Class Actions -- 2017

International Paper Co. v. Kleen Products LLC   (U.S. Supreme Court)

Presumption of classwide antitrust impact

On February 3, 2017, the NAM filed an amicus brief in the U.S. Supreme Court urging the court to consider the class action issues raised in this case. The Seventh Circuit departed from U.S. Supreme Court case law when it approved a presumption of classwide antitrust impact based on allegations of a coordinated cardboard packaging industry price increase. Courts should comply with Supreme Court precedents, including undertaking the rigorous analysis required by Federal Rule of Civil Procedure 23 before permitting a case to proceed as a class action. Many industries, such as the one at issue here, feature price indexes that help set standard prices, and this case raises concerns that manufacturers will be exposed to expansive class action antitrust liability. The lower courts failed to consider the realities of the market, which is made up of sophisticated players that negotiate prices based on a variety of market inputs that are often reflected in a price index for particular goods.

We argued for review because the case raised a recurring question of federal class action law that has divided the lower courts and is extraordinarily important to the Nation’s businesses: When may a court apply a presumption of classwide injury to avoid individualized inquiries that would otherwise preclude class certification? In the proceedings below, the district court applied, and the Seventh Circuit approved, a presumption of classwide antitrust injury based on alleged price increases that occurred in an unrepresentative price index. They then made that presumption irrebuttable, deeming the class action requirements of Rule 23 satisfied despite extensive evidence showing that the index price did not reflect the prices that individual class members actually paid, which were frequently individually negotiated and driven by a variety of market inputs, of which only one was price.

On April 17, 2017, the Supreme Court denied review, declining to correct the lower court's errors. As a result, the ruling threatens to expand antitrust liability well beyond the scope of anything Congress intended.

Related Documents:
NAM amicus brief  (February 3, 2017)


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