Distribution, Competition, and Antitrust / IP Law

TFT-LCD Antitrust Court Addresses Quantum of Proof for Class Impact and Refuses to Exclude Plaintiffs’ Economists

In re: TFT-LCD (Flat Panel) Antitrust Litigation, No. M 07-1827 SI (Feb. 21, 2012) (Illston, J.)

Judge Illston refused to exclude indirect purchaser plaintiffs’ economics experts. In doing so, the Court addressed the necessary quantum of proof for class impact in an indirect purchaser case.

The indirect purchaser plaintiffs indirectly purchased TFT-LCD panels made by the defendants. They allege price-fixing, and seek injunctive relief under federal law and damages under state antitrust law. Plaintiffs retained two experts, Drs. Janet Netz and William Comanor, who concluded that defendants’ alleged cartel increased prices to direct purchasers (by around 12%), who in turn passed on overcharges to indirect purchasers, resulting in some $3 billion in alleged damages.

Defendants argued that the case was not amenable to class treatment, because plaintiffs could not show “with certainty” that class members were impacted. However, the Court rejected this argument. “[P]laintiffs need not be able to articulate the precise degree to which every individual class member was injured; it suffices to show that it was more likely than not that classwide impact occurred.” According to the Court, the nature of the industry rendered defendants’ proposed standard inappropriately strict; plaintiffs asserted that TFT-LCD panels are fungible commodities. “It is therefore unnecessary for plaintiffs to provide evidence of panel-by-panel impact. Rather, plaintiffs may resort to generalized methods of proof.”

In short, the Court held that “[p]laintiffs need not identify the overcharge on each and every panel sold to direct purchasers, and they need not trace that specific overcharge through the manufacturing and retail chains to the ultimate purchaser. The fact that plaintiffs lack perfect proof does not mean that plaintiffs lack any proof at all.”

The Court then addressed defendants’ related argument that the experts’ economic regression analyses, while relevant to damages, cannot be used to establish either impact to direct purchasers or pass-through to indirect purchasers. Because the Court had determined that plaintiffs need not establish, to a certainty, class members’ injuries on an LCD panel-by-panel basis, the Court rejected this argument – at least in its categorical form. “Even if regression models are not enough, standing alone, to establish classwide impact, they may nevertheless be relevant to the issue. A large average overcharge, for example, might make it more likely that every direct purchaser was overcharged to some degree.” The Court declined to preclude the experts from testifying that their models establish impact, but agreed to let defendants renew their objections when the experts’ specific testimony is before the Court.

The Court then turned to, and rejected, defendants’ various specific arguments about the experts’ regression analyses, finding that they did not render the testimony inadmissible under the Daubert standard.

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