The D.C. Circuit’s recent decision in In Re Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244 (Aug. 9, 2013) (“Rail Freight”) represents an important advancement in class certification law, particularly in antitrust cases. In a rare grant of interlocutory review of a class certification decision, the D.C. Circuit’s opinion offers an expansive reading of the Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). In Behrend, the Court held that plaintiffs’ expert models must be tailored to the theories of harm alleged in order to meet the predominance requirement for class certification under Federal Rule of Civil Procedure 23(b)(3). The D.C. Circuit in Rail Freight went further to require that the plaintiffs’ expert model also be specific enough to exclude the possibility of including uninjured plaintiffs in the purported class. The court thus underscored that the plaintiffs’ expert model is of paramount importance at the class certification stage. As the court wrote: “No damages model, no predominance, no class certification.” Rail Freight also rejects the previously oftcited standard that allowed plaintiffs to obtain class certification where they showed only that “virtually all” class members were injured. The court in Rail Freight instead required that common evidence must show that “all class members suffered some injury.” This raises the bar for plaintiffs seeking class certification and provides defendants with yet another avenue for attacking it. Because of these important clarifications of class certification law after Behrend, Rail Freight is likely to set the tone for future decisions around the country.

Background of the Case

Rail Freight involves allegations that the nations’ four largest freight railroads conspired to fix the fuel surcharge component of their overall prices during a five year period starting in 2003, allegedly causing thousands of rail freight shippers to pay unwarranted overcharges on their shipments. Initial cases were consolidated in the United States District Court for the District of Columbia in 2007. After over two years of litigation, direct purchaser plaintiffs filed a motion for class certification under Fed. R. Civ. P. 23(b)(3) in early 2010. On June 21, 2012 the district court issued a 145‐page decision granting the plaintiffs’ motion, based on its finding that that the plaintiffs’ expert’s injury and damages models were “plausible” and “workable.”

Subsequently, the defendant railroads filed a Fed. R. Civ. P. 23(f) motion for interlocutory appeal. In the period between when the defendants filed their appeal and when the D.C. Circuit agreed to hear it, the United States Supreme Court announced its decision in Behrend and, in so doing, significantly altered the class certification landscape generally and for the D.C. Circuit in Rail Freight.

Summary of the Opinion

  1. Rail Freight Presented the Perfect Storm for Appeal

Courts of appeal have broad discretion to grant review of class certification decisions, and it is widely recognized that Rule 23(f) appeals are “the exception, not the rule.” William B. Rubenstein, Newberg on Class Actions 208 (Thompson Reuters 5th ed. 2013). The D.C. Circuit found that Rail Freight presented one of the rare exceptions. “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,”the court wrote. 725 F.3d 254. However, Rail Freight was “not the ordinary case.” Id.

“Courts of appeal have broad discretion to grant review of class certification decisions, and it is widely recognized that Rule 23(f) appeals are ‘the exception, not the rule.’”

As the court explained, class certification decisions warrant interlocutory review in three situations: (1) when class certification “places substantial pressure on the defendant to settle”—otherwise known as the “death knell” standard; (2) when the decision “presents an unsettled and fundamental issue of law relating to class actions”; and (3) where the certification decision is “manifestly erroneous.” Id. at 250. Noting that these three situations are “mutually reinforcing, not exclusive,” the court found that a “hybrid” of these scenarios was present in Rail Freight. Id. The court first found that this case presented a situation in which certification of a class would be the “death knell” of the litigation, because it would place significant pressure on the defendants to settle. It noted that the defendants did not provide details of the cost to them of continuing the litigation―because much of the record below was under seal―but also rejected the plaintiffs’ arguments that the defendants could afford to pay the damages at issue. Id. at 252 (“The death knell marks not the defendant’s demise, but the litigation’s.”). The court also suggested that antitrust cases may have an easier time meeting the death knell standard than other cases, because of the potential for treble damages: “the plaintiffs demand a vast sum in damages, which, because this is an antitrust case, are subject to trebling.” Id. at 251. Still, the court was clear that a death knell situation alone is not sufficient to warrant the appeal; it must be accompanied by a “questionable” lower court decision. Id. at 252.

The circuit court’s finding that the lower court’s decision was “questionable” centered on the plaintiffs’ expert model. The court first stated the standard with respect to how many class members must be injured for class certification:

The plaintiffs must also show that they can prove, through common evidence, that all class members were in fact injured by the alleged conspiracy...That is not to say that the plaintiffs must be prepared at the certification stage to demonstrate...the precise amount of damages incurred by each class member...But we do expect the common evidence to show that all class members suffered some injury.

