Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC

• Court: U.S. Court of Appeals — Ninth Circuit
• Writing for the Court: BUMATAY, Circuit Judge
• Citation: Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 993 F.3d 774 (9th Cir. 2021)
• Decision Date: 06 April 2021
• Docket Number: No. 19-56514,19-56514
• Parties: OLEAN WHOLESALE GROCERY COOPERATIVE, INC. ; Beverly Youngblood; Pacific Groservice, Inc., DBA Pitco Foods; Capitol Hill Supermarket; Louise Ann Davis Matthews; James Walnum; Colin Moore; Jennifer A. Nelson; Elizabeth Davis-Berg; Laura Childs; Nancy Stiller; Bonnie Vanderlaan; Kristin Millican; Trepco Imports and Distribution, Ltd.; Jinkyoung Moon; Corey Norris; Clarissa Simon; Amber Sartori; Nigel Warren; Amy Joseph ; Michael Juetten; Carla Lown; Truyen Ton-Vuong, AKA David Ton ; A-1 Diner ; Dwayne Kennedy; Rick Musgrave; Dutch Village Restaurant ; Lisa Burr ; Larry Demonaco; Michael Buff; Ellen Pinto; Robby Reed; Blair Hysni; Dennis Yelvington ; Kathy Durand Gore; Thomas E. Willoughby III; Robert Fragoso; Samuel Seidenburg; Janelle Albarello; Michael Coffey; Jason Wilson; Jade Canterbury; Nay Alidad; Galyna Andrusyshyn; Robert Benjamin; Barbara Buenning; Danielle Greenberg ; Sheryl Haley; Lisa Hall; Tya Hughes; Marissa Jacobus; Gabrielle Kurdt; Erica Pruess; Seth Salenger; Harold Stafford ; Carl Lesher; Sarah Metivier Schadt; Greg Stearns ; Karren Fabian; Melissa Bowman; Vivek Dravid; Jody Cooper ; Danielle Johnson; Herbert H. Kliegerman; Beth Milliner; Liza Milliner; Jeffrey Potvin; Stephanie Gipson; Barbara Lybarger; Scott A. Caldwell; Ramon Ruiz; Thyme Cafe & Market, Inc. ; Harvesters Enterprises, LLC; Affiliated Foods, Inc.; Piggly Wiggly Alabama Distributing Co., Inc.; Elizabeth Twitchell; Tina Grant; John Trent ; Brian Levy; Louise Adams; Marc Blumstein; Jessica Breitbach; Sally Crnkovich; Paul Berger; Sterling King ; Evelyn Olive; Barbara Blumstein; Mary Hudson; Diana Mey; Associated Grocers of New England, Inc.; North Central Distributors, LLC; Cashwa Distributing Co. of Kearney, Inc.; URM Stores, Inc.; Western Family Foods, Inc.; Associated Food Stores, Inc.; Giant Eagle, Inc.; McLane Company, Inc.; Meadowbrook Meat Company, Inc.; Associated Grocers, Inc.; Bilo Holding, LLC ; WinnDixie Stores, Inc. ; Janey Machin; Debra L. Damske; Ken Dunlap; Barbara E. Olson; John Peychal; Virginia Rakipi; Adam Buehrens; Casey Christensen; Scott Dennis; Brian Depperschmidt; Amy E. Waterman; Central Grocers, Inc.; Associated Grocers of Florida, Inc.; Benjamin Foods LLC ; Albertsons Companies LLC; H.E. Butt Grocery Company; Hyvee, Inc.; The Kroger Co.; Lesgo Personal Chef LLC; Kathy Vangemert; Edy Yee; Sunde