In a significant year-end decision affecting all class actions, but particularly antitrust cases, the U.S. Court of Appeals for the Third Circuit decided that trial courts must make bench-trial-like factual findings on all issues of fact essential to a class certification decision, even if it means deciding “merits” issues. In re Hydrogen Peroxide Antitrust Litigation, No. 07-1689 (3d Cir, Dec. 30, 2008). It may make class action defense lawyers into trial lawyers again. And in one area where class certification was nearly automatic— antitrust cartel cases—plaintiffs will find it harder to certify a class because it eliminates any presumption of “injury in fact.” The unanimous decision, authored by Chief Judge Scirica and marked “PRECEDENTIAL” by the court, reversed a trial court’s class certification in an antitrust class action that followed on U.S. DoJ criminal enforcement action against manufacturers of the primary bleaching agent in paper manufacturing. The court summarized its decision as follows:
In this appeal, we clarify three key aspects of class certification procedure. First, the decision to certify a class calls for findings by the court, not merely a “threshold showing” by a party, that each requirement of Rule 23 is met. Factual determinations supporting Rule 23 findings must be made by a preponderance of the evidence. Second, the court must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits—including disputes touching on elements of the cause of action.
Third, the court’s obligation to consider all relevant evidence and arguments extends to expert testimony, whether offered by a party seeking class certification or by a party opposing it.
The court also made clear that any findings on merits issues made by the trial court in connection with class certification will not be binding on the finder of fact in any trial on the merits.