), 208 U.S. 274, 276 (1908) (holding unions subject to injunctions under the Sherman Act).Show More

In 1914, Congress attempted to oust federal courts from antitrust scrutiny of labor disputes through the passage of the Clayton Act. Section 6 of the Clayton Act declares that, for the purposes of antitrust law, “[t]he labor of a human being is not a commodity,” and that “[n]othing contained in the antitrust laws shall be construed to forbid the existence and operation of labor . . . organizations . . . ; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.”¹³13. 15 U.S.C. § 17.Show More Yet, the federal courts were not deterred. In Duplex Printing, the Supreme Court construed Section 20 of the Clayton Act as merely codifying the case law that had grown around the labor injunction, importing the federal common-law prohibitions on labor boycotts enforced in cases like Danbury Hatters.¹⁴14. Duplex Printing Press Co. v. Deering, 254 U.S. 443, 470 (1921) (“The first paragraph [of Clayton Act § 20] merely puts into statutory form familiar restrictions upon the granting of injunctions already established and of general application in the equity practice of the courts of the United States.”).Show More

President Hoover signed the Norris-LaGuardia Act in 1932.¹⁵15. 29 U.S.C. § 101. Show More That Act barred federal courts from issuing injunctions “in a[ny] case involving or growing out of a labor dispute.”¹⁶16. Id.Show More A decade later, and after the additional passage of the NLRA, the Court construed the ouster broadly, restoring the original purpose of the Clayton Act as a bar on any antitrust scrutiny of labor organizing.¹⁷17. See United States v. Hutcheson, 312 U.S. 219, 231 (1941) (“[W]hether trade union conduct constitutes a violation of the Sherman Law is to be determined only by reading the Sherman Law and § 20 of the Clayton Act and the Norris-LaGuardia Act as a harmonizing text . . . .”).Show More

The next year, the Supreme Court issued the first in a series of decisions that narrowed the applicability of the labor-dispute exemption. In Columbia River Packers, the Supreme Court declined to apply the exemption to a dispute between a fishermen’s union and the owner of a cannery.¹⁸18. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 145 (1942).Show More The union represented fishermen who owned or leased fishing vessels and, in some cases, employed their own crew.¹⁹19. Id. at 147.Show More The Court found that they were independent businesspeople, and their dispute with the cannery was over “the terms of a contract for the sale” of fish, rather than, as the Norris-LaGuardia Act required, “the terms or conditions of employment.”²⁰20. Id. at 145.Show More The Court reasoned that because in passing the Norris-LaGuardia Act “the attention of Congress was focussed upon disputes affecting the employer-employee relationship, . . . the Act was not intended to have application to disputes over the sale of commodities.”²¹21. Id.Show More While acknowledging that the Norris-LaGuardia Act expressly allowed for parties to a labor dispute that did not stand in “the proximate relation of employer and employee,” the Court insisted that it did not apply to “controversies upon which the employer-employee relationship has no bearing.”²²22. Id. at 147.Show More

Though nothing in either the Clayton or Norris-LaGuardia Act conditions the immunity on the labor group consisting of common-law employees (as opposed to independent contractors), the Court has, in a handful of cases, declined to apply the immunity to independent contractors that were selling (or re-selling) goods, or whom the Court found were otherwise in business for themselves, and not merely workers selling their labor.²³23. See, e.g., United States v. Women’s Sportswear Mfr. Ass’n, 336 U.S. 460, 463–64 (1949) (denying the exemption to a stitching contractor who sold labor but also had “rentals, capital costs, overhead and profits,” and thus was “an entrepreneur, not a laborer”); Los Angeles Meat & Provision Drivers Union v. United States, 371 U.S. 94, 96–97 (1962) (denying the exemption to “grease peddlers,” whom the Court found were “independent entrepreneurs whose earnings as middlemen consisted of the difference between the price at which they bought . . . restaurant grease . . . and the price at which they sold it to the processors,” and who had significant capital investment in the form of “operating and maintaining their trucks”); see also FTC v. Superior Ct. Trial Laws. Ass’n, 493 U.S. 411, 436 (1990) (upholding FTC order against boycott by private attorneys who worked as court-appointed counsel). The exemption was not raised on appeal. See Superior Ct. Trial Laws. Ass’n v. FTC, 856 F.2d 226, 230 n.6 (D.C. Cir. 1988) (“Petitioners routinely used the word ‘strike’ to describe their concerted refusal to accept new cases. Petitioners have not suggested, however, that they are ‘employees’ within the meaning of § 20 of the Clayton Act . . . or that SCTLA is a ‘labor organization’ within the meaning of § 6 of the same Act . . .”).Show More In other cases, workers classified as independent contractors, doing the same work as employees but under different contractual conditions, have enjoyed antitrust immunity for labor union activity.²⁴24. See, e.g., Am. Fed’n of Musicians v. Carroll, 391 U.S. 99, 106 (1968) (treating independent contractor band leaders as a “labor group” involved in a “labor dispute” due to the presence of “job or wage competition or some other economic inter-relationship affecting legitimate union interests between the union members and the independent contractors”); H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 721–22 (1981) (“In a case . . . where there is no direct wage or job competition between the union and the group it regulates [viz. agents], the Carroll formulation to determine the presence of a nonlabor group . . . necessarily resolves this issue.”).Show More While some lower courts have inferred a categorical exclusion,²⁵25. See, e.g., Taylor v. No. 7, Int’l Union of Journeymen Horseshoers, 353 F.2d 593, 606 (4th Cir. 1965) (finding that a boycott by the farriers’ union was not entitled to the exemption because the farriers “do not stand in the proximate relation of employees and employers” with horse owners and trainers and “[t]here is no evidence in the record that the boycotting and price-fixing activities of the defendant unions were undertaken in aid of or in connection with the wages, hours, working conditions or any other interest of horseshoers”); Julien v. Soc’y of Stage Dirs. & Choreographers, Inc., No. 68 CIV 5120, 1975 WL 957, at *1 (S.D.N.Y. Oct. 7, 1975) (finding that members of defendant organization “are employees of producers and not independent contractors [and] therefore come[] within the labor exemption”); Int’l Ass’n of Heat & Frost Insulators & Asbestos Workers, etc. v. United Contractors Ass’n, 483 F.2d 384, 390–91 (3d Cir. 1973) (“[C]ourts have sought to fashion the labor exemption . . . according to the . . . analyses of the function of the work in its relevant economic relationships.”); Spence v. Se. Alaska Pilots’ Ass’n, 789 F. Supp. 1007, 1012 (D. Alaska 1990) (“A party seeking refuge in the statutory exemption must be a bona fide labor organization and not independent contractors.” (citing H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 717 n.20 (1981))); Ring v. Spina, 148 F.2d 647, 652 (2d Cir. 1945) (“[T]he controversy cannot concern itself with conditions of employment, since none of the parties affected are in any true sense employees. . . . We think the exception therefore inapplicable.”). Show More the Supreme Court’s cases on the issue are few, and offer ambiguous guidance.²⁶26. See Henry H. Perritt, Jr., Don’t Burn the Looms—Regulation of Uber and Other Gig Labor Markets, 22 SMU Sci. & Tech. L. Rev. 51, 143–44 (2019) (“Most labor lawyers assume that independent contractors are outside the scope of the labor exemption, on the strength of Allen Bradley, Columbia River Packers, and a number of lower court opinions. However, the case law supporting that proposition is not as strong as one might assume.”); Michael C. Duff, Labor Viscerality? Work Stoppages in the “New Work” Non-Union Economy, 65 St. Louis U. L.J. 115, 148–49 (2020) (noting “the paucity of authority since Columbia River Packers touching on the question of application of the [Norris-LaGuardia Act] to non-employee workers,” and that “it is difficult to locate any narrowing authority” to support lower court inferences to a categorical rule); Samuel Estreicher & Jack Samuel, Independent-Contractor Unionism and the Antitrust Laws 49–56 (Apr. 4, 2023) (unpublished manuscript) (on file with author) (arguing that the Supreme Court’s precedents do not incorporate the common-law agency tests but rather distinguish workers, including independent contractors who sell only their labor, from independent entrepreneurs). Show More Some labor and antitrust experts side with the lower courts in adopting a categorical approach, while others argue that—as far as the Supreme Court cases go—there remains a grey area in which independent contractors who are not in business for themselves fall within the scope of the exemption.²⁷27. Compare Brief for the United States and the Federal Trade Commission as Amici Curiae at 8, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“Independent contractors, as horizontal competitors, may not collude to set the price for their services.”), and Heather M. Whitney, Rethinking the Ban on Employer-Labor Organization Cooperation, 37 Cardozo L. Rev. 1455, 1482 n.143 (2016) (summarizing the current doctrine as categorically excluding independent contractors), with Brief for Professor Samuel Estreicher as Amicus Curiae at 5, Chamber of Com. v. City of Seattle, 890 F.3d 769 (9th Cir. 2018) (No. 17-36540) (“There is nothing in the Clayton Act or Supreme Court decisions on labor’s statutory antitrust exemption that hinges the applicability of the exemption on ‘employee’ status under federal labor relations law.”).Show More

