In an antitrust class action lawsuit, multiple theories of liability often create separable anticompetitive effects that, when combined, can result in aggregated damages, but a plaintiff’s model must measure damages attributable only to the liability theory (and resulting anticompetitive effects) accepted for class action treatment. Thus, an antitrust lawsuit involving money damages cannot be certified to proceed as a class action unless the damages sought result from the alleged class-wide injury. This was the conclusion reached by the U.S. Supreme Court in its 2013 decision, Comcast Corp. v. Behrend.
The Sixth Circuit Court of Appeals recently had occasion to apply Comcast in considering a petition for interlocutory appeal under Rule 23(f) involving a class of nurses that sued eight Detroit-area hospitals in antitrust for conspiring to suppress wages based on two separate theories of liability:
- a “per se theory” that the hospitals had a wage-fixing agreement; and
- a “rule of reason theory” that compensation information shared between the hospitals resulted in softened competition.
Rather than provide separate calculations for each theory of liability, the plaintiffs’ damages expert provided a conservative “but for” baseline calculation that could apply if the class succeeded in proving either of the alleged theories.
After seven of the eight hospitals settled, the remaining defendant, Detroit Medical Center (DMC), prevailed on summary judgment with respect to the per se wage-fixing theory, but was unable to dissuade the district court from certifying the class based on the rule of reason theory. The district court reconsidered its certification ruling in light of the recently-decided Comcast, concluding that the plaintiffs’ damages calculation did not reflect an aggregation of distinct harms because the plaintiffs’ evidence showed that the two theories of liability were mutually exclusive and the damages calculation could therefore equally represent either theory of recovery. The generic damages model was not problematic under Comcast, according to the district court, because there was adequate evidence of causation linking the rule of reason antitrust theory to plaintiff’s injury and damages.
DMC challenged the district court’s application of Comcast by filing a Rule 23(f) petition for permission to immediately appeal the district court’s certification order. In considering such petitions, the Sixth Circuit gives the district court’s decision to certify substantial deference and will only reverse on a strong showing that the district court’s decision was a clear abuse of discretion. Among other factors, the Sixth Circuit considers:
- whether the petitioner is likely to succeed on appeal under the deferential abuse-of-discretion standard;
- whether the cost of continuing the litigation for either party will hamper subsequent review;
- whether the case presents a novel or unsettled question of law; and
- the procedural posture of the case.
Applying this standard, the Sixth Circuit quickly disposed of DMC’s petition, finding that none of the factors weighed in favor of granting DMC an immediate appeal. In particular, the court noted that there was little likelihood that DMC would succeed in making the requisite strong showing of an abuse of discretion because the district court’s reasoning was correct. The generic damages calculation could be applied to either of plaintiffs’ mutually exclusive theories, so damages were not improperly aggregated, and the concern implicated by Comcast–aggregated damages attributable to rejected liability theories–was not present.
In re: VHS of Michigan, Inc., No. 14-0107 (6th Cir. Feb. 3, 2015).
