United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 3, 2013 Decided August 9, 2013
No. 12-7085
IN RE: RAIL FREIGHT FUEL SURCHARGE ANTITRUST
LITIGATION - MDL NO. 1869,
BNSF RAILWAY COMPANY, ET AL.,
PETITIONERS
Appeal from the United States District Court
for the District of Columbia
Carter G. Phillips argued the cause for petitioners. With
him on the briefs were Joseph R. Guerra, Saul P.
Morgenstern, Maureen E. Mahoney, J. Scott Ballenger, Alan
M. Wiseman, Thomas A. Isaacson, Theodore J. Boutrous, Jr.,
John M. Nannes, Tara L. Reinhart, Tyrone R. Childress,
David G. Meyer, Veronica S. Lewis, Kent A. Gardiner,
Kathryn D. Kirmayer, Andrew S. Tulumello, Samuel L. Sipe,
Jr., and Linda Stein.
Theodore J. Boutrous, Jr., Andrew S. Tulumello, and
Veronica S. Lewis were on the briefs for petitioner BNSF
Railway Company. Richard J. Favretto, Michael E. Lackey,
Jr., and G. Paul Moates entered appearances.
Mark T. Stancil, Robin S. Conrad, and Sheldon Gilbert
were on the briefs for amicus curiae Chamber of Commerce
of the United States of America in support of petitioners.
2
Stephen R. Neuwirth argued the cause for respondents.
With him on the brief were William B. Adams, Michael D.
Hausfeld, and Michael P. Lehmann.
Before: GARLAND, Chief Judge, BROWN, Circuit Judge,
and SENTELLE, Senior Circuit Judge.
BROWN, Circuit Judge: Over the last decade, the four
major freight railroads imposed rate-based fuel surcharges on
shipments over their tracks. Although the practice had existed
for some time, it proliferated and intensified early last decade.
Suspecting foul play, a group of shippers who paid these
surcharges brought an antitrust suit accusing the freight
railroads of engaging in a price-fixing conspiracy. They also
sought and obtained certification of a class including all
similarly situated shippers who paid these surcharges during
the relevant period. The freight railroads now seek, via
interlocutory appeal, to undo class certification, the crux of
their argument being that separate trials are needed to
distinguish the shippers the alleged conspiracy injured from
those it did not. Satisfied that this case is among the rare
instances in which interlocutory review of a certification
decision is warranted, we exercise our discretion to hear this
appeal.
I
A
Four companies account for nearly 90% of rail freight
traffic: BNSF Railway Co. (BNSF); CSX Transportation, Inc.
(CSX); Norfolk Southern Railway Co. (NS); and Union
Pacific Railroad Co. (UP). See In re Rail Freight Fuel
Surcharge Antitrust Litig. (Fuel Surcharge I), 587 F. Supp. 2d
3
27, 29 (D.D.C. 2008). In some regions, the railroads’
networks overlap. In others, tracks may belong almost
exclusively to a single railroad. A sizable percentage of
shipping traffic over the four railroads’ tracks is “interline,”
i.e., serviced by multiple railroads, 1 and some is “intermodal”
traffic, which involves transferring freight from trains to other
forms of transportation like trucks or ships.
To offset fuel costs, freight railroads often include fuel
surcharges on top of the base rates they charge their
customers. These fuel surcharges have traditionally taken two
forms. Mileage-based fuel surcharges raise total rates in
proportion to shipping distances. Rate-based fuel surcharges,
by contrast, depend on a prearranged “strike” or “trigger”
price. When fuel prices are below the trigger price, no fuel
surcharge supplements the base rate. But once fuel prices
exceed the trigger price, a surcharge is imposed as a function
of the base rate. Together, the fuel surcharge and base rate
constitute the total rate paid (sometimes called the “all-in”
rate).
Rate-based fuel surcharges were not unheard of at the
start of the new millennium, but neither were they the norm.
