Last month in In re: Keurig Green Mountain Single-Serve Coffee Antitrust Litigation, the Southern District of New York denied certification to a proposed class of direct purchasers who alleged that Keurig, a manufacturer of branded coffee pods and brewers, violated antitrust laws by allegedly suppressing competition from generic coffee pod manufacturers.  Although the plaintiffs offered statistical evidence suggesting that Keurig’s coffee pod prices were elevated on average, the court held that individual issues of antitrust impact predominated over common questions because Keurig directly negotiated prices with large buyers that might fully offset any increase in average prices.

Named plaintiffs in Keurig sought to represent all direct purchasers of coffee pods, a wide-ranging proposed class that included individual consumers who purchased pods at prices listed on Keurig’s website; corporate buyers that provided coffee pods to workplaces and hotels; and large resellers like Costco and Amazon that directly negotiated prices with Keurig for their volume purchases.  To establish antitrust impact, the plaintiffs’ expert offered econometric models that purported to estimate an average overcharge for each of six different groups of purchasers.  As the court noted, however, none of those models measured “individual overcharge for any given purchaser” and those models’ “use of averages masked uninjured class members” who could “negotiate away” any price increases that resulted from Keurig’s alleged conduct.  According to the court, the “prevalence of individual negotiations” within the corporate and reseller purchaser groups rendered the expert’s aggregated overcharge estimates “insufficient to demonstrate class-wide antitrust injury,” preventing the plaintiffs from meeting the predominance requirement of Rule 23(b)(3). 

Plaintiffs’ argument that Keurig used “price lists” as a “starting point” for negotiations with individual large purchases did not change this outcome.  As the court explained, “the existence of price lists alone” did not establish that large-volume purchasers ultimately “paid prices based on price lists” particularly when “individual price negotiations were common” among those proposed class members.  In so concluding, the court distinguished cases that relied on price lists as evidence of common impact, noting that those cases predated the Supreme Court’s decision in Comcast Corp. v. Behrend, 569 U.S. 27 (2013), which required courts to conduct a “rigorous analysis” of expert models supporting class certification. 

Consistent with Comcast, the Keurig decision shows that courts will rigorously scrutinize experts’ econometric models in antitrust class actions and deny certification of damages classes when price negotiations with individual class members might fully offset any average estimated overcharge, leaving questions of antitrust impact subject to individualized inquiry, rather than common proof.