A month after the U.S. Supreme Court heard arguments over the role of Daubert review at the class certification stage, a federal judge in the Middle District of Pennsylvania has granted class status to direct purchasers of chocolate candies from major manufacturers after conducting an unabridged Daubert analysis of their two expert witnesses.
The purchasers allege the chocolate manufacturers engaged in price fixing.
Since the U.S. Court of Appeals for the Third Circuit hasn't squarely addressed the extent to which expert testimony proffered by parties seeking class status should be analyzed and other circuits are split on the question, U.S. District Judge Christopher Conner of the Middle District of Pennsylvania had little guidance.
The direct purchasers' proof of predominance to satisfy the class certification standard was based wholly on the testimony of its witnesses, Conner said. So, he decided that he had to examine the reliability of that testimony before deciding on the class certification.
"Despite the paucity of relevant precedent in the Third Circuit and the discordant views percolating in the circuits, the court finds that a thorough Daubert analysis is appropriate at the class certification stage of this MDL in light of the court's responsibility to apply a 'rigorous analysis' to determine if the putative class has satisfied the requirements of Rule 23," Conner said in In re Chocolate Confectionary Antitrust Litigation.
The multidistrict litigation consolidates 91 actions filed by various purchasers including distributors, convenience stores and grocery stores against the Hershey Co., Mars and Nestle USA that allege the three companies, which produce about 75 percent of the country's chocolate candies, conspired for five years to increase the prices for their products, according to the opinion.
Conner held that the testimony of both Dr. Robert Tollison and Dr. James McClave satisfied the standard of the Federal Rule of Evidence 702 and Daubert, which was first laid out with regard to scientific testimony in the U.S. Supreme Court's 1993 opinion in Daubert v. Merrell Dow Pharmaceuticals and was later expanded to apply to all expert testimony.
"The crux of Dr. Tollison's testimony is his opinion that various features of the chocolate confectionary industry create an environment which is conducive to price-fixing," Conner said. "In addition, Dr. Tollison utilizes the econometric analyses undertaken by Dr. McClave to assert classwide antitrust injury."
The models offered by McClave "demonstrate inflated prices during the class period which cannot be explained by non-collusive conduct," according to the opinion.
McClave told the court that the class was overcharged by 7 percent to 8.6 percent for regular-sized candy bars and 9.5 percent to 11 percent for king-sized. That amounts to approximately $524 million and $202 million, respectively, according to the opinion.