1
Facilitating interline traffic requires coordination among
competing freight railroads over logistics and shipping rates, so
federal law dictates that illicit conduct “may not be inferred from
evidence that two or more rail carriers acted together with respect
to an interline rate or related matter and that a party to such action
took similar action with respect to a rate or related matter on
another route or traffic.” 49 U.S.C. § 10706(a)(3)(B)(ii). To prevent
any resulting anticompetitive behavior, interline agreements
between railroads are subject to federal oversight. See id. § 10706.
While invocation of this statutory safe harbor is part of the
defendants’ overall litigation strategy, it is not an issue before us on
appeal.
4
That all changed by the mid-2000s, when fuel surcharge
provisions became ubiquitous, governing the vast majority of
the defendants’ shipments. At the same time, the defendants
sharpened the surcharges’ sting, with all four dropping their
trigger prices between March 2003 and March 2004. Not all
shippers were affected, though. Some had entered into so-
called legacy contracts with the defendants before this period,
thereby guaranteeing they would be subject to fuel surcharge
formulae that predated the later changes.
B
The heyday of the rate-based fuel surcharge did not last.
Eventually, the Surface Transportation Board (STB) put an
end to the practice with respect to common carrier traffic
within its regulatory authority. See Rail Fuel Surcharges, Ex
Parte No. 661, 2007 WL 201205 (S.T.B. Jan. 25, 2007). The
STB was especially troubled by the disconnect between the
purported rationale for the fuel surcharges—fuel cost
recovery—and the formula’s dependence on base rates, which
need not reflect the marginal fuel costs of a particular
shipment. See id. at *4. The decision did not, however,
directly implicate those shippers whose traffic was governed
by bilateral contract. See id. at *10.
A flurry of antitrust class actions against the four major
freight railroads ensued, all of which were ultimately
consolidated before the district court. See Fuel Surcharge I,
587 F. Supp. 2d at 29. While several sets of plaintiffs were
part of the consolidated proceedings, this case deals with
those eight plaintiffs 2 who brought against the defendants a
2
The plaintiffs comprise Dust Pro, Inc.; Olin Corporation;
Dakota Granite Company; Nyrstar Taylor Chemicals, Inc.; U.S.
5
claim of price fixing under § 1 of the Sherman Act, 15 U.S.C.
§ 1. Following discovery, these plaintiffs sought certification
of a class of shippers who paid the purportedly inflated fuel
surcharges. See In re Rail Freight Fuel Surcharge Antitrust
Litig. (Fuel Surcharge II), 287 F.R.D. 1, 12 (D.D.C. 2012). 3
As in any other case, obtaining certification required the
plaintiffs to meet the two burdens prescribed in Federal Rule
of Civil Procedure 23. First, the proposed class must satisfy
all four “prerequisites” to certification: numerosity,
commonality, typicality, and adequate representation. 4 Id. at
Magnesium LLC; Carter Distributing Company; Strates Shows,
Inc.; and Donnelly Commodities Incorporated.
3
The plaintiffs proposed the following class:
All entities or persons that at any time from July 1,
2003 until December 31, 2008 (the “Class Period”)
purchased rate-unregulated rail freight
transportation services directly from one or more of
the Defendants, as to which Defendants assessed a
stand-alone rail freight fuel surcharge applied as a
percentage of the base rate for the freight transport
(or where some or all of the fuel surcharge was
included in the base rate through a method referred
to as “rebasing”) (“Fuel Surcharge”).
Fuel Surcharge II, 287 F.R.D. at 12.
4
Stated in full, these prerequisites require that
(1) the class is so numerous that joinder of all
members is impracticable;
(2) there are questions of law or fact common to
the class;
6
20. Second, the proposed class must fit one of three categories
defined by Rule 23(b)—in this case, the plaintiffs had to show
that the litigation presents “questions of law or fact common
to class members [that] predominate over any questions
affecting only individual members,” and that “a class action is
superior to other available methods for fairly and efficiently
adjudicating the controversy.” FED. R. CIV. P. 23(b)(3); see
Fuel Surcharge II, 287 F.R.D. at 20. This latter criterion is
known as the predominance requirement. Amgen, Inc. v.
Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191
(2013).
Class certification is far from automatic. As recognized
by the district court, “Rule 23 does not set forth a mere
pleading standard. A party seeking class certification must
affirmatively demonstrate his compliance with the Rule—that
is, he must be prepared to prove that there are in fact
sufficiently numerous parties, common questions of law or
fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,
2552 (2011); see Fuel Surcharge II, 287 F.R.D. at 22.
Oftentimes, this inquiry resembles an appraisal of the merits,
for “it may be necessary for the court to probe behind the
pleadings before coming to rest on the certification question.”
Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982).
Such was the case here. While the defendants opposed class
certification on a number of grounds, much of the debate
centered on the predominance requirement and whether the
plaintiffs could show, through common evidence, injury in
(3) the claims or defenses of the representative
parties are typical of the claims or defenses of the
class; and
(4) the representative parties will fairly and
adequately protect the interests of the class.
FED. R. CIV. P. 23(a).
7
fact 5 to all class members from the alleged price-fixing
scheme, setting up another classic battle of the experts. See
Fuel Surcharge II, 287 F.R.D. at 43–71. In the plaintiffs’
corner was Dr. Gordon Rausser, the Robert Gordon Sproul
Distinguished Professor at the University of California at
Berkeley. See id. at 17. Facing off against him was Dr. Robert
Willig, Professor of Economics and Public Affairs at
Princeton University. See id. at 18.
The plaintiffs’ case for certification hinged on two
regression models prepared by Rausser. The first of these, the
“common factor model,” attempted to isolate the common
determinants of the prices shippers paid to the defendants.
Rausser also constructed a “damages model,” which sought to
quantify, in percentage terms, the overcharge due to
conspiratorial conduct at various intervals over the Class
Period. Purportedly, the two models operate in conjunction to
“set forth a persuasive inference of causation: certain common
factors predominate in the determination of freight rates;
controlling for those common factors, analysis of defendants’
transaction data reveals that there was a structural break in the
relationship between freight rates and fuel prices around
2003,” the start of the Class Period. See id. at 69. Willig, for
his part, contested various aspects of Rausser’s methodology
and conclusions. But for naught. The district court accepted
Rausser’s models as “plausible” and “workable,” rejected the
5
As the Supreme Court has noted, a successful antitrust
plaintiff must prove more than just the fact that collusive behavior
occurred: “The antitrust injury requirement cannot be met by broad
allegations of harm to the ‘market’ as an abstract entity. Although
all antitrust violations, under both the per se rule and rule-of-reason
analysis, ‘distort’ the market, not every loss stemming from a
violation counts as antitrust injury.” See Atl. Richfield Co. v. USA
Petroleum Co., 495 U.S. 328, 339 n.8 (1990).
8
defendants’ critiques, and granted class certification. Id. at 67.
This appeal followed.
II
Before addressing the merits, we pause to consider a
thorny threshold question. Should we be exercising our
appellate jurisdiction over this case in the first place? Class
certification is, after all, not a final decision of the sort we
typically review on appeal from the district court. See 28
U.S.C. § 1291. Certain interlocutory decisions do qualify for
immediate appellate review. See id. § 1292. But in the case of
class certification, that review is discretionary, not automatic.
See FED. R. CIV. P. 23(f) & advisory committee’s note; see
also 28 U.S.C. § 1292(e) (creating jurisdiction over
interlocutory appeals in those circumstances in which the
Supreme Court has prescribed rules providing for such
review).
