Taking on the issue for the first time, the Court of Appeals for the Third Circuit rejected a district court’s certification of a nationwide class of indirect purchasers under various state antitrust laws. Over the objections of some class members, the district court had certified the class as part of a settlement.
While state antitrust statutes generally mirror the federal antitrust laws, many have more lenient standing requirements. In 1977, in Illinois Brick v. Illinois, the United States Supreme Court held that only direct purchasers of a product or service may sue for an antitrust injury. In the years that followed, twenty-five states and the District of Columbia extended antitrust standing to indirect purchasers via “Illinois Brick repealer” statutes or judicial decisions. The remaining states follow the federal rule and do not grant standing to indirect purchasers.
In Sullivan v. DB Investments, Inc., the Third Circuit considered the novel issue of “whether variations among state antitrust statutes are so far-reaching that those differences overshadow commonalities when a class of indirect purchasers seeks certification on a nationwide basis.” In concluding that it would be improper to permit a nationwide class of indirect purchasers, the court reasoned: “[T]here can be no certification of a nationwide class of state indirect purchaser plaintiffs because there is no common question of law or material fact. It is improper to certify a nationwide class when the legal right shared by class members purportedly arises under the laws of multiple jurisdictions, but only some of those jurisdictions extend standing to class members to enforce that right.” The appeals court noted that “when the parties propose to use class certification mechanisms in a manner that materially changes substantive rights, the district court has a duty to ensure that such use does not create a right of recovery where none existed before.” By certifying the nationwide class, the district court created standing for plaintiffs who otherwise lacked standing and ran afoul of the Rules Enabling Act in the process. The Rules Enabling Act prohibits a court from interpreting procedural rules in a manner that creates new substantive rights.
The Third Circuit rejected the idea that a nationwide class could be certified using various state antitrust laws and remanded the case to the district court. On remand, the district court would be permitted to entertain certification motions for a class that, at least as to the state antitrust law claims, is not nationwide in scope.
Ultimately, this decision deals a significant blow to indirect purchaser plaintiffs who would seek to circumvent certain states’ Illinois Brick standing requirements by filing a nationwide class action.