# In Re RAIL FREIGHT FUEL SURCHARGE ANTITRUST LITIGATION

> District Court, District of Columbia · July 13, 2012 · 287 F.R.D. 1

URL: https://www.frixlaw.com/law-library/cases/2662168

## Case

- **Full name:** In Re: Rail Freight Fuel Surcharge Antitrust Litigation - Mdl 1869
- **Court:** District Court, District of Columbia
- **Decided:** July 13, 2012
- **Citations:** 287 F.R.D. 1; 2012 WL 2870207
- **Precedential status:** Published
- **Opinion:** Opinion by Friedman
- **Judges:** Judge Paul L. Friedman
- **Nature of suit:** Magistrate Case
- **Cited by:** 32 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Vacated on other grounds by In Re Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244 (2013).
- Negative treatments: 1
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/2662168

## How later opinions describe it (automated extraction)

- stating “many liability questions” regarding the plaintiffs’ 23 RICO claims “can be resolved on a class-wide basis, including whether defendant was part 24 of an association-in-fact enterprise operating an alleged scheme to defraud the class 25 member.”
- finding that plaintiffs’ expert’s use of regression analysis was a generally accepted basis for certifying a class
- holding that common proof could be used to prove injury by raising the starting point for negotiations

## Opinion text

OPINION
PAUL L. FRIEDMAN, District Judge.
TABLE OF CONTENTS
Section Page
I. INTRODUCTION..........................................................10
II. BACKGROUND............................................................11
A. The Alleged Conspiracy..................................................13
B. Surface Transportation Board Proceedings and 18 Class Action Lawsuits......15
C. Class Certification Papers and Supplemental Briefing Before and After the Motions Hearing...................................................17
D. “Interline-Related” Communications.......................................19
III. LEGAL STANDARD FOR CLASS CERTIFICATION UNDER RULE 23(b)(3) OF THE FEDERAL RULES OF CIVIL PROCEDURE...............20
A. Requirements of Rule 23(a) and (b)(3)......................................20
B. Resolution of Factual Disputes and Standard of Proof........................21
1. Factual Disputes and Dueling Experts .................................22
2. Standard of Proof....................................................24
a. Facts Bearing on Rule 23.........................................24
b. Expert Opinions and Regression Analyses ..........................25
IV. RULE 23(a) FINDINGS AND CONCLUSIONS................................28
A. Two Implied Requirements...............................................28
1. Class Definition.....................................................28
2. Named Representatives Within the Putative Class.......................30
B. Four Express Requirements..............................................31
1. Numerosity.........................................................31
2. Commonality........................................................31
3. Typicality...........................................................32
4. Adequacy of Representation ..........................................34
V. RULE 23(b)(3) FINDINGS AND CONCLUSIONS.............................35
A. Predominance ..........................................................35
1. Violation of Antitrust Law............................................36
2. Impact.............................................................36
a. Uninjured Class Members........................................39
b. “Presumption” of Common Impact.................................40
*10
c. Antitrust Injury..................................... 41
d. Injury-In-Fact...................................... 43
i. Payment of an allegedly conspiratorial fuel surcharge 45
ii. Component of the total price of shipping........... 55
iii. Expert opinions on injury-in-fact.................. 61
3. Damages............................................... 71
B. Superiority................................................. 73
VI. CONCLUSION..................... 74
I. INTRODUCTION
This matter is before the Court on the motion of the direct purchaser plaintiffs for class certification under Rule 23(b)(3) of the Federal Rules of Civil Procedure. Also before the Court is the motion of the defendants to exclude what they refer to as “interline-related communications” from consideration for class certification or for any other purpose under 49 U.S.C. § 10706 . The Court heard oral argument on both motions on October 6 and 7, 2010, and took them under advisement. The Court delayed decision on the motions until after the Supreme Court decided
Wal-Mart Stores, Inc. v. Dukes,
— U.S. -, 131 S.Ct. 2541 , 180 L.Ed.2d 374 (2011), and then invited the parties to file supplemental briefs discussing the impact of the
Wal-Mart
decision on the class certification question in this case. Those briefs have been filed, and the motions now are ripe.
Upon consideration of the parties’ papers, the oral arguments presented by counsel, the relevant legal authorities, and the entire extensive record in this case, the Court finds by a preponderance of the evidence that the direct purchaser plaintiffs have satisfied all of the requirements of Rule 23. The Court therefore will grant the direct purchaser plaintiffs’ motion for class certification; will certify this case as a class action under Rule 23(b)(3) for purposes of litigation and trial; will define the class as proposed by the direct purchaser plaintiffs in their motion for class certification; will certify for class treatment the direct purchaser plaintiffs’ claim for price fixing in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 ; will designate the eight named plaintiffs as the class representatives; and will appoint Quinn Emanuel Urquhart & Sullivan, LLP and Hausfled LLP as co-lead class counsel. The Court concludes that it need not rule at this time on the defendants’ motion to exclude interline-related communications.
1
*11
II. BACKGROUND
The Court previously has described the background of this case.
See In re Rail Freight Fuel Surcharge Antitrust Litig. (“Rail Freight I”),
587 F.Supp.2d 27, 29-31 (D.D.C.2008);
In re Rail Freight Fuel Surcharge Antitrust Litig. (“Rail Freight II ”),
593 F.Supp.2d 29, 32, 34-35 (D.D.C.2008),
affd, Fayus Enters, v. BNSF Ry. Co.,
602 F.3d 444, 445-46, 454 (D.C.Cir.2010). It therefore will limit its discussion accordingly.
This case involves the claim that defendants — BNSF Railway Company (“BNSF”); CSX Transportation, Inc. (“CSX”); Norfolk Southern Railway Company (“NS”); and Union Pacific Railroad Company (“UP”) — en
*12
gaged in a price fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supra-competitive total price increases on their shipping customers.
See
2d Am. Compl. ¶¶ 1-2; Class Mem. at 1. As plaintiffs describe it, a rail fuel surcharge “is a separately-identified fee that is charged by the railroads for ... agreed-upon transportation [services], purportedly to compensate for increases in the cost of fuel.” 2d Am. Compl. ¶2. Plaintiffs allege, however, that the four defendants, through their collective action, “conspired to impose Rail Fuel Surcharges that far exceeded any of the Defendants’ fuel costs, and thereby collected billions of dollars of additional profits during the ... conspiracy.”
Id.
Plaintiffs have been divided into two putative classes: (1) the direct purchasers — those who allegedly purchased rail freight transportation from defendants from July 1, 2003 until December 31, 2008 and who were assessed a rail fuel surcharge for the transportation; and (2) the indirect purchasers— those who allegedly purchased rail freight transportation services indirectly from defendants.
See Rail Freight I,
587 F.Supp.2d at 29 . Plaintiffs in both putative classes allege that defendants violated Section 1 of the Sherman Act, 15 U.S.C. § 1 , by conspiring to fix prices through use of their fuel surcharges, and seek recovery under Section 4 of the Clayton Act, 15 U.S.C. § 15 .
See Rail Freight I,
587 F.Supp.2d at 29 ; 2d Am. Compl. ¶ 33.
In 2008, defendants moved to dismiss the claims of both putative classes. On November 7, 2008, the Court denied defendants’ motion regarding the direct purchaser plaintiffs, concluding that the direct purchasers had sufficiently alleged an agreement in restraint of trade.
See Rail Freight I,
587 F.Supp.2d at 32 . Shortly thereafter, on December 28, 2008, the Court denied in part and granted in part defendants’ motion regarding the indirect purchaser plaintiffs, concluding that the indirect purchasers’ state law claims were preempted and must be dismissed, but that the indirect purchasers’ federal antitrust claim for injunctive relief could proceed.
See Rail Freight II,
593 F.Supp.2d at 32, 43 . The United States Court of Appeals for the District of Columbia Circuit affirmed this Court’s dismissal of the indirect purchasers’ state law claims.
See Fayus Enters, v. BNSF Ry. Co.,
602 F.3d at 454 .
2
The direct purchaser plaintiffs (hereinafter, “plaintiffs” unless otherwise specified) now move for class certification. Specifically, plaintiffs move this Court under Rule 23(b)(3) of the Federal Rules of Civil Procedure for certification of a class of
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”).
Excluded from this Class definition are (a) Defendants, any subsidiaries or affiliates of Defendants, any of Defendants’ co-conspirators, whether or not named as a Defendant in the Complaint, and all federal governmental entities, and (b) all entities or persons that paid a Fuel Surcharge directly to any of the Defendants solely pursuant to a railroad-shipper contract that was (i)
*13
entered into before July 1, 2003, and (ii) provided for a stand-alone Fuel Surcharge to be paid under a predetermined formula specifically set forth in the contract.
Class Mot. at 1.
Plaintiffs request that this ease be certified as a class action for litigation and trial of plaintiffs’ claim for price fixing under Section 1 of the Sherman Act, 15 U.S.C. § 1 , and that the eight named plaintiffs — Dust Pro, Inc.; Carter Distributing Company; Dakota Granite Company; Donnelly Commodities, Inc.; U.S. Magnesium LLC; Nyrstar Taylor Chemicals, Inc.; Olin Corporation; and Strates Shows, Inc. — be designated as class representatives. Class Mot. at 1. Plaintiffs further request that Quinn Emanuel Urquhart & Sullivan, LLP and Hausfeld LLP be designated as co-lead class counsel under Rule 23(g) of the Federal Rules of Civil Procedure. Defendants oppose plaintiffs’ motion for class certification, arguing that plaintiffs have failed to satisfy the requirements of Rule 23.
A. The Alleged Conspiracy
Plaintiffs allege that in early 2003 defendants, the four largest Class I railroads in the continental United States,
see
2d Am. Compl. ¶ 1, conspired to increase their total revenues through the use of standardized, uniform, and supra-competitive fuel surcharges.
Rail Freight I,
587 F.Supp.2d at 29 . A Class I railroad is a large freight railway company that has “annual carrier operating revenues of at least $250 million.” 1st Rausser Report at 20. Together, defendants comprise just one percent of all the freight railroads, see
id.,
but control about 90 percent of rail freight traffic in the United States. 2d Am. Compl. ¶ 4;
see
Class Mem. at 7. BNSF and UP operate in the western United States; CSX and NS operate in the east.
See
1st Rausser Report at 30-31; Wil-lig Report ¶ 166.
3
Before Congress passed the Staggers Rail Act in 1980, defendants would have had to apply to the Interstate Commerce Commission (“ICC”) for approval of an across-the-board rate increase.
Rail Freight I,
587 F.Supp.2d at 29-30 . Following the deregulation of the railroad industry, at least 80 percent of all rail shipments now move under private transportation contracts, which are not rate regulated, or are otherwise exempt from rate regulation.
Id.
Plaintiffs allege that defendants ultimately determined that the most efficient way to increase their profits was through the imposition of an across-the-board, artificially high, and uniform fuel surcharge,
see id.
at 30 , instead of attempting to renegotiate all of their individual contracts,
id.,
or attempting to fix each base rate separately, which plaintiffs say “would have been extremely complex, highly costly and effectively unmanageable.” 1st Rausser Report at 52 n. 118.
The total freight price for a shipping customer, that is, the all-in rate, consists of a base rate (also referred to as a line-haul rate) and any percentage fuel surcharge applied to the base rate.
See
Willig Report ¶ 18; Class Opp. at 3 (all-in price includes the base rate, fuel surcharge, and other charges and elements of value). The base rate
includes fixed cost (or overhead) elements, such as the cost of organizing a particular shipment[,] ---- the large fixed costs of building and maintaining track, bridges, and other structures to achieve long-run sustainability[,] ____ [and] the railroad’s markup of price over costs, i.e., the profitability element of pricing.
1st Rausser Report at 62. Plaintiffs allege that defendants imposed “an across-the-board artificially high and uniform fuel surcharge” as a percentage multiplier of the base rate, thereby permitting defendants “to raise total freight prices widely by a given percentage.”
Rail Freight I,
587 F.Supp.2d
*14
at 30;
see also
1st Rausser Report at 50 (“[Ajdding a percentage fuel surcharge on top of line-haul rates or base rates is by its very nature a general price increase.”). In effect, according to plaintiffs, the allegedly conspiratorial fuel surcharges operated like a tax, increasing the total price of shipping by a set percentage. 1st Rausser Report at 80. Plaintiffs contend that this “approach yielded defendants billions of dollars of additional profits because the surcharge raised rates far beyond the real increased cost of fuel.”
Rail Freight I,
587 F.Supp.2d at 30 .
According to plaintiffs, it took defendants some trial and error to reach the point of conspiracy. Before the class period, plaintiffs say that defendants “operated as a price-discriminating, interdependent, but non-collusive oligopoly.” Class Mem. at 8. And for many years before the class period, defendants “confronted a long-term, structural decline in rail freight rates.”
Id.
“Between 2000 and early 2003, the three-year period preceding the Class Period,” plaintiffs contend that defendants “unilaterally took various actions designed to increase rail freight prices and revenues.”