II. The First Circuit’s Decision

Puerto Rico is home to only one racetrack: Hipódromo Camarero in the town of Canóvanas.²⁸28. Jinetes, 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023).Show More The Camarero jockeys are hired by horse owners and paid a twenty-dollar “mount fee” per race—a rate about one-fifth of that paid to their counterparts in the rest of the United States, and which has not changed since 1989—plus prize money for the top five finishers.²⁹29. Id.Show More The jockeys have been unhappy with this arrangement for years; they have also criticized pre-race weigh-in procedures and the conduct of racing officials.³⁰30. Id.Show More On June 10, 2016, several aggrieved jockeys refused to race.³¹31. Id.Show More Race officials fined them; in response, thirty-seven jockeys refused to race for three days.³²32. Id.Show More The horse and racetrack owners sued the jockeys, along with their spouses and two different associations that had been involved in the dispute.³³33. Id. Show More The district court enjoined the work stoppage and awarded summary judgment to the owners, trebling their claimed losses and ordering the jockeys to pay $1,190,685.³⁴34. Id. at 312.Show More

On appeal, the jockeys argued that the labor-dispute exemption should apply. The First Circuit rejected the district court’s categorical exclusion of the jockeys from the protection of the labor-dispute exemption based on their “alleged independent-contractor status.”³⁵35. Id. at 314.Show More It noted that “any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating . . . terms or conditions of employment,”³⁶36. Id. at 313 (quoting 29 U.S.C. § 113(c)).Show More was by statute an exempted labor dispute.

The court interpreted Columbia River Packers as standing not for a categorical exclusion of independent contractor labor organizations but for a distinction between “disputes about wages for labor” and “those over prices for goods.”³⁷37. Id. at 315. The court distinguished Taylor v. Loc. No. 7, Int’l Union of Journeymen Horseshoers, 353 F.2d 593 (4th Cir. 1965) (en banc), along the same lines: The independent contractors in that case did not only sell their labor but sold horseshoes as well, so the dispute was at least partly over prices for goods. Id. at 315 n.3. The First Circuit did not address Women’s Sportswear or Los Angeles Meat and discussed Superior Court Trial Lawyers Association only by way of noting that the labor exemption was not argued. See id. at 316 n.4.Show More Unlike other independent contractor cases, the First Circuit held that, as a “labor only case,” Jinetes did not involve any dispute over prices. “The key question,” according to the First Circuit, “is not whether the jockeys are independent contractors or laborers but whether what is at issue is compensation for their labor.”³⁸38. Id. at 314.Show More

Having established the irrelevance of the jockeys’ employment status as a threshold question determining the exemption’s applicability, the First Circuit applied the four-part test usually reserved for disputes involving employees. The exemption “applies to conduct arising (1) out of the actions of a labor organization and undertaken (2) during a labor dispute, (3) unilaterally, and (4) out of the self-interest of the labor organization.”³⁹39. Id. at 313.Show More The defendant association in Jinetes “advocates for the jockeys’ terms of employment”⁴⁰40. Id. at 314.Show More and thus is “a ‘bona fide’ group representing laborers,”⁴¹41. Id. at 313 (quoting H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 717 (1981)).Show More regardless of whether it is “formally recognized as a union.”⁴²42. Id. (citing NLRB v. Wash. Aluminum Co., 370 U.S. 9, 14–15 (1962)).Show More Because defendants struck for “higher wages and safer working conditions,” theirs was “a core labor dispute.”⁴³43. Id. at 314.Show More “The district court erred,” the First Circuit held, “when it concluded that the jockeys’ alleged independent-contractor status categorically meant they were ineligible for the exemption” because “by the express text of the Norris-LaGuardia Act, a labor dispute may exist ‘regardless of whether or not the disputants stand in the proximate relation of employer and employee.’”⁴⁴44. Id. (quoting 29 U.S.C. § 113(c)).Show More

The third and fourth requirements were not in dispute.⁴⁵45. Id. (“The plaintiffs make no assertion that the defendants coordinated with any nonlabor group. And the defendants acted to serve their own economic interests.”).Show More The First Circuit found that the test was satisfied by the facts of the case, and thus that the labor-dispute exemption applied.⁴⁶46. Id. at 316.Show More

III. The Future of Independent Contractor Organizing?

The Jinetes decision offers hope to workers organizing in the platform economy. Citing Jinetes, the Federal Trade Commission (FTC) has recently indicated an intention “not [to] focus [enforcement] on organizing efforts undertaken by gig workers.”⁴⁷47. Fed. Trade Comm’n, Policy Statement on Enforcement Related to Gig Work 14 n.68 (2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Matter%20No.%20P227600%20Gig%20Policy%20Statement.pdf [https://perma.cc/7KLY-TVT2].Show More As an increasing share of the workforce falls outside the protection of the NLRA due to workplace fissuring and the growth of “gig economy” firms,⁴⁸48. See generally David Weil, The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It (2014) at 10 (“Employers have incentives to [fissure] for obvious reasons: shifting employment to other parties allows an employer to avoid mandatory social payments (such as unemployment and workers’ compensation insurance or payroll taxes) or to shed liability for workplace injuries by deliberately misclassifying workers as independent contractors.”).Show More and as unionization efforts at workplaces across the country like Amazon and Starbucks continue to gather steam,⁴⁹49. See, e.g., Sharon Block & Benjamin Sachs, Mapping Union Activity at Amazon, OnLabor (Apr. 1, 2022), https://onlabor.org/mapping-union-activity-at-amazon-update-april-1-2022 [https://perma.cc/Y2EJ-RYKC] (“[E]specially when paired with the recent wave of successful Starbucks organizing sweeping the nation, [the union victory in Amazon’s Staten Island facility] could precipitate a surge of union organizing in pivotal economic sectors, such as the service sector, in which unions have traditionally struggled to gain a meaningful foothold.”).Show More replacing the categorical rule with a potentially more flexible standard would be a timely expansion of the right to strike. Exactly how sweeping a change the decision signals will depend on how the wages/prices distinction is applied. Yet the First Circuit said little to indicate how future courts should apply it.⁵⁰50. Some remarks in footnote 3 of Jinetes distinguish Taylor and suggest the surprising conclusion that the distinction mirrors that between selling services and selling goods. Jinetes, 30 F.4th 306, 315 n.3 (1st Cir. 2002), cert. denied, 143 S. Ct. 631 (2023). In Taylor, the workers “provided not just labor but also a product [namely horseshoes] . . . to their customers,” unlike Jinetes, which is a “labor-only” case. Id. This could be interpreted to imply that so long as putative laborers are not selling any goods they are entitled to the labor exemption, which would place plumbers and dentists into the same category as steelworkers, longshoremen, and mail carriers. Whatever the merits of allowing plumbers or dentists to collectively set prices, such a rule would be unlikely to survive further judicial review. It is well-settled law that attempts by dentists’ organizations to set rates constitute illegal cartels. See FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986); see also Marina Lao, Workers in the “Gig” Economy: The Case for Extending the Antitrust Labor Exemption, 51 U.C. Davis L. Rev. 1543, 1563–64 n.88 (2018) (collecting cases). In addition to being overinclusive of professional services providers, such a rule could be underinclusive of workers involved in the production or distribution of goods, so long as their contracts can be structured to construe their pay as a price per unit, though in most cases this would require novel forms of fissuring, as wages cannot be reasonably construed as prices for goods if the workers never own the goods in the first place.Show More

The First Circuit held that Columbia River Packers stands not for the categorical rule based on classification, but for the wages/prices distinction, effectively rejecting the Supreme Court’s claims about the importance of the employer-employee relationship as dicta.⁵¹51. See Jinetes, 30 F.4th at 314–15.Show More If the wages/prices distinction operated independently of employee classification, how was the distinction applied there? In Columbia River Packers, the decision rested partly on the Court’s finding that the fishermen operated with significant independence and had invested capital in their individual fishing operations.⁵²52. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 147 (1942) (“[The fishermen] desire[d] . . . to continue to operate as independent businessmen, free from such controls as an employer might exercise.”).Show More Capital investment and independence are among the central criteria in distinguishing independent contractors from employees under the common law “control” test,⁵³53. See Restatement (Second) of Agency § 220 (Am. L. Inst. 1958). Show More which determines employee status under the NLRA.⁵⁴54. See NLRB v. United Ins. Co. of Am., 390 U.S. 254, 256 (1968) (holding that the Taft-Harley amendment of the NLRA’s definition of “employee” to exclude “independent contractors” was intended to incorporate the common-law control test); see also Supershuttle DFW, Inc., 367 NLRB No. 75 at *2 (Jan. 25, 2019) (summarizing NLRB’s interpretation of the common-law control test factors specified in United Insurance).Show More But these factors need not be understood to have legal significance only in the context of employee classification tests. One possible interpretation of Jinetes is that the categorical approach relies on the right factors but is viewed through the wrong doctrinal lens, and thus that capital investment and independence go to distinguishing prices from wages not because prices are by definition paid to contractors and wages to employees—but because employment classification and the wages/prices distinction both reflect the substance of the underlying economic relationships. Rejecting the categorical approach amounts to holding that courts should look directly at the substance of the relationship, in all of its factual richness, without employee classification tests as a mediating analytic step.⁵⁵55. Cf. New Prime Inc. v. Oliveira, 139 S. Ct. 532, 542 (2019) (“[A]s dominantly understood in 1925, a contract of employment did not necessarily imply the existence of an employer-employee or master-servant relationship.”) (emphasis omitted); Chamber of Com. v. City of Seattle, 426 F. Supp. 3d 786, 788 n.3 (W.D. Wash. 2019) (“Plaintiffs argue that the labor exemption applies only in the context of an employer-employee relationship. . . . [A] recent Supreme Court decision makes clear that, at the time the Clayton Act was written, even the narrower term ‘employment’ encompassed both master-servant relationships and independent contractors.” (citing New Prime, 139 S. Ct. at 542–44)).Show More

Inviting courts faced with putative labor disputes to look at the economic relations between workers and management with fresh eyes would be a welcome development for otherwise-misclassified workers. There is a risk, however, of resuscitating a de facto, antitrust-specific classification test if courts parse the same set of factors in a similar way, and it would be unwise to bet on federal courts dramatically revising their general understanding of employment status.

