In Re Rail Freight Fuel Surcharge Antitrust Litigation

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 3, 2013 Decided August 9, 2013

No. 12-7085

IN RE: RAIL FREIGHT FUEL SURCHARGE ANTITRUST

LITIGATION - MDL NO. 1869,

BNSF RAILWAY COMPANY, ET AL.,

PETITIONERS

Appeal from the United States District Court

for the District of Columbia

Carter G. Phillips argued the cause for petitioners. With

him on the briefs were Joseph R. Guerra, Saul P.

Morgenstern, Maureen E. Mahoney, J. Scott Ballenger, Alan

M. Wiseman, Thomas A. Isaacson, Theodore J. Boutrous, Jr.,

John M. Nannes, Tara L. Reinhart, Tyrone R. Childress,

David G. Meyer, Veronica S. Lewis, Kent A. Gardiner,

Kathryn D. Kirmayer, Andrew S. Tulumello, Samuel L. Sipe,

Jr., and Linda Stein.

Theodore J. Boutrous, Jr., Andrew S. Tulumello, and

Veronica S. Lewis were on the briefs for petitioner BNSF

Railway Company. Richard J. Favretto, Michael E. Lackey,

Jr., and G. Paul Moates entered appearances.

Mark T. Stancil, Robin S. Conrad, and Sheldon Gilbert

were on the briefs for amicus curiae Chamber of Commerce

of the United States of America in support of petitioners.

2

Stephen R. Neuwirth argued the cause for respondents.

With him on the brief were William B. Adams, Michael D.

Hausfeld, and Michael P. Lehmann.

Before: GARLAND, Chief Judge, BROWN, Circuit Judge,

and SENTELLE, Senior Circuit Judge.

BROWN, Circuit Judge: Over the last decade, the four

major freight railroads imposed rate-based fuel surcharges on

shipments over their tracks. Although the practice had existed

for some time, it proliferated and intensified early last decade.

Suspecting foul play, a group of shippers who paid these

surcharges brought an antitrust suit accusing the freight

railroads of engaging in a price-fixing conspiracy. They also

sought and obtained certification of a class including all

similarly situated shippers who paid these surcharges during

the relevant period. The freight railroads now seek, via

interlocutory appeal, to undo class certification, the crux of

their argument being that separate trials are needed to

distinguish the shippers the alleged conspiracy injured from

those it did not. Satisfied that this case is among the rare

instances in which interlocutory review of a certification

decision is warranted, we exercise our discretion to hear this

appeal.

I

A

Four companies account for nearly 90% of rail freight

traffic: BNSF Railway Co. (BNSF); CSX Transportation, Inc.

(CSX); Norfolk Southern Railway Co. (NS); and Union

Pacific Railroad Co. (UP). See In re Rail Freight Fuel

Surcharge Antitrust Litig. (Fuel Surcharge I), 587 F. Supp. 2d

3

27, 29 (D.D.C. 2008). In some regions, the railroads’

networks overlap. In others, tracks may belong almost

exclusively to a single railroad. A sizable percentage of

shipping traffic over the four railroads’ tracks is “interline,”

i.e., serviced by multiple railroads, 1 and some is “intermodal”

traffic, which involves transferring freight from trains to other

forms of transportation like trucks or ships.

To offset fuel costs, freight railroads often include fuel

surcharges on top of the base rates they charge their

customers. These fuel surcharges have traditionally taken two

forms. Mileage-based fuel surcharges raise total rates in

proportion to shipping distances. Rate-based fuel surcharges,

by contrast, depend on a prearranged “strike” or “trigger”

price. When fuel prices are below the trigger price, no fuel

surcharge supplements the base rate. But once fuel prices

exceed the trigger price, a surcharge is imposed as a function

of the base rate. Together, the fuel surcharge and base rate

constitute the total rate paid (sometimes called the “all-in”

rate).

Rate-based fuel surcharges were not unheard of at the

start of the new millennium, but neither were they the norm.