Id.
at 9. As plaintiffs describe it, “[t]hese uncoordinated actions included, among other things, unilateral attempts to apply stand-alone fuel surcharges, which were designed ‘to take advantage of future rising fuel prices’ and intended as ‘revenue enhancement steps.’ ”
Id.
(quoting RD Ex. 9, E-mail from C. Adams, at UPFSC 0147060, Dec. 5, 2002; RD Ex. 163, NS 2000 Annual Report, at 3). But plaintiffs contend that defendants “acting on their own had limited success when trying to boost revenues through fuel surcharges.”
Id.
Plaintiffs contend that these pre-class period “fuel surcharges were applied only sporadically to a limited number of shippers,” because defendants were concerned about competition — “losing business to other [railroads] that did not apply fuel surcharges[.]”
Id.
at 9-10.
Another barrier to broad application of fuel surcharges during the pre-class period, according to plaintiffs, was wide use of “the so-called Rail Cost Adjustment Factor, or ‘RCAF.’ ” Class Mem. at 31. The RCAF “is a weighted index that accounts for all significant input costs, including fuel.”
Id.; see also
Willig Rep. ¶ 63 (“RCAF measures changes in the prices of major components of the railroad industry’s operating expenses, including labor, fuel, materials, equipment rents, depreciation, interest and other expenses.”). According to plaintiffs, wide use of the RCAF impeded broad application of fuel surcharges because defendants “recognized that imposing a stand-alone fuel surcharge where fuel price increases were already covered by the RCAF would be perceived by shippers as double dipping.” Class Mem. at 11 (quotations omitted).
Thus, plaintiffs contend that before the class period
the number of shippers covered by standalone, rate-based fuel surcharges was relatively low ..., and fuel surcharges did not contribute significantly to Defendants’ revenues or bottom lines. Defendants were unable to meet their respective revenue enhancement goals through the use of uncoordinated fuel surcharges.
Class Mem. at 12.
But all of this allegedly changed in 2003. Plaintiffs contend that beginning in the spring of 2003 “[t]he four Defendants agreed to create and apply a common Fuel Surcharge” — linked to the price of oil on one of two oil indexes, the On-Highway Diesel Fuel (“HDF”) index or the West Texas Intermediate (“WTI”) index — “based on a percentage of base rates on an across-the-board basis to all members of’ plaintiffs’ putative class. Class Mem. at 19. Under CSX’s new, allegedly conspiratorial fuel surcharge program, the railroad would assess a 0.4 percent surcharge when the price of oil on the WTI index exceeded $23 per barrel, and an additional 0.4 percent for every dollar above $23.
Id.
at 19. Plaintiffs say that “[u]nlike its predecessor program, which required the price of oil to exceed the threshold price ($28 per barrel under the old program) for 30 consecutive days, CSX’s new program would be based on the average price of oil from the preceding month.”
Id.
at 19-20. And plaintiffs allege that BNSF, UP, and NS adopted “essentially uniform” programs, and all four
*15
defendants “remained in synch through the class period.”
Id.
at 24.
As plaintiffs describe it,
“[t]he only differences in the Defendants’ programs concerned the indices used and the thresholds chosen. The two indices chosen were closely related. The western railroads (BNSF and the UP) linked their fuel surcharge to the on-highway diesel fuel (HDF) index, whereas the eastern railroads (CSX and NS) linked their fuel surcharge to the [WTI] index.”
Class Mem. at 24 n. 76 (quoting 1st Rausser Report at 54-55). Although UP and BNSF used slightly different thresholds in their fuel surcharge programs, plaintiffs allege that this difference “had no practical effect”:
“The UP applied a fuel surcharge when the HDF was above the threshold of $1.35 per gallon and the BNSF applied a Fuel Surcharge when the HDF index was above $1.25 per gallon. CSX and NS both applied fuel surcharges when the WTI index was above $23 per barrel. The different thresholds used by UP and BNSF were not relevant to fuel surcharge amounts during the class period, because the indices were all above the threshold values for the entire Class Period. Consequently, the UP and BNSF Fuel Surcharge programs provided for identical fuel surcharge percentages once the $1.35 threshold was reached.”
Id.
(quoting 1st Rausser Report at 55).
The next step in the alleged conspiracy, according to plaintiffs, was defendants’ agreement and collective action to cause the American Association of Railroads (“AAR”) to create a new cost escalation index, the All Inclusive Index Less Fuel (“AIILF”), that removed fuel costs from the prior cost escalation index, the All Inclusive Index (“AII”), on which the RCAF was based.
See Rail Freight I,
587 F.Supp.2d at 30 ;
see
Class Mem. at 27. Plaintiffs say that defendants reached this agreement during the October and December 2003 meetings of the AAR; the AIILF index was published in December 2003.
Rail Freight I,
587 F.Supp.2d at 30 ;
see
Class Mem. at 29. As plaintiffs describe it, “[t]he magnitude of this accomplishment from Defendants’ perspective cannot be understated.” Class Mem. at 29. Plaintiffs point to a letter written by BNSF’s chief economist, Sam Kyei, in which he stated:
“In December 2003 [Matt Rose, BNSF’s chief executive officer], single-handedly got the A.A.R. to establish a non-fuel RCAF index, now called the All-Inclusive Index Less Fuel____In my 18-year railroad career, no one had ever succeeded in steering the A.A.R. to do this____[T]he combination of sound price escalation using this index and a fuel surcharge should tremendously help our bottom-line for years to come. In fact, ... the entire rail industry should benefit from the escalation options the index provides.”
Class Mem. at 29-30 (quoting RD Ex. 122, Letter from S. Kyei, at BNSF-0070502, Mar. 15, 2005).
At this point, plaintiffs allege that defendants, having coordinated their fuel surcharges and created and published the AIILF, “worked tirelessly to achieve 100% Fuel Surcharge coverage across their customers.” Class Mem. at 31. Plaintiffs say that following defendants’ agreement to coordinate their fuel surcharges, defendants’ fuel surcharge revenue “skyrocketed”: as an example, plaintiffs state that NS saw fuel surcharge revenue for certain businesses grow exponentially from about $11.6 million in 2002 to about $61.7 million, $208 million, $650 million, and $974 million in 2003, 2004, 2005, and 2006, respectively.
Id.
at 42-43 . Plaintiffs say that because of the conspiracy, defendants “were able to reverse the long-term downward trend in rail freight rates and move rates sharply upward[,]”
id.
at 43 , at the expense of putative class members.
Id.
at 45 .
B. Surface Transportation Board Proceedings and 18 Class Action Lawsuits
Eventually, shippers of both rate-regulated and rate-unregulated freight traffic complained about defendants’ use of fuel surcharges, arguing that the surcharges recovered far more than the incremental cost of fuel, and that the surcharges had become non-negotiable. Shippers of rate-regulated traffic expressed their complaints to the Sur
*16
face Transportation Board (“STB”),
see
2d Am. Compl. ¶ 96; Class Mem. at 47, an agency that regulates certain aspects of the railroad industry.
See Manufacturers Ry. Co. v. Surface Transp. Bd.,
676 F.3d 1094, 1095 (D.C.Cir.2012). In response, the STB “instituted [a] proceeding to inquire into rail earner practices related to fuel surcharges.”
Rail Fuel Surcharges,
Ex Parte No. 661, 2007 WL 201205 , at *1 (S.T.B. Jan. 26, 2007).
As the STB made clear, its proceedings on fuel surcharges and its ultimate decision on the matter related only to
rate-regulated
freight traffic.
See Rail Fuel Surcharges,
2007 WL 201205 , at *10 (“Under 49 U.S.C. 10709, we have no authority to regulate rail rates and services that are governed by a contract. Therefore, our findings and actions here apply only to regulated common carrier traffic.”);
see also Fayus Enters, v. BNSF Ry. Co.,
602 F.3d at 445 (noting that under 49 U.S.C. § 10709 traffic that moves under railroad-shipper contracts generally is not subject to challenge before the STB). And plaintiffs’ putative class in the instant case includes only those shippers who purchased
rate-unregulated
transportation services.
See
Class Mot. at 1. But plaintiffs say that the fuel surcharges applied to rate-regulated freight traffic are the same fuel surcharges applied during the class period to putative class members,
see
Class Mem. at 49; 2d Am. Compl. ¶ 98, and both sides reference the STB decision and rely on it for various propositions in their class certification briefing.
See
Class Mem. at 49; Class Opp. at 16-17; Class Reply at 22-25. The Court therefore will describe below the STB proceedings and the STB’s 2007 decision.
The STB held hearings on the use of fuel surcharges on rate-regulated traffic in May and August 2006.
Rail Fuel Surcharges,
2007 WL 201205 , at *1. On January 26, 2007, the STB issued its decision on the matter, concluding:
[I]t is an unreasonable practice to compute fuel surcharges as a percentage of the base rates. Because railroads rely on differential pricing, under which rates are dependent on factors other than costs, a surcharge that is tied to the level of the base rate, rather than to fuel consumption for the movement to which the surcharge is applied, cannot fairly be described as merely a cost recovery mechanism. Rather, a fuel surcharge program that increases all rates by a set percentage stands virtually no prospect of reflecting the actual increase in fuel costs for handling the particular traffic to which the surcharge is applied. Two shippers may have traffic with identical fuel costs, but if one starts out with a higher base rate (because, for example, it has fewer transportation alternatives), it will pay dramatically more in fuel surcharges.
Id.
at *4 . Thus, the STB directed defendants to change their practice of “computing rail fuel surcharges as a percentage of a base rate” on regulated traffic.
Id.
at *1 .
The STB emphasized, however, that its ruling did not ban all fuel surcharges for regulated traffic.
See Rail Fuel Surcharges,
2007 WL 201205 , at *6 (“[W]e are not precluding railroads from incorporating as many factors that affect fuel consumption as they wish in calculating fuel surcharges. Nor are we requiring them to incorporate every conceivable such factor, as we agree that would be impracticable.”). Under the STB’s decision, a railroad could still choose to implement a fuel surcharge for rate-regulated traffic, but that surcharge “must be based upon attributes of a movement that directly affect the amount of fuel consumed.”
Id.
Essentially, the STB imposed the requirement that any fuel surcharge applied by a railroad must have “a reasonable nexus to fuel consumption.”
Id.
The STB concluded that a fuel surcharge applied as a percentage of a base rate fails that test because it “increases all rates by a set percentage” and therefore “stands virtually no prospect of reflecting the actual increase in fuel costs for handling the particular traffic to which the surcharge is applied.”
Id.
at *4 .
As discussed, the STB decision did not apply to rate-unregulated freight traffic. Nor did the STB decision in any way preclude railroads from using fuel surcharges tied to base rates in private contracts. As the STB noted in its decision:
Several carriers introduced evidence that many of their customers favor the contin
*17
ued use of a fuel surcharge program that is tied to the base rate. Given that such a program shifts greater responsibility for fuel recovery to shippers with higher rates, it is not surprising that a subset of customers (presumably those with lower base rates) favor retaining a percentage-of-the-base-rate approach. We note that such shippers are free to enter into contractual arrangements with earners that incorporate into those contracts any escalation provision for fuel cost recovery that the parties wish.
Rail Fuel Surcharges,
2007 WL 201205 , at *6 n. 34.
Although some customers of rate-unregulated freight traffic may have favored the use of fuel surcharges tied to base rates, many others did not, and that latter group of shippers had similar complaints to those expressed before the STB.
See
Class Mem. at 45-47. Those complaints eventually gave rise to 18 separate class action lawsuits, pending in six districts, involving common antitrust allegations relating to the use of fuel surcharges on rate-unregulated freight traffic.
See Rail Freight I,
587 F.Supp.2d at 29 ;
In re Rail Freight Fuel Surcharge Antitrust Litig.,
528 F.Supp.2d 1358, 1358-59 (J.P.M.L.2007). On November 26, 2007, the Multidistriet Litigation Panel consolidated those 18 separate class actions and transferred them to this Court,
see In re Rail Freight Fuel Surcharge Antitrust Litig.,
528 F.Supp.2d at 1358-59 , and now eight named plaintiffs request that this Court certify this case as a class action under Rule 23(b)(3).
See
Class Mot. at 1-2.
C. Class Certification Papers and Supplemental Briefing Before and After the Motions Hearing
As will be discussed in detail below, to obtain class certification plaintiffs must satisfy the four threshold requirements of Rule 23(a) — commonly referred to as numerosity, commonality, typicality, and adequacy — and the two additional requirements of Rule 23(b)(3) — predominance and superiority.
4
Although there is some dispute over whether plaintiffs have satisfied some of the requirements of Rule 23(a),
see
Class Opp. at 75-82, the parties agree that the central question before the Court relates to predominance, that is, whether plaintiffs have met their burden to show that “questions of law or fact common to class members predominate over any questions affecting only individual members[.]” Fed.R.Civ.P. 23(b)(3);
see
Defs.
Wal-Mart
Reply Brief at 1; Oct. 6 Tr. at 88; Oct. 7 Tr. at 167. That question, in turn, focuses on whether plaintiffs have shown that the harm — that is, the impact— from the alleged conspiracy is capable of proof at trial through evidence that is common to the class rather than individual to its members.