Discretionary does not mean arbitrary. Choosing whether
to exercise jurisdiction over an interlocutory appeal from a
certification decision turns on more than what we had for
breakfast. According to our case law, three situations warrant
immediate review. The first of these arises when the decision
to certify is “questionable” and is accompanied by a “death-
knell”—i.e., it places “substantial pressure on the defendant to
settle independent of the merits of the plaintiffs’ claims.” In
re Lorazepam & Clorazepate Antitrust Litig., 289 F.3d 98,
102, 105 (D.C. Cir. 2002). The second situation occurs when
the certification decision “presents an unsettled and
fundamental issue of law relating to class actions, important
both to the specific litigation and generally, that is likely to
evade end-of-the-case review.” Id. at 105. Thirdly and finally,
we will grant interlocutory review of a certification decision
that is “manifestly erroneous.” Id. Absent “special
9
circumstances,” these three categories constitute the sole
bases for interlocutory review. Id. at 106.
The categories are mutually reinforcing, not exclusive. A
certification decision may warrant immediate review under
multiple theories. See, e.g., Szabo v. Bridgeport Machs., Inc.,
249 F.3d 672, 675 (7th Cir. 2001). And, where a single
ground for interlocutory appeal might otherwise be shaky, the
confluence of multiple rationales may fortify our decision—
the sort of “special circumstances” contemplated by our case
law. Cf. In re Veneman, 309 F.3d 789, 795 (D.C. Cir. 2002)
(holding out the possibility that a fundamental issue of first
impression unlikely to evade end-of-case review may
nevertheless qualify for interlocutory review as a special
circumstance). We have such a hybrid rationale here. Even if
the amount involved does not sound a death knell for the
defendants, it is still astronomical. Recent decisions of the
Supreme Court have unsettled the law relating to class
actions, and the latest pronouncement on the role of expert
evidence was unavailable to the district court at the time of its
decision. Collectively, these factors—the death knell, the
questionability of class certification, and new developments in
the jurisprudence—convince us that this is a case fit for
immediate review.
A
We start with the death knell question. While the case
law is neither precise nor particularly informative, a few
lessons may still be gleaned. We know, for instance, that
defendants invoking the death-knell rationale must go beyond
“mere assertions.” In re Lorazepam, 289 F.3d at 108. It is not
enough to claim irresistible pressure to settle and call it a day.
Nor do we deal in absolutes: “what might be ‘ruinous’ to a
company of modest size might be merely unpleasant to a
10
behemoth.” Waste Mgmt. Holdings, Inc. v. Mowbray, 208
F.3d 288, 294 (1st Cir. 2000). Above all, death-knell cases are
uncommon, for courts have discouraged them except in those
rare instances in which “the grant of class status raises the
cost and stakes of the litigation so substantially that a rational
defendant would feel irresistible pressure to settle.” Prado-
Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1274 (11th Cir.
2000).
Under normal circumstances, we would take this
opportunity to inject some clarity and detail the elements that
sound a death knell. Unfortunately, many of the financial
particulars are under seal. We will note, however, that the
plaintiffs demand a vast sum in damages, which, because this
is an antitrust case, are subject to trebling. See Clayton Act
§ 4, 15 U.S.C. § 15(a). The sheer magnitude is eye-catching,
but even more important is the context. Despite the
defendants’ size and market position, liability of this
magnitude could threaten their financial stability. According
to the defendants’ uncontested representations, at least some
would risk a damages award that “would wipe out a
substantial portion of their market capitalization.” Pet’rs’ Br.
23.
The plaintiffs are skeptical, citing the defendants’ own
financial disclosures. NS, for example, has stated in a filing
with the Securities and Exchange Commission, “We do not
believe that the outcome of these proceedings will have a
material effect on our financial position, results of operations,
or liquidity.” NS, Quarterly Report (Form 10-Q), at 13 (filed
Apr. 24, 2013). But this rosy prognostication is not a function
of NS’s limitless resources; in the sentence just before, NS
also revealed, “We believe the allegations in the complaints
are without merit and intend to vigorously defend the cases.”