So how should courts understand the wages/prices distinction, if not as common-law employee classification in a different guise? While it offered virtually no detail concerning the nature of a wage dispute, the First Circuit emphasized the Norris-LaGuardia Act was intended to navigate the “inherent tension between national antitrust policy, which seeks to maximize competition, and national labor policy, which encourages cooperation among workers to improve the conditions of employment.”⁵⁶56. Jinetes, 30 F.4th 306, 312 (1st Cir. 2002), cert. denied, 143 S. Ct. 631 (2023) (quoting H.A. Artists & Assocs., Inc. v. Actors’ Equity Ass’n, 451 U.S. 704, 713 (1981)). Show More It does so by acknowledging that while “antitrust law [generally] forbids would-be competitors from colluding to increase prices . . . [w]hen the price is a laborer’s wage . . . a different set of rules apply. That must be so, lest antitrust law waylay ordinary collective bargaining.”⁵⁷57. Id. at 312.Show More New Deal labor policy, in other words, was intended to carve out a space for workers to organize, and the scope of its coverage should reflect that purpose.

Eighty years ago, the Supreme Court faced a similar question: Were newsboys entitled to organize under the National Labor Relations Act, or, as the appeals court below had found, did the NLRA exclude common-law independent contractors? In NLRB v. Hearst Publications, the Court rejected the idea that the control test was appropriate for distinguishing a labor organization from an illegal cartel.⁵⁸58. NLRB v. Hearst Publ’ns, 322 U.S. 111, 120–121 (1944).Show More According to the Court, in enacting the NLRA, “Congress had in mind a wider field than the narrow technical legal relation of ‘master and servant,’ as the common law had worked this out in all its variations, and at the same time a narrower one than the entire area of rendering service to others.”⁵⁹59. Id. at 124.Show More Interpreting the category of covered employees in light of the purposes of the NLRA, the Hearst Court found that, because some workers classified as independent contractors under agency law face the same “[i]nequality of bargaining power in controversies over wages, hours and working conditions” as those classified as employees, and “when acting alone, may be as helpless in dealing with an employer, as dependent on his daily wage and as unable to leave the employ and to resist arbitrary and unfair treatment,”⁶⁰60. Id. at 127 (internal quotations omitted).Show More the Board’s determination that they were covered employees was due judicial deference.

Hearst was overturned by the Taft-Hartley Act.⁶¹61. Labor Management Relations (Taft-Hartley) Act, 29 U.S.C. § 151; see also NLRB v. United Ins. Co., 390 U.S. 254, 256 (1968) (holding the use of “independent contractor” in the Taft-Hartley Act as intended “to have the Board and the courts apply general agency principles in distinguishing between employees and independent contractors under the Act”).Show More While Taft-Hartley was specifically targeted at amending the NLRA to weaken unions, it did not touch the Norris-LaGuardia antitrust exemption, which draws its purpose from the same policy framework: The New Deal scheme of labor regulation was intended to remedy inequalities of bargaining power and to protect collective self-help by workers.⁶²62. 75 Cong. Rec. 5461, 5487 (1932) (statement of Rep. Charles Sparks); cf. Hiba Hafiz, Labor Antitrust’s Paradox, 86 U. Chi. L. Rev. 381, 386–87 (2019) (“The NLRA justified worker combinations as a countervailing power that, in the words of its sponsor, Senator Robert Wagner, ‘match[ed] the huge aggregates of modern capital.’”) (citing Senator Robert Wagner, The New Responsibilities of Organized Labor, Address to the New York State Federation of Labor Convention ¶ 5 (1928), reprinted in 70 Cong. Rec. 225, 227).Show More Interpreting the labor-dispute exemption in light of labor policy, rather than the common law of agency, requires looking at the substance of the economic relation, including the extent to which it reflects inequality of bargaining power between workers and dominant firms. The Hearst Court drew on the preamble to the NLRA to interpret that statute’s purpose, but the Norris-LaGuardia Act’s stated policy aims were essentially the same: to ensure that independent contractors were “free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”⁶³63. 29 U.S.C. § 102.Show More

Courts could, and perhaps should, adjudicate labor-dispute exemption cases by looking directly to the substance of the economic relation at issue, considering the purposes of New Deal labor law, rather than the common law of agency. And if the key to the labor-dispute exemption is the wages/prices distinction, antitrust doctrine may need to account for the economic context in which the economic relation is formed, including the market power on the other side.⁶⁴64. See generally Brian Callaci & Sandeep Vaheesan, Antitrust Remedies for Fissured Work, 108 Cornell L. Rev. Online 27 (2023) (arguing that antitrust law should prevent corporations from controlling the business decisions of distributors and suppliers); Sanjukta Paul, Antitrust as Allocator of Coordination Rights, 67 UCLA L. Rev. 378 (2020) (exploring antitrust law’s preference for coordination via vertical contracting, as opposed to horizontal, interfirm coordination).Show More In Jinetes, the owners of the horses and the track enjoyed a monopoly over Puerto Rican horse racing and thus a monopsony over the relevant labor market,⁶⁵65. Jinetes, 30 F.4th 306, 311 (1st Cir. 2022), cert. denied, 143 S. Ct. 631 (2023).Show More but the First Circuit did not address the relevance, if any, of the monopsony power of the plaintiffs. An analysis of unequal bargaining power could help make clear why the jockeys, who have no meaningful ability to bargain over their pay, should be considered as earning a wage rather than being paid a price: What makes a wage a wage, rather than a price for independently provided services, may not only be the capital investment or independence of the recipient, but also the market power of the payor.⁶⁶66. Analysis of market power already has a role in antitrust doctrine, albeit a limited one in recent decades. Courts consider the market power of defendants in a rule of reason analysis. See, e.g., Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 27–29 (1984) (finding a “tying” practice permissible in part due to the defendant’s lack of market power).Show More Whether future courts will interpret the wages/prices distinction in light of an analysis of market power remains to be seen.

CONCLUSION

The racetrack and horse owners filed a petition for certiorari on October 4th, 2022, identifying the question presented as “Whether the statutory labor exemption from the operation of the antitrust laws, which exempts ‘labor dispute[s]’ that ‘concern[] terms or conditions of employment,’ encompasses concerted action by independent contractors that do not relate to an employer-employee relationship.”⁶⁷67. Petition for Writ of Certiorari at i, Jinetes, 30 F.4th 306 (No. 22-327).Show More

The jockeys’ opposition brief emphasized, among other things, the public meaning of “employment” when the Clayton and Norris-LaGuardia Acts were passed, no doubt with an eye on the Court’s embrace of textualism and in hopes of convincing at least one more of the Court’s six conservative justices to follow Justice Gorsuch’s lead in New Prime.⁶⁸68. See Respondents’ Brief in Opposition at 18–20, Jinetes, 30 F.4th 306 (No. 22-327).Show More While the jockeys construed the First Circuit’s decision as consistent with prior Supreme Court and federal appeals courts decisions⁶⁹69. See id. at 9–15.Show More (as had the First Circuit), the owners portrayed the categorical exclusion of workers classified as independent contractors, where no “employer-employee relationship [i]s the matrix of the controversy,”⁷⁰70. Columbia River Packers Ass’n v. Hinton, 315 U.S. 143, 147 (1942).Show More as clearly established by prior case law.⁷¹71. Reply Brief for Petitioners at 1–7, Jinetes, 30 F.4th 306 (No. 22-327).Show More

If the Supreme Court agreed with the owners’ understanding of its prior decisions, it chose not to say so: on January 9th, 2023, the Court denied the petition for certiorari without explanation or noted dissent.⁷²72. See Confederación Hípica v. Confederación de Jinetes Puertorriqueños, 143 S. Ct. 631 (2023).Show More At least within the First Circuit, workers classified as independent contractors now have the right to strike over wages and other terms and conditions of employment.