See, e.g.,
Defs.
Wal-Mart
Reply Brief at 1.
Plaintiffs maintain that they will be able to demonstrate the alleged conspiracy’s impact at trial with common evidence.
See
Class Mem. at 67-75. And in support of their motion for class certification, plaintiffs have submitted for consideration by the Court the expert report of Dr. Gordon Rausser, the Robert Gordon Sproul Distinguished Professor at the University of California at Berkeley.
See
1st Rausser Report at 1. Plaintiffs asked Dr. Rausser to determine, among other things, whether “[t]here was a common impact of Defendants’ alleged conspiracy on the Plaintiffs and the Class which can be demonstrated through evidence and economic analysis common to the Class[.]”
Id.
at 4. Dr. Rausser analyzed the rail freight industry and defendants’ transaction data and concluded that there was such a common impact.
See id.
at 5-8. As Dr. Rausser explains, he developed economic regressions that he applied to defendants’ transaction data; in view of the results of his regressions, he concludes, among other things, that common evidence and economic analysis can be used to determine the impact of defendants’ alleged conspiracy on a class-wide basis.
See id.
at 7-8, 80-81.
*18
Defendants oppose plaintiffs’ motion for class certification, arguing primarily that individual issues predominate in determining the impact of the alleged conspiracy.
See
Class Opp. at 28-72. In support of their position that class certification is inappropriate, defendants have submitted for consideration by the Court the expert report of Dr. Robert Willig, a Professor of Economies and Public Affairs at Princeton University.
See
Willig Report ¶ 1. Among other things, defendants asked Dr. Willig to determine “whether it is feasible for plaintiffs to demonstrate through common proof that members of the proposed class suffered
economic
injury[.]”
Id.
¶ 11. Dr. Willig concludes that it is not feasible; as he sees it, individual issues predominate over common issues for purposes of determining the impact from the alleged conspiracy.
Id.
¶25. According to Dr. Willig, “[evaluation of plaintiffs’ claims in this matter would require undertaking analysis that is specific to individual plaintiffs.”
Id.
Furthermore, Dr. Willig contends that Dr. Rausser’s regressions are flawed, and he disagrees with Dr. Rausser’s conclusion that common evidence and analysis can be used to determine the impact of the alleged conspiracy.
Id.
The parties and their experts therefore have presented this Court with what other courts have referred to as a “battle of the experts” on predominance and, in turn, impact. Ei
lis v. Costco Wholesale Corp.,
657 F.3d 970, 982 (9th Cir.2011);
In re Puerto Rican Cabotage Antitrust Litig.,
269 F.R.D. 125,132 (D.P.R.2010).
Compare
1st Rausser Report at 7,
with
Willig Report ¶25. As plaintiffs see it, they should win this battle: whereas Dr. Rausser used economic analysis to show persuasively that workable formulas, common to the class, are available to prove impact, Class Reply at 1, Dr. Willig’s analysis should not be credited because his methodology is “overtly flawed.”
Id.
at 5. Defendants say the opposite, arguing that the Court should not credit Dr. Rausser’s analysis because it is “fatally flawed.” Class Opp. at 50.
In preparation for the hearing on plaintiffs’ motion for class certification and in view of the disputes between Dr. Rausser and Dr. Willig on the central issue of predominance, the Court concluded that supplemental briefing was necessary. The Court therefore ordered supplemental briefing on two issues, to be completed before the class certification motions hearing: (1) What standard of proof should the Court apply when examining the requirements of Rule 23 of the Federal Rules of Civil Procedure?; and (2) Can the Court resolve factual disputes relevant to Rule 23 requirements — with particular emphasis on conflicting expert reports — if those factual disputes overlap with the merits of this case?
See
Order at 1-2, Sept. 17, 2010 [Dkt. No. 423]. The Court then heard oral argument on plaintiffs’ motion for class certification, including argument on these two supplemental issues, on October 6 and 7, 2010.
See generally
Oct. 6 Tr.; Oct. 7 Tr.;
see also
Order at 1-2, Oct. 5, 2010 [Dkt. No. 445] (listing topics and schedule of argument).
After the class certification motions hearing, the Court, on its own review of the Supreme Court’s oral argument transcript in
Wal-Mart Stores, Inc. v. Dukes,
provided the parties with the opportunity for further supplemental briefing. As the Court explained, although plaintiffs’ class certification motion involves Rule 23(b)(3), and the certification question in
Wal-Mart Stores, Inc. v. Dukes
involved Rule 23(b)(2), “a review of the oral argument transcript in
Wal-Mart ...
suggested] that the Supreme Court’s decision in that case may have a bearing on this case.” Order at 1, Apr. 7, 2011 [Dkt. No. 504], Thus, the Court ordered the parties to meet and confer and file a joint report with the Court 30 days after the Supreme Court issued its decision in
Wal-Mart,
stating whether either side believed that supplemental briefing was necessary and, if so, listing the proposed topics and proposing a briefing schedule.
Id.
at 1-2.
On June 20, 2011, the Supreme Court issued its decision in
Wal-Mart Stores, Inc. v. Dukes,
and one month later the parties agreed that supplemental briefing was necessary and submitted a joint report listing three proposed topics.
See
Joint Report Pursuant to April 7, 2011 Order at 1-2, July 20, 2011 [Dkt. No. 519]. The Court approved the parties’ joint proposal and ordered sup
*19
plemental briefing on the following three questions:
(1) Whether
Walr-Mart
provides guidance with respect to the standards to be applied in determining whether to certify a class here.
(2) Whether
Wal-Mart
has any implications for the plaintiffs’ ability to satisfy the requirements of Rule 23(b)(3), in light of the facts of this case, plaintiffs’ claims and defendants’ asserted defenses.
(3) Whether
Wal-Mart
has any implication for this Court’s evaluation of the parties’ expert evidence submitted in connection with the pending class certification motion.
Order at 1, July 20, 2011 [Dkt. No. 520]. That supplemental briefing now is complete.
D. “Interline-Related,” Communications
One final matter requires preliminary discussion. In the course of briefing on plaintiffs’ motion for class certification, defendants filed a motion to exclude what they refer to as “interline-related” communications from consideration for class certification or for any other purpose under 49 U.S.C. § 10706 . Interline Mot. at 1. According to defendants, plaintiffs devote substantial class certification briefing “to the merits of this case” and “repeatedly cite to evidence of communications between Defendants related to interline traffic,” defined by defendants as “traffic that originates on the line of one rail carrier but must be handed off to one or more other rail carriers to reach a destination point.” Interline Mem. at 1. Defendants argue that “Congress, by statute, has banned such evidence in antitrust cases because it regards such communications as necessary and perfectly lawful, and wanted to protect rail carriers from false allegations of antitrust violations.”
Id.
The relevant statute is 49 U.S.C. § 10706 , and defendants say that Congress enacted it specifically
to prevent plaintiffs from inferring an unlawful agreement “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,” and
to provide that “evidence of a discussion or agreement between or among such rail carrier and one or more other rail carriers, or of any rate or other action resulting from such discussion or agreement, shall not be admissible if the discussion or agreement ... concerned an interline movement of the rail carrier, and the discussion or agreement would not, considered by itself, violate the [antitrust] laws.”
Interline Mem. at 1 (quoting 49 U.S.C. § 10706 (a)(3)(B)(ii)) (alteration in original).
Plaintiffs oppose defendants’ motion on procedural and substantive grounds.
See
Interline Opp. at 1-2. As for the latter, plaintiffs argue that
to the extent it applies at all, the limited scope of § 10706(a)(3)(B)(ii)’s evidentiary protection is clear. That subsection does not — as Defendants assert — immunize any discussion or agreement relating in any way to anything having to do with interline traffic. Rather, it narrowly protects only a discussion or agreement that concerned a specific “interline movement of the rail carrier.”
Id.
at 4 (quoting 49 U.S.C. § 10706 (a)(3)(B)(ii)(II)). Plaintiffs therefore contend that 49 U.S.C. § 10706 does not preclude the admissibility of the evidence that defendants purport to challenge.
See id.
at 10 .
The parties agree that the question whether there was a conspiracy can be established by common proof, so it is not an issue in dispute for purposes of class certification.
See infra
at 35-36. Thus, defendants note that they “expect that at this stage of the case the Court will not find it necessary to consider any of the [interline-related communications] evidence that Plaintiffs have cited to support their claim that Defendants engaged in an unlawful conspiracy.” Interline Mem. at 27;
see id.
(describing as “legally immaterial” plaintiffs’ argument in their certification briefs referencing purported interline communications);
see also
Oct. 6 Tr. at 44. Consequently, the parties also agree that the Court need only rule on defendants’
*20
motion before relying on any such disputed evidence.
See
Oct. 6 Tr. at 44.
At the Court’s direction, after the class certification hearing defendants provided the Court with the list of specific objections to documents and deposition testimony that plaintiffs submitted in support of their motion for class certification, as well as annotated copies of relevant excerpts from Dr. Raus-ser’s two reports that purportedly rely on interline-related communications.
See
Defs. Interline Objections at 1;
see also id.,
Exs. 1-11, A-C. Because the Court has not relied on any of the disputed evidence in reaching its decision on plaintiffs’ motion for class certification, the Court concludes that it need not rule at this time on defendants’ motion to exclude interline-related communications.
III. LEGAL STANDARD FOR CLASS CERTIFICATION UNDER RULE 23(b)(3) OF THE FEDERAL RULES OF CIVIL PROCEDURE
A. Requirements of Rule 23(a) and (b)(3)
A party that moves for class certification bears the burden of showing that its proposed suit meets all of the requirements for certification.
See In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d 305 , 316 n. 14 (3d Cir.2008);
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. 51, 54 (D.D.C. 2008). Those requirements fall into two categories.
First, the moving party must show that its proposed suit satisfies the two implied and the four express requirements of Rule 23(a).
See Vigus v. Southern Ill. Riverboat/Casino Cruises, Inc.,
274 F.R.D. at 235;
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 54 . As for the implied requirements, plaintiffs must show (1) that their proposed class is “sufficiently defined so as to be identifiable as a class”; and (2) that the named representatives “fall within the class.”
Vigus v. Southern Ill. Riverboat/Casino Cruises, Inc.,
274 F.R.D. at 235. As for the express requirements, the moving party must show 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;
(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.CivP. 23(a). Those four express requirements commonly are referred to as nu-merosity, commonality, typicality, and adequacy. Failure to adequately demonstrate any of the Rule 23(a) requirements is fatal to class certification.
See Garcia v. Johanns,
444 F.3d 625, 631 (D.C.Cir.2006).
Second, the moving party must show that its proposed suit falls within at least one of the three categories of cases set forth in Rule 23(b).
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 54 . In this case, plaintiffs move for class certification under Rule 23(b)(3). That part of Rule 23 is intended to encompass cases in which “a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.”
Id.
at 56 (quoting Fed.R.Civ.P. 23(b) Advisory Committee Note to 1966 Amendments). In order to certify a class under Rule 23(b)(3), a court must find “[1] that the questions of law or fact common to class members predominate over any questions affecting only individual members, and [2] that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). These two requirements commonly are referred to as predominance and superiority. As Rule 23(b)(3) states, in deciding whether a moving party has satisfied the predominance and superiority requirements, pertinent considerations for a court include:
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the ligation of the claims in the particular forum; and
*21
(D) the likely difficulties in managing a class action.
Id.
The Supreme Court has emphasized that a class certification decision invites a “close look at the case,”
Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 615 , 117 S.Ct. 2231 , 138 L.Ed.2d 689 (1997) (quotations omitted), and a class may be certified only “if the trial court is satisfied, after rigorous analysis,” that the applicable Rule 23 requirements have been met.
General Tel. Co. of the Sw. v. Falcon,
457 U.S. 147, 161 , 102 S.Ct. 2364 , 72 L.Ed.2d 740 (1982). In examining the predominance requirement under Rule 23(b)(3), a court’s rigorous analysis “ ‘begins ... with the elements of the underlying cause of action.’”
Messner v. Northshore Univ. HealthSystem,
669 F.3d 802, 815 (7th Cir.2012) (quoting
Erica P. John Fund, Inc. v. Halliburton Co.,
— U.S. —, 131 S.Ct. 2179, 2184 , 180 L.Ed.2d 24 (2011));
see In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 ;
see also Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. 293, 299 (D.D.C.2007). A court must “examine the elements of plaintiffs’ claim through the prism of Rule 23 to determine whether” the Rule 23 requirements have been met.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 (quotations omitted).
Under Rule 23(b)(3), “[i]ndividual questions need not be absent.”
Messner v. Northshore Univ. HealthSystem,
669 F.3d at 815 . Indeed, “[t]he text of Rule 23(b)(3) itself contemplates that such individual questions will be present. The rule requires only that those questions not predominate over the common questions affecting the class as a whole.”
Id.
“If proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 (quotations omitted).
In this case, plaintiffs allege that defendants engaged in price fixing, in violation of Section 1 of the Sherman Act. To prevail on the merits of their claim at trial, plaintiffs will have to prove three elements: (1) a violation of the antitrust laws — here, Section 1 of the Sherman Act; (2) individual impact or injury resulting from that violation; and (3) measurable damages.