Daniels; Christopher Todd; Publix Super Markets, Inc.; Wakefern Food Corp.; Robert Skaff; Wegmans Food Markets, Inc.; Julie Wiese; Meijer Distribution, Inc.; Daniel Zwirlein; Meijer, Inc.; Supervalu Inc.; John Gross & Company ; Super Store Industries; W. Lee Flowers & Co. Inc.; Family Dollar Services, LLC ; Amy Jackson; Family Dollar Stores, Inc.; Katherine McMahon ; Dollar Tree Distribution, Inc.; Jonathan Rizzo ; Greenbrier International, Inc.; Joelyna A. San Agustin; Alex Lee, Inc.; Rebecca Lee Simoens; Big Y Foods, Inc.; David Ton ; KVAT Food Stores, Inc., DBA Food City; Affiliated Foods Midwest Cooperative, Inc.; Merchants Distributors, LLC; Brookshire Brothers, Inc.; Schnuck Markets, Inc.; Brookshire Grocery Company; Kmart Corporation; Certco, Inc.; Rushin Gold, LLC, DBA The Gold Rush; Unified Grocers, Inc.; Target Corporation; Simon-Hindi, LLC ; Fareway Stores, Inc.; Moran Foods, LLC, DBA Save-A-Lot; Woodman's Food Market, Inc.; Dollar General Corporation; Sam's East, Inc.; Dolgencorp, LLC; Sam's West, Inc.; Krasdale Foods, Inc.; Walmart Stores East, LLC; CVS Pharmacy, Inc.; Walmart Stores East, LP; Bashas’ Inc.; Wal-Mart Stores Texas, LLC; Marc Glassman, Inc.; Wal-Mart Stores, Inc.; 99 Cents Only Stores; Jessica Bartling; Ahold U.S.A., Inc.; Gay Birnbaum; Delhaize America, LLC; Sally Bredberg; Associated Wholesale Grocers, Inc.; Kim Craig ; Maquoketa Care Center ; Gloria Emery; Erbert & Gerbert's, Inc. ; Ana Gabriela Felix Garcia; Janet Machen; John Frick ; Painted Plate Catering; Kathleen Garner ; Robert Etten; Andrew Gorman; Groucho's Deli of Five Points, LLC; Edgardo Gutierrez; Groucho's Deli of Raleigh ; Zenda Johnston; Sandee's Catering; Steven Kratky; Confetti's Ice Cream Shoppe; Kathy Lingnofski; End Payer Plaintiffs; Laura Montoya; Kirsten Peck; John Pels; Valerie Peters; Elizabeth Perron ; Audra Rickman; Erica C. Rodriguez, Plaintiffs-Appellees and Jessica Decker; Joseph A. Langston; Sandra Powers ; Grand Supercenter, Inc.; The Cherokee Nation; US Foods, Inc.; Sysco Corporation; Gladys, LLC; Spartannash Company; Bryan Anthony Reo, Plaintiffs v. BUMBLE BEE FOODS LLC; Tri-Union SeafoodS, LLC, DBA Chicken of the Sea International, DBA Thai Union Group PCL, DBA Thai Union North America, Inc. ; Starkist Co.; Dongwon Industries Co., Ltd.; Thai Union Group PCL, Defendants-Appellants, and King Oscar, Inc.; Thai Union Frozen Products PCL ; Del Monte Foods Company; Tri Marine International, Inc.; Dongwon Enterprises; Del Monte Corp.; Christopher D. Lischewski; Lion Capital (Americas), Inc.; Big Catch Cayman LP, AKA Lion/Big Catch Cayman LP ; Francis T. Enterprises ; Glowfisch Hospitality ; Thai Union North America, Inc., Defendants.