1

Facilitating interline traffic requires coordination among

competing freight railroads over logistics and shipping rates, so

federal law dictates that illicit conduct “may not be inferred from

evidence that two or more rail carriers acted together with respect

to an interline rate or related matter and that a party to such action

took similar action with respect to a rate or related matter on

another route or traffic.” 49 U.S.C. § 10706(a)(3)(B)(ii). To prevent

any resulting anticompetitive behavior, interline agreements

between railroads are subject to federal oversight. See id. § 10706.

While invocation of this statutory safe harbor is part of the

defendants’ overall litigation strategy, it is not an issue before us on

appeal.

4

That all changed by the mid-2000s, when fuel surcharge

provisions became ubiquitous, governing the vast majority of

the defendants’ shipments. At the same time, the defendants

sharpened the surcharges’ sting, with all four dropping their

trigger prices between March 2003 and March 2004. Not all

shippers were affected, though. Some had entered into so-

called legacy contracts with the defendants before this period,

thereby guaranteeing they would be subject to fuel surcharge

formulae that predated the later changes.

B

The heyday of the rate-based fuel surcharge did not last.

Eventually, the Surface Transportation Board (STB) put an

end to the practice with respect to common carrier traffic

within its regulatory authority. See Rail Fuel Surcharges, Ex

Parte No. 661, 2007 WL 201205 (S.T.B. Jan. 25, 2007). The

STB was especially troubled by the disconnect between the

purported rationale for the fuel surcharges—fuel cost

recovery—and the formula’s dependence on base rates, which

need not reflect the marginal fuel costs of a particular

shipment. See id. at *4. The decision did not, however,

directly implicate those shippers whose traffic was governed

by bilateral contract. See id. at *10.

A flurry of antitrust class actions against the four major

freight railroads ensued, all of which were ultimately

consolidated before the district court. See Fuel Surcharge I,

587 F. Supp. 2d at 29. While several sets of plaintiffs were

part of the consolidated proceedings, this case deals with

those eight plaintiffs 2 who brought against the defendants a

2

The plaintiffs comprise Dust Pro, Inc.; Olin Corporation;

Dakota Granite Company; Nyrstar Taylor Chemicals, Inc.; U.S.

5

claim of price fixing under § 1 of the Sherman Act, 15 U.S.C.

§ 1. Following discovery, these plaintiffs sought certification

of a class of shippers who paid the purportedly inflated fuel

surcharges. See In re Rail Freight Fuel Surcharge Antitrust

Litig. (Fuel Surcharge II), 287 F.R.D. 1, 12 (D.D.C. 2012). 3

As in any other case, obtaining certification required the

plaintiffs to meet the two burdens prescribed in Federal Rule

of Civil Procedure 23. First, the proposed class must satisfy

all four “prerequisites” to certification: numerosity,

commonality, typicality, and adequate representation. 4 Id. at

Magnesium LLC; Carter Distributing Company; Strates Shows,

Inc.; and Donnelly Commodities Incorporated.

3

The plaintiffs proposed the following class:

All entities or persons that at any time from July 1,

2003 until December 31, 2008 (the “Class Period”)

purchased rate-unregulated rail freight

transportation services directly from one or more of

the Defendants, as to which Defendants assessed a

stand-alone rail freight fuel surcharge applied as a

percentage of the base rate for the freight transport

(or where some or all of the fuel surcharge was

included in the base rate through a method referred

to as “rebasing”) (“Fuel Surcharge”).

Fuel Surcharge II, 287 F.R.D. at 12.

4

Stated in full, these prerequisites require that

(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;

6

20. Second, the proposed class must fit one of three categories

defined by Rule 23(b)—in this case, the plaintiffs had to show

that the litigation presents “questions of law or fact common

to class members [that] 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); see

Fuel Surcharge II, 287 F.R.D. at 20. This latter criterion is

known as the predominance requirement. Amgen, Inc. v.

Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191

(2013).

Class certification is far from automatic. As recognized

by the district court, “Rule 23 does not set forth a mere

pleading standard. A party seeking class certification must

affirmatively demonstrate his compliance with the Rule—that

is, he must be prepared to prove that there are in fact

sufficiently numerous parties, common questions of law or

fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,

2552 (2011); see Fuel Surcharge II, 287 F.R.D. at 22.

Oftentimes, this inquiry resembles an appraisal of the merits,

for “it may be necessary for the court to probe behind the

pleadings before coming to rest on the certification question.”

Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982).

Such was the case here. While the defendants opposed class

certification on a number of grounds, much of the debate

centered on the predominance requirement and whether the

plaintiffs could show, through common evidence, injury in

(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 the class.

FED. R. CIV. P. 23(a).

7

fact 5 to all class members from the alleged price-fixing

scheme, setting up another classic battle of the experts. See

Fuel Surcharge II, 287 F.R.D. at 43–71. In the plaintiffs’

corner was Dr. Gordon Rausser, the Robert Gordon Sproul

Distinguished Professor at the University of California at

Berkeley. See id. at 17. Facing off against him was Dr. Robert

Willig, Professor of Economics and Public Affairs at

Princeton University. See id. at 18.

The plaintiffs’ case for certification hinged on two

regression models prepared by Rausser. The first of these, the

“common factor model,” attempted to isolate the common

determinants of the prices shippers paid to the defendants.

Rausser also constructed a “damages model,” which sought to

quantify, in percentage terms, the overcharge due to

conspiratorial conduct at various intervals over the Class

Period. Purportedly, the two models operate in conjunction to

“set forth a persuasive inference of causation: certain common

factors predominate in the determination of freight rates;

controlling for those common factors, analysis of defendants’

transaction data reveals that there was a structural break in the

relationship between freight rates and fuel prices around

2003,” the start of the Class Period. See id. at 69. Willig, for

his part, contested various aspects of Rausser’s methodology

and conclusions. But for naught. The district court accepted

Rausser’s models as “plausible” and “workable,” rejected the

5

As the Supreme Court has noted, a successful antitrust

plaintiff must prove more than just the fact that collusive behavior

occurred: “The antitrust injury requirement cannot be met by broad

allegations of harm to the ‘market’ as an abstract entity. Although

all antitrust violations, under both the per se rule and rule-of-reason

analysis, ‘distort’ the market, not every loss stemming from a

violation counts as antitrust injury.” See Atl. Richfield Co. v. USA

Petroleum Co., 495 U.S. 328, 339 n.8 (1990).

8

defendants’ critiques, and granted class certification. Id. at 67.

This appeal followed.

II

Before addressing the merits, we pause to consider a

thorny threshold question. Should we be exercising our

appellate jurisdiction over this case in the first place? Class

certification is, after all, not a final decision of the sort we

typically review on appeal from the district court. See 28

U.S.C. § 1291. Certain interlocutory decisions do qualify for

immediate appellate review. See id. § 1292. But in the case of

class certification, that review is discretionary, not automatic.

See FED. R. CIV. P. 23(f) & advisory committee’s note; see

also 28 U.S.C. § 1292(e) (creating jurisdiction over

interlocutory appeals in those circumstances in which the

Supreme Court has prescribed rules providing for such

review).

Discretionary does not mean arbitrary. Choosing whether

to exercise jurisdiction over an interlocutory appeal from a

certification decision turns on more than what we had for

breakfast. According to our case law, three situations warrant

immediate review. The first of these arises when the decision

to certify is “questionable” and is accompanied by a “death-

knell”—i.e., it places “substantial pressure on the defendant to

settle independent of the merits of the plaintiffs’ claims.” In

re Lorazepam & Clorazepate Antitrust Litig., 289 F.3d 98,

102, 105 (D.C. Cir. 2002). The second situation occurs when

the certification decision “presents an unsettled and

fundamental issue of law relating to class actions, important

both to the specific litigation and generally, that is likely to

evade end-of-the-case review.” Id. at 105. Thirdly and finally,

we will grant interlocutory review of a certification decision

that is “manifestly erroneous.” Id. Absent “special

9

circumstances,” these three categories constitute the sole

bases for interlocutory review. Id. at 106.