See In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 ;
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 307 . In antitrust cases, injury includes both injury-in-fact and so-called antitrust injury.
See Cordes & Co. Fin. Servs., Inc. v. AG. Edwards & Sons, Inc.,
502 F.3d 91, 106 (2d Cir.2007);
see also In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 .
At the class certification stage, however, plaintiffs need not prove their case.
See Behrend v. Comcast Corp.,
655 F.3d 182, 199 (3d Cir.2011),
petition for cert, filed
(U.S. Jan. 11, 2012) (No. 11-864);
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 ;
see also Walsh v. Ford Motor Co.,
807 F.2d 1000, 1017-18 (D.C.Cir.1986) (“Class action proponents may not be called upon to prove their case in order to obtain certification.”). Instead, plaintiffs’ burden at the class certification stage is to demonstrate that the elements of their claim are
“capable of proof at
trial through evidence that is common to the class rather than individual to its members.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311-12 (emphasis added);
see Messner v. Northshore Univ. HealthSystem,
669 F.3d at 818 ;
Behrend v. Comcast Corp.,
655 F.3d at 192-93 . Thus, the Court’s focus at the class certification stage is on
how
plaintiffs will attempt to prove the elements of their claim at trial.
See Behrend v. Comcast Corp.,
655 F.3d at 199 ;
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 .
B. Resolution of Factual Disputes and Standard of Proof
It has long been established that the moving party cannot be called upon to prove its case at the class certification stage.
See, e.g., Walsh v. Ford Motor Co.,
807 F.2d at 1017-18 . Until recently, however, it was unclear whether and, if so, how, a court should assess factual disputes, especially those related to the merits of plaintiffs’ cause of action, in ruling on a motion for class certification.
Compare In re Vitamins Antitrust Litig.,
209 F.R.D. 251 , 257 n. 9 (D.D.C.2002),
with In re Hydrogen Peroxide Antitrust Litig.,
*22
552 F.3d at 316-20 . Moreover, there was “little guidance ... available on the subject of the proper standard of ‘proof for class certification.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 316 ;
see
1 Joseph M. McLaughlin, McLaughlin on Class Actions § 3:12 (8th ed. 2011) (“Until recently ... there had been surprisingly little case law addressing the evidentiary standard the proponent of certification must meet in demonstrating that Rule 23’s requirements are satisfied.”);
Teamsters Local 115 Freight Div. Pension v. Bombardier Inc.,
546 F.3d 196, 202 (2d Cir.2008) (“readily acknowledging]” that prior case law had “been less than clear,” and directly “addressing] a question that weaves through the[ ] various requirements of Rule 23: the standard of proof applicable to evidence proffered to meet them”);
see also Shariff v. Goord,
235 F.R.D. 563 , 568 n. 3 (W.D.N.Y.2006) (“Neither Rule 23, nor the vast majority of cases interpreting it identifies a particular burden of proof on the plaintiff.”).
Although the D.C. Circuit has not yet had occasion to provide much guidance on these questions,
see Kottaras v. Whole Foods Mkt., Inc.,
281 F.R.D. 16, 20-21 (D.D.C. 2012), the Supreme Court’s recent decision in
Wal-Mart
as well as persuasive decisions from the Third Circuit and others have clarified the standards that a district court must apply in determining whether to certify a class. Upon review of those decisions, the Court concludes (1) that it can and must resolve any factual disputes relevant to the requirements for class certification — even if that requires considerations enmeshed in the factual and legal issues comprising plaintiffs’ claim on the merits,
see Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551-52;
see also In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 320 ; and (2) that it should apply a preponderance of the evidence standard of proof in doing so.
See, e.g., In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 320 .
1. Factual Disputes and Dueling Experts
As the Supreme Court stated in
Wal-Mart Stores, Inc. v. Dukes:
“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. at 2551 (emphasis in original). A district court must be satisfied, after “rigorous analysis,” that the requirements of Rule 23 have been met, and
[frequently that rigorous analysis will entail some overlap with the merits of the plaintiffs underlying claim. That cannot be helped. [T]he class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiffs cause of action---Nor is there anything unusual about that consequence[.]
Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551-52 (quotations and citations omitted).
The Supreme Court in
Wal-Mart
definitively resolved the question whether its decision in
Eisen v. Carlisle & Jacquelin,
417 U.S. 156 , 94 S.Ct. 2140 , 40 L.Ed.2d 732 (1974), precludes inquiry into the merits at the class certification stage. Before the Supreme Court issued its decision in
Wal-Mart,
much of the law on that question arose from an “oft-quoted statement” in
Eisen, see In re Initial Pub. Offerings Sec. Litig.,
471 F.3d 24, 33 (2d Cir.2006), that “nothing in either the language or history of Rule 23 ... gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.”
Eisen v. Carlisle & Jac-quelin,
417 U.S. at 177 , 94 S.Ct. 2140 . In the past, that statement in
Eisen
has led some courts to think that in determining whether any Rule 23 requirement is met, a judge may not consider any aspect of the merits, and has led other courts to think that a judge may not do so at least with respect to a prerequisite of Rule 23 that overlaps with an aspect of the merits of the case.
In re Initial Pub. Offerings Sec. Litig.,
471 F.3d at 33 .
The Supreme Court in
Wal-Mart
made clear that that reading of its decision in
*23
Eisen
is wrong. As the Supreme Court stated:
[I] n
[Eisen],
the judge had conducted a preliminary inquiry into the merits of a suit,
not in order to determine the propriety of certification under Rules 23(a) and (b) (he had already done that ...),
but in order to shift the cost of notice required by Rule 23(c)(2) from the plaintiff to the defendants.
Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2552 n. 6 (emphasis added) (citation omitted). To the extent that language in
Eisen
suggests the impermissibility of a merits inquiry
related to the Rule 23(a) and (b) analysis,
the Supreme Court made clear that such language “is the purest dictum and is contradicted by ... other [Supreme Court] cases.”
Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2552 n. 6. Thus, “it is appropriate — and indeed necessary — in some circumstances to ‘consider[ ] a merits question at the Rule 23 stage.’ ”
Kottaras v. Whole Foods Mkt., Inc.,
281 F.R.D. at 21 -22 (quoting
Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2552 n. 6);
see In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 316-20 ;
Regents of the Univ. of Cal. v. Credit Suisse First Boston (USA), Inc.,
482 F.3d 372, 381 (5th Cir.2007);
In re Initial Public Offerings Sec. Litig.,
471 F.3d at 41 ;
Gariety v. Grant Thornton, LLP,
368 F.3d 356, 366 (4th Cir.2004);
Szabo v. Bridgeport Machines, Inc.,
249 F.3d 672, 677 (7th Cir.2001);
see also
1 McLaughlin on Class Actions § 3:12 (“The Supreme Court recently cemented consensus that recently emerged among the United States Courts of Appeal. Virtually every circuit had expressly adopted standards that require a district court considering class certification to consider evidence” and “resolve factual disputes that are relevant to Rule 23’s criteria[.]”).
The required rigorous factual review that a court must perform in examining whether the requirements of Rule 23(a) and (b) have been met similarly applies to disputes among experts relevant to class certification. As the Third Circuit stated in
In re Hydrogen Peroxide Antitrust Litig.:
“Expert opinion with respect to class certification, like any matter relevant to a Rule 23 requirement, calls for rigorous analysis.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 323 . Nothing in Rule 23 distinguishes expert evidence from other types of evidence.
Under Rule 23 the district court must be “satisfied,” ... or “persuaded,” ... that each requirement is met before certifying a class. Like any evidence, admissible expert opinion may persuade its audience, or it may not. This point is especially important to bear in mind when a party opposing certification offers expert opinion. The district court may be persuaded by the testimony of either (or neither) party’s expert with respect to whether a certification requirement is met. Weighing conflicting expert testimony at the certification stage is not only permissible; it may be integral to the rigorous analysis Rule 23 demands.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 323 (quoting
General Tel. Co. of the Sw. v. Falcon,
457 U.S. at 161 , 102 S.Ct. 2364 ;
In re Initial Pub. Offerings Sec. Litig.,
471 F.3d at 41 );
see also id.
at 315 n. 13 (stating that the “ultimate question” at the class certification stage is “whether the district court is satisfied, by all the evidence and arguments including all relevant expert opinion, that the requirements of Rule 23 have been met”).
“Resolving expert disputes in order to determine whether a class certification requirement has been met is always a task for the court — no matter whether a dispute might appear to implicate the ‘credibility’ of one or more experts[.]”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 324 ;
see In re Initial Pub. Offerings Sec. Litig.,
471 F.3d at 40 (concluding that courts must “resolve[] factual disputes relevant to each Rule 23 requirement,” including weighing conflicting opinion evidence);
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 107 ;
In re Ethylene Propylene Diene Monomer (EPDM) Antitrust Litig.,
256 F.R.D. 82, 96-97 (D.Conn.2009). Such disputes among experts in an antitrust case may include, among other things, different views on the appropriate characterization of the relevant market, different views on how defendants structured their prices, and any other considerations relevant to whether
*24
plaintiffs have satisfied the requirements of Rule 28.
See In re Hydrogen Peroxide Antitrust Litig.,
552 F.8d at 325;
In re EPDM Antitrust Litig.,
256 F.R.D. at 96-97 ;
Hnot v. Willis Grp. Holdings Ltd.,
241 F.R.D. 204, 209-10 (S.D.N.Y.2007). Failure to weigh conflicting expert opinions ‘“amounts to a delegation of judicial power to the plaintiffs, who can obtain class certification just by hiring a competent expert.’ ”
Kottaras v. Whole Foods Mkt., Inc.,
281 F.R.D. at 26 (quoting
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 323 ).
There are, of course, limits to a court’s inquiry into disputes among experts, just as there are limits to a court’s inquiry into factual disputes generally: they should be resolved at the class certification stage only to the extent necessary to “satisffy]” or “persuaden” a court that each requirement of Rule 23 has or has not been met.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 323 (quotations and citations omitted);
see also In re Zum Pex Plumbing Prods. Liab. Litig.,
644 F.3d 604, 611 (8th Cir.2011). Thus, for example, a court should only engage itself in “ ‘statistical dueling’ ” of experts if “such dueling presents ‘a valid basis for [granting or] denying class certification.’”
Hnot v. Willis Grp. Holdings Ltd.,
241 F.R.D. at 210 (quoting
In re Initial Pub. Offerings Sec. Litig.,
471 F.3d at 35 ). Similarly, for example, a court should resolve “which expert is correct,”
Cordes & Co. Fin. Servs., Inc. v. A. G. Edwards & Sons, Inc.,
502 F.3d at 107 , when experts disagree on
“whether
a single formula can be created, or
whether
there really [are] too many factors at work for a multiple regression model to be methodologically sound.”
In re EPDM Antitrust Litig.,
256 F.R.D. at 96 -97 (citing
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 107 ) (emphasis added).
In contrast, if the defendants’ expert is “merely disputing the
results
of the plaintiffs’ experts’ analysis rather than the feasibility of using a single formula methodology, that would be a merits issue, not a class certification issue.”
In re EPDM Antitrust Litig.,
256 F.R.D. at 96 (emphasis added);
see id.
at 100-01 (concluding that defendants’ challenge to plaintiffs’ expert at the class certification stage was a matter to be resolved at trial because, although each sides’ expert “arrived at a polar opposing finding concerning common impact[,] ... significantly both employ single formulas”). When both experts agree on a methodology for determining class-wide impact, but ultimately reach different conclusions whether putative class members were injured by an alleged conspiracy, a court need not resolve which expert is correct at the class certification stage; that dispute presents a merits question to be resolved by the finder of fact at trial.
In re Currency Conversion Fee Antitrust Litig.,
264 F.R.D. 100, 115 (S.D.N.Y. 2010);
see In re EPDM Antitrust Litig.,
256 F.R.D. at 90 ;
Hnot v. Willis Grp. Holdings Ltd.,
241 F.R.D. at 209-10 .
2. Standard of Proof
a. Facts Bearing on Rule 23
The Court concludes that plaintiffs must establish the requirements of Rule 23 by a preponderance of the evidence, and that this standard applies to any factual disputes, including those among experts, that bear on the decision whether to certify a class. As both sides acknowledge, in the past some judges in this district at the class certification stage have required plaintiffs to make only a “threshold showing” or to set forth a “colorable method” by which they intend to satisfy the requirements of Rule 23.
In re Vitamins Antitrust Litig.,
209 F.R.D. at 264 ;
see
Pls. Supp. Brief at 1-2; Defs. Supp. Brief at 14-15. Recent decisions by the Second, Third, and Fifth Circuits, however, all expressly hold that Rule 23 requirements must be established by a higher standard: a preponderance of the evidence.
