Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39810 Filed 03/17/22 Page 1 of 14
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`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39811 Filed 03/17/22 Page 2 of 14
`
`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
`
`
`
`
`f
`
`
`
`KeyCite Yellow Flag - Negative Treatment
`Distinguished by Sidibe v. Sutter Health, N.D.Cal., October 18, 2019
`2016 WL 467444
`United States District Court, N.D. California,
`San Francisco Division.
`
`whether the wrongdoing was limited to those events and
`defendants, or whether, as plaintiffs contend, the bid
`rigging was merely one part of a vast industry-wide
`price-fixing conspiracy, also involving inter-competitor
`agreements, and exchanges of price, output, and other
`types of confidential information.
`
`
`Previously, two groups of plaintiffs, so-called “direct
`purchasers” (“DPPs”) and “indirect purchasers,” (“IPPs”)
`who are separately represented and proceeding under
`separate complaints, sought class certification. The crux
`of the disputes in the two certification motions was
`whether plaintiffs’ experts had presented a viable
`methodology for establishing class-wide antitrust injury
`and damages. Because neither group of plaintiffs had
`made a persuasive showing that the expert analyses they
`proffered sufficiently address the relevant question, the
`motions were both denied. Subsequent to that ruling and
`to the Ninth Circuit denying leave to appeal, the DPPs
`entered into settlement agreements disposing of their
`remaining claims.
`
`
`The IPPs also reached settlement agreements with certain
`defendants—court approval of
`those settlements
`is
`pending. As to their remaining claims, however, the IPPs
`have renewed their request for class certification. The
`IPPs support their renewed motion with further analysis
`from Dr. Kenneth Flamm,
`their economic expert,
`consisting of both modified and additional approaches to
`the calculations he performed, and consideration of more
`data. Defendants insist the additional material proffered is
`not substantively different from that previously found to
`be inadequate as a means for establishing class-wide
`antitrust injury and damages. Defendants also continue to
`argue
`that certain alleged errors
`in Dr. Flamm’s
`methodology render his conclusions unreliable.
`
`
`As plaintiffs state, “there is a meaningful line drawn at
`class certification between methods and merits.” That
`line, dividing what is an appropriate inquiry into the
`soundness of plaintiffs’ proffered statistical models on the
`one hand, and an improper adjudication of merits issues
`on the other hand, remains challenging to draw. Here,
`some of the issues defendants have raised may ultimately
`be persuasive to a trier of fact that plaintiffs cannot show
`antitrust injury or establish damages across the class. The
`methodologies and theories plaintiffs proffer, however,
`will stand or fall on a class-wide basis and are not so
`lacking in substance as to permit rejection at the
`certification stage. Accordingly, with consideration of the
`choice of law issue discussed below, the motion for
`certification will be granted, as to 23 states and the
`District of Columbia, under California law.1
`
`IN RE OPTICAL DISK DRIVE ANTITRUST
`LITIGATION.
`This Document Relates to: All Actions.
`
`CASE NO. 3:10-md-2143 RS
`|
`Signed 02/08/2016
`
`
`
`
`
`
`ORDER GRANTING INDIRECT PURCHASERS’
`RENEWED MOTION FOR CLASS
`CERTIFICATION
`
`RICHARD SEEBORG, UNITED STATES DISTRICT
`JUDGE
`
`
`
`I. INTRODUCTION
`
`*1 In 2009, the Department of Justice disclosed the
`existence of an ongoing criminal investigation of possible
`antitrust violations within the optical disc drive (“ODD”)
`industry. That investigation ultimately resulted in guilty
`pleas by Hitachi-LG Data Storage, Inc. and some of its
`employees. Substantial fines were imposed and the
`individuals were sentenced
`to prison
`terms. This
`Multi-District Litigation consolidates the many civil
`actions that were filed against ODD manufacturers in the
`wake of the DOJ investigation.