The categories are mutually reinforcing, not exclusive. A

certification decision may warrant immediate review under

multiple theories. See, e.g., Szabo v. Bridgeport Machs., Inc.,

249 F.3d 672, 675 (7th Cir. 2001). And, where a single

ground for interlocutory appeal might otherwise be shaky, the

confluence of multiple rationales may fortify our decision—

the sort of “special circumstances” contemplated by our case

law. Cf. In re Veneman, 309 F.3d 789, 795 (D.C. Cir. 2002)

(holding out the possibility that a fundamental issue of first

impression unlikely to evade end-of-case review may

nevertheless qualify for interlocutory review as a special

circumstance). We have such a hybrid rationale here. Even if

the amount involved does not sound a death knell for the

defendants, it is still astronomical. Recent decisions of the

Supreme Court have unsettled the law relating to class

actions, and the latest pronouncement on the role of expert

evidence was unavailable to the district court at the time of its

decision. Collectively, these factors—the death knell, the

questionability of class certification, and new developments in

the jurisprudence—convince us that this is a case fit for

immediate review.

A

We start with the death knell question. While the case

law is neither precise nor particularly informative, a few

lessons may still be gleaned. We know, for instance, that

defendants invoking the death-knell rationale must go beyond

“mere assertions.” In re Lorazepam, 289 F.3d at 108. It is not

enough to claim irresistible pressure to settle and call it a day.

Nor do we deal in absolutes: “what might be ‘ruinous’ to a

company of modest size might be merely unpleasant to a

10

behemoth.” Waste Mgmt. Holdings, Inc. v. Mowbray, 208

F.3d 288, 294 (1st Cir. 2000). Above all, death-knell cases are

uncommon, for courts have discouraged them except in those

rare instances in which “the grant of class status raises the

cost and stakes of the litigation so substantially that a rational

defendant would feel irresistible pressure to settle.” Prado-

Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1274 (11th Cir.

2000).

Under normal circumstances, we would take this

opportunity to inject some clarity and detail the elements that

sound a death knell. Unfortunately, many of the financial

particulars are under seal. We will note, however, that the

plaintiffs demand a vast sum in damages, which, because this

is an antitrust case, are subject to trebling. See Clayton Act

§ 4, 15 U.S.C. § 15(a). The sheer magnitude is eye-catching,

but even more important is the context. Despite the

defendants’ size and market position, liability of this

magnitude could threaten their financial stability. According

to the defendants’ uncontested representations, at least some

would risk a damages award that “would wipe out a

substantial portion of their market capitalization.” Pet’rs’ Br.

23.

The plaintiffs are skeptical, citing the defendants’ own

financial disclosures. NS, for example, has stated in a filing

with the Securities and Exchange Commission, “We do not

believe that the outcome of these proceedings will have a

material effect on our financial position, results of operations,

or liquidity.” NS, Quarterly Report (Form 10-Q), at 13 (filed

Apr. 24, 2013). But this rosy prognostication is not a function

of NS’s limitless resources; in the sentence just before, NS

also revealed, “We believe the allegations in the complaints

are without merit and intend to vigorously defend the cases.”

Id.; see also UP, Quarterly Report (Form 10-Q), at 33 (filed

11

Apr. 18, 2013) (“We believe that these lawsuits are without

merit, and we will vigorously defend our actions. Therefore,

we currently believe that these matters will not have a

material adverse effect on any of our results of operations,

financial condition, and liquidity.”). Implicit in these

representations is the defendants’ hope they will prevail on

appeal from the district court’s certification decision. Of

course, the defendants’ belief in the availability of

interlocutory review in this case does not make it so. But for

that matter, the plaintiffs’ logic similarly depends on an

appeal to the defendants’ faith in their own solvency. Public

filings may offer useful guidance to the death-knell inquiry

when they actually discuss a company’s ability to satisfy a

judgment, but not when they merely speculate on a

defendant’s prospects for success on the merits. In this case, it

is the arithmetic that matters.