See Brown v. Kelly,
609 F.3d 467, 476 (2d Cir.2010) (“The Rule 23 requirements must be established by at least a preponderance of the evidence.”) (citing Teamsters
Local 445 Freight Div. Pension v. Bombardier Inc.,
546 F.3d at 202 (“Today, we dispel any remaining contusion and hold that the preponderance of the evidence standard applies to evidence proffered to establish Rule 23’s requirements.”));
In re Ins. Brokerage Antitrust Litig.,
579 F.3d 241, 257-58 (3d Cir.2009) (“The ‘[factual de
*25
terminations necessary to make Rule 23 findings must be made by a preponderance of the evidence.’”) (quoting
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 320 );
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 307 (expressly rejecting a “threshold showing” standard and requiring proof by a preponderance of the evidence);
Alaska Elec. Pension Fund v. Flowserve Corp.,
572 F.3d 221, 228 (5th Cir.2009) (“ ‘[T]he preponderance of the evidence standard applies to evidence proffered to establish Rule 23’s requirements.’ ”) (quoting
Teamsters Local 445 Freight Div. Pension v. Bombardier Inc.,
546 F.3d at 202 ) (alteration in original).
5
As the Third Circuit stated in
In re Hydrogen Peroxide:
[I]nvoking the phrase “threshold showing” risks misapplying Rule 23. A “threshold showing” could signify, incorrectly, that the burden on the party seeking certification is a lenient one (such as a prima facie showing or a burden of production) or that the party seeking certification receives deference or a presumption in its favor. So defined, “threshold showing” is an inadequate and improper standard. [T]he requirements of Rule 23 must be met, not just supported by some evidence.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 321 (quotations omitted).
“Class certification requires a finding that each of the requirements of Rule 23 has been met” by a preponderance of the evidence.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 320 ;
see
Fed.R.Civ.P. 23(b)(3) (the court must “find[ ] that the questions of law or fact common to class members predominate”). A court can only do so upon weighing all relevant evidence for and against class certification and then concluding by a preponderance of the evidence that the Rule 23 requirements in fact have been met.
See id.
at 320-22 ;
see also Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551 (party seeking certification “must be prepared to prove that there are
in fact
sufficiently numerous parties, common questions of law or fact, etc.”) (emphasis in original). Applying a lesser standard would permit class certification even if a court thought it less than likely that each Rule 23 requirement had been met, violating the Supreme Court’s instruction that “actual, not presumed conformance” with Rule 23 is “indispensable.”
General Tel. Co. of the Sw. v. Falcon,
457 U.S. at 160 , 102 S.Ct. 2364 ;
see also Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551.
b. Expert Opinions and Regression Analyses
An expert opinion presenting economic regression analysis commonly is used as a basis for certifying a class.
See, e.g., In re TFT-LCD (Flat Panel) Antitrust Litig.,
267 F.R.D. 291, 313 (N.D.Cal.2010) (citing cases accepting multiple regression analysis as a means of proving antitrust injury and damages on a class-wide basis);
In re EPDM Antitrust Litig.,
256 F.R.D. at 95 ;
see also
Daniel L. Rubinfeld, Reference Guide on Multiple Regression 305-08 (Fed. Judicial Center, 3d ed. 2011). In this case, plaintiffs’ expert, Dr. Gordon Rausser, has developed two multiple regression models, a common factor model and a damage model, that, in his opinion, together reveal that impact can be established at trial with evidence common to the class.
See
2d Rausser Report at 91-92, 99-100;
see also
Oct. 6 Tr. at 137. Defendants’ expert, Dr. Robert Willig, disagrees with Dr. Rausser’s analysis and concludes that Dr. Rausser’s regressions suffer from fatal flaws.
See generally
Willig Report.
Where, as here, experts disagree on the ultimate question whether an economic regression model shows that impact is capable of proof at trial through evidence common to the class, that disagreement must be resolved by a court at the class certification stage: a court must determine “which expert is correct” about whether “the injury-in-fact question is common to the class.”
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 107 ;
see In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at
*26
324. To answer that question, the Third Circuit instructed in
In re Hydrogen Peroxide Antitrust Litig.
that a court must apply a two prong test, examining (1) whether the plaintiffs have established that their expert’s theory of common impact is “plausible”; and, if so, (2) whether the plaintiffs have established by a preponderance of the evidence that the expert’s plausible theory is “susceptible to proof at trial through available evidence common to the class.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 325 ;
see Behrend v. Comcast Corp.,
655 F.3d at 192-93 .
The Third Circuit recognized in
In re Hydrogen Peroxide Antitrust Litig.,
and then reaffirmed in
Behrend v. Comcast Corp.,
that an expert’s theory that impact is capable of common proof at trial — by means of regression analysis or other common evidence — is not a question of fact necessarily capable of resolution by a preponderance of the evidence. The plausibility standard falls below a requirement of perfection,
see Behrend v. Comcast Corp.,
655 F.3d at 204 n. 13 (a court need not determine that a regression model “is perfect at the certification stage”), and above a “threshold,”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 321 (quotations omitted), or a “not fatally flawed” standard.
In re Initial Pub. Offerings Sec. Litig.,
471 F.3d at 42 . Plausibility depends on the “ability to establish — whether through mathematical models or further data or other means — the key logical steps behind [the] theory.”
In re New Motor Vehicles Canadian Exp. Antitrust Litig.,
522 F.3d 6, 25-26 (1st Cir.2008).
By way of illustration, Dr. Willig criticizes Dr. Rausser’s common factor regression model for looking at only a snapshot in time and therefore purportedly failing to examine changes in freight rates over time.
See
Wil-lig Report ¶213. Whether this purported error discredits Dr. Rausser’s common factor model is not a question that readily lends itself to resolution by a preponderance of the evidence; indeed, such a standard has not been adopted by any court and lacks intuitive force.
See
Oct. 6 Tr. at 20 (plaintiffs’ counsel noting that “there has been no direction by any circuit, let alone this district or the Supreme Court that applies an evidentiary type standard to the assessment by the court as a whole of an expert report directed at proof of impact or fact of damage and amount of damage”). Instead, applying the first prong of the test set forth in
In re Hydrogen Peroxide Antitrust Litig.,
the Court will evaluate whether this purported error precludes a determination that Dr. Rausser’s theory of proof is “plausible,”
Behrend v. Comcast Corp.,
655 F.3d at 204 n. 13;
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 325 , or “viable,”
In re New Motor Vehicles Canadian Exp. Antitrust Litig.,
522 F.3d at 25 (1st Cir.2008); and that his regression analysis is “feasible,”
In re EPDM Antitrust Litig.,
256 F.R.D. at 96 , or “workable.”
In re Amaranth Natural Gas Commodities Litig.,
269 F.R.D. 366 , 383 & n. 118 (S.D.N.Y.2010);
see In re Ready-Mixed Concrete Antitrust Litig.,
261 F.R.D. 154, 171 (S.D.Ind.2009).
6
If a court determines that the plaintiffs have established that their expert’s theory of proof is plausible and that their expert’s regression analysis, if any, is workable, then the next question for the court to resolve is whether the plaintiffs have established by a preponderance of the evidence that the plausible theory and workable regression are “susceptible to proof at trial through available evidence common to the class.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 325 ;
see Behrend v. Comcast Corp.,
655 F.3d at 192-93 . In assessing that question in this ease, the Court will resolve all factual disputes bearing on Dr. Rausser’s and Dr. Willig’s analyses — including what the parties refer to as subsidiary factual disputes underlying the experts’ opinions — by a preponderance of the evidence.
See In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at
*27
320-25;
see
Oet. 6 Tr. at 30-31. And ultimately, the Court will determine which expert is correct, Dr. Rausser or Dr. Willig, on the question whether a workable regression model can be used to establish by a preponderance of the evidence that impact can be proven at trial with common evidence.
See, e.g., Behrend v. Comcast Corp.,
655 F.3d at 192-93 ;
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 325 ;
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 107 .
To summarize, the Court will resolve factual disputes relevant to Rule 23 requirements, and the Court will apply a preponderance of the evidence standard in examining whether plaintiffs have satisfied each of the requirements of Rule 23. Accordingly, in order to certify plaintiffs’ putative class, the Court “must find that the evidence more likely than not establishes each fact necessary to meet the requirements of Rule 23.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 320 ;
see also Behrend v. Comcast Corp.,
655 F.3d at 185 (plaintiffs must establish by a preponderance of the evidence that they would be able to prove through common evidence impact and a common methodology to quantify damages). As for the predominance requirement of Rule 23(b)(3), in examining Dr. Rausser’s conclusion that impact can be established at trial with common evidence, the Court will determine whether Dr. Raus-ser’s theory of proof is plausible and whether his regression models are workable; and, if so, whether plaintiffs have established by preponderance of the evidence that his theory and models are “susceptible to proof at trial through available evidence common to the class.”
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 325 ;
see Behrend v. Comcast Corp.,
655 F.3d at 192-93 .
Defendants contend that there are numerous factual disputes between the parties and their experts that are relevant to whether plaintiffs have satisfied the predominance requirement of Rule 23(b)(3), and defendants further contend that Dr. Rausser’s analysis is fatally flawed. Defendants identify four principal factual disputes and assert that each one bears on whether impact can be proven at trial with common evidence: (1) whether rate-based fuel surcharges frequently were used before the class period,
see
Defs.
Wal-Mart
Brief at 5; (2) whether “legacy shippers” — that is, shippers who paid a rate-based fuel surcharge during the class period under a contract that was entered into before July 1, 2003 — would have continued paying fuel surcharges, even absent the alleged conspiracy,
see id.; see also
Defs. Supp. Brief at 17; (3) whether captive shippers — that is, those shippers served by only one railroad or those shippers with no viable transport alternatives to the railroad that serves it — would have paid fuel surcharges, even absent the alleged conspiracy,
see
Defs.
Wal-Mart
Brief at 6; Defs. Supp. Brief at 18 & n. 10; and (4) whether some class members received concessions from a defendant on certain aspects of their rail transportation agreement in exchange for acceptance of the defendant’s fuel surcharge.
See
Defs.
Wal-Mart
Brief at 6; Defs. Supp. Brief at 19. As defendants describe it, the Court’s resolution of each of these factual disputes in plaintiffs’ favor is a necessary condition for class certification; defendants contend that these disputes “must be resolved” in examining whether to certify plaintiffs’ putative class. Defs.
Walr-Mart
Brief at 6;
see
Defs. Supp. Brief at 19-20.
The Court agrees with defendants that these factual disputes are relevant to Rule 23(b)(3)’s predominance requirement — primarily, whether plaintiffs can show that impact is capable of proof at trial through evidence that is common to the class. Regarding, for example, the issue of concessions, if shippers received concessions in the form of base rate discounts in exchange for the application of a fuel surcharge, then, as plaintiffs’ expert himself acknowledges, the impact for those shippers “wouldn’t have been common to others” who did not receive such discounts. 1st Rausser Dep. at 272;
see also id.
at 270 (Dr. Rausser, acknowledging that “any coordinated program that focuses just on a part of the pricing can be unwound or made far less effective if there is a change in the base pricing”). Going further, if the fuel surcharge applied to a shipper “was
*28
exactly offset by the base rate,” then, as plaintiffs’ expert states, “there would be no injury.” 2d Rausser Dep. at 208.
7
Defendants and their expert contend that some shippers included within plaintiffs’ class were not harmed by the alleged conspiracy because they received contract concessions in the form of base rate discounts. And defendants say that determining which shippers received such discounts requires individualized evidence and analysis that precludes a finding that impact can be proven on a class-wide basis with common evidence. Plaintiffs and their expert disagree, arguing that there is no evidence of widespread discounting and any examples of discounting are anomalies that do not preclude a finding that impact can be proven on a class-wide basis with common evidence. Because this dispute is relevant to whether common evidence can be used to establish impact at trial, the Court must resolve it by a preponderance of the evidence — even though it plainly is an issue enmeshed in the factual and legal issues comprising the merits of plaintiffs’ claim.
Although the Court agrees with defendants that it must resolve this (and other) factual disputes, the Court disagrees with defendants that the facts fall in their favor at this stage. As discussed below, the Court finds by a preponderance of the evidence that the fuel surcharge programs applied by defendants before the class period were nothing like the widespread application of defendants’ more aggressive, standardized fuel surcharge programs during the class period; that these standardized fuel surcharges were applied uniformly, to all or virtually all class members; and that there is no evidence of widespread discounting of base rates in exchange for application of fuel surcharges, and that any such discounting in the record is an anomaly that does not preclude a finding of predominance. Furthermore, the Court credits Dr. Rausser’s conclusion that impact and damages are capable of proof at trial with common evidence. The Court finds that Dr. Rausser’s economic regression analysis is workable, and that he presents a theory of proof that is plausible and susceptible to proof at trial through available evidence common to the class.
8
IV. RULE 23(a) FINDINGS AND CONCLUSIONS
A. Two Implied Requirements
1. Class Definition
The first implied requirement of Rule 23(a) is that the class must be “sufficiently defined so as to be identifiable as a class.”
Vigus v. Southern Ill. Riverboat/Casino Cruises, Inc.,
274 F.R.D. at 235; see
also Johnson v. District of Columbia,
248 F.R.D. 46, 52 (D.D.C.2008);
Pigford v. Glickman,
182 F.R.D. 341, 346 (D.D.C.1998). “The requirement that a class be clearly defined is designed primarily to help the trial court manage the class.”