`
`
`From the outset of this matter, defendants have conceded,
`that as the guilty pleas reflect, there were at least some
`instances of illegal anticompetitive conduct in connection
`with the sale of ODDs. Specifically, defendants do not
`deny
`there were multiple
`incidents
`involving “bid
`rigging” during procurements of ODDs by Dell, HP, and
`Microsoft. The controversy therefore has centered on
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`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39812 Filed 03/17/22 Page 3 of 14
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`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
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`
`
`II. BACKGROUND
`
`*2 The factual background and long procedural history of
`this action have been set out in prior orders and will not
`be recounted in full detail here. Briefly, an optical disc2 is
`a medium for storing data. Familiar forms include CDs
`(compact discs) typically containing music or computer
`software, and DVDs (digital video disc or, officially,
`Digital Versatile Disc), often containing movies or other
`video content, and also used for computer software.
`Depending on the stage of technological development,
`optical discs were “read-only” or “recordable” or
`“rewritable.” In a broad sense, the technology evolved
`generationally from CDs to DVDs to Blu-Ray Discs, each
`with a progression from read-only, to recordable, and then
`to rewritable.
`
`
`Optical disc drives—ODDs—are devices that allow data
`to be read from and, where applicable, written to, optical
`discs. ODDs are typically “backwards-compatible,” – that
`is, an ODD that is designed to read (and perhaps write to)
`a more recently-developed format of optical disc usually
`will also be able to process older formats as well. ODDs
`have applications in a variety of consumer electronic
`devices, including desktop and laptop computers, game
`consoles, and camcorders. In these applications, the ODD
`is typically a built-in component of the device. ODDs are
`also available as stand-alone units, in a number of forms.
`Where ODDs are incorporated into other products such as
`computers, they typically represent a relatively small
`percentage of the cost of the product as a whole. Plaintiffs
`have argued, however, that an ODD can be one of the
`more significant
`individual cost components
`in a
`computer, even if only a fraction of the total.
`
`
`During the putative class period, the prices of ODDs were
`generally marked by steep declines. While each
`generational advance
`in
`the
`technology was often
`introduced at a higher price, the overall trend was
`downward, and dramatically so, as has generally been the
`case in the high technology arena. Plaintiffs’ basic theory
`in this action is that defendants were highly motivated to
`attempt to slow, or at least stabilize, the inevitable decline
`in prices. In short, plaintiffs are not arguing that the
`alleged conspiracy drove prices upward, merely that it
`kept prices from falling as rapidly and/or as far as they
`otherwise would have.
`
`
`At the center of this action are multiple instances of
`alleged “bid rigging” involving procurements of ODDs by
`Dell, HP, and Microsoft. In connection with
`the
`
`that conduct,
`into
`investigation
`now-closed DOJ
`defendant Hitachi-LG Data Storage, Inc. pleaded guilty to
`criminal antitrust violations and paid a $21.1 million
`criminal fine. As alluded to above, plaintiffs contend that
`lengthy and voluminous discovery has revealed evidence
`the bid rigging was merely one part of a vast
`industry-wide price-fixing conspiracy, involving a broad
`range of improper anti-competitive behavior.
`
`
`Although much of the evidence to which plaintiffs point
`involves the bidding events, they contend continuous
`illegal
`information exchanges occurred among all
`defendants relating to customer accounts other than HP
`and Dell. Plaintiffs point to certain “alliances” among
`defendants
`that allegedly allocated customers and
`markets. They contend “supply arrangements” existed
`among
`certain defendants
`that nominally were
`competitors in the market. Plaintiffs aver that defendants
`reached oral agreements at various meetings in Asia and
`in the United States at numerous points in time. While
`plaintiffs argue
`that cumulatively
`the evidence
`is
`indicative of a “pervasive” industry-wide conspiracy, at
`least at this juncture they have not proffered evidence or
`allegations of any instances in which the defendants’
`executive
`decision-makers
`entered
`into
`express
`agreements to fix prices across the board on an ongoing
`basis.
`
`
`
`III. LEGAL STANDARD
`
`r
`
`*3 Class actions are governed by
`Rule 23 of the
`Federal Rules of Civil Procedure, which represents much
`more than a mere pleading standard. To obtain class
`certification, plaintiffs bear the burden of showing that
`they have met each of the four requirements of
`Rule
`f
`Rule 23(b).
`23(a) and at least one subsection of
`f
`Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180,
`1186, amended by 273 F.3d 1266 (9th Cir. 2001). “A
`party seeking class certification must affirmatively
`demonstrate...compliance with the Rule.”
`Wal–Mart
`Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011).