Id.; see also UP, Quarterly Report (Form 10-Q), at 33 (filed
11
Apr. 18, 2013) (“We believe that these lawsuits are without
merit, and we will vigorously defend our actions. Therefore,
we currently believe that these matters will not have a
material adverse effect on any of our results of operations,
financial condition, and liquidity.”). Implicit in these
representations is the defendants’ hope they will prevail on
appeal from the district court’s certification decision. Of
course, the defendants’ belief in the availability of
interlocutory review in this case does not make it so. But for
that matter, the plaintiffs’ logic similarly depends on an
appeal to the defendants’ faith in their own solvency. Public
filings may offer useful guidance to the death-knell inquiry
when they actually discuss a company’s ability to satisfy a
judgment, but not when they merely speculate on a
defendant’s prospects for success on the merits. In this case, it
is the arithmetic that matters.
Naturally, the plaintiffs quibble with the numbers too. In
particular, they cite the defendants’ $110 billion in revenues
collected from the class members during the class period,
which they claim is obvious proof the defendants can afford
to provide class members the restitution they seek. The
plaintiffs misapprehend the standard. The death knell marks
not the defendant’s demise, but the litigation’s. The plaintiffs’
case may not threaten the very existence of the defendants’
companies, but potential extinction is not invariably a
prerequisite. A party need not risk utter destitution to qualify
for immediate review; it is enough that certification
“generate[s] unwarranted pressure to settle nonmeritorious or
marginal claims.” Newton v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 259 F.3d 154, 168 (3d Cir. 2001). Our inquiry
does not require the defendants be fighting for their very
existence.
12
That said, specific facts relating the defendants’ wealth
and liquidity to the magnitude of the damages they face and
the litigation choices they would be forced to make are sparse.
The defendants have generally let the sheer size of the
demanded damages award speak for itself. But although the
defendants could have done a better job establishing the
existence of a death knell, they have adduced just enough
facts to satisfy the standard in this case. The threat to NS’s
market capitalization is considerable, and according to the
defendants, certification exposes them to potential liability so
massive it would exceed their cumulative adjusted net income
for all of 2003–2011. Tellingly, the plaintiffs dispute none of
these facts.
Even when the numbers are dispositive, though, a death
knell alone does not warrant interlocutory review. Not only
must certification push litigants inexorably toward settlement,
but the certification decision must itself be “questionable.”
B
Meeting the predominance requirement demands more
than common evidence the defendants colluded to raise fuel
surcharge rates. The plaintiffs must also show that they can
prove, through common evidence, that all class members were
in fact injured by the alleged conspiracy. See Amchen Prods.,
Inc. v. Windsor, 521 U.S. 591, 623–24 (1997). Otherwise,
individual trials are necessary to establish whether a particular
shipper suffered harm from the price-fixing scheme. That is
not to say the plaintiffs must be prepared at the certification
stage to demonstrate through common evidence the precise
amount of damages incurred by each class member. Messner
v. Northshore Univ. HealthSystem, 669 F.3d 802, 815–16 (7th
Cir. 2012); see Wal-Mart, 131 S. Ct. at 2558. But we do
13
expect the common evidence to show all class members
suffered some injury.
With this in mind, we proceed to the defendants’ claim
the certification decision is “questionable.” Of the medley of
attacks on the plaintiffs’ ability to satisfy the predominance
requirement, we focus on one: according to the defendants,
Rausser’s damages model is defective. The model purports to
quantify the injury in fact to all class members attributable to
the defendants’ collusive conduct. But the same methodology
also detects injury where none could exist. When applied to
shippers who were subject to legacy contracts—i.e., those
shippers who, during the Class Period, were bound by rates
negotiated before any conspiratorial behavior was alleged to
have occurred—the damages model yields similar results. If
accurate, this critique would shred the plaintiffs’ case for
certification. Common questions of fact cannot predominate
where there exists no reliable means of proving classwide
injury in fact. See Concord Boat Corp. v. Brunswick Corp.,
207 F.3d 1039, 1056–57 (8th Cir. 2000). When a case turns
on individualized proof of injury, separate trials are in order.