Pigford v. Glickman,
182 F.R.D. at 346 . This requirement “is not designed to be a particularly stringent test, but plaintiffs must at least be able to establish that ‘the general outlines of the members of the class are determinable at the outset of the litigation.’”
Id.
(quoting 7A
*29
Charles Alan Wright, Arthur R. Miller
&
Mary Kay Kane, Federal Practice & Procedure § 1790, at 118). “In other words, the class must be sufficiently definite ‘that it is administratively feasible for the court to determine whether a particular individual is a member.’ ”
Id.
(quoting 7A Federal Practice
&
Procedure, supra, § 1760, at 121). A court therefore should deny class certification “where the class definitions are overly broad, amorphous, and vague, or whether the number of individualized determinations required to determine class membership becomes too administratively difficult.”
Perez v. Metabolife Int’l, Inc.,
218 F.R.D. 262, 269 (S.D.Fla.2003); see
also Johnson v. District of Columbia,
248 F.R.D. at 52 .
In this case, plaintiffs seek certification of 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”).
Excluded from this Class definition are (a) Defendants, any subsidiaries or affiliates of Defendants, any of Defendants’ co-conspirators, whether or not named as a Defendant in the Complaint, and all federal governmental entities, and (b) all entities or persons that paid a Fuel Surcharge directly to any of the Defendants solely pursuant to a railroad-shipper contract that was (i) entered into before July 1, 2003, and (ii) provided for a stand-alone Fuel Surcharge to be paid under a predetermined formula specifically set forth in the contract.
Class Mot. at l.
9
Defendants contend that plaintiffs’ class definition “renders determining which shippers would actually be in the proposed class extremely difficult, if not impossible.” Class Opp. at 75. According to defendants, there are two problems with plaintiffs’ proposed class: (1) there is no “[e]asy [w]ay” to determine whether freight traffic qualifies as rate-unregulated,
id.;
and (2) plaintiffs propose no method to identify shippers with “re-based” rates.
Id.
at 76 .
As discussed, plaintiffs’ proposed class is specifically limited to “rate-unregulated” traffic. Class Mot. at 1. Plaintiffs have defined the term “unregulated” as referring to “rail freight transportation services where the rates are set by private contracts or through other means exempt from rate regulation under federal law.” 2d Am. Compl. ¶ 1. Defendants contend that it is difficult to discern whether freight traffic moves under a regulated common carrier authority or, instead, under an unregulated contract. Class Opp. at 75. According to defendants, determining whether freight traffic is rate-regulated or rate-unregulated requires individualized inquiries viewed in light of the parties’ intent.
Id.
Consequently, defendants contend that “[determining
*30
class membership would require individualized inquiries, making class certification inappropriate.”
Id.
at 76 .
The Court disagrees with defendants. As plaintiffs point out, the STB ruling in 2007 distinguished between rate-regulated and rate-unregulated traffic, expressly stating that its ruling applied only to the former.
See
Class Reply at 39. Neither the STB nor defendants asserted that it was too difficult to determine which traffic the ruling covered.
Id.
Furthermore, in this case defendants have produced during discovery transaction data for rate-unregulated traffic without arguing that it was too difficult to determine which transaction data related to that type of traffic.
Id.
And finally, defendants’ expert, Dr. Willig, has not claimed any difficulty in distinguishing between rate-regulated and rate-unregulated traffic. To the contrary, Dr. Willig was able to quantify both the amount of rate-unregulated traffic during the class period and the revenue it produced for defendants.
See
Willig Report ¶ 24 (“[Shippers of unregulated traffic with revenue-based FSCs[, that is, fuel surcharges,] generated roughly 72 million carloads of rail traffic during the class period and $110 billion in revenue for defendants. This reflects roughly 56 percent of defendants’ total non-regulated traffic over this period. For the class period as a whole, there were nearly 30,000 shippers of unregulated traffic with revenue-based FSCs[.]”);
see also
1st Rausser Report at 89 (noting that “the data supplied by BNSF ... records whether the shipment was regulated or not”). Dr. Willig’s report therefore belies defendants’ claim that it is too difficult to determine whether rail traffic qualifies as rate-unregulated.
Defendants’ second argument focuses on plaintiffs’ proposed inclusion of shippers who paid “rebased” rates. As plaintiffs describe it, at some point during the alleged conspiracy NS “engaged in something that has come to be known in this case as rebasing; namely folding at least part of the fuel surcharge into the base rate.” Oct. 6 Tr. at 133. Defendants contend that plaintiffs “do not identify ... shippers” who paid a re-based rate “or propose any methodology for doing so.” Class Opp. at 76. And in the absence of any viable methodology, defendants contend that it is impossible to determine what shippers are in the class due to rebasing.
Id.
The Court disagrees with defendants. Plaintiffs assert that shippers who paid a rebased rate simply paid a new base rate with a portion of the previous supra-competitive fuel surcharge “bake[d]” in. Class Reply at 40 (citing HD Ex. 83, Lawson Dep. at 72);
see
Class Mot. at 48. As Dr. Rausser explains it, NS’ rebasing strategy “effectively made permanent a surcharge based on a WTI of $64 by folding that amount into base rates, and supplemented that with a new stand-alone fuel surcharge anytime the WTI exceeded $64.” 1st Rausser Report at 117 n. 250. And Dr. Rausser has accounted for NS’ alleged rebasing in his analysis.
See id.
(“As my analysis considers the gross price it will not be affected by NS’ change to their fuel surcharge program” by means of rebased rates.);
see also id.
at 47 n. 105 (“[M]ost shipments still received a fuel surcharge on top of that new base rate[.]”).
The Court therefore finds by a preponderance of the evidence that plaintiffs’ proposed class is defined so as “to establish that ‘the general outlines of the membership of the class are determinable at the outset of the litigation.’ ”
Pigford v. Glickman,
182 F.R.D. at 346 (quoting 7A Federal Practice & Procedure,
supra,
§ 1790, at 118). Plaintiffs have satisfied their burden of showing that “‘it is administratively feasible for the court to determine whether a particular individual is a member.’ ”
Id.
(quoting 7A Federal Practice & Procedure,
supra,
§ 1760, at 121).
2. Named Representatives Within the Putative Class
The second implied requirement of Rule 23(a) is that the named representative plaintiffs must “fall within the class.”
Vigus v. Southern III. Riverboat/Casino Cruises, Inc.,
274 F.R.D. at 235. Defendants appear to argue that some (or perhaps all) of the proposed representatives are not part of the putative class.
See
Class Opp. at 80 (stating that “[a] class cannot be certified where the proposed representatives would not be mem
*31
bers of the class.”). The basis for that argument, however, is unclear, and the Court is not persuaded. Plaintiffs assert, and defendants do not dispute, that during the class period each of the eight named representatives directly purchased from one or more of the defendants rail freight services as to which a fuel surcharge was applied.
See
Class Mem. at 1;
id.
at 58-60. Consequently, the Court finds by a preponderance of the evidence that the second implied requirement of Rule 23(a) is met: each of the named representative plaintiffs falls within the putative class.
B. Four Express Requirements
1. Numerosity
The first express requirement of Rule 23(a) is numerosity: the putative class must be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “Typically, a class in excess of 40 members is sufficiently numerous to satisfy this requirement.”
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 55 . “Mere conjecture, without more, is insufficient to establish numerosity, but plaintiffs do not have to provide an exact number of putative class members in order to satisfy the numerosity requirement.”
Pigford v. Glickman,
182 F.R.D. at 347 .
Plaintiffs assert that defendants’ transaction data show that “tens of thousands of shippers” are included in the putative class. Class Mem. at 56. Defendants do not contest the numerosity requirement and themselves acknowledge that plaintiffs’ putative class includes approximately 30,000 shippers.
See, e.g.,
Oct. 7 Tr. at 258;
see also
Willig Report ¶ 24 (“For the class period as a whole, there were nearly 30,000 shippers of unregulated traffic with revenue-based FSCs[.]”). “When the class is large” — here, in the tens of thousands — “numbers alone are dispositive[.]”
Meijer, Inc. v. Warner Chilcott Holdings Co. Ill,
246 F.R.D. at 306 . The Court therefore finds that plaintiffs have satisfied their burden of showing by a preponderance of the evidence that the putative class “is so numerous that joinder of all members is impracticable[.]” Fed.R.Civ.P. 23(a)(1).
2. Commonality
The second express requirement of Rule 23(a) is commonality: there must be “questions of law or fact common to the class[.]” Fed.R.Civ.P. 23(a)(2). “Not every issue of law or fact [need] be the same for each member.”
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. a,t 55 (quotations omitted) (alteration in original). “Rather, the commonality test is met when there is at least one issue ... the resolution of which will affect all or a significant number of the putative class members.”
Id.
(quotations omitted) (alteration in original).
Because the commonality requirement is satisfied “by a single common issue,” courts have noted that it often is easily met.
Taylor v. District of Columbia Water & Sewer Autk,
241 F.R.D. 33, 37 (D.D.C.2007). But as the Supreme Court recently made clear, what matters for purposes of commonality “is not the raising of common questions — even in droves — but, rather the capacity of a class-wide proceeding to generate common
answers
apt to drive the resolution of the litigation.”
Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551 (quotations omitted).
In antitrust class actions, “numerous courts have held that allegations concerning the existence, scope, and efficacy of an alleged antitrust conspiracy present important common questions sufficient to satisfy the commonality requirement[.]”
Meijer, Inc. v. Warner Chilcott Holdings Co. Ill,
246 F.R.D. at 300 (quotations omitted). As plaintiffs assert, and as defendants do not dispute, the question whether defendants engaged in a conspiracy — the first element of plaintiffs’ claim — is an issue that is common to all class members because the answer to that question will focus exclusively on defendants’ conduct.
See
Class Mem. at 57;
see also
Oct. 7 Tr. at 161 (defendants’ counsel, acknowledging that “whether there was or was not a conspiracy is in fact capable of common proof’). The Court therefore finds by a preponderance of the evidence that “there are questions of law or fact common to the elass[.]” Fed.R.Civ.P. 23(a)(2).
*32
3. Typicality
The third express requirement of Rule 23(a) is typicality: “the claims or defenses of the representative parties [must be] typical of the claims or defenses of the class[.]” Fed.R.Civ.P. 23(a)(3). Typicality is “intended to assess whether the action can be efficiently maintained as a class and whether the named pláintiffs have incentives that align with those of the absent class members so as to assure that the absentees’ interests will be fairly represented.”
Pigford v. Glickman,
182 F.R.D. at 349 (quotations omitted). “[I]f the class representative’s claims arise from the same events, practice, or conduct, and are based on the same legal theory as those of other class members, the typicality requirement is satisfied.”
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 55 (quotations omitted);
see Pigford v. Glickman,
182 F.R.D. at 349 .
“The facts and claims of each class member do not have to be identical to support a finding of typicality ..., rather, the requirement goes to whether the named plaintiffs claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.”
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 301 (citation and quotations omitted);
see also Johnson v. District of Columbia,
248 F.R.D. at 53 . “The requirement has been liberally construed by courts ... [and] in the antitrust context, typicality will be established by plaintiffs and all class members alleging the same antitrust violations by defendants.”
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 301 (alternations in original) (quotations omitted).
Plaintiffs contend that the typicality requirement easily is satisfied in this case because “all named Plaintiffs and all Class members seek overcharge damages pursuant to an identical price-fixing claim under Section 1 of the Sherman Act.” Class Mem. at 58. As plaintiffs describe it, “[t]he claims of the named Plaintiffs and the absent Class members alike arose out of the same course of events: Defendants’ conspiracy to impose stand-alone, rate-based Fuel Surcharges in order to raise shipping prices across the board.”
Id.
Defendants disagree. They argue that none of the eight proposed class representatives is typical.
See
Class Opp. at 79. First, defendants argue that shippers that paid a fuel surcharge before July 1, 2003 are not properly members of the class, and shippers that are served by only one defendant can have no claim because there was no competition among defendants for their business that could have been affected by the alleged conspiracy.
See id.
According to defendants, this disqualifies all of the eight proposed class representatives.
Id.
The Court finds defendants’ arguments in-apposite because the typicality requirement focuses on the
“claims
of the representative, not the individual characteristics of the [named] plaintiff[s].”
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 301 (quotations omitted) (emphasis added). The claims of the eight named plaintiffs and those of the absentee class members arose from the same course of events: defendants’ alleged conspiracy to impose supra-competitive fuel surcharges across-the-board on all shippers. And the eight named plaintiffs and the absentee class members seek the same relief: overcharge damages under Section 1 of the Sherman Act.
Next, defendants target two of the named representatives, Dust Pro and Nystar, arguing that each one faces a disqualifying problem. As for Dust Pro, defendants argue that the shipper “generally did not pay for its shipments — it liquidated the business while owing a substantial debt to UP — and has no evidence that the dollar total of fuel surcharges it actually paid even approached the amount of its unpaid debt[.]” Class Opp. at 79 n. 89. Defendants, however, cite no authority for their claim that Dust Pro’s alleged “non-payment” should disqualify it as a class representative. Nor can the Court surmise any reason why Dust Pro should be disqualified.