Ninth Circuit Offers Guidance to Trial Courts in Evaluating Ancillary Predominance Issues for Purposes of Rule 23(b)(3)

Jonathan L. Goldberg

Recent Case: Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 31 F.4th 651 (9th Cir. 2022) (en banc)

The Ninth Circuit Court of Appeals recently held in an en banc ruling that district courts wield significant discretion when deciding whether to certify a class action containing potentially uninjured class members. The opinion rejected a “de minimis” rule, which, according to Defendants, other circuits adopted. The court properly focused on Rule 23’s broad text and the class mechanism’s core efficiency goals. However, the Ninth Circuit prematurely addressed the de minimis issue because its opinion reaffirmed the district court’s finding that each plaintiff was similarly situated. Still, in concluding Defendants failed to demonstrate a fatal dissimilarity within the class, the en banc panel effectively reasoned that opposition to predominance at class certification must attack evidence’s relevancy as to each class member rather than its sufficiency in proving the class claims.

INTRODUCTION

The Supreme Court recently confirmed that uninjured plaintiffs may not recover damages from class action judgments but left open questions of how that rule might affect a trial court’s class certification decision.²2. See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2208, 2208 n.4 (2021) (holding Article III requires class members to have standing to recover damages but declining to answer the “distinct question whether every class member must demonstrate standing before a court certifies a class”).Show More In Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC,³3. 31 F.4th 651 (9th Cir. 2022) (en banc).Show More the Ninth Circuit provided crucial guidance to trial courts struggling to apply TransUnion’s holding.

Class action lawsuits depart from the usual rule that only named parties conduct litigation.⁴4. Califano v. Yamasaki, 442 U.S. 682, 700–01 (1979).Show More Federal Rule of Civil Procedure 23 outlines the strict conditions a class must meet to ensure aggregate litigation proceeds fairly, both for absent class members and defendants, and advances judicial economy.⁵5. See Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455, 470 (2013) (citing Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 107 (2009)) (confirming predominance tests whether a court can resolve dissimilarities among class members in a manner that is not “inefficient or unfair”).Show More To recover damages for themselves and the absent class members they represent, putative class representatives usually certify their class under Rule 23(b)(3).⁶6. See Richard A. Nagareda, Robert G. Bone, Elizabeth Chamblee Burch & Patrick Wooley, The Law of Class Actions and Other Aggregate Litigation 274–75 (3d ed. 2020) (suggesting that plaintiffs are extremely unlikely to recover monetary damages through a (b)(2) class after Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)).Show More Rule 23(b)(3) demands that class litigation be superior to other adjudicatory methods and that common questions of law or fact predominate over individual questions.⁷7. Fed. R. Civ. P. 23(b)(3).Show More Parties frequently target the predominance requirement to challenge motions for class certification.⁸8. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (class settlement); Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), 573 U.S. 258 (2014) (securities fraud); Amgen, 568 U.S. at 466 (securities fraud); Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 454 (2016) (Fair Labor Standards Act).Show More In short, predominance asks whether common questions of law or fact are both central to the litigation and more prevalent or important than individual ones.⁹9. Tyson Foods, 577 U.S. at 453–54 (2016) (“The predominance inquiry ‘asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues’ [and whether] ‘one or more of the central issues in the action are common to the class and can be said to predominate . . . .’” (first quoting 2 W. Rubenstein, Newberg on Class Actions § 4:50 (5th ed. 2012); then quoting 7AA Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1778 (3d ed. 2005))).Show More

The Olean defendants contended that the plaintiff class included more than a de minimis number of uninjured members, prompting many individual questions, preventing common issues from predominating, and automatically precluding certification.¹⁰10. A question is common because its answer resolves a central issue in each class member’s claim. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th Cir. 2022) (en banc) (quoting Wal-Mart, 564 U.S. at 350). By contrast, an individual question requires different evidence to prove each class member’s claim. Id. (citing Tyson Foods, 577 U.S. at 453). Uninjured plaintiffs within a class may raise individual questions because a court must determine “which ones” are injured and “which ones” are not. See Tyson Foods, 577 U.S. at 464–66 (Roberts, C.J., concurring) (finding decertification appropriate where a district court cannot identify the uninjured plaintiffs within the class); cf. Olean, 31 F.4th at 681–82 & n.31 (discussing mini-trials to identify each plaintiff’s damages award).Show More Defendants also argued the D.C.¹¹11. In re Rail Freight Fuel Surcharge Antitrust Litig. (Rail Freight II), 934 F.3d 619, 624–25 (D.C. Cir. 2019) (discussing a “six-percent upper limit” on the number of uninjured class members in a certified class).Show More and First¹²12. See In re Asacol Antitrust Litig., 907 F.3d 42, 47, 51–58 (1st Cir. 2018) (intimating that 10% exceeds the de minimis boundary).Show More Circuits already adopted a “de minimis” rule and urged the Ninth Circuit to hold similarly.¹³13. Defendants-Appellants’ Supplemental En Banc Brief at 19, 31 F.4th 651 (9th Cir. 2022) (No. 3:15-MD-026770-JLS-MDD), 2021 WL 4126353, at *19. Cf. Olean, 31 F.4th at 666 n.9 (9th Cir. 2022) (discussing the argument but not directly attributing it to defendants); id. at 692 (Lee, J., dissenting) (same).Show More In rejecting a per se de minimis standard, the en banc court held that a district court is in the best position to determine whether individual questions, including those regarding class members’ injury, will overwhelm common ones.¹⁴14. Olean, 31 F.4th at 669.Show More In other words, the district court’s decision to certify the class fell within the broad range of permissible conclusions that a class certification appeal’s abuse of discretion standard affords.¹⁵15. Id. (quoting Hung Lam v. City of San Jose, 869 F.3d 1077, 1084 (9th Cir. 2017) (quoting Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010))).Show More

The court properly resolved an issue percolating in class action jurisprudence through careful attention to Rule 23’s text and the class mechanism’s core efficiency goals. Furthermore, the decision follows a broad trend—developing as judicial experience with class actions grows—of increasing deference towards trial courts at the class certification stage. Nevertheless, the en banc panel should never have reached the issue. The opinion’s logic renders the holding advisory by concluding each plaintiff could rely upon their expert’s report to prove class-wide antitrust impact—i.e., that defendants injured each and every class member by causing them to pay for tuna at supra-competitive prices. Still, the appellate tribunal faithfully applied Supreme Court precedent on a frequently confusing aspect of the predominance inquiry, carefully distinguishing between evidentiary issues of relevancy (whether there is a “fatal dissimilarity”) and sufficiency or persuasiveness (whether there is a “fatal similarity”).¹⁶16. See Nagareda, supra note 4, at 131 (arguing courts should address fatal dissimilarities between class members at certification and address fatal similarities, such as a failure of proof, at summary judgment).Show More

I. BACKGROUND

A. The District Court’s Class Certification Order

Following a 2015 Department of Justice antitrust investigation, various plaintiffs (collectively “Tuna Purchasers”) filed suit against Bumble Bee, StarKist, Chicken of the Sea (“COSI”), and their parent corporations (collectively “Tuna Suppliers”), alleging the corporations conspired to fix tuna prices in violation of federal and state antitrust laws.¹⁷17. The Tuna Purchasers allege the Tuna Suppliers engaged in a price-fixing conspiracy from November 2010 to at least December 31, 2016 and further claim the conspiracy forced them to pay supra-competitive prices for the Tuna Suppliers’ products. Olean, 31 F.4th at 661–62.Show More Soon thereafter, the Department of Justice (“DOJ”) entered notice of a pending investigation into the packaged tuna industry for similar violations of the antitrust laws.¹⁸18. Id. at 661; see In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. 308, 317 (S.D. Cal. 2019) (“Shortly after the commencement of this action, the U.S. Department of Justice (‘DOJ’) noticed the Court of pending investigations of the Defendants. Since that time, Defendants and individual employees have pled guilty and the DOJ has entered multiple indictments.”), vacated and remanded sub nom. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021), on reh’g en banc, 31 F.4th 651 (9th Cir. 2022), and aff’d sub nom. Olean, 31 F.4th at 661.Show More During the ongoing civil litigation, the DOJ filed multiple indictments alleging a criminal price-fixing conspiracy in the industry from around November 2011 to December 2013.¹⁹19. Olean, 31 F.4th at 661–62; see also In re Packaged Seafood Prod. Antitrust Litig., 332 F.R.D. at 317.Show More Bumble Bee, StarKist, and three industry executives ultimately pled guilty to the conspiracy; a jury convicted Bumble Bee’s former CEO, and COSI cooperated with the DOJ, admitting to price fixing in exchange for leniency.²⁰20. Olean, 31 F.4th at 662. Show More By the end of 2015, the Judicial Panel on Multidistrict Litigation consolidated the civil complaints in the Southern District of California.²¹21. In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. at 316.Show More Judge Janis Lynn Sammartino divided the Tuna Purchasers into four tracks: (1) plaintiffs who filed suit individually against the Tuna Suppliers (“DAPs”); (2) direct purchasers, such as nationwide retailors or regional grocery stores (“DPPs”); (3) indirect purchasers who bought bulk-sized products for prepared food or resale (“CFPs”); and (4) individual end purchasers (“EPPs”).²²22. Id. at 316–17. The DPPs and EPPs include plaintiffs who purchased packaged tuna between June 1, 2011 and July 1, 2015, but the CFPs include plaintiffs who purchased tuna products from June 2011 through December 2016. Olean, 31 F.4th at 662.Show More