Rausser contested the legal significance of this criticism
of his damages model, but he conceded it measured
overcharges to legacy shippers and class members alike. The
district court opinion, for its part, regarded Rausser’s damages
model as essential to its certification decision, for “neither his
common factor model nor his damage model in isolation
attempts to prove common injury-in-fact. Rather, the result of
the damage model must be viewed as the final step in the
body of evidence . . . presented to show that injury-in-fact is
capable of common proof.” Fuel Surcharge II, 287 F.R.D. at
69 (internal quotation marks omitted). It did not, however,
address the defendants’ concern that the damages model
yielded false positives with respect to legacy shippers. See id.
14
at 66–70. Together, Rausser’s concession and the district
court’s silence are sufficient to render the certification
decision questionable under the death-knell rationale for
interlocutory review—particularly when combined with
Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), which
clarified the law of class actions after the district court
certified the class.
C
After the district court’s decision to certify—after the
parties even submitted their briefing in this appeal—the
Supreme Court decided Comcast Corp. v. Behrend, whose
analysis informs the case before us. Behrend also involved
certification of an antitrust class action under Rule 23(b)(3)
based on regression modeling. See 133 S. Ct. at 1430–31. The
plaintiffs in Behrend had proposed four theories of antitrust
impact, all but one of which the district court rejected. See id.
at 1431. The plaintiffs’ sole ground, however, for asserting
that damages could be calculated on a classwide basis was a
model that assumed the validity of all four theories. See id.
Not good enough. Predicating class certification on a model
divorced from the plaintiffs’ theory of liability, the Court
held, indicates a failure to conduct the rigorous analysis
demanded by Rule 23. See id. at 1433. Without some
alternative model to turn to, predominance could not be
shown: “Questions of individual damage calculations will
inevitably overwhelm questions common to the class.” Id.
Rejected was the view of the Court of Appeals that “attacks
on the merits of the methodology . . . have no place in the
class certification inquiry.” Behrend v. Comcast Corp., 655
F.3d 182, 207 (3d Cir. 2011).
As we see it, Behrend sharpens the defendants’ critique
of the damages model as prone to false positives. It is now
15
indisputably the role of the district court to scrutinize the
evidence before granting certification, even when doing so
“requires inquiry into the merits of the claim.” 133 S. Ct. at
1433. If the damages model cannot withstand this scrutiny
then, that is not just a merits issue. Rausser’s models are
essential to the plaintiffs’ claim they can offer common
evidence of classwide injury. See Fuel Surcharge II, 287
F.R.D. at 66. No damages model, no predominance, no class
certification.
Recall that we may assume jurisdiction even when a
certification decision does not fit neatly within one of the
three categories calling for interlocutory appeal. “Special
circumstances” might also prompt immediate review. In re
Lorazepam, 289 F.3d at 106. While our case law has not
identified what makes a circumstance special, we believe the
present case fits the bill. Intervening Supreme Court decisions
with significant bearing on a certification decision are not an
everyday occurrence, and the district court here did not have
the benefit of Behrend’s wisdom when making its
certification decision. And if that is not enough to justify
interlocutory appeal as a special circumstance, the added
weight of a certification order already on the cusp of
satisfying the death-knell standard tips the scales in favor of
review.
Lest our decision be misunderstood, we reiterate our view
that “interlocutory appeals are generally disfavored as
disruptive, time-consuming, and expensive” for both the
parties and the courts. In re Lorazepam, 289 F.3d at 103
(internal quotation marks omitted). But this is not the ordinary
case. In light of Behrend, the pressure to settle posed by the
threat to the defendants’ market capitalization, and the
identified defect in the damages model, we grant the
16
defendants interlocutory review under Rule 23(f) because this
qualifies as even more than a death-knell situation.
III
Now to the merits. We have already laid out the damages
model’s propensity toward false positives. The plaintiffs
nevertheless make several attempts at saving the model—and
with it, the certification decision. They first argue that
“shipments under these pre-Class Period contracts are not
even part of the Class, and the relevant issue is whether Class
members paid higher all-in rates following Defendants’
aggressive imposition of new fuel surcharges.” Resp’ts’ Br.