Regarding Nystar, defendants argue that this named plaintiff should be disqualified because, according to defendants, it spoliated evidence. Class Opp. at 80-81. “The requirement that the proposed repre
*33
sentatives not be subject to
unique defenses
” — which includes spoliation — “can be seen as an offshoot of the requirement that the representative have circumstances that are sufficiently similar to those of the class.”
In re Sobering Plough Corp. ERISA Litig.,
589 F.3d 585, 598 (3d Cir.2009) (emphasis in original). Because Rule 23 requires that both the claims and the defenses be typical, a proposed class representative will not satisfy Rule 23(a)(3) “if the representative is subject to a unique defense that is likely to become a major focus of the litigation.”
Id.
(quotations omitted);
see also Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
903 F.2d 176, 180 (2d Cir.1990) (“[T]here is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.”).
Spoliation of evidence constitutes a unique defense, and courts have concluded that in some circumstances defending against a charge of spoliation of evidence can render a plaintiff an inadequate class representative.
See, e.g., Falcon v. Philips Elees. N. Am. Corp.,
304 Fed.Appx. 896 , 897 (2d Cir.2008) (district court did not abuse its discretion in concluding that defending against a charge of spoliation rendered a plaintiff an inadequate class representative). The presence of a unique defense, however, “will not ... destroy typicality [unless it] will skew the focus of the litigation and create a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.”
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 302 (quotations omitted) (alteration in original). In this ease, the Court agrees with plaintiffs that at this stage the spoliation issue is hypothetical and speculative,
see
Class Reply at 39, and the Court is satisfied that this alleged unique defense presents a question of law and fact “that can readily be resolved by the Court without skewing the focus of the litigation or creating a significant danger of distracting [plaintiffs’] ability to pursue the interests of the absent class members.”
Meijer, Inc. v. Warner Chilcott Holdings Co. III,
246 F.R.D. at 302 (quotations omitted).
Finally, defendants argue that a “significant number” of putative class members’ contracts include broad arbitration clauses.
See
Class Opp. at 78. Defendants state that they “intend, as they have a right to do, to rely on [those putative class members’] agreements to arbitrate,” which would include, according to defendants, the Sherman Act claim alleged in this case.
Id. at
78-79. Thus, defendants argue that shippers whose contracts include arbitration provisions cannot pursue their claims in this Court and, as a result, cannot be part of the class that plaintiffs seek to certify here.
Id.
at 79. And defendants assert that the Court should consider these agreements to arbitrate — constituting, as defendants see it, affirmative defenses — in making its class certification decision.
Id.
(citing
Rodney v. Northwest Airlines, Inc.,
146 Fed.Appx. 783, 786 (6th Cir.2005)). Defendants do not assert, however, that any of the eight named plaintiffs have contracts containing arbitration clauses; nor do defendants assert that they have initiated any arbitrations.
See
Class Reply at 40.
While defendants do not suggest under what part of Rule 23 the Court should consider their argument regarding arbitration, courts generally have considered the question of defenses in the context of examining the typicality and commonality requirements of Rule 23(a), as well as the predominance requirement of Rule 23(b)(3).
See, e.g., In re Schering Plough Corp. ERISA Litig.,
589 F.3d at 598 (question of unique defenses is an offshoot of typicality requirement);
Gene & Gene LLC v. BioPay LLC,
541 F.3d 318, 327 (5th Cir.2008) (“[T]he predominance of individual issues necessary to decide an affirmative defense may preclude class certification.”) (quotations omitted);
Gunnells v. Healthplan Servs., Inc.,
348 F.3d 417 , 438 (4th Cir.2003) (“[Affirmative defenses must be factored into the calculus of whether common issues predominate.”). Regardless of which part of Rule 23 applies, however, the Court concludes that “the
possible
arbitration of some class members” does not, “by itself, defeat class certification.”
Lemer v. Haimsohn,
126 F.R.D. 64, 66 (D.Colo.1989) (emphasis added). Neither plaintiffs nor defendants have initiated arbitration, and the Court concludes that defendants’ assertion regarding their “inten[t]” to
*34
initiate arbitration, Class Opp. at 78, is too speculative to defeat predominance, much less commonality or typicality.
The Court finds that the claims of the eight named class representatives arise from the “same events, practice, or conduct, and are based on the same legal theory as those of other class members.”
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 55 (quotations omitted). Consequently, plaintiffs have satisfied their burden of showing by a preponderance of the evidence that “the claims or defenses of the representative parties are typical of the claims or defenses of the class[.]” Fed.R.Civ.P. 23(a)(3).
4. Adequacy of Representation
The fourth and final express requirement of Rule 23(a) is adequacy. It requires that “the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a)(4). Thus, this requirement “necessitates an inquiry into the adequacy of representation, including the quality of class counsel, any disparity of interest between class representatives and members of the class, communication between class counsel and the class and the overall context of the litigation.”
Pigford v. Glickman,
182 F.R.D. at 350 . “A proposed representative is ‘adequate’ if (1) his interests do not conflict with those of other class members, and (2) he will vigorously prosecute the interests of the class through qualified counsel.”
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 55 .
Plaintiffs assert that the eight named representative plaintiffs have shown a willingness to step forward, incur substantial discovery burdens, and prosecute this case in the best interests of the members of the putative class. Class Mem. at 61. Furthermore, plaintiffs assert that there are no conflicts with the unnamed members of the class that would warrant denial of class certification.
Id.
Finally, plaintiffs contend that they have protected the interests of absent class members through the selection of qualified class counsel. As plaintiffs describe it, interim co-lead class counsel Quinn Emanuel and Hausfeld
—firms that have extensive experience in both antitrust litigation in particular and class action litigation generally — have vigorously prosecuted this action, expending substantial time and resources in investigating the claims, overseeing the production and review of documents, taking and defending of depositions, working with experts, and briefing and arguing motions.
Id.
at 62 . Defendants present mostly the same arguments regarding adequacy as they did for typicality.
See
Class Opp. at 79-80. For the reasons just discussed,
see supra
at 32-34, the Court rejects them.
In addition, defendants argue that Donnelly Commodities, Inc. should be disqualified because it filed for bankruptcy and is currently under the control of an appointed trustee. Class Opp. at 81-82. According to defendants, when a class representative has filed for bankruptcy under Chapter 7 and has had a trustee appointed, an “ ‘inherent’ conflict of interest exists.”
Id.
at 82 (quoting
Dechert v. Cadle Co.,
333 F.3d 801 , 803 (7th Cir.2003)). As defendants see it, this is because of the trustee’s “‘dual role as class representative and creditors’ representative.’ ”
Id.
(quoting
Dechert v. Cadle Co.,
333 F.3d at 803). But the authority upon which defendants rely for that proposition,
Dechert v. Cadle Co.,
rejected a “flat rule that a trustee in a bankruptcy ... can never be a class representative.”
Dechert v. Cadle Co.,
333 F.3d at 803. And other courts have allowed such representation where, as here, “an additional representative [is designated] to appear as plaintiff along with the Trustee[.]”
Ernst & Ernst v. U.S. Dist. Court for the S. Dist. of Tex.,
457 F.2d 1399 , 1400 (5th Cir.1972). In this case, of course, there are eight representative plaintiffs only one of which, Donnelly Commodities, Inc., is under the control of a trustee in bankruptcy. The Court therefore sees no basis at this stage to disqualify Donnelly Commodities, Inc. as a named representative.
Finally, as for the quality of class counsel, the Court agrees with plaintiffs’ undisputed assertion that they have protected the interests of absent class members through the selection of class counsel.
See
Class Mem. at 62-63. As the Court previously has stated, the firms Quinn Emanuel and Hausfeld both
*35
have sufficient resources and expertise to prosecute this matter in the putative class’ best interests.
See
Memorandum Op. & Order at 3, Mar. 13, 2009 [Dkt. No. 232], As plaintiffs state:
Quinn Emanuel and Hausfeld LLP have already demonstrated their ability to work well together, coordinate the efforts of the various other firms also representing plaintiffs in this multidistrict litigation, and generate work product at the highest professional levels. Together, these firms are extraordinarily well situated to assess how Plaintiffs’ case will be presented at trial, and will be prepared to try this case should that be necessary.
Class Mem. at 63. Defendants do not disagree, and neither does this Court.
10
The Court finds that plaintiffs have met their burden of showing by a preponderance of the evidence that “the representative parties will fairly and adequately protect the interests of the class,” Fed.R.Civ.P. 23(a)(4), because the interests of the eight named representatives do not conflict with those of other class members, and because they will vigorously prosecute the interests of the class through qualified counsel.
Lindsay v. Government Emps. Ins. Co.,
251 F.R.D. at 55 .
V. RULE 23(b)(3) FINDINGS AND CONCLUSIONS
Because plaintiffs have satisfied all of the threshold Rule 23(a) requirements by a preponderance of the evidence, the Court now must conduct a “rigorous analysis” of the requirements of Rule 23(b)(3).
See In re Zum Pex Plumbing Prods. Liab. Litig.,
644 F.3d at 611 ;
Madison v. Chalmette Refining, L.L.C.,
637 F.3d 551, 554 (5th Cir.2011);
see also Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. at 2551. In examining whether plaintiffs have satisfied their burden under Rule 23(b)(3), the Court has resolved the factual disputes between the parties and their experts that are relevant to the requirements for class certification — even when such resolution requires considerations enmeshed in the factual and legal issues comprising the plaintiffs’ claim on the merits- — and the Court has applied a preponderance of the evidence standard of proof in doing so.
A. Predominance
Rule 23(b)(3) requires that the Court “find[] that the questions of law or fact common to class members predominate over any questions affecting only individual members!.]” Fed.R.Civ.P. 23(b)(3). As discussed,
see supra
at 21, in examining the predominance requirement under Rule 23(b)(3), a court’s rigorous analysis “ ‘begins ... with the elements of the underlying cause of action.’ ”
Messner v. Northshore Univ. HealthSystem,
669 F.3d at 815 (quoting
Erica P. John Fund, Inc. v. Halliburton, Co.,
131 S.Ct. at 2184). The Court must “scrutiniz[e] plaintiffs’ legal causes of action to determine whether they are suitable for resolution on a classwide basis.”
McCarthy v. Kleindienst,
741 F.2d 1406 , 1412 n. 6 (D.C.Cir.1984). The Court therefore examines “the elements of plaintiffs’ claim through the prism of Rule 23 to determine” whether plaintiffs have satisfied the predominance requirement.
In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 (quotations omitted). If proof of the essential elements of the claim requires individual treatment, then common questions do not predominate and class certification is “unsuitable.”
Id.
(quotations omitted).
In this ease, plaintiffs allege that defendants engaged in price fixing, in violation of Section 1 of the Sherman Act. Thus, to prevail on the merits of their claim at trial, plaintiffs will have to prove three elements: (1) a violation of the antitrust laws — here, Section 1 of the Sherman Act; (2) individual impact resulting from that violation; and (3) measurable damages.
See In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 . At the class certification stage, plaintiffs’ burden is different: plaintiffs must show by a preponderance of the evidence that the elements of their claim are
“capable of proof
at
*36
trial through evidence that is common to the class rather than individual to its members.”
Id.
at 311-12 (emphasis added).
1. Violation of Antitrust Law
Plaintiffs have alleged that defendants engaged in a horizontal price fixing conspiracy to coordinate their fuel surcharge programs in order to effect an overall supraeompetitive total price increase on their customers, in violation of Section 1 of the Sherman Act.
See
Am. Compl. ¶¶ 1-2. A horizontal price fixing conspiracy, as alleged here, is a
per se
violation of the Sherman Act.
See, e.g., Texaco Inc. v. Dagher,
547 U.S. 1, 5 , 126 S.Ct. 1276 , 164 L.Ed.2d 1 (2006);
NYNEX Corp. v. Discon, Inc.,
525 U.S. 128, 133-34 , 119 S.Ct. 493 , 142 L.Ed.2d 510 (1998);
Jacobs v. Tempur-Pedic Inti, Inc.,
626 F.3d 1327, 1334 (11th Cir.2010). And the parties agree that this element of plaintiffs’ claim is capable of proof at trial through evidence that is common to the class.
See
Class Mem. at 65-66;
see
Oct. 7 Tr. at 161 (defendants’ counsel, acknowledging that “whether there was or was not a conspiracy is in fact capable of common proof, so that’s really not at issue in the predominance analysis”). That is because plaintiffs’ allegations of price fixing indisputably “will focus on the actions of the defendants, and, as such, proof for these issues will not vary among class members.”
In re Vitamins Antitrust Litig.,
209 F.R.D. at 264 ;
see Meijer, Inc. v. Warner Chilcott Holdings Co. Ill,
246 F.R.D. at 308 (because alleged violation of the antitrust laws “relates solely to Defendants’ conduct ... proof for [this] issue will not vary among class members”) (quotations omitted) (alteration in original). The Court therefore finds by a preponderance of the evidence that the first element of plaintiffs’ claim is capable of proof at trial through evidence that is common to the class rather than individual to its members.