The latter three groups moved for class certification in 2018 under Rule 23(b)(3). The Tuna Suppliers opposed the motion, arguing individual questions predominated over common ones because the DPPs’ expert, Dr. Russell Mangum, could not demonstrate a common class-wide antitrust impact.²³23. Olean, 31 F.4th at 673. Each of the three plaintiff subclasses employed their own expert to establish antitrust impact through qualitative and quantitative analyses. Id. at 662. However, this Case Comment will focus on the DPPs’ class certification, the center of each opinion.Show More Dr. Mangum constructed a multiple regression model to assess whether the price-fixing conspiracy subjected each DPP to an overcharge.²⁴24. Id. at 671.Show More To do so, Dr. Mangum pooled the Tuna Suppliers’ actual sales transaction data during benchmark periods before and after the conspiracy, identified a number of variables that could affect the price of tuna—like product characteristics, input costs, consumer type, consumer preferences and demand, etc.—and recorded the model’s results.²⁵25. Id.Show More The model showed “the DPPs paid 10.28 percent more for tuna during the conspiracy period than they did during the benchmark periods.”²⁶26. Id.Show More To further support this finding, Dr. Mangum conducted four robustness checks,²⁷27. Dr. Mangum (1) evaluated the overcharge to each defendant, (2) changed the model to assess the overcharge for different products with different characteristics, (3) altered the model to evaluate overcharge by customer types, and (4) used the output of the pooled regression model to predict the but-for prices paid by the DPP class. Id. at 672. According to Dr. Mangum, each robustness check confirmed the conspiracy generated higher prices for all or nearly all DPPs. Id.Show More and the final one indicated that 94.5 percent of the DPPs purchased at least one product at a supra-competitive rate.²⁸28. Id. To be clear, despite the regression’s result, Dr. Mangum concluded the Tuna Suppliers injured each DPP: The robustness check was one basis for a conclusion that rested on additional “correlation tests, the record evidence and the guilty pleas and admissions entered in [the] case.” See id. at 676.Show More

The Tuna Suppliers’ rebuttal expert to the DPPs, Dr. John Johnson, advanced two areas of critique: (1) Dr. Mangum inappropriately pooled direct purchaser data for his model, papering over differences among class members, such as disparities in bargaining power or negotiating tactics;²⁹29. Dr. Johnson pointed to several empirics to support this argument. A Chow test, a commonly employed statistical tool to assess whether data can be pooled, counseled against data pooling. See id. at 673. Further, Dr. Mangum’s model could not find statistically significant results for twenty-eight percent of the direct purchaser class, so Dr. Johnson argued the plaintiffs could not rely on the model to demonstrate class-wide impact. Id.Show More and (2) Dr. Mangum’s model contained various errors that undermined its validity, including the use of an improper cost index.³⁰30. First, Dr. Mangum’s model outputted false positives, including those who purchased tuna products from non-defendants (non-conspiring tuna producers). See id. at 674. Second, Dr. Mangum’s model did not match the time periods listed in the plaintiff’s complaint. Id. Third, Dr. Mangum used a cost index rather than the Tuna Suppliers’ actual accounting cost. Id.Show More Further, the Tuna Suppliers argued Dr. Johnson’s superior report indicated around twenty-eight percent of the class was uninjured.³¹31. Id. at 680.Show More

The district court certified the class after carefully evaluating Dr. Johnson’s critiques and Dr. Mangum’s rebuttal.³²32. Id. at 662, 675–76. First, the district court found Dr. Mangum’s pooled model to be acceptable. Dr. Mangum’s model included statistically insignificant results as to some direct purchasers because those class members completed too few transactions to provide significant results, but this data issue had no bearing on a direct purchaser’s ability to rely on the model as evidence of impact. Id. at 675. For instance, general evidence that the Tuna Suppliers inflated prices through their conspiracy supported the inference that all direct purchasers were similarly situated. See id. at 674. Second, while the court acknowledged the Chow Test should be taken seriously, its opinion reiterated Dr. Mangum’s assertions that Dr. Johnson designed the Chow Tests to fail by including too many coefficients and observations and concluded that Dr. Mangum’s testimony gave “persuasive reasons, grounded in economic theory, for why a pooled model [was] appropriate” despite the concerning Chow Test results. In re Packaged Seafood, 332 F.R.D. 308, 225 (S.D. Cal. 2019); see also id. at 325 n.9 (offering examples of “multiple courts [that] have addressed instances where a pooled regression model failed a Chow Test, yet still accepted those models”).Show More The trial judge first found each plaintiff was similarly situated and, therefore, able to rely upon Dr. Mangum’s report as well as other evidence—i.e., guilty pleas, market characteristics, and record evidence—to prove a common antitrust impact.³³33. In re Packaged Seafood, 332 F.R.D. at 324.Show More The court concluded that the Tuna Suppliers’ remaining criticisms were “serious and could be persuasive to a finder of fact” but ultimately “beyond the scope of” the certification motion because they merely attacked Dr. Mangum’s persuasiveness rather than his capability of establishing impact for each class member.³⁴34. Id. at 328. The district court still rejected Dr. Johnson’s additional critiques. First, Dr. Mangum included purchases from non-defendant tuna suppliers because the conspiracy had an “umbrella effect” that raised non-colluding tuna suppliers’ prices. Olean, 31 F.4th at 676. Second, Dr. Mangum’s choice to narrow the time frame added to the report’s credibility by improving its accuracy. Id. Third, the court accepted Dr. Mangum’s arguments that cost indexes were preferable for determining competitive market prices as well as his conclusion that defendant-specific costs confirmed the pooled model’s results in any event. Id. at 675–76.Show More

B. The Ninth Circuit’s Three-Judge Panel

The Tuna Suppliers appealed, and the Ninth Circuit’s three-judge panel vacated and remanded. The circuit panel concluded each class member could rely upon Dr. Mangum’s model to establish antitrust impact.³⁵35. See Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774, 790 (9th Cir. 2021), reh’g en banc granted, 5 F.4th 950 (9th Cir. 2021), and on reh’g en banc, 31 F.4th 651 (9th Cir. 2022).Show More However, the court found the trial judge abused its discretion in certifying the class without resolving the experts’ competing conclusions on the number of uninjured plaintiffs within the class.³⁶36. Id. at 793.Show More Even though the issue of the experts’ persuasiveness overlaps with the merits of plaintiffs’ claims, the court held that more than a de minimis number of uninjured class members would raise too many individual questions and defeat predominance.³⁷37. Id. at 794. The court precedent analysis “suggest[s] that 5% to 6% constitutes the outer limits of a de minimis number.” Id. at 792 (quoting Rail Freight II, 934 F.3d 619, 624–25 (D.C. Cir. 2019). However, the panel insisted it did “not adopt a numerical or bright-line rule” but only held “that 28% would be out-of-bounds.” Id. at 793.Show More As a result, the district court should have weighed the persuasiveness of each expert report, entered findings on the number of uninjured class members,³⁸38. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982)) (holding that Rule 23 requires a party seeking class certification to affirmatively demonstrate compliance with the Rule, a standard that will frequently require courts to engage in a “rigorous analysis” at certification that overlaps with the merits of the moving party’s claims).Show More and only have certified the class if it contained fewer than a de minimis number of uninjured plaintiffs. Judge Andrew D. Hurwitz broke from the panel. He concurred the trial court should have resolved the factual dispute relating to uninjured class members before certification but dissented from the panel’s decision to adopt a de minimis standard.³⁹39. Olean, 993 F.3d at 794 (Hurwitz, J., concurring in part and dissenting in part).Show More According to Judge Hurwitz, predominance asks not about the number of uninjured class members but whether a district court may “economically” separate uninjured plaintiffs from the class, a determination best left to the trial court’s discretion.⁴⁰40. Id. at 794–95.Show More After all, “Rule 23 certification is at bottom a trial management decision.”⁴¹41. Id. at 796.Show More