`Rule 23(a) provides that a district court may certify a
`class only if: “(1) the class is so numerous that joinder of
`all members is impracticable; (2) there are questions of
`law or fact common to the class; (3) the claims or
`defenses of the representative parties are typical of the
`claims or defenses of the class; and (4) the representative
`parties will fairly and adequately protect the interests of
`Fed. R. Civ. P. 23(a). That is, the class
`the class.”
`must
`satisfy
`the
`requirements
`of
`numerosity,
`
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`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39813 Filed 03/17/22 Page 4 of 14
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`A. Class definition
`The IPPs’ renewed motion proposes a slightly narrowed
`class definition:
`
`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
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`commonality, typicality, and adequacy of representation
`to maintain a class action. Mazza v. Am. Honda Motor
`Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012).
`
`If all four prerequisites of
`Rule 23(a) are satisfied, a
`court must also find that plaintiffs “satisfy through
`evidentiary proof” at least one of the three subsections of
`Rule 23(b).
`Comcast Corp. v. Behrend, 133 S.Ct.
`1426 (2013). Relevant here is
`Rule 23(b)(3), which
`permits certification if a court finds that “questions of law
`or fact common to class members predominate over any
`questions affecting only individual members, and that a
`class action is superior to other available methods for
`fairly and efficiently adjudicating
`the controversy.”
`Fed. R. Civ. P. 23(b)(3).
`
`All persons and entities who, as
`residents of [the United States or
`State] and during the period April
`2003 to December 2008, purchased
`new for their own use and not for
`resale: (i) a computer with an
`internal ODD; (ii) a stand-alone
`ODD designed for internal use in
`computers; or
`(iii) an ODD
`designed to be attached externally
`to a computer. ODD refers to a
`DVD-RW,
`DVD-ROM,
`or
`COMBO drive manufactured by
`one or more Defendants or their
`coconspirators. Excluded from the
`class
`are
`any
`purchases
`of
`Panasonic-branded computers.
`
`
`
`This narrower language removes CD and Blu-ray ODDs
`from the scope of products involved in the litigation.
`Additionally, the products are limited to computers
`containing ODDs and stand-alone ODDs only, removing
`videogame consoles such as the Xbox. Panasonic-branded
`computers are also now excluded. Finally, although IPPs
`continue to claim the conspiracy did not end until
`sometime in 2009, they limit the damages period to
`extend only through December 2008. The IPPs contend,
`and defendants do not particularly dispute, that the effect
`of these changes is to remove significant volumes of
`products to which defendants pointed in the prior motion
`as reflecting heterogeneity sufficient to defeat class
`certification.
`
`
`*4 Plaintiffs have also proposed a “subclass,” consisting
`of purchasers of products from Dell and HP, the two
`entities most directly affected by the alleged bid-rigging.
`IPPs assert that because Flamm’s economic models now
`provide separate estimates for the alleged overcharge on
`Dell and HP products, certifying a subclass will give the
`trier of fact the option to conclude the object and impact
`of the conspiracy was limited to ODDs sold to and
`incorporated in Dell and HP computers. Whether the IPPs
`advance the possibility of certifying a subclass as a hedge
`against outright denial of their motion, or rather out of a
`genuine concern that such a subclass needs separate
`definition, remains unclear. A fundamental premise of the
`
`
`
`“[A] court’s class-certification analysis must be ‘rigorous’
`and may ‘entail some overlap with the merits of the
`plaintiff’s underlying claim.’ ”
`Amgen Inc. v. Conn.
`Ret. Plans and Trust Funds, 133 S.Ct. 1184, 1194 (2013)
`(quoting
`Dukes, 131 S.Ct. at 2551); see also
`Mazza, 666 F.3d at 588 (“ ‘Before certifying a class,
`the trial court must conduct a ‘rigorous analysis’ to
`determine whether the party seeking certification has met
`the prerequisites of
`Rule 23.’ ” (quoting
`Zinser,
`253 F.3d at 1186)). This “rigorous” analysis applies to
`both
`Rule 23(a) and Rule 23(b). See
`Comcast, 133
`S.Ct. at 1432 (discussing how Congress
`included
`“addition[al]...procedural safeguards for (b)(3) class
`members beyond those provided for (b)(1) or (b)(2) class
`members (e.g., an opportunity to opt out)” and how a
`court has a “duty to take a ‘close look’ at whether
`common questions predominate over individual ones.”).