Naturally, the plaintiffs quibble with the numbers too. In

particular, they cite the defendants’ $110 billion in revenues

collected from the class members during the class period,

which they claim is obvious proof the defendants can afford

to provide class members the restitution they seek. The

plaintiffs misapprehend the standard. The death knell marks

not the defendant’s demise, but the litigation’s. The plaintiffs’

case may not threaten the very existence of the defendants’

companies, but potential extinction is not invariably a

prerequisite. A party need not risk utter destitution to qualify

for immediate review; it is enough that certification

“generate[s] unwarranted pressure to settle nonmeritorious or

marginal claims.” Newton v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 259 F.3d 154, 168 (3d Cir. 2001). Our inquiry

does not require the defendants be fighting for their very

existence.

12

That said, specific facts relating the defendants’ wealth

and liquidity to the magnitude of the damages they face and

the litigation choices they would be forced to make are sparse.

The defendants have generally let the sheer size of the

demanded damages award speak for itself. But although the

defendants could have done a better job establishing the

existence of a death knell, they have adduced just enough

facts to satisfy the standard in this case. The threat to NS’s

market capitalization is considerable, and according to the

defendants, certification exposes them to potential liability so

massive it would exceed their cumulative adjusted net income

for all of 2003–2011. Tellingly, the plaintiffs dispute none of

these facts.

Even when the numbers are dispositive, though, a death

knell alone does not warrant interlocutory review. Not only

must certification push litigants inexorably toward settlement,

but the certification decision must itself be “questionable.”

B

Meeting the predominance requirement demands more

than common evidence the defendants colluded to raise fuel

surcharge rates. The plaintiffs must also show that they can

prove, through common evidence, that all class members were

in fact injured by the alleged conspiracy. See Amchen Prods.,

Inc. v. Windsor, 521 U.S. 591, 623–24 (1997). Otherwise,

individual trials are necessary to establish whether a particular

shipper suffered harm from the price-fixing scheme. That is

not to say the plaintiffs must be prepared at the certification

stage to demonstrate through common evidence the precise

amount of damages incurred by each class member. Messner

v. Northshore Univ. HealthSystem, 669 F.3d 802, 815–16 (7th

Cir. 2012); see Wal-Mart, 131 S. Ct. at 2558. But we do

13

expect the common evidence to show all class members

suffered some injury.

With this in mind, we proceed to the defendants’ claim

the certification decision is “questionable.” Of the medley of

attacks on the plaintiffs’ ability to satisfy the predominance

requirement, we focus on one: according to the defendants,

Rausser’s damages model is defective. The model purports to

quantify the injury in fact to all class members attributable to

the defendants’ collusive conduct. But the same methodology

also detects injury where none could exist. When applied to

shippers who were subject to legacy contracts—i.e., those

shippers who, during the Class Period, were bound by rates

negotiated before any conspiratorial behavior was alleged to

have occurred—the damages model yields similar results. If

accurate, this critique would shred the plaintiffs’ case for

certification. Common questions of fact cannot predominate

where there exists no reliable means of proving classwide

injury in fact. See Concord Boat Corp. v. Brunswick Corp.,

207 F.3d 1039, 1056–57 (8th Cir. 2000). When a case turns

on individualized proof of injury, separate trials are in order.