65–66. The plaintiffs are right that the defendants’ critique
does not disprove the damages model’s claim of classwide
overcharges as a matter of logical necessity; absence of
evidence is not evidence of absence. 6 But they misapprehend
their burden. It is not enough to submit a questionable model
whose unsubstantiated claims cannot be refuted through a
priori analysis. Otherwise, “at the class-certification stage any
method of measurement is acceptable so long as it can be
applied classwide, no matter how arbitrary the measurements
may be.” Behrend, 133 S. Ct. at 1433. As things stand, we
have no way of knowing the overcharges the damages model
calculates for class members is any more accurate than the
obviously false estimates it produces for legacy shippers.
The plaintiffs next suggest the defendants’ price-fixing
conspiracy predates the start of the Class Period, meaning
antitrust violations may also have tainted even legacy
contracts. But the plaintiffs failed to adduce specific evidence
6
Or, more formally, “‘P ⊃ Q’ does not mean ‘¬P ⊃ ¬Q.’”
New Eng. Power Generators Ass’n v. FERC, 707 F.3d 364, 370 n.3
(D.C. Cir. 2013).
17
of this possibility—say, by rerunning both models from an
earlier start date. The claim also runs directly counter to the
district court’s factual finding that “the fuel surcharge
programs applied before the class period were nothing like the
widespread and uniform application of standardized fuel
surcharges during the class period” because “[b]efore the
alleged conspiracy, defendants’ differentiated fuel surcharges
were subject to competition and negotiation with shippers,
were less aggressive, and were applied only sporadically.”
Fuel Surcharge II, 287 F.R.D. at 48. This was, after all, the
crux of the plaintiffs’ own evidence of collusion—that there
was a “structural break” at the start of the Class Period in the
relationship between total shipping rates and fuel prices. Id. at
69.
Finally, the plaintiffs also place great emphasis on the
standard of review, contending that the district court’s
endorsement of Rausser’s models was a finding of fact we
may only review for clear error. But there is no factual finding
to which we could defer. As we already explained, the district
court never grappled with the argument concerning legacy
shippers. That the district court deemed the damages model
workable in the face of different challenges is irrelevant. And,
in any event, “while the data contained within an econometric
model may well be ‘questions of fact’ in the relevant sense,
what those data prove is no more a question of fact than what
our opinions hold.” Behrend, 133 S. Ct. at 1433 n.5.
Before Behrend, the case law was far more
accommodating to class certification under Rule 23(b)(3).
Though Behrend was grounded in what the Court deemed “an
unremarkable premise,” id. at 1433, courts had not treated the
principle as intuitive in the past. In determining Rausser’s two
models are “‘plausible,’” the district court understandably
relied on these precedents—including the very decision the
18
Supreme Court reversed in Behrend. Fuel Surcharge II, 287
F.R.D. at 62 (quoting Behrend v. Comcast Corp., 655 F.3d at
204 n.13). In a similar vein, the district court looked to cases
from other circuits suggesting that false positives do not indict
the viability of a class, since “[c]lass certification is not
precluded simply because a class may include persons who
have not been injured by the defendant’s conduct.” Mims v.
Stewart Title Guar. Co., 590 F.3d 298, 308 (5th Cir. 2009);
see Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir.
2009) (same). It is now clear, however, that Rule 23 not only
authorizes a hard look at the soundness of statistical models
that purport to show predominance—the rule commands it.
Mindful that the district court neither considered the
damages model’s flaw in its certification decision nor had the
benefit of Behrend’s guidance, we will vacate class
certification and remand the case to the district court to afford
it an opportunity to consider these issues in the first instance.
See DL v. Dist. of Columbia, 713 F.3d 120, 129 (D.C. Cir.
2013). We need not reach the defendants’ alternate grounds
for relief.
IV
For the foregoing reasons, we vacate the district court’s
class certification decision and remand the case to permit the
district court to reconsider its decision in light of Comcast
Corp. v. Behrend.
So ordered.