`
`
`Nevertheless, “
`Rule 23 grants courts no license to
`engage in free-ranging merits inquiries at the certification
`stage.”
`Amgen, 133 S.Ct. at 1194–95. “Merits
`questions may be considered to the extent—but only to
`the extent—that they are relevant to determining whether
`Rule 23 prerequisites for class certification are
`the
`satisfied.”
`Id. at 1195. If a court concludes that the
`moving party has met its burden of proof, then the court
`Zinser, 253
`has broad discretion to certify the class.
`F.3d at 1186.
`
`
`
`IV. DISCUSSION
`
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`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39814 Filed 03/17/22 Page 5 of 14
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`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
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`IPPs’ motion is that prices in the ODD industry during the
`class period were linked, and, moreover, that prices paid
`by Dell and HP effectively set a “floor,” given their
`combined share of the market and purchasing power. At
`this juncture, at least, the IPPs have not demonstrated that
`defining a subclass is warranted, and that aspect of the
`motion will be denied, without prejudice. If, in the course
`of trial preparation or trial itself, it becomes apparent that
`defining a subclass of Dell and HP would have salutary
`purposes, the issue may be revisited.
`
`
`
`
`The prior order denying the motions for certification
`brought by both the DPPs and the IPPs centered on the
`question of whether plaintiffs had presented a plausible
`methodology for establishing class-wide injury. See In re
`Dynamic Random Access Memory (DRAM) Antitrust
`Litig., 2006 WL 1530166, *7 (N.D. Cal. 2006) (“plaintiffs
`must establish the predominance of common issues...[as
`to] the fact of plaintiff’s antitrust injury, or “impact” of
`defendants’ unlawful activity.”3 That order explained the
`question arises under
`subsection (3) of Rule 23(b),
`which, as noted above, places a burden on plaintiffs to
`show, among other things, that “questions of law or fact
`common to the members of the class predominate.”
`Predominance requires “that the common issues be both
`numerically and qualitatively substantial in relation to the
`issues peculiar to individual class members.”
`In re
`Bulk [Extruded] Graphite Prod. Antitrust Litig., 2006 WL
`891362 at *9. Generally speaking,
`the
`test
`for
`predominance is met “when there exists generalized
`evidence which proves or disproves an [issue or element]
`on a simultaneous, class-wide basis, since such proof
`obviates the need to examine each class member’s
`individual position.”
`In re Vitamins Antitrust Litig.,
`209 F.R.D. 251, 262 (D.C. Cir. 2002).
`
`
`*5 As in their prior motion for certification, the IPPs
`proffer evidence and expert opinion
`that various
`conditions in the ODD industry were conducive to the
`formation of an antitrust conspiracy, including barriers to
`entry, high concentration among sellers, substantial
`cross-ownership,
`including
`joint ventures, and an
`allegedly commoditized product. The IPPs also argue that
`the DOJ
`investigation and
`resulting penalties, an
`enforcement action in Taiwan, and rumors of penalties to
`be issued by the European Union, all further support an
`inference of a conspiracy, with class-wide impact. The
`real meat of plaintiffs’ motion, however, lies in Dr.
`Flamm’s presentation of econometric analysis offered to
`show, in essence, that prices in the ODD market during
`the class period were
`linked, such
`that all direct
`purchasers would likely have been impacted by a
`conspiratorial overcharge.4
`
`In addressing the expert testimony offered to show
`class-wide injury to direct purchasers, the prior order first
`focused on the analysis provided by Dr. Gary French,
`who had been retained by the DPPs. In addition to
`pointing to certain characteristics of the industry, Dr.
`French offered (1) an empirical correlation analysis and
`(2) a regression analysis which he contended could serve
`as
`reliable, economically sound, methodologies
`to
`demonstrate that all, or nearly all, members of the class
`suffered damage as a result of defendants’ alleged
`anti-competitive conduct. In finding
`the correlation
` © 2022 Thomson Reuters. No claim to original U.S. Government Works.