2. Impact
In this case, as in many antitrust cases, the second element of plaintiffs’ claim — individual impact resulting from the alleged conspiratorial conduct (also referred to by the parties as “injury”) — is the central issue.
See
Oct. 6 Tr. at 9; Defs.
WaV-Mart
Reply Brief at 1 (“The parties ... agree that the central question here is whether Plaintiffs have met their burden ... to show that common questions predominate over individual ones, which in turn requires that they proffer a viable classwide method for proving injury at trial.”);
see also In re Hydrogen Peroxide Antitrust Litig.,
552 F.3d at 311 .
In examining whether impact is capable of common proof; it is important to note at the outset that this element involves two distinct components: injury-in-fact; and antitrust injury.
See Bassett v. National Collegiate Athletic Ass’n,
528 F.3d 426, 434 (6th Cir.2008) (“[A] private antitrust plaintiff, in addition to having to show injury-in-fact and proximate cause, must allege, and eventually prove, antitrust injury.”) (quotations omitted);
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 106 ;
see also In re Currency Conversion Fee Antitrust Litig.,
264 F.R.D. at 114 ;
Mazanderan v. Independent Taxi Owners’ Ass’n, Inc.,
700 F.Supp. 588, 590 (D.D.C.1988) (discussing the “two-fold requirement of individual economic injury to [a] plaintiff that is grounded in the antitrust laws”). These two components pose “two distinct questions”: injury-in-fact presents the “familiar factual question whether the plaintiff has indeed suffered harm,” whereas antitrust injury presents “the legal question whether any such injury is the ‘injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.’”
Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc.,
502 F.3d at 106 (quoting
Brunswick Corp. v. Pueblo Bowlr-OMat, Inc.,
429 U.S. 477, 489 , 97 S.Ct. 690 , 50 L.Ed.2d 701 (1977)). Antitrust injury is injury to competition, not just injury to an individual.
Andrx Pharms., Inc. v. Biovail Corp. Inti,
256 F.3d 799, 812 (D.C.Cir.2001). And the reason an antitrust plaintiff is required to prove antitrust injury is to ensure that a plaintiff can recover “only if the loss stems from a competition
-reducing
aspect or effect of the defendant’s behavior.”
Atlantic Richfield Co. v. USA Petroleum Co.,
495 U.S. 328, 334 , 110 S.Ct. 1884 , 109 L.Ed.2d 333 (1990) (emphasis in original).
*37
1. Injury-in-fact.
The primary dispute in this case relates to the injury-in-fact component of the impact element. The parties vigorously dispute whether injury-in-fact can be established at trial with common evidence, and they have submitted expert reports by distinguished economists that reach diametrically opposed conclusions. Plaintiffs contend that they will prove injury-in-fact on a class-wide basis at trial “by showing that Defendants’ conspiracy caused the Class members to pay supra-eompetitive prices during the Class Period.” Class Mem. at 67. According to plaintiffs, the effect of defendants’ alleged conspiracy was to impose “on all Class members coordinated Fuel Surcharges that rose in lockstep and resulted in across-the-board prices increases.”
Id.
at 68.
Plaintiffs assert that they will show injury-in-fact “with public information, Defendants’ documents, and witness testimony” — -all of which, they contend, will be evidence that is common to the class. Class Mem. at 70. Specifically, plaintiffs assert that common evidence will show at trial that
• Defendants intended to use their coordinated Fuel Surcharge programs not as a means solely to recover fuel costs, but as a means to raise revenues and profits.
• Defendants[ ] intended their coordinated fuel surcharge programs to be applied across-the-board.
• Defendants each, and in coordination with each other, undertook during the Class Period to monitor success in achieving broad application o[f] the Fuel Surcharges.
• Defendants during the Class Period adopted policies precluding discounting to offset the Fuel Surcharges.
• Defendants recognized in internal documents that during the Class Period, the Fuel Surcharges generated revenues by raising prices paid by the Class far beyond Defendants’ actual fuel costs.
• During the Class Period, the Fuel Surcharges were responsible in large part for very large increases in Defendants’ revenues and profits.
Id.
(citations omitted).
Plaintiffs further contend that the analysis of their expert, Dr. Gordon Rausser, confirms that injury-in-fact can be established at trial with common evidence and economic analysis.
See
Class Mem. at 71.
11
Dr. Raus-ser explains that he has examined the rail freight industry and concludes that certain structural factors make it so that “had a conspiracy occurred it would have succeeded in subjecting the Class to a common” injury-in-fact. 2d Rausser Report at 80;
see
1st Rausser Report at 7-8. Furthermore, Dr. Rausser has developed two economic regression models and has analyzed 100 percent of defendants’ transaction data during the alleged conspiracy, 2d Rausser Report at 91-92, 96. Dr. Rausser’s regression analyses purportedly substantiate his theory of common proof, showing that
• [Defendants] did implement a common rate increase across the Class through their use of the fuel surcharge applied as a percentage of base rates.
• Common factors such as shipment weight, distance, route and commodity type, among others, predominate over individual factors in the determination of freight rates. These common factors can be measured using the Defendants’ transaction data and used in a common analysis to identify and quantity the harm experienced by the Class.
• Defendants’ transaction data reveals that there was no material discounting of base rates to offset the fuel surcharges that were applied to shipments made by
*38
the Class. As a result, Class members commonly experienced price increases from the Defendants’ actions irrespective of the commodity they were shipping. ...
• Class members paid significantly higher prices to Defendants for rail freight transportation during the Class Period than before and that these higher prices are not explainable by price determinants other than the conspiracy.
1st Rausser Report at 7-8. Thus, according to Dr. Rausser, “[t]here was a common impact of Defendants’ alleged conspiracy on the Plaintiffs and the Class which can be demonstrated through evidence and economic analysis common to the Class[J” 1st Rausser Report at 4.
Defendants disagree that injury-in-fact can be proven at trial with common evidence. As defendants frame the issues, in order to demonstrate that plaintiffs’ claims are suited for class treatment
Plaintiffs must prove ... that they have a method of providing a common answer to each of the core questions each class member would have to answer had it brought its own claim: (i)
Did i pay a fuel surcharge (or higher fuel surcharge) because of the alleged conspiracy?
and (ii)
Did payment of a fuel surcharge cause me to pay more for shipping than it would have otherwise paid?
Defs.
Wal-Mart
Brief at 2 (emphasis in original). Defendants contend that the facts in this case make clear that rate-based fuel surcharges were widely used before the start of the alleged conspiracy; that the use of fuel surcharges was growing; and that even Dr. Rausser concedes that some class members would have paid rate-based fuel surcharges absent the alleged conspiracy.
See id.
Given these proffered facts, among others, defendants conclude that neither plaintiffs nor their expert “has offered any way to use common evidence to show that, absent the alleged conspiracy, every shipper would have paid a lower fuel surcharge or none at all.”
Id.
According to defendants, plaintiffs therefore have failed to show that they have a common answer to the first question quoted above.
Id.
As for the second question quoted above, defendants contend that it, too, cannot be answered with common evidence. According to defendants, the facts show that “many shippers received contract concessions, including lower base rates than the railroads initially offered, in exchange for accepting a fuel surcharge[J” Defs.
Wal-Mart
Brief at 6. Because the alleged conspiracy was only directed at a portion of the total price of shipping, defendants say that any class member who obtained anything of value in exchange for accepting a fuel surcharge may not have suffered injury-in-fact.
See
Class Opp. at 41. And in view of the purported evidence that “some (but not all) shippers made trade-offs for fuel surcharges,”
id.,
defendants contend that individualized issues predominate because “it is necessary to examine the circumstances and negotiating history of each shipper to prove that it did not negotiate offsetting savings and therefore pay a higher all-in price for shipping as a result of its having agreed to a fuel surcharge.” Defs.
Wal-Mart
Brief at 2.
In support of their position that class certification is inappropriate in this case, defendants have submitted the expert report of Dr. Robert Willig.
12
As Dr. Willig explains, he was asked by defendants to address from an economic perspective “whether it is feasible for plaintiffs to demonstrate through common proof that members of the proposed class suffered economic injury”; “whether it is feasible to estimate each class member’s
*39
damages on a class-wide basis”; and “to evaluate the damage methodology proposed by Professor Rausser as well as the analyses that support his conclusions.” Willig Report ¶11.
As for the issue of injury-in-fact, Dr. Wil-lig’s overall conclusion is that assessing injury-in-fact “requires an in-depth individualized inquiry into the circumstances of the particular shipper.” Willig Report ¶ 15. In arriving at this conclusion, Dr. Willig makes six principal points:
• First, “[t]he fact that shippers paid FSCs [fuel surcharges] is not common evidence of class-wide impact or damages assessment.” Willig Report at 13.
• Second, “[t]he levels of the FSCs paid by shippers provide no common evidence of class-wide impact or damages assessment.”
Id.
at 14.
• Third, “[t]he processes by which FSCs were applied to shipper rates preclude common evidence of class-wide impact or damages assessment.”
Id.
at 16.
• Fourth, “[a]ll-in rates varied widely and contradict the possibility of common evidence showing class-wide impact.”
Id.
at 18.
• Fifth, “Professor Rausser’s attempts to show that common evidence can establish class-wide impact and assessment of damages fail to support his conclusion.”
Id.
at 22.
• Sixth, “[m]embers of the proposed class have conflicting economic interests.”
Id.
at 28.
2. Antitrust injury.
Although it was not initially apparent from defendants’ papers that they also dispute whether antitrust injury can be established at trial with common evidence,
see
Class Opp. at 50-56 (seemingly equating antitrust injury with injury-in-fact arguments);
see also
Oct. 7 Tr. at 172, defendants’ counsel stated at oral argument that defendants do argue that some class members — specifically, captive shippers — cannot suffer antitrust injury.
See
Oct. 7 Tr. at 171-73. As discussed, antitrust injury is “ ‘injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.’”
Cordes & Co. Fin. Servs., Inc. v. A. G. Edwards & Sons, Inc.,
502 F.3d at 106 (quoting
Brunswick Corp. v. Pueblo Bowlr-O-Mat, Inc.,
429 U.S. at 489 , 97 S.Ct. 690 ). As defendants see it, certain shippers in plaintiffs’ putative class are “captive shippers,” also referred to synonymously as “sole served” shippers. Oct. 6 Tr. at 30. Because of various factors, including geographic location, these shippers have “no option but to use a single railroad when it ships out of its place[.]” Oct. 7 Tr. at 172. Defendants contend that these captive shippers cannot as a matter of law suffer antitrust injury because they have “no reduction in competition”— having had no competition in the first place— “as a result of the alleged wrong.”
Id.
And defendants argue that identifying such captive shippers requires individualized inquiry.
Plaintiffs disagree. Plaintiffs contend that defendants themselves, as well as defendants’ expert, Dr. Willig, admit that captives shippers are subject to competitive pressures,
see
Oct. 7 Tr. at 304, and that Dr. Rausser’s analysis confirms what defendants themselves have admitted.
Id.
at 304-05.
The Court first addressees two preliminary legal issues regarding the impact element: the number of uninjured class members sufficient to preclude a finding of predominance, and the “presumption” of common impact. The Court then examines the parties’ and the experts’ arguments regarding whether antitrust injury and injury-in-faet are capable of proof at trial through evidence that is common to the class.
a. Uninjured Class Members
The first preliminary legal issue regarding impact involves a dispute between the parties over the number of uninjured class members sufficient to preclude a finding of predominance. Defendants contend that plaintiffs “must proffer a valid method for proving ... injury to all or virtually all class members on a simultaneous, class-wide basis[.]” Class Opp. at 26-27 (quotations omitted). Defendants acknowledge that “[s]ome cases have suggested a more relaxed requirement in which inability to show injury as to a few does not defeat class certification where the
*40
plaintiffs can show widespread injury to the class.”
Id.
at 27 n. 39 (quotations omitted);
see
Oct. 7 Tr. at 258 (defendants’ counsel, acknowledging that “the case law ... is mixed on the issue of whether every single class member must be injured or whether there’s some negligible number”);
see also Kottaras v. Whole Foods Mkh, Inc.,
281 F.R.D. at 22-24 (discussing cases addressing number of uninjured class members sufficient to preclude a finding of predominance). Defendants assert, however, that this “relaxed requirement” has not been adopted by the D.C. Circuit, and argue that, in any event, plaintiffs have failed to meet either standard in this case.
See
Class Opp. at 27; Oct. 7 Tr. at 258.
The Court concludes that defendants are incorrect about the legal standard for impact. “Class certification is not precluded simply because a class may include persons who have not been injured by the defendants’ conduct.”
Mims v. Stewart Title Guar. Co.,
590 F.3d 298, 308 (5th Cir.2009) (citing
Kohen v. Pacific Inv. Mgmt. Co.,
571 F.3d 672, 677 (7th Cir.2009)). As the Seventh Circuit stated in
Kohen v. Pacific Investment Management Co.:
[A] class will often include persons who have not been injured by the defendant’s conduct; indeed this is almost inevitable because at the outset of the case many of the members of the class may be unknown, or if they are known still th

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2662168. Public record. Not legal advice.