imageHave class actions — after a steady decline under the Roberts Court — begun a come-back?

I believe they have. And I offer here, and in the next post, three reasons they will continue to rebound.

The outsize influence of Justice Scalia

Justice Antonin Scalia disliked class actions. He advocated putting a spotlight on class cases and then wrote opinions that made class cases harder to certify and more difficult to win. More than any other jurist, he reduced the effectiveness of Rule 23 as a means to deter and remedy wrongs that hurt large numbers of people but didn’t justify an individual lawsuit