`4
`
`B. Predominance
`subsection (3)
`The IPPs seek class certification under
`of Rule 23(b), which requires them to show (1) “questions
`of law or fact common to the members of the class
`predominate” and (2) “a class action is superior to other
`available methods for the fair and efficient adjudication of
`the controversy.” As set out in the prior order, to obtain
`class certification, the IPPs must satisfy the predominance
`requirement with respect to all the key elements of their
`claims: (1) whether there was a conspiracy to fix prices in
`violation of the antitrust laws; (2) the fact of plaintiffs’
`antitrust injury, or “impact” of defendants’ unlawful
`activity; and (3) the amount of damages sustained as a
`result of the antitrust violations. In re Dynamic Random
`Access Memory (DRAM) Antitrust Litig., 2006 WL
`1530166, *7 (N.D. Cal. 2006);
`In re Vitamins
`Antitrust Litig., 209 F.R.D. at 257.
`
`
`the existence or
`The prior order explained why
`non-existence of the alleged conspiracy presented an
`appropriate question for resolution on a class-wide basis,
`and the parties have not revisited that issue in the present
`motion. While the parties briefly discuss the question of
`damages, there is no basis to conclude that damages
`issues would be a basis for denying certification if
`otherwise
`warranted.
`A
`plaintiff’s
`damages
`“[c]alculations need not be exact, but...‘must be consistent
`with its liability case.’ ”
`Comcast Corp. v. Behrend,
`___U.S.____, 133 S. Ct. 1426, 1433 (2013) (internal
`citation omitted). Although defendants have offered
`reasons they contend that Dr. Flamm’s damages models
`are flawed,
`those arguments may appropriately be
`considered by the trier of fact, and do not rise to a level
`that would require denial of certification. Accordingly,
`the critical issue is antitrust injury or impact.
`
`
`
`
`1. Class-wide injury
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`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39815 Filed 03/17/22 Page 6 of 14
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`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
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`analysis lacking, the prior order pointed to Dr. French’s
`admission that “[w]ith or without a conspiracy I would
`expect to see high correlation of prices across customers
`in this industry.” The order further concluded that Dr.
`French’s regression analysis, which calculated a single
`overcharge percentage for all purchasers across all models
`of ODDs and
`throughout
`the entire class period,
`effectively assumed the proposition it was intended to
`prove—i.e. class-wide impact.
`
`In the IPPs’ renewed motion, Dr. Flamm stops short of
`explicitly endorsing the prior order’s rejection of Dr.
`French’s model, but he makes clear his view that his own
`analysis previously included elements that were lacking in
`Dr. French’s approach, and which he contends address the
`issues raised by the prior order, at least in part. Indeed, the
`prior order expressly noted that Dr. Flamm’s analysis was
`“more complex” than that of Dr. French. Significantly,
`the prior order noted, Dr. Flamm
`included a
`“cointegration” analysis designed to filter out “spurious”
`correlations that would arise even in the absence of a
`conspiracy, and his model allowed for more than one
`estimated overcharge coefficient. Nevertheless, the prior
`order concluded the IPPs had failed to make a persuasive
`showing that Dr. Flamm’s somewhat more complex
`analysis could serve to establish class-wide impact, rather
`than assuming it.
`
`
`While Dr. Flamm does not endorse that view of his prior
`analysis, for the present motion he has done additional
`work designed
`to eliminate any doubt
`that his
`methodologies are
`reliably designed
`to measure
`class-wide impact (if any), rather than to assume it. First,
`Dr. Flamm now offers a “more extensive” cointegration
`analysis, which he contends controls for declining ODD
`prices in the market. The “refined” analysis now includes
`data from a greater number of defendants—Dr. Flamm
`contends it incorporates all the “sufficiently useable data”
`produced in discovery. Dr. Flamm asserts the analysis
`empirically tests for (and supports) the existence of
`market-wide impact by studying the prices for ODDs sold
`to different customer segments.
`
`
`As Dr. Flamm explains it, a “cointegration test is a test for
`structural economic cohesion among variables with time
`trends.” Dr. Flamm has tested for economic cohesion
`between ODD products, prices, producers, and customers.
`In his view, if there is cointegration, there is a strong
`likelihood of market-wide impact from the conspiracy.
`Acknowledging that a correlation analysis does not
`necessarily imply causation, he opines that cointegration
`does. From his cointegration analysis Dr. Flamm
`concludes that the relationships among ODD prices in the
`class period “are NOT a spurious artifact of these prices
`
`simply declining over time.” (Emphasis in original.)