C. The Ninth Circuit’s En Banc Resolution

The Ninth Circuit then vacated the panel’s decision⁴²42. Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 5 F.4th 950, 952 (9th Cir. 2021).Show More and reheard the case en banc.⁴³43. Olean, 31 F.4th at 662.Show More Writing for a 9-2 majority, Judge Sandra Segal Ikuta rejected the “argument that Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.”⁴⁴44. Id. at 669.Show More The panel conceded that “[w]hen individualized questions relate to the injury status of class members, Rule 23(b)(3) requires that the court determine whether individualized inquiries about such matters would predominate over common questions.”⁴⁵45. Id. at 668.Show More But any numerical rule would go too far. First, the court analogized classes with uninjured plaintiffs to class actions that require individual proof of damages.⁴⁶46. Id. at 668–69.Show More Both the Ninth Circuit⁴⁷47. See, e.g., Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150, 1155 (9th Cir. 2016) (“Our precedent is well settled on this point. . . . [T]he need for individualized findings as to the amount of damages does not defeat class certification.”); Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975) (“The amount of damages is invariably an individual question and does not defeat class action treatment.”).Show More and Supreme Court⁴⁸48. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 453–54 (2016) (citing Wright & Miller, supra note 8, § 1778) (noting that individual questions like damages and affirmative defenses do not defeat predomination).Show More permit district courts to certify classes despite the need for individualized damages assessments at trial, “a conclusion implicitly based on the determination that such individualized issues do not predominate over common ones.”⁴⁹49. Olean, 31 F.4th at 669.Show More Second, the majority determined a de minimis rule to be inconsistent with Rule 23’s text, “which requires only that the district court determine after rigorous analysis whether the common question predominates over any individual questions, including individualized questions about injury or entitlement to damages.”⁵⁰50. Id. (citing Fed. R. Civ. P. 23(b)(3)).Show More Rule 23(b)(3)’s general language points towards decisionmaking on a “case-by-case basis, rather than . . . a per se rule.”⁵¹51. Id. at 669 n.13. The court also rejected the dissent’s policy arguments as atextual. “[W]e are bound to apply Rule 23(b)(3) as written, regardless of policy preferences.” Id.Show More Finally, the panel asserted that a district court “is in the best position to determine whether individualized questions” predominate over common ones.⁵²52. Id. at 669. Show More The opinion abandoned the previous panel’s strong justifications for this position, stating only that the abuse of discretion standard permits district courts to rule within a “wide range of permissible outcomes.”⁵³53. Id. (quoting Hung Lam v. City of San Jose, 869 F.3d 1077, 1084 (9th Cir. 2017) (quoting Kode v. Carlson, 596 F.3d 608, 612 (9th Cir. 2010))).Show More However, the en banc panel also noted the presence of uninjured class members may indicate the class is fatally overbroad, an issue a district court may resolve sua sponte with its inherent authority to manage the class action.⁵⁴54. See id. at 669 n.14 (“[A] court must consider whether the possible presence of uninjured class members means that the class definition is fatally overbroad.”); see also id. at 666 (“In such a case, the court may redefine the overbroad class to include only those members who can rely on the same body of common evidence to establish the common issue.”); Tobias Barrington Wolff, Discretion in Class Certification, 162 U. Pa. L. Rev. 1897, 1925 (2014) (“[T]he discretionary power that federal courts possess to reshape the boundaries and composition of the class is continuous with their power to decide whether to certify at all.”).Show More

The court then addressed the “central questions on appeal[:] . . . whether the expert evidence presented by the DPPs is capable of resolving this issue ‘in one stroke;’ and whether this common question predominates over any individualized inquiry.”⁵⁵55. Olean, 31 F.4th at 670 (citation omitted).Show More It found the district court did not abuse its discretion in concluding so.⁵⁶56. Id. at 670.Show More The majority rigorously analyzed both Dr. Mangum’s and Dr. Johnson’s reports and the district court’s handling of the expert’s disagreements.⁵⁷57. Id. at 670–77.Show More The en banc panel held that the district court appropriately addressed Dr. Johnson’s arguments and considered unrebutted record evidence, such as prior guilty pleas.⁵⁸58. Id. at 676. For more detail on the arguments made by both experts, see supra notes 26–33 and accompanying text.Show More The trial court’s recognition that Dr. Johnson’s arguments may prove persuasive at trial did not detract from its ultimate conclusion that “Dr. Mangum’s evidence was capable of showing class-wide impact.”⁵⁹59. Id. at 676.Show More At bottom, “‘each class member could have relied on [the plaintiffs’ evidence] to establish liability if he or she had brought an individual action,’ and the evidence ‘could have sustained a reasonable jury finding’ on the merits of a common question.’”⁶⁰60. Id. at 667 (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 455 (2016)) (alterations in original).Show More

The court then rejected the Tuna Suppliers’ primary arguments. Their main argument was that the regression model used averaging assumptions to “paper over” or mask the individual differences in class members’ bargaining power and negotiation tactics.⁶¹61. Id. at 677.Show More The court affirmed that regressions models using averaging assumptions are not inherently suspect but rather a commonly used econometric tool.⁶²62. Id.Show More Then, the majority rejected the Tuna Suppliers’ attempt to establish a fatal dissimilarity between Plaintiffs. Even if some DPPs negotiated their tuna prices with greater bargaining power than that of their peers, a conspiracy would logically and plausibly impact all purchasers by inflating the baseline for price negotiations.⁶³63. Id. at 677–78 (quoting In re Urethane Antitrust Litig., 768 F.3d 1245, 1254–55 (10th Cir. 2014)).Show More The court noted Dr. Mangum concluded the largest retailers—those that should have the most bargaining power, such as Wal-Mart—still paid supracompetitive prices.⁶⁴64. Id. at 678.Show More At most, the Tuna Suppliers’ argument suggested DPPs have different damages. But, “[w]hile individualized differences among the overcharges imposed on each purchaser may require a court to determine damages on an individualized basis, . . . such a task would not undermine the regression model’s ability to provide evidence of common impact.”⁶⁵65. Id. at 679. The majority reiterated that individualized damages do not threaten predominance. Id.Show More With respect to impact, all DPPs were similarly situated.

Finally, the court dismissed the Tuna Suppliers’ complaint that the district court refused to resolve the parties’ dispute on the number of uninjured class members. The majority first clarified the Tuna Suppliers’ argument was premised on a misreading of Dr. Johnson’s report.⁶⁶66. Id. at 680. The Tuna Suppliers read Dr. Johnson’s report to suggest twenty-eight percent of the DPP class was uninjured. Id. However, Dr. Johnson’s test was only an attempt to undermine the confidence in Dr. Mangum’s model because it did not produce statistically significant results. Id. The court held the statistic did not support the Tuna Suppliers’ underlying claim. Id. The district court resolved this dispute as well. Id. at 681 (“[T]he district court determined that Dr. Mangum’s pooled regression model was capable of showing that the DPP class members suffered antitrust impact on a class-wide basis, notwithstanding Dr. Johnson’s critique.”).Show More Then, the opinion confirmed neither expert’s report raised individual inquiries into the class members’ injuries. The trial court already concluded each DPP’s bargaining power was immaterial to a finding of common price impact, and the Tuna Suppliers provided no other factual or legal grounds to distinguish between individual class members.⁶⁷67. Id. at 681 (“The district court fulfilled its obligation to resolve the disputes raised by the parties in order to satisfy itself that the evidence proves the prerequisites for Rule 23(b)(3), which is that the evidence was capable of showing that the DPPs suffered antitrust impact on a class-wide basis.”); see also Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 622–23 (1997) (“The predominance requirement . . . trains on the legal or factual questions that qualify each class member’s case as a genuine controversy . . . .”).Show More Thus, each class member was similarly situated. In other words, evidence relevant to one class member would be relevant to them all. The Tuna Suppliers’ remaining arguments simply attacked the expert report’s persuasiveness, a determination for the jury at trial.⁶⁸68. Olean, 31 F.4th at 681.Show More

If the jury found that Dr. Mangum’s model was reliable, then the DPPs would have succeeded in showing antitrust impact on a class-wide basis, an element of their antitrust claim. On the other hand, if the jury were persuaded by Dr. Johnson’s critique, the jury could conclude that the DPPs had failed to prove antitrust impact on a class-wide basis.⁶⁹69. Id.Show More

Judge Kenneth K. Lee dissented.⁷⁰70. The majority’s opinion briefly addressed the CFP and EPP classes in its conclusion. The en banc panel held the district court did not abuse its discretion in certifying both classes. Id.Show More He first stressed the importance of a rigorous analysis at class certification to prevent in terrorem settlements.⁷¹71. Id. at 691 (Lee, J., dissenting) (“‘[W]hen damages allegedly owed to tens of thousands of potential claimants are aggregated and decided at once, the risk of an error will often become unacceptable. Faced with even a small chance of devastating loss, defendants will be pressured into settling questionable claims.’” (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 350 (2011))).Show More Next, he argued the district court did not resolve the dueling experts’ opinions on the presence of uninjured class member, asserting class certification demands the moving party prove Rule 23’s prerequisites by a preponderance of the evidence after a rigorous analysis.⁷²72. Id. at 687–88.Show More The dissent took issue with the majority’s attempt to “wave[] away” the differences in DPPs’ “negotiating power,” which would have permitted certain retailers to extract rebates or promotional concessions and thereby push tuna prices below competitive levels.⁷³73. Id. at 690.Show More At the very least, according to the dissent, the “only way” to “find out if Wal-Mart and other major retailers suffered any injury” would be to conduct a “highly individualized analys[is]” that defeats predominance.⁷⁴74. Id.Show More Finally, the dissent stressed that the court’s rejection of a de minimis rule would generate a circuit split.⁷⁵75. Id. at 691. However, the majority denies the creation of a circuit split. Id. at 669 n.13 (arguing neither case adopted a per se rule but held that based on the particular facts in those disputes, the “need to identify uninjured class members” would “render an adjudication unmanageable” (quoting In re Asacol Antitrust Litig., 907 F.3d 42, 53–54 (1st Cir. 2018))).Show More

According to the dissent, both the D.C. and First Circuits settled on a de minimis rule. The D.C. Circuit stated “5% to 6% constitutes the outer limits of a de minimis number” of uninjured class members,⁷⁶76. Id. at 692 (quoting In re Rail Freight Fuel Surcharge Antitrust Litig. (Rail Freight II), 934 F.3d 619, 625 (D.C. Cir. 2019)).Show More and the “First Circuit suggested that ‘around 10%’ of uninjured class members marks the de minimis border.”⁷⁷77. Id. (quoting Asacol, 907 F.3d at 47).Show More But, the Ninth Circuit majority properly denied the creation of a circuit split.⁷⁸78. Id. at 699 n.13.Show More Both sister circuits defined de minimis “in functional terms”⁷⁹79. Asacol, 907 F.3d at 54 (quoting In re Nexium Antitrust Litig., 777 F.3d 9, 30 (1st Cir. 2015)).Show More and concluded that the need to identify uninjured class members precluded predominance based on the “nuanced”⁸⁰80. Rail Freight II, 934 F.3d at 625.Show More and “particular facts of the cases before them.”⁸¹81. Olean, 31 F.4th at 699 n.13.Show More While the D.C. and First Circuits contemplated per se boundaries, their opinions ultimately hinged on whether the trial court could employ a “mechanism that can manageably remove uninjured persons from the class in a manner that protects the parties’ rights.”⁸²82. Asacol, 907 F.3d at 54; see Rail Freight II, 934 F.3d at 625 (holding the district court did not abuse its discretion in denying class certification where the plaintiffs “proposed no ‘further way’—short of full-blown, individual trials—‘to reduce this number and segregate the uninjured from the truly injured’” (citation omitted)); see also Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 462 (2016) (Roberts, C.J., concurring) (suggesting the class jury verdict should not stand if the district court cannot “fashion a method for awarding damages only to those class members who suffered an actual injury”).Show More Thus, the en banc panel’s focus on discretion largely accorded with their sister circuits’ case law.