Rausser contested the legal significance of this criticism

of his damages model, but he conceded it measured

overcharges to legacy shippers and class members alike. The

district court opinion, for its part, regarded Rausser’s damages

model as essential to its certification decision, for “neither his

common factor model nor his damage model in isolation

attempts to prove common injury-in-fact. Rather, the result of

the damage model must be viewed as the final step in the

body of evidence . . . presented to show that injury-in-fact is

capable of common proof.” Fuel Surcharge II, 287 F.R.D. at

69 (internal quotation marks omitted). It did not, however,

address the defendants’ concern that the damages model

yielded false positives with respect to legacy shippers. See id.

14

at 66–70. Together, Rausser’s concession and the district

court’s silence are sufficient to render the certification

decision questionable under the death-knell rationale for

interlocutory review—particularly when combined with

Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), which

clarified the law of class actions after the district court

certified the class.

C

After the district court’s decision to certify—after the

parties even submitted their briefing in this appeal—the

Supreme Court decided Comcast Corp. v. Behrend, whose

analysis informs the case before us. Behrend also involved

certification of an antitrust class action under Rule 23(b)(3)

based on regression modeling. See 133 S. Ct. at 1430–31. The

plaintiffs in Behrend had proposed four theories of antitrust

impact, all but one of which the district court rejected. See id.

at 1431. The plaintiffs’ sole ground, however, for asserting

that damages could be calculated on a classwide basis was a

model that assumed the validity of all four theories. See id.

Not good enough. Predicating class certification on a model

divorced from the plaintiffs’ theory of liability, the Court

held, indicates a failure to conduct the rigorous analysis

demanded by Rule 23. See id. at 1433. Without some

alternative model to turn to, predominance could not be

shown: “Questions of individual damage calculations will

inevitably overwhelm questions common to the class.” Id.

Rejected was the view of the Court of Appeals that “attacks

on the merits of the methodology . . . have no place in the

class certification inquiry.” Behrend v. Comcast Corp., 655

F.3d 182, 207 (3d Cir. 2011).

As we see it, Behrend sharpens the defendants’ critique

of the damages model as prone to false positives. It is now

15

indisputably the role of the district court to scrutinize the

evidence before granting certification, even when doing so

“requires inquiry into the merits of the claim.” 133 S. Ct. at

1433. If the damages model cannot withstand this scrutiny

then, that is not just a merits issue. Rausser’s models are

essential to the plaintiffs’ claim they can offer common

evidence of classwide injury. See Fuel Surcharge II, 287

F.R.D. at 66. No damages model, no predominance, no class

certification.

Recall that we may assume jurisdiction even when a

certification decision does not fit neatly within one of the

three categories calling for interlocutory appeal. “Special

circumstances” might also prompt immediate review. In re

Lorazepam, 289 F.3d at 106. While our case law has not

identified what makes a circumstance special, we believe the

present case fits the bill. Intervening Supreme Court decisions

with significant bearing on a certification decision are not an

everyday occurrence, and the district court here did not have

the benefit of Behrend’s wisdom when making its

certification decision. And if that is not enough to justify

interlocutory appeal as a special circumstance, the added

weight of a certification order already on the cusp of

satisfying the death-knell standard tips the scales in favor of

review.

Lest our decision be misunderstood, we reiterate our view

that “interlocutory appeals are generally disfavored as

disruptive, time-consuming, and expensive” for both the

parties and the courts. In re Lorazepam, 289 F.3d at 103

(internal quotation marks omitted). But this is not the ordinary

case. In light of Behrend, the pressure to settle posed by the

threat to the defendants’ market capitalization, and the

identified defect in the damages model, we grant the

16

defendants interlocutory review under Rule 23(f) because this

qualifies as even more than a death-knell situation.

III

Now to the merits. We have already laid out the damages

model’s propensity toward false positives. The plaintiffs

nevertheless make several attempts at saving the model—and

with it, the certification decision. They first argue that

“shipments under these pre-Class Period contracts are not

even part of the Class, and the relevant issue is whether Class

members paid higher all-in rates following Defendants’

aggressive imposition of new fuel surcharges.” Resp’ts’ Br.

