Ploss v. Kraft Foods Grp., Inc.

• Decision Date: 03 January 2020
• Docket Number: No. 15 C 2937,15 C 2937
• Citation: 431 F.Supp.3d 1003
• Parties: Harry PLOSS , AS TRUSTEE FOR the HARRY PLOSS TRUST DTD 8/16/1993 , on behalf of himself and a proposed class, et al., Plaintiffs, v. KRAFT FOODS GROUP, INC. and Mondelez Global LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

431 F.Supp.3d 1003

Harry PLOSS , AS TRUSTEE FOR the HARRY PLOSS TRUST DTD 8/16/1993 , on behalf of himself and a proposed class, et al., Plaintiffs,

v. KRAFT FOODS GROUP, INC. and Mondelez Global LLC, Defendants.

No. 15 C 2937

United States District Court, N.D. Illinois, Eastern Division.

Signed January 3, 2020

Benjamin M. Jaccarino, Pro Hac Vice, Christopher Lovell, Christopher M McGrath, Gary S. Jacobson, Ian Trevor Stoll, Lovell Stewart Halebian Jacobson LLP, New York, NY, Marvin Alan Miller, Lori Ann Fanning, Miller Law LLC, Chicago, IL, Amanda Nicole Miller, Pro Hac Vice, Lowey Dannenberg, P.C., White Plains, NY, Devona Lynn Wells, Heidi M. Silton, Kate M. Baxter-kauf, Pro Hac Vice, W. Joseph Bruckner, Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, Douglas A Millen, Robert J. Wozniak, Steven A Kanner, Freed Kanner London & Millen, LLC, Bannockburn, IL, Marco Cercone, Rupp Baase Pfalzgraf Cunningham LLC, Buffalo, NY, Bradley J. Demuth, Faruqi & Faruqi, LLP, New York, NY, David Lesht, Sperling & Slater, P.C., Chicago, IL, Linda P. Nussbaum, Susan Rogers Schwaiger, Pro Hac Vice, Nussbaum Law Group, P.C., New York, NY, Christian Levis, Craig Maider, Johnathan Seredynski, Lee Jason Lefkowitz, Matthew J. Acocella, Peter D. St. Phillip, Jr., Raymond P Girnys, Pro Hac Vice, Geoffrey M. Horn, Vincent Briganti, Lowey Dannenberg, P.C., White Plains, NY, Brian Philip Murray, Lee Albert, Pro Hac Vice, Glancy Prongay & Murray LLP, New York, NY, Anthony F. Fata, Jennifer Winter Sprengel, Cafferty Clobes Meriwether & Sprengel LLP, Chicago, IL, for Plaintiffs.

Dean Nicholas Panos, Christopher Graham Wells, J. Kevin McCall, Nicole Amie Allen, Thomas Edward Quinn, Jenner & Block LLP, Chicago, IL, Christian Levis, Michelle E. Conston, Peter D. St. Phillip, Jr., Raymond P Girnys, Pro Hac Vice, Geoffrey M. Horn, Vincent Briganti, Lowey Dannenberg, P.C., White Plains, NY, Anthony F. Fata, Jennifer Winter Sprengel, Cafferty Clobes Meriwether & Sprengel LLP, Chicago, IL, Bradley J. Demuth, Faruqi & Faruqi, LLP, New York, NY, David Lesht, Sperling & Slater, P.C., Chicago, IL, Linda P. Nussbaum, Susan Rogers Schwaiger, Pro Hac Vice, Nussbaum Law Group, P.C., New York, NY, Michael Scott Davis, Law Office of Michael S. Davis, LLC, Chicago, IL, Robert J. Wozniak, Steven A Kanner, Freed Kanner London & Millen, LLC, Bannockburn, IL, Zachary Jayson Ziliak, Ziliak Law, LLC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Honorable Edmond E. Chang, United States District Judge Harry Ploss and other plaintiffs brought this proposed class-action lawsuit against Kraft Food Group, Inc. and Mondelez Global LLC, alleging violations of the Commodity Exchange Act (CEA); the Sherman Antitrust Act; and unjust enrichment.¹ (For simplicity, the Opinion will refer to the Plaintiffs collectively as Ploss and to the Defendants collectively as Kraft.) In the Consolidated Class Action Complaint ("Complaint" for short), Ploss alleged that Kraft manipulated the wheat-futures market using two schemes: the long wheat futures scheme, and the wash trading scheme. R. 71, Compl.² After a prior motion to dismiss, all that remains are the claims on the long wheat futures scheme. See R. 113, Opinion (granting Kraft's motion to dismiss (R. 76) as to Count Four ( Section 9(a)(2) EFP wash trading manipulation) and Count Five (Section 6(c)(1) EFP wash trading manipulation)); Ploss v. Kraft Foods Group, Inc. , 197 F. Supp. 3d 1037 (N.D. Ill. 2016).

Ploss now wishes to certify the class on the remaining claims. See R. 237, Mot. Class Cert. In support of the motion for class certification, Ploss submitted expert reports authored by Dr. Craig Pirrong. R. 240, Pirrong Rep.; R. 315, Pirrong Rebuttal Rep. In response, Kraft moves to exclude Pirrong's opening report, R. 276, Defs.' Mot. Exclude, and to strike his rebuttal report, R. 319, Defs.' Mot. Strike. For the reasons below, the Court grants Ploss's motion for class certification and denies Kraft's motions.