`Rather, in Dr. Flamm’s opinion, the co-integration
`revealed by his analysis supports a conclusion that “the
`economic forces of substitution in supply and demand
`link prices for different drives to different customers
`together in the market.”
`
`
`*6 Second, Dr. Flamm has performed a new “Granger
`causality” analysis.5 That analysis asks the question, “does
`the history of a series x assist in forecasting a series y
`f
`when one also knows the history of y?” See
`In re
`Amaranth, 269 F.R.D. at 384. Here, Dr. Flamm’s analysis
`concludes that after controlling for the entire past history
`of prices and costs for any single type of drive, the past
`history of drive prices for Dell or HP has statistically
`significant value in predicting the prices for other
`customers. Thus, Dr. Flamm opines, changes in ODD
`prices in sales to HP and Dell caused price movements
`among drives sold to other ODD purchasers.
`
`
`Third, Dr. Flamm has modified his overcharge regression
`model in four respects:
`
`(a) The overcharge model now is expressly delineated to
`estimate separate overcharge coefficients first for Dell
`and HP on the one hand, and then for “other” customers.
`As a result, Dr. Flamm contends, the overcharge model
`now expressly is capable of testing whether the cartel
`impacted only its two largest customers (Dell and HP) or
`also the other direct purchasers.
`
`(b) The overcharge regression model is also capable of
`measuring the overcharge on a monthly basis, by each
`different drive in the class (DVD-RW, DVD-ROM, and
`COMBO) for each of these customer groups.
`
`(c) The model now integrates all “useable” sales and cost
`data produced – from 86 percent of the market (all but
`two defendants).
`
`(d) IPPs provide further detail on the multivariable
`regression analysis, which they contend shows that all
`factors other
`than conspiracy are being adequately
`controlled for in the overcharge model.
`
`
`Finally, the IPPs present additional graphic evidence and
`argument to support their claim that prices paid by Dell
`and HP effectively served as a “floor,” and that any
`artificial maintenance of the level of that floor would
`necessarily impact prices paid by other customers. The
`IPPs take issue with a characterization in the prior order
`that the prices charged to other customers did not “cluster
`within an especially narrow range above the supposed
`‘floor’ of the prices paid by Dell and HP.” The relevant
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`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
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`the existence or
`is not
`insist,
`the IPPs
`question,
`non-existence of any such clustering, but whether the
`economic evidence supports linkage between the prices.
`The IPPs point out that, with one exception, the prices
`paid by other customers were maintained at a generally
`consistent level above those paid by Dell and HP.6
`
`
`Defendants argue that none of these changes or additions
`to Dr. Flamm’s analysis warrants a different conclusion
`from that reached in the prior order. Defendants fully
`endorse
`the order’s finding
`that Dr. Flamm was
`effectively assuming class-wide impact, and argue he is
`still doing so. As previously explained, the standard under
`which expert opinion like that offered by Dr. Flamm is to
`be evaluated at class certification has been evolving. The
`DRAM decision suggested
`that courts “must avoid
`engaging in a battle of expert testimony.” 2006 WL
`1530166, at *9. Particularly in light of the “rigorous
`analysis” required under Dukes and Comcast, however,
`the caution offered in GPU is apt. “[C]ertification [should
`not be] automatic every
`time counsel dazzle
`the
`courtroom with graphs and tables.”
`253 F.R.D. at 491.
`If the presumption were otherwise, “nearly all antitrust
`plaintiffs could survive certification without
`fully
`f
`complying with
`Rule 23.”
`Id. at 492; see also, In
`re High-Tech Employee Antitrust Litig., 289 F.R.D. 555,
`567 (N.D. Cal. 2013)(“conducting a thorough review of
`Plaintiffs’ theory and methodology is consistent with the
`requirement that the Court conduct a ‘rigorous analysis’ ”
`to ensure that the predominance requirement is met”);
`In re Rail Freight Fuel Surcharge Antitrust Litig., 725
`F.3d 244, 255 (D.C. Cir. 2013) (“It is now clear...that
`Rule 23 not only authorizes a hard look at the
`soundness of statistical models that purport to show
`predominance—the rule commands it.”). Put another way,
`the inquiry must be to determine if the proffered expert
`testimony has the requisite integrity to demonstrate
`class-wide impact.