Id. (emphasis added).

The court then determined that the lower court had neglected to consider one of defendants’ arguments, which, if correct, “would shred the plaintiffs’ case for certification” because it would have fallen short of this standard. Id. Specifically, the expert model, when applied to shippers that were operating under contracts entered into before the class period as defined by plaintiffs―socalled “legacy shippers,” who everyone agreed could not be in the class―yielded damages equal to those shown for members of the purported class. That meant that the expert’s methodology “detect*ed+ injury where none could exist” because legacy shippers by definition could not be injured by the alleged conspiracy, yet they would have been entitled to damages under the expert’s model. Id. at 253. As a result, the model suffered from the same legal flaw as the expert report in Behrend: it failed to credibly connect the injury to the alleged wrong.

Finally, and perhaps most significantly, the Supreme Court decision in Behrend came at just the right time for the defendants. The D.C. Circuit noted that “*i+ntervening Supreme Court decisions with significant bearing on a certification decision are not an everyday occurrence.” Id. at 254. The court stated that Behrend requires district courts now to “scrutinize the evidence before granting certification,” and because the district court did not have “the benefit of Behrend’s wisdom,” this, along with the other factors discussed, justified appellate review. Id (emphasis added).

“Perhaps most significantly, the Supreme Court decision in Behrend came at just the right time for the defendants.”

  1. The Merits of the Appeal

In its brief consideration of the merits of the appeal, the court addressed and rejected each of the plaintiffs’ efforts to save their expert’s model. First, the plaintiffs argued that because legacy shippers were not part of the class, they are not relevant as to whether certification was appropriate. The D.C. Circuit rejected this argument, noting that the plaintiffs’ contention failed to show whether the overcharges calculated for class members are more accurate than “the obviously false estimates it produces for legacy shippers.” Id. Second, the plaintiffs argued that because the conspiracy predated the class period, it would make sense for legacy shippers to have suffered some injury. However, the court noted that the plaintiffs cited no specific evidence for this argument and, more significantly, the argument conflicted with the “crux” of plaintiffs’ evidence and the lower court’s finding that fuel surcharges after the alleged conspiracy were notably different from those that were used before the conspiracy allegedly began. Id. Finally, the plaintiffs argued that, because the district court’s rulings on plaintiffs’ expert were findings of fact, only clear error would warrant the circuit court’s review. The court quickly rejected this, pointing out that the district court made no findings of either fact or questions of law as to legacy shippers. Citing Behrend, the court also noted that while the data relied upon by experts may be considered a question of fact, the results of the data are “no more a question of fact than what our opinions hold.” Id. at 255.

  1. The Court’s Discussion of Behrend

The significance of the Rail Freight decision lies primarily in the last few paragraphs of the court’s opinion, where the court comments on Behrend, in what can only be considered a discussion that will be exceedingly helpful for defendants opposing class certification going forward. The court noted that “[b]efore Behrend, the case law was far more accommodating to class certification under Rule 23(b)(3).” Id. The court then concluded that, because of Behrend, courts going forward must closely consider the expert methodologies presented by the plaintiffs seeking class certification:

It is now clear...that Rule 23 not only authorizes a hard look at the soundness of statistical models that purport to show predominance―the rule commands it.

Id (emphasis added).

The court recognized that the district court did not have the benefit of Behrend when it decided the motion in the first instance. Consequently, it vacated the district court’s decision and remanded the case for further consideration in light of Behrend.


After Rail Freight, it seems unavoidable that defendants will increasingly scour the plaintiffs’ experts’ materials for inclusion of uninjured class members as well as any other evidence that the experts’ modeling of injury is insufficiently connected to the alleged wrongful conduct. This was already apparent in the recent expert testimony presented during the last week of October in In Re Air Cargo Shipping Services Antitrust Litigation, 06‐md‐1775, currently being litigated in the Eastern District of New York. There, the defendants’ experts were explicit about the fact that they changed the focus of their criticisms of the plaintiffs’ models in light of Rail Freight. Closing arguments on class certification in that case are scheduled for November 25, 2013; it will be interesting to count the number of instances in which Rail Freight is cited by the defendants in their allotted two and a half hours of oral argument.