Duane Morris Class Action Review - 2023 - Report - Page 48
pleaded guilty or admitted to charges in exchange for leniency from the Department of
Justice in 2015. Id. at 661-62. The district court held an evidentiary hearing to hear the
party’s “battle of the experts” and held that the plaintiffs’ statistical analysis suggesting
class-wide impact, while not determinative of issues of merit, was sufficient under Rule
23(b)(3)’s predominance requirement to show common questions and it certified three
classes of plaintiffs. Id. at 662. In 2022, the en banc Ninth Circuit affirmed the district
court’s class certification orders. The Ninth Circuit held that the district court did not
abuse its discretion in finding that statistical regression models and other expert
evidence satisfied the predominance requirement of class certification under Rule
23(b)(3). Id. at 661. In doing so, the Ninth Circuit rejected any de minimis rule about the
number of potentially uninjured members included in a class, holding that such a rule
would be inconsistent with the text of Rule 23, which requires “rigorous analysis whether
the common question predominates over any individual questions, including
individualized questions about injury or entitlement to damages.” Id. at 669.
In addition, the Ninth Circuit rejected the defendants’ arguments that the use of
averages in statistical regression models improperly obscures individualized issues
such as bargaining power of individual purchasers, holding that individual negotiation
positions may have been diverse, but that the conspiracy could have inflated all of the
baseline negotiation positions. Id. at 678. The Ninth Circuit also rejected the argument
that class certification should be denied because the averages could not be used to
determine individual damages of some class members: “while 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.” Id. at 679.
In November of 2022, the Supreme Court declined to hear an appeal of the Ninth
Circuit’s affirmation of class certification, clearing the way for the class action to
proceed.
Another important class certification decision that followed unsuccessful challenges to
Rule 23(b)(3) predominance issues is Burnett, et al. v. National Association Of Realtors,
2022 U.S. Dist. LEXIS 73682 (W.D. Mo. Apr. 22, 2022), where the plaintiffs accused the
realtor association and large broker franchisors of promulgating industrywide rules that
amount to price-fixing and that inflate broker fees by forcing brokers that represent
sellers to pay commissions to brokers representing buyers. The plaintiffs moved for
class certification under Rule 23(b)(3), claiming that common questions of law or fact
predominated over individualized issues. Id. at 27-28. The plaintiffs offered expert
opinions on high commission rates, a regression analysis that purportedly showed that
the defendants’ conduct led to “steering” of home buyers away from lower commission
homes, and a “but for defendant’s conduct” hypothetical market to demonstrate that
common evidence could demonstrate class wide impact. Id. at 33-36. The defendants
offered several arguments to counter the plaintiff’s expert and demonstrate that
individualized issues within the proposed classes should defeat certification under Rule
23(b)(3)’s predominance requirement. The defendants argued that each broker has
individually specific reasons and incentives for offering commissions and whether or not
those commissions would continue to be made in each plaintiff’s but-for world required
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Duane Morris Class Action Review – 2023