`
`
`*7 GPU notes that “antitrust plaintiffs have in recent
`years trended toward presenting an econometric formula
`or other statistical analysis to show class-wide impact”
`and that such analysis has often been accepted at the
`f
`certification stage.
`253 F.R.D. at 491. GPU concluded
`that “such methods, where plausibly reliable, should be
`allowed as a means of common proof. To rule otherwise
`would allow antitrust violators a free pass in many
`industries.” Id. Accordingly, it is clear that statistical and
`economic methodologies of the sort advanced here may
`be employed to establish class-wide impact. While
`defendants have strenuously quarreled with Dr. Flamm’s
`implementation of econometric models, they do not
`challenge the propriety of employing such models in the
`
`first instance.
`
`
`Defendants and their expert advance a litany of supposed
`defects in Dr. Flamm’s analysis. At heart, though, the
`biggest dispute between the parties as to the appropriate
`mode of analysis lies in the degree to which the available
`data should be “aggregated” or “disaggregated.” As
`defendants point out, where averages and conclusions are
`drawn from overly-broad data sets, it may conceal a
`reality that many members of the data set do not share the
`characteristics reflected in the averages. In crude form, for
`example, if it were the empirical case that 1 million
`combo drives were sold with a $10 overcharge each, and
`1 million DVD-ROM drives were sold with no
`overcharge, aggregating the data would show that 2
`million drives were sold with an average overcharge of
`$5, when in fact fully half of the drives were not impacted
`by conspiracy at all.
`
`
`The IPPs and Dr. Flamm do not suggest that misleading
`results could never emerge from over-aggregation. They
`point out, however, that reducing sample size too far
`undermines the statistical reliability of any results,
`possibly masking effects that truly exist by impeding their
`detection at conventional levels of statistical significance.
`Thus, they contend, the calculations offered by defendants
`to suggest the impact of any conspiracy was not-class
`wide are unreliable, or, at the most, represent a challenge
`to
`the merits of Dr. Flamm’s calculations, not
`appropriately resolved at the class certification stage.
`
`
`Other quarrels defendants have with Dr. Flamm’s analysis
`involve his selection of particular data to utilize, the
`variables he has elected to include in his regressions, and
`similar details relating to the implementation of his
`econometric models. While some or all of these points
`certainly could be considered by a fact-finder evaluating
`the persuasiveness of Dr. Flamm’s conclusions,
`defendants have not shown a basis for wholly rejecting
`those conclusions at this stage in the proceedings as
`methodologically unsound. Nor does it appear that it
`would be
`legitimate
`to characterize Dr. Flamm’s
`expanded analysis as one which assumes class-wide
`impact. Rather, he has presented theories that explain
`why, in his view, class-wide impact would have existed,
`and he has offered means for testing the data to
`demonstrate that it did, and to calculate what he believes
`the overcharges were. Defendants will be free to show
`why they think Dr. Flamm is wrong, but for purposes of
`satisfying the requisites of
`Rule 23, the IPPs have now
`made an adequate showing of a methodology for proving
`antitrust injury to all or nearly all direct purchasers, on a
`class-wide basis.
`
`
`WESTLAW
`
` © 2022 Thomson Reuters. No claim to original U.S. Government Works.
`
`6
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`
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`

`

`Case 2:12-md-02311-SFC-RSW ECF No. 2192-9, PageID.39817 Filed 03/17/22 Page 8 of 14
`
`In re Optical Disk Drive Antitrust Litigation, Not Reported in Fed. Supp. (2016)
`2016-1 Trade Cases P 79,503
`
`
`
`
`2. Pass-through
`As noted above, IPPs, unlike DPPs, have a two-fold
`burden in securing class certification in matters such as
`this. Not only must they show that all or nearly all of the
`original direct purchasers of ODDs bought at inflated
`prices, they must also show those overcharges were
`passed through all stages of the distribution chain. See
`In re Graphics Processing Units Antitrust Litigation,
`253 F.R.D. 478, 499 (N.D. Cal. 2008) (“GPU”)
`(“[I]ndirect-purchaser plaintiffs must demonstrate that
`defendants overcharged their direct purchasers...and that
`those direct purchasers passed on the overcharges to
`plaintiffs. In so doing, they must find a way to account for
`the decision-making of a variety of resellers and
`manufacturers.”).
`
`
`*8 Because the prior order concluded t