993 F.3d 774

OLEAN WHOLESALE GROCERY COOPERATIVE, INC. ; Beverly Youngblood; Pacific Groservice, Inc., DBA Pitco Foods; Capitol Hill Supermarket; Louise Ann Davis Matthews; James Walnum; Colin Moore; Jennifer A. Nelson; Elizabeth Davis-Berg; Laura Childs; Nancy Stiller; Bonnie Vanderlaan; Kristin Millican; Trepco Imports and Distribution, Ltd.; Jinkyoung Moon; Corey Norris; Clarissa Simon; Amber Sartori; Nigel Warren; Amy Joseph ; Michael Juetten; Carla Lown; Truyen Ton-Vuong, AKA David Ton ; A-1 Diner ; Dwayne Kennedy; Rick Musgrave; Dutch Village Restaurant ; Lisa Burr ; Larry Demonaco; Michael Buff; Ellen Pinto; Robby Reed; Blair Hysni; Dennis Yelvington ; Kathy Durand Gore; Thomas E. Willoughby III; Robert Fragoso; Samuel Seidenburg; Janelle Albarello; Michael Coffey; Jason Wilson; Jade Canterbury; Nay Alidad; Galyna Andrusyshyn; Robert Benjamin; Barbara Buenning; Danielle Greenberg ; Sheryl Haley; Lisa Hall; Tya Hughes; Marissa Jacobus; Gabrielle Kurdt; Erica Pruess; Seth Salenger; Harold Stafford ; Carl Lesher; Sarah Metivier Schadt; Greg Stearns ; Karren Fabian; Melissa Bowman; Vivek Dravid; Jody Cooper ; Danielle Johnson; Herbert H. Kliegerman; Beth Milliner; Liza Milliner; Jeffrey Potvin; Stephanie Gipson; Barbara Lybarger; Scott A. Caldwell; Ramon Ruiz; Thyme Cafe & Market, Inc. ; Harvesters Enterprises, LLC; Affiliated Foods, Inc.; Piggly Wiggly Alabama Distributing Co., Inc.; Elizabeth Twitchell; Tina Grant; John Trent ; Brian Levy; Louise Adams; Marc Blumstein; Jessica Breitbach; Sally Crnkovich; Paul Berger; Sterling King ; Evelyn Olive; Barbara Blumstein; Mary Hudson; Diana Mey; Associated Grocers of New England, Inc.; North Central Distributors, LLC; Cashwa Distributing Co. of Kearney, Inc.; URM Stores, Inc.; Western Family Foods, Inc.; Associated Food Stores, Inc.; Giant Eagle, Inc.; McLane Company, Inc.; Meadowbrook Meat Company, Inc.; Associated Grocers, Inc.; Bilo Holding, LLC ; WinnDixie Stores, Inc. ; Janey Machin; Debra L. Damske; Ken Dunlap; Barbara E. Olson; John Peychal; Virginia Rakipi; Adam Buehrens; Casey Christensen; Scott Dennis; Brian Depperschmidt; Amy E. Waterman; Central Grocers, Inc.; Associated Grocers of Florida, Inc.; Benjamin Foods LLC ; Albertsons Companies LLC; H.E. Butt Grocery Company; Hyvee, Inc.; The Kroger Co.; Lesgo Personal Chef LLC; Kathy Vangemert; Edy Yee; Sunde Daniels; Christopher Todd; Publix Super Markets, Inc.; Wakefern Food Corp.; Robert Skaff; Wegmans Food Markets, Inc.; Julie Wiese; Meijer Distribution, Inc.; Daniel Zwirlein; Meijer, Inc.; Supervalu Inc.; John Gross & Company ; Super Store Industries; W. Lee Flowers & Co. Inc.; Family Dollar Services, LLC ; Amy Jackson; Family Dollar Stores, Inc.; Katherine McMahon ; Dollar Tree Distribution, Inc.; Jonathan Rizzo ; Greenbrier International, Inc.; Joelyna A. San Agustin; Alex Lee, Inc.; Rebecca Lee Simoens; Big Y Foods, Inc.; David Ton ; KVAT Food Stores, Inc., DBA Food City; Affiliated Foods Midwest Cooperative, Inc.; Merchants Distributors, LLC; Brookshire Brothers, Inc.; Schnuck Markets, Inc.; Brookshire Grocery Company; Kmart Corporation; Certco, Inc.; Rushin Gold, LLC, DBA The Gold Rush; Unified Grocers, Inc.; Target Corporation; Simon-Hindi, LLC ; Fareway Stores, Inc.; Moran Foods, LLC, DBA Save-A-Lot; Woodman's Food Market, Inc.; Dollar General Corporation; Sam's East, Inc.; Dolgencorp, LLC; Sam's West, Inc.; Krasdale Foods, Inc.; Walmart Stores East, LLC; CVS Pharmacy, Inc.; Walmart Stores East, LP; Bashas’ Inc.; Wal-Mart Stores Texas, LLC; Marc Glassman, Inc.; Wal-Mart Stores, Inc.; 99 Cents Only Stores; Jessica Bartling; Ahold U.S.A., Inc.; Gay Birnbaum; Delhaize America, LLC; Sally Bredberg; Associated Wholesale Grocers, Inc.; Kim Craig ; Maquoketa Care Center ; Gloria Emery; Erbert & Gerbert's, Inc. ; Ana Gabriela Felix Garcia; Janet Machen; John Frick ; Painted Plate Catering; Kathleen Garner ; Robert Etten; Andrew Gorman; Groucho's Deli of Five Points, LLC; Edgardo Gutierrez; Groucho's Deli of Raleigh ; Zenda Johnston; Sandee's Catering; Steven Kratky; Confetti's Ice Cream Shoppe; Kathy Lingnofski; End Payer Plaintiffs; Laura Montoya; Kirsten Peck; John Pels; Valerie Peters; Elizabeth Perron ; Audra Rickman; Erica C. Rodriguez, Plaintiffs-AppelleesandJessica Decker; Joseph A. Langston; Sandra Powers ; Grand Supercenter, Inc.; The Cherokee Nation; US Foods, Inc.; Sysco Corporation; Gladys, LLC; Spartannash Company; Bryan Anthony Reo, Plaintiffs

v. BUMBLE BEE FOODS LLC; Tri-Union SeafoodS, LLC, DBA Chicken of the Sea International, DBA Thai Union Group PCL, DBA Thai Union North America, Inc. ; Starkist Co.; Dongwon Industries Co., Ltd.; Thai Union Group PCL, Defendants-Appellants,andKing Oscar, Inc.; Thai Union Frozen Products PCL ; Del Monte Foods Company; Tri Marine International, Inc.; Dongwon Enterprises; Del Monte Corp.; Christopher D. Lischewski; Lion Capital (Americas), Inc.; Big Catch Cayman LP, AKA Lion/Big Catch Cayman LP ; Francis T. Enterprises ; Glowfisch Hospitality ; Thai Union North America, Inc., Defendants.