III. IMPLICATIONS OF THE RULING

A. Predominance as Efficient Aggregation

In rejecting the de minimis standard, the Ninth Circuit adhered to Rule 23’s broad textual commands to advance the class mechanism’s driving goal of judicial economy.⁸³83. See Samuel Issacharoff, Rule 23 and the Triumph of Experience, 84 Duke L.J. 161, 168 (2021) (arguing a “simple ‘light touch’ textual reading shows that the words [of Rule 23] point to concerns about the overall administration of justice, measured in terms of the substantive results of aggregate litigation rather than the nature of the rights-holder”).Show More Rule 23(b)(3) asks whether common questions predominate over individual ones, making no statement on specific characteristics⁸⁴84. Compare Fed. R. Civ. P. 23(b)(3) (defining predominance generally), with id. 23(b)(3)(A)–(D) (detailing the four factors courts must consult to conclude a class action is superior to other adjudicatory methods).Show More that influence such an analysis.⁸⁵85. Standard canons of statutory construction counsel against limiting general language. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 101 (2012) (“Without some indication to the contrary, general words . . . are to be accorded their full and fair scope. They are not to be arbitrarily limited.”).Show More Without specific guidance, the Supreme Court has been hesitant to adopt hard rules based on general language.⁸⁶86. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997) (noting that while the Advisory Committee for Rule 23’s 1966 revision cautioned mass accidents are “ordinarily not appropriate” for class litigation, “the text of the Rule does not categorically exclude mass tort cases from class certification, and District Courts, since the late 1970’s, have been certifying such cases in increasing number”); Goldman Sachs Grp., Inc. v. Ark. Tchr. Ret. Sys., 141 S. Ct. 1951, 1960 (2021) (addressing “whether the generic nature of a misrepresentation is relevant to price impact” findings at class certification and concluding “courts ‘should be open to all probative evidence on that question—qualitative as well as quantitative—aided by a good dose of common sense’” (citation omitted)).Show More For instance, in Tyson Foods v. Bouaphakeo, the Supreme Court rejected a “broad” and “categorical” rule forbidding plaintiffs from using representative evidence to establish predominance, holding such a rule would make “little sense” because evidence’s permissibility turns on a specific case’s cause of action.⁸⁷87. Tyson Foods, 577 U.S. at 454–55.Show More Rule 23’s purposefully general language⁸⁸88. See Samuel Issacharoff & Peter Zimroth, An Oral History of Rule 23: An Interview with Professor Arthur Miller, 74 N.Y.U. Ann. Surv. Am. L. 105, 117 (2018) (quoting Professor Miller, noting predominance and superiority were meant to ensure (b)(3) classes were a “true efficiency economy win,” but also confirming those “[w]ords . . . were like silly putty that could be molded in any way by a judge in a particular context”).Show More affords trial courts ample latitude to certify, or decline to certify, class proposals based on whether aggregation may materially advance the litigation before them in a fair and efficient manner.⁸⁹89. See Amchem, 521 U.S. at 615 (stating that predominance and superiority were added for efficiency and fairness, among other considerations); Fed. R. Civ. P. 23 advisory committee’s note to 1966 amendment (“It is only where this predominance exists that economies can be achieved by means of the class-action device.”); see also Am. L. Inst., Principles of the Law of Aggregate Litigation § 2.02(a)(1) (2010) (authorizing aggregate treatment where such adjudication would “materially advance” litigation “in a manner . . . so as to generate significant judicial efficiencies”).Show More Though the dissent attempted to interpret a de minimis rule as enforcing that policy, the dissenting judges provided no assurance such a rule best economizes judicial procedure.⁹⁰90. Olean, 31 F.4th at 692 (Lee, J., dissenting) (claiming that “allowing more than a de minimis number of uninjured class members tilts the playing field in favor of plaintiffs”).Show More Instead, the dissent erred on the side of preventing “oversized classes,”⁹¹91. Id.Show More but the Rules Committee added (b)(3) certification in the 1966 revision precisely to help vindicate the rights of people “who individually would be without effective strength to bring their opponents into court at all.”⁹²92. Amchem, 521 U.S. at 617 (quoting Benjamin Kaplan, A Prefatory Note, 10 B.C. Ind. & Com. L. Rev. 497, 497 (1969)) (discussing how class actions can be a tool for those with smaller damages claims to still obtain relief).Show More The majority’s critical move is to train the predominance inquiry on how a judge will resolve the issue of uninjured class members at trial. After all, “Rule 23 certification is at bottom a trial management decision; it simply allows the class litigation to continue under the district court’s ongoing supervision.”⁹³93. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 993 F.3d 774, 796 (9th Cir. 2021) (Hurwitz, J., concurring in part and dissenting in part), aff’d on reh’g en banc, 31 F.4th 651 (9th Cir. 2022).Show More So long as a district court can fairly and efficiently “winnow out” a “non-injured subset of class members,”⁹⁴94. Olean, 31 F.4th at 669.Show More common questions should predominate, even if the number of uninjured plaintiffs or percentage of the class appears to be more than de minimis.⁹⁵95. The Supreme Court recently concluded that 6,332 class members, in a class of 8,185 plaintiffs, did not suffer an injury in fact. TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2214 (2021). The Court remanded on the issue of typicality but made no mention of predominance. Id. Even though the Court concluded most of the class was uninjured, neither the Supreme Court nor the district court had a difficult time separating class members based on the injury-defining characteristic of whether TransUnion provided their tainted credit reports to third parties.Show More

B. Discretion and Judicial Experience

Additionally, Olean solidifies the dominance of discretion at class certification, resulting from an accumulation of judicial experience with complex multi-district and class adjudications. As Professors Samuel Issacharoff and Arthur R. Miller explain, the past decade has seen judges certify classes that “would have given the Rules adopters grave pause.”⁹⁶96. See Issacharoff, supra note 82, at 163 (citing Issacharoff & Zimroth, supra note 87, at 125) (recounting his interview with Professor Arthur R. Miller and discussing how judicial experience influenced the settlement class’s development, culminating with In re National Football League Players Concussion Injury Litigation, 821 F.3d 410 (3d Cir. 2016)).Show More Circuit courts, and even specific judges, that once viewed novel class proposals with skepticism abandoned their previous positions to embrace efficient aggregation. The rise of Rule 23(c)(4) issue classes provides an apt example. In the 1990s, a series of decisions erected barriers to certifying issue classes. Judge Richard Posner, writing for a Seventh Circuit panel in In re Rhone–Poulenc Rorer Inc.,⁹⁷97. 51 F.3d 1293 (7th Cir. 1995).Show More rejected an attempt to certify a class only on a negligence element because the “desire to experiment with an innovative procedure” would possibly infringe upon the defendants’ Seventh Amendment rights to avoid re-examination of a jury’s decision.⁹⁸98. Id. at 1297, 1303.Show More Similarly, the Fifth Circuit held a district court may not certify an issue class unless the “cause of action, as a whole, . . . satisf[ies] the predominance requirement.”⁹⁹99. Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996).Show More But these barriers did not last long. Seven years after Rhone–Poulenc, Judge Posner upheld an issue class, stating issue class treatment “is appropriate and is permitted by Rule 23 when the judicial economy from consolidation of separate claims outweighs any concern with possible inaccuracies from their being lumped together in a single proceeding.”¹⁰⁰100. Mejdrech v. Met-Coil Sys. Corp., 319 F.3d 910, 911 (7th Cir. 2003).Show More Posner made no mention of the Seventh Amendment but focused entirely on efficiency and accuracy. The Fifth Circuit also moved past the narrow view of issue class certification.¹⁰¹101. See Steering Comm. v. Exxon Mobil Corp., 461 F.3d 598, 603 (5th Cir. 2006) (noting trial bifurcation might eliminate “the obstacles preventing a finding of predominance”).Show More The majority of circuit courts now take the broad view¹⁰²102. Russell v. Educ. Comm’n for Foreign Med. Graduates, 15 F.4th 259, 273–74, 273 n.6 (3d Cir. 2021) (writing that “the Second, Fourth, Sixth, Seventh, and Ninth Circuits” have adopted this view and that “[u]nder the broad view, courts apply the Rule 23(b)(3) predominance and superiority prongs after common issues have been identified for class treatment”), cert. denied, 142 S. Ct. 2706 (2022).Show More and have eliminated the strict barriers that once completely precluded issue certification, reducing them into pieces of a multi-factor test that outline a district court’s wide discretion.¹⁰³103. Id. at 268 (listing nine factors that indicate when issue certification may be appropriate, including whether bifurcated proceedings risk re-examining a jury’s initial findings) cf. Issacharoff, supra note 82, at 176 (arguing the Third Circuit’s prior experience with class settlements allowed them to “give independent weight to the need for closure” in future cases).Show More But, unlike the issue class’s story, the Ninth Circuit correctly resolved the dilemma of uninjured class members upon first impression. Rather than calcify class adjudication through a strict reading of Rule 23, the en banc panel left the decision to the district court’s sound discretion, acknowledging that the trial judge is in the best position to expend judicial resources efficiently and fairly.¹⁰⁴104. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 31 F.4th 651, 669 (9th Cir. 2022) (en banc). Show More

