Ninth Circuit En Banc Ruling Olean Creates Circuit Split Rejecting Bright Line Rule for Rule 23(b)(3) Predominance in Favor of Case by Case Analysis

Following en banc review, the Ninth Circuit affirmed the district court’s ruling based on the evidence in that case. The Ninth Circuit held that Rule 23(b)(3) predominance requirements must be demonstrated by a preponderance of the evidence. The en banc panel also held that when individualized questions relate to the antitrust impact, or injury status, of class members under Rule 23(b)(3), that likewise requires the court to determine whether individualized inquiries about antitrust impact predominate over common questions and rejected the bright line rule of the de minimis formulation articulated by the original Ninth Circuit panel. Notably, the majority opinion contains several footnotes limiting its own opinion. For example, in footnote 9, the majority agrees with the dissent that not all expert evidence is capable of showing that predominance has been met or resolving issues in one stroke. And footnote 12 acknowledges that under the Supreme Court’s ruling in TransUnion LLC v. Ramirez¹ last term, every class member must have Article III standing.

Two judges dissented from the majority opinion. In particular, the dissent noted that if defendant’s econometrician was correct, that means almost a third of the class members may not have suffered any antitrust impact or injury, thus the common questions of fact do not predominate. Moreover, the rigorous analysis under Rule 23 requires district courts to resolve expert disputes that implicate whether the Rule 23 requirements are met. Thus, the dissent would hold that the district court committed the same error cautioned against by the Ninth Circuit in Ellis v. Costco Wholesale Corp.² In Costco, as in Olean, the district court deemed the plaintiffs’ expert to be reliable and declined to resolve the disputes between the parties’ experts at the class certification stage. The Ninth Circuit reversed because the district court’s ruling confused expert reliability with the required rigorous analysis under Rule 23, which the dissent argues is the same error in Olean.

Finally, the dissent explained that the Ninth Circuit’s rejection of the de minimis test creates a circuit split with the D.C. Circuit and the First Circuit. The dissent noted that while a plaintiff is not required to show that every putative class member was injured or suffered antitrust impact, the number of uninjured class members must still be small.

As the dissent noted, class certification often is a prelude to settlement, regardless of actual likelihood of success. Accordingly, in light of the importance of the issues and the circuit split on the de minimis threshold, it is likely that this case will be appealed to the Supreme Court.

¹141 S. Ct. 2190, 2208 (2021).

²657 F.3d 970, 982–84 (9th Cir. 2011).