No. 19-56514

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 9, 2020 Pasadena, California

Filed April 6, 2021

BUMATAY, Circuit Judge:

StarKist Company and Tri-Union Seafoods d/b/a Chicken of the Sea (collectively, "Defendants"),¹ producers of packaged tuna, appeal an order certifying three classes in a multidistrict antitrust case alleging a price-fixing conspiracy. Defendants challenge the district court's determination that Rule 23(b)(3) ’s "predominance" requirement was satisfied by expert statistical evidence finding classwide impact based on averaging assumptions and pooled transaction data.

We ultimately conclude that this form of statistical or "representative" evidence can be used to establish predominance, but the district court abused its discretion by not resolving the factual disputes necessary to decide the requirement before certifying these classes. We thus vacate the district court's order certifying the classes and remand for the court to determine the number of uninjured parties in the proposed class based on the dueling statistical evidence. Only then should the district court rule on whether predominance has been established.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Price-Fixing Conspiracy

Various purchasers of tuna products ("Plaintiffs") brought this class action alleging a price-fixing conspiracy by Defendants, the three largest domestic producers of packaged tuna. Together, Defendants account for over 80% of all branded packaged tuna sales in the country. Plaintiffs allege that Defendants colluded to artificially inflate the prices of their tuna products by engaging in various forms of anti-competitive conduct, including agreeing to (1) fix the net and list prices for packaged tuna, (2) limit promotional activity for packaged tuna, and (3) exchange sensitive or confidential business information in furtherance of the conspiracy. There is little dispute over the existence of a price-fixing scheme. Soon after this action was commenced, the Department of Justice initiated criminal charges against Defendants for their price-fixing conspiracy. Bumble Bee and StarKist have since pleaded guilty to federal, criminal price-fixing charges, as have several of their current and former executives. Chicken of the Sea has also admitted to price fixing and agreed to cooperate with the federal investigation.

B. Certifying the Classes

Plaintiffs proposed three classes of purchasers who bought packaged tuna products between November 2010 and December 2016.

The first proposed class, called the Direct Purchaser Plaintiff ("DPP") Class, consists of retailers who directly purchased packaged tuna products during the relevant period. In support of certification, the Plaintiffs submitted the expert testimony and report of econometrician Dr. Russell Mangum III. Dr. Mangum "primarily" relied on statistical evidence "in the form of a regression model which purports to prove that the price-fixing conspiracy harmed all, or nearly all, of the Class members." First, Dr. Mangum calculated what the price for wholesale tuna would have been "but for" the alleged price fixing. To do so, he compared the prices during the period of the alleged price-fixing scheme to prices either before or after the alleged impacted period, while controlling for other factors that affect price differences. Comparing that but-for price to a "clean" benchmark period with no anticompetitive activity, Dr. Mangum concluded that the DPP Class was overcharged by an average of 10.28% because of the price fixing. Finally, assuming each class member experienced the same 10.28% average overcharge, Dr. Mangum ran a regression analysis and concluded that 1,111 out of 1,176 direct purchasers (or 94.5%) were injured by Defendants’ actions.

The Defendants’ expert econometrician, Dr. John Johnson, posed several objections to Dr. Mangum's methodology. First, Dr. Johnson contended that because Dr. Mangum used an average estimated overcharge, his model incorrectly assumed "every direct purchaser was injured—and necessarily in the same way." Dr. Johnson instead calculated a unique overcharge coefficient for 604 individual class members and concluded that only 72% paid an inflated price, meaning 28% of the class members suffered no injury at all. Second, Dr. Johnson argued that Dr. Mangum found "false positives" because his equation identified overcharges during the "clean" benchmark period by both Defendants and by packaged tuna sellers who are not Defendants. Additionally, Dr. Johnson claimed that Dr. Mangum relied on faulty economic assumptions. For example, Dr. Mangum's report purportedly assumed that all Defendants would respond identically to changes in supply and demand factors, and therefore costs would rise or fall identically across all producers. Dr. Johnson also commented that Dr. Mangum's model failed a "Chow Test," which examines the stability of coefficients among separate subgroups...