I. Background

This Opinion assumes familiarity with the facts set out in greater detail in the opinion that addressed the motion to dismiss. Ploss , 197 F. Supp. 3d 1037. As a quick refresher, Ploss alleges that Kraft manipulated the wheat-futures market by buying and maintaining an enormous position on wheat futures for the purpose of influencing prices, rather than out of any legitimate need for that quantity of wheat. Compl. ¶ 122-138. Specifically, Kraft bought $90 million worth of December 2011 wheat futures contracts, and then refused to liquidate its long position and stopped buying wheat in the cash market. Id. ¶¶ 86, 91, 92. These acts, according to Ploss, falsely signaled to the market that Kraft was satisfying its need for wheat from the futures market rather than the cash market, and caused the wheat prices in the cash market to drop and the price of wheat futures to increase. Id. ¶¶ 55-56, 82. As a result of the artificial prices allegedly caused by the scheme, all of the Plaintiffs that transacted in December 2011 and March 2012 wheat futures lost money—that is, the Plaintiffs allege that they either bought at a higher price or sold at a lower price than they would have absent Kraft's allegedly manipulative actions.

Ploss now seeks to certify the following two classes under Federal Rule of Civil Procedure 23(b)(3), comprised of all persons who either:

a. purchased a CBT December 2011 or a CBT March 2012 futures contract after October 31, 2011 except that purchases of CBT March 2012 futures contracts made after December 14, 2011 qualify for inclusion in the Class only to the extent they were made in liquidation of a short position in the CBT March 2012 contract (whether an outright short position or as part of a spread position) which was sold between November 1 and December 14, 2011 inclusive; or

b. sold put options or purchased call options on the CBT December 2011 contract or on the CBT March 2012 contract after October 31, 2011 except that sales of put options or purchases of call options on the CBT March 2012 contracts made after December 14, 2011 qualify for inclusion in the Class only to the extent they were made in liquidation of a position in the CBT March 2012 contract (whether an outright position or as part of a spread position) which was initiated between November 1 and December 14, 2011 inclusive.

Mot. Class Cert. at 1. In support of the motion, Ploss first submitted an opening expert report authored by Dr. Craig Pirrong. See Pirrong Rep. In the opening report, Pirrong opined, among other things, that Kraft caused artificially high prices in the December 2011 and March 2012 wheat futures markets, thus causing the Plaintiffs' damages. See generally id. Kraft, unsurprisingly, opposes the class-certification motion. R. 267, Defs.' Resp. Br. (SEALED). To rebut Pirrong's report, Kraft submitted the expert report of Dr. James Overdahl, who attempted to poke holes in Pirrong's causation opinions. R. 264-3, Overdahl Rep. (SEALED). Ploss then submitted a rebuttal report written by Pirrong, which responded to Overdahl's criticisms. See Pirrong Rebuttal Rep. Kraft moves to exclude Pirrong's causation opinions and to strike parts of the rebuttal report.

II. Legal Standard

To justify class certification, a plaintiff must satisfy each requirement of Rule 23(a) —numerosity, commonality, typicality, and adequacy of representation—as well as at least one of the subsections of Rule 23(b). See Harper v. Sheriff of Cook Cnty. , 581 F.3d 511, 513 (7th Cir. 2009) ; Oshana v. Coca–Cola Co. , 472 F.3d 506, 513 (7th Cir. 2006). Here, Ploss is seeking class certification under Rule 23(b)(3). So in addition to the requirements of Rule 23(a), he must also show predominance and superiority. See Fed. R. Civ. P. 23(b)(3). Separate and apart from the requirements in Rule 23(a) and (b)(3), "a class must be sufficiently definite that its members are ascertainable." Jamie S. v. Milwaukee Pub. Sch. , 668 F.3d 481, 493 (7th Cir. 2012) ; Oshana , 472 F.3d at 513 ("The plaintiff must also show ... that the class is indeed identifiable as a class.").

Failure to meet any of those requirements precludes class certification. Harper , 581 F.3d at 513 (cleaned up).³ The Court "must make whatever factual and legal inquiries are necessary to ensure that requirements for class certification are satisfied before deciding whether a class should be certified, even if those considerations overlap the merits of the case." Am. Honda Motor Co. v. Allen , 600 F.3d 813, 815 (7th Cir. 2010) ; see also Schleicher v. Wendt , 618 F.3d 679, 685 (7th Cir. 2010) ("[A] court may take a peek at the merits before certifying a class," but that peek is "limited to those aspects of the merits that affect the decisions essential under Rule 23."). At the same time, however, the ultimate inquiry at the class-certification stage are the requirements of Rule 23. See Bell v. PNC Bank, Nat. Ass'n , 800 F.3d 360, 376 (7th Cir. 2015). So class-certification proceedings cannot be allowed to turn into a preemptive determination of the merits if the answers to merits questions are not needed to decide the certification motion. Id.

III. Analysis

A. Rule 23 Requirements

Kraft challenges Ploss's showing on (1) typicality; (2) the adequacy of class representatives; (3) predominance; and (4) ascertainability.⁴ The Court addresses each in turn.

1. Typicality and Adequacy

Rule 23(a)(3) requires that "the claims or defenses of the representative parties [be] typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "A plaintiff's claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members and is based on the same legal theory." Lacy v. Cook Cty., Illinois , 897 F.3d 847, 866 (7th Cir. 2018) (quoting Rosario v. Livaditis , 963 F.2d 1013, 1018 (7th Cir. 1992) ) (cleaned up). The typicality requirement "is meant to ensure that the named representative's claims have...