C. Predominance as Relevance

1. The Ninth Circuit’s Unnecessary Holding

Nevertheless, the Ninth Circuit should never have addressed this legal issue because the court’s conclusions were “clearly unnecessary to its resolution of the case, d[id] not affect its outcome in any manner, and constitute[d] an advisory opinion.”¹⁰⁵105. Spears v. Stewart, 283 F.3d 992, 998–99 (9th Cir. 2002) (Reinhardt, J., dissenting from denial of rehearing en banc) The Court has shared similar concerns. See Loc. 144 Nursing Home Pension Fund v. Demisay, 508 U.S. 581, 592 n.5 (1993) (describing dicta as language “uninvited, unargued, and unnecessary to the Court’s holdings”).Show More Simply put, if a district court understood each class member to be similarly situated, it would not need to confront questions of how to handle a class containing both injured and uninjured class members.¹⁰⁶106. See Olean, 31 F.4th at 681 (noting that a jury’s findings as to the persuasiveness of Dr. Mangum’s report would not give rise to any individual issues regarding a class member’s injury status).Show More Even here, the district court considered whether a de minimis standard would impact the case but did not develop the issue because it concluded Dr. Mangum’s report could establish class-wide impact.¹⁰⁷107. See In re Packaged Seafood Prods. Antitrust Litig., 332 F.R.D. 308, 323–24, 329 (S.D. Cal. 2019), vacated and remanded sub nom. Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021), aff’d on reh’g en banc, 31 F.4th 651 (9th Cir. 2022).Show More The en banc panel unequivocally affirmed that conclusion.¹⁰⁸108. Olean, 31 F.4th at 685.Show More And, the Ninth Circuit’s refusal to resolve the related issue of whether each class member must prove Article III standing at certification renders the decision to address the de minimis question paradoxical.¹⁰⁹109. See id. at 682 (“We need not consider the Tuna Suppliers’ argument that the possible presence of a large number of uninjured class members raises an Article III issue, because . . . the district court concluded that the DPPs’ evidence was capable of establishing antitrust impact on a class-wide basis.”).Show More It ultimately appears the court “reached out to address a novel, complex, and important issue in an advisory opinion.”¹¹⁰110. Spears, 283 F.3d at 1004.Show More

2. Distinguishing Between Evidence’s Relevance and Sufficiency to Satisfy Predominance

Still, in addressing the predominance issues related to the parties’ experts, the Ninth Circuit navigated a confusing inquiry: whether the plaintiff must preliminarily prove antitrust impact or simply demonstrate that antitrust impact is capable of class-wide proof.¹¹¹111. See Nagareda et al., supra note 5, at 334 (discussing the thin line between the two different conceptions of the moving party’s burden at class certification).Show More The Supreme Court in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds clearly takes the latter side: Moving parties need not establish that they “will win the fray” but only that the class is cohesive enough to prompt predominating common questions of law or fact.¹¹²112. 568 U.S. 455, 460 (2013).Show More Merits questions may overlap with the inquiry into whether the class is cohesive. In that situation, courts must engage in the trickier determination of which ancillary issues—for instance, factual questions about the nature of a product market¹¹³113. See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 316, 325 (3d Cir. 2008) (remanding and requiring the district court to resolve experts’ disputes as to hydrogen peroxide’s fungibility in the relevant market before certifying that plaintiffs can prove antitrust impact through common evidence).Show More or a defendant’s particular business practices¹¹⁴114. See, e.g., Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983–84 (9th Cir. 2011) (mandating the district court resolve factual disputes regarding whether local or upper management promoted individuals because plaintiffs would be unlikely to establish discrimination with common evidence if local managers promoted employees).Show More—bear on the predominance inquiry.¹¹⁵115. Courts routinely engage in similar determinations when they address preliminary evidentiary questions of conditional relevance. See Fed. R. Evid. 104(a)–(b) (directing the court to “decide any preliminary question about whether . . . evidence is admissible”). Courts must first decide if the proffered evidence’s relevance “depends on whether a fact exists” and, if so, preliminarily rule on the existence of that fact. Id. 104(b). Similarly at certification, a trial court must determine if the putative class’s cohesion depends on whether a fact exists and, if so, resolve the factual question by a preponderance of the evidence. See Olean Wholesale Grocery Coop. v. Bumble Bee Foods LLC, 31 F.4th 651, 665 (9th Cir. 2022) (en banc) (holding “plaintiffs must prove the facts necessary” to satisfy Rule 23’s prerequisites “by a preponderance of the evidence”); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351–52 (2011) (directing lower courts to “resolve preliminary matters” at class certification); see also Jonah B. Gelbach, The Triangle of Law and the Role of Evidence in Class Action Litigation, 165 U. Pa. L. Rev. 1807, 1820 & n.62 (2017) (arguing courts at class certification should resolve disputes over “auxiliary assumption[s] necessary for counterfactual evidence to be probative” for each class member through Rule 104’s framework).Show More

Olean presents such a case. To the dissent, every attack on Dr. Mangum’s report required the court’s attention because a jury might have believed Dr. Johnson’s argument that twenty-eight percent of the class was uninjured. But, the Ninth Circuit effectively distinguished between the Tuna Suppliers’ arguments that raised “fatal dissimilarit[ies]” and those that illustrated “fatal similarit[ies].”¹¹⁶116. Amgen, 568 U.S. at 470 (citing Nagareda, supra note 4, at 107).Show More Fatal dissimilarities are those differences between the class members that “make use of the class-action device inefficient or unfair” because each class member may require individualized proof:¹¹⁷117. Id.Show More Evidence would not be relevant to each class member.¹¹⁸118. Compare Wal-Mart, 564 U.S. at 356–57 (decertifying a class action because 1.5 million plaintiffs across thousands of stores managed by tens of thousands of managers were not similar enough for statistical regressions or sampling evidence to prove Wal-Mart discriminated against each plaintiff), with Amgen, 568 U.S. at 467 (holding proof of materiality is not needed at the certification stage because it is objective and applies to each member of the class), and Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 459 (2016) (holding each plaintiff could rely upon a single study to recover under the Fair Labor Standards Act because “each employee worked in the same facility, did similar work, and was paid under the same policy”).Show More The Tuna Suppliers only argued some plaintiffs were uninjured, and therefore dissimilar, because of their stronger bargaining power, but Dr. Mangum, the district court, and the Ninth Circuit adequately addressed and resolved the dispute on that ancillary issue.¹¹⁹119. See supra notes 60–64 and accompanying text (explaining how the Ninth Circuit concluded each plaintiff could establish antitrust injury with Dr. Mangum’s evidence).Show More In contrast, the district court refused to enter any findings on many of Dr. Johnson’s general critiques—e.g., Dr. Mangum used inferior cost data—because those addressed a similarity: Evidence would not be sufficient for every class member.¹²⁰120. See In re Asacol Antitrust Litig., 907 F.3d 42, 54 (1st Cir. 2018) (“[P]laintiffs point to no such substantive law that would make an opinion that ninety percent of class members were injured both admissible and sufficient to prove that any given individual class member was injured.”).Show More As the en banc aptly held, such a debate is best reserved for summary judgment and, ultimately, a jury.¹²¹121. Olean, 31 F.4th at 681.Show More

CONCLUSION

The Ninth Circuit’s decision to reject a de minimis standard for uninjured class members is another step in acknowledging Rule 23’s core purpose of and the trial court’s superior position in efficiently managing complex cases and controversies. The de minimis standard is a proxy for Rule 23’s textual commands at best and a hindrance to district courts saddled with overwhelming dockets and weary plaintiffs at worst. Though the en banc panel should not have reached the de minimis question, its opinion still provided important guidance for district courts struggling to evaluate ancillary predominance issues. By properly distinguishing between disputes over dissimilarities—relevancy issues a court must address at certification—and similarities—sufficiency debates best reserved for summary judgment or a jury—the court ensured Rule 23 continues to serve as an important tool to redress democratic theft and preserve increasingly strained judicial resources.