65–66. The plaintiffs are right that the defendants’ critique

does not disprove the damages model’s claim of classwide

overcharges as a matter of logical necessity; absence of

evidence is not evidence of absence. 6 But they misapprehend

their burden. It is not enough to submit a questionable model

whose unsubstantiated claims cannot be refuted through a

priori analysis. Otherwise, “at the class-certification stage any

method of measurement is acceptable so long as it can be

applied classwide, no matter how arbitrary the measurements

may be.” Behrend, 133 S. Ct. at 1433. As things stand, we

have no way of knowing the overcharges the damages model

calculates for class members is any more accurate than the

obviously false estimates it produces for legacy shippers.

The plaintiffs next suggest the defendants’ price-fixing

conspiracy predates the start of the Class Period, meaning

antitrust violations may also have tainted even legacy

contracts. But the plaintiffs failed to adduce specific evidence

6

Or, more formally, “‘P ⊃ Q’ does not mean ‘¬P ⊃ ¬Q.’”

New Eng. Power Generators Ass’n v. FERC, 707 F.3d 364, 370 n.3

(D.C. Cir. 2013).

17

of this possibility—say, by rerunning both models from an

earlier start date. The claim also runs directly counter to the

district court’s factual finding that “the fuel surcharge

programs applied before the class period were nothing like the

widespread and uniform application of standardized fuel

surcharges during the class period” because “[b]efore the

alleged conspiracy, defendants’ differentiated fuel surcharges

were subject to competition and negotiation with shippers,

were less aggressive, and were applied only sporadically.”

Fuel Surcharge II, 287 F.R.D. at 48. This was, after all, the

crux of the plaintiffs’ own evidence of collusion—that there

was a “structural break” at the start of the Class Period in the

relationship between total shipping rates and fuel prices. Id. at

69.

Finally, the plaintiffs also place great emphasis on the

standard of review, contending that the district court’s

endorsement of Rausser’s models was a finding of fact we

may only review for clear error. But there is no factual finding

to which we could defer. As we already explained, the district

court never grappled with the argument concerning legacy

shippers. That the district court deemed the damages model

workable in the face of different challenges is irrelevant. And,

in any event, “while the data contained within an econometric

model may well be ‘questions of fact’ in the relevant sense,

what those data prove is no more a question of fact than what

our opinions hold.” Behrend, 133 S. Ct. at 1433 n.5.

Before Behrend, the case law was far more

accommodating to class certification under Rule 23(b)(3).

Though Behrend was grounded in what the Court deemed “an

unremarkable premise,” id. at 1433, courts had not treated the

principle as intuitive in the past. In determining Rausser’s two

models are “‘plausible,’” the district court understandably

relied on these precedents—including the very decision the

18

Supreme Court reversed in Behrend. Fuel Surcharge II, 287

F.R.D. at 62 (quoting Behrend v. Comcast Corp., 655 F.3d at

204 n.13). In a similar vein, the district court looked to cases

from other circuits suggesting that false positives do not indict

the viability of a class, since “[c]lass certification is not

precluded simply because a class may include persons who

have not been injured by the defendant’s conduct.” Mims v.

Stewart Title Guar. Co., 590 F.3d 298, 308 (5th Cir. 2009);

see Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir.

2009) (same). It is now clear, however, that Rule 23 not only

authorizes a hard look at the soundness of statistical models

that purport to show predominance—the rule commands it.

Mindful that the district court neither considered the

damages model’s flaw in its certification decision nor had the

benefit of Behrend’s guidance, we will vacate class

certification and remand the case to the district court to afford

it an opportunity to consider these issues in the first instance.

See DL v. Dist. of Columbia, 713 F.3d 120, 129 (D.C. Cir.

2013). We need not reach the defendants’ alternate grounds

for relief.

IV

For the foregoing reasons, we vacate the district court’s

class certification decision and remand the case to permit the

district court to reconsider its decision in light of Comcast

Corp. v. Behrend.

So ordered.