On December 28, the Western District of New York denied class certification in Miami Products & Chemical Co. v. Olin Corp, 1:19-cv-00385, an antitrust lawsuit alleging collusion over the price for caustic soda—a chemical used in various industries from pharmaceuticals to detergents.  The proposed class of caustic soda purchasers alleged that defendants, the largest soda manufacturers, colluded to increase prices through parallel public price announcements.  After closely scrutinizing the parties’ dueling economic expert reports, the court determined that plaintiffs had not satisfied the predominance standard of Rule 23(b)(3) as to questions of antitrust injury for two principal reasons.

First, the court concluded that plaintiffs’ expert’s damages and impact model failed reliably to exclude caustic soda purchasers who were not harmed by defendants’ conduct.  At the outset, plaintiffs’ proposed class definition excluded purchasers who bought caustic soda under long-term contracts with either fixed prices or prices based upon production input costs.  Both parties agreed that those excluded purchases could not have been affected by any collusive price announcements, unlike purchases at prices determined by private negotiations, spot market transactions, or market-price indices. 

But for roughly one-third of all transactions included in his impact model, plaintiffs’ expert lacked data to classify whether the purchaser used one of the excluded contract types.  In a rebuttal report, defendants’ expert analyzed several individual contract documents and demonstrated that some transactions that had not been classified in plaintiffs’ expert’s model indeed had used the excluded contract types.  Defendants thus argued that only a transaction-by-transaction analysis of each underlying contract could establish class membership and injury.  Following an evidentiary hearing, Chief Judge Wolford agreed with defendants and resolved that such an individualized contract review would predominate over plaintiffs’ common model of price impact.

Second, the court determined that plaintiffs’ expert’s model of price impact had not accounted adequately for fluctuations in global caustic soda supply and demand.  Plaintiffs argued that their expert controlled for global demand by including in his model global production volumes for alumina, which uses caustic soda as a production input.  But defendants’ expert presented evidence that purchasers used a significant amount of caustic soda for other purposes.  Further, when defendants’ expert added another measure of demand into plaintiffs’ model, the estimated price effect of the alleged conspiracy disappeared.  After weighing this dueling expert evidence, the court again sided with defendants and concluded that plaintiffs’ expert’s regression “methodology [was] insufficiently sound to satisfy the requirements of Rule 23.”

Throughout its 51-page opinion, the court carefully parsed the statistical models of antitrust impact presented by the parties’ experts to determine whether the plaintiffs had established predominance.  The case thus presents a good example of the “rigorous analysis” in which district courts engage to evaluate the Rule 23 prerequisites to class certification.  See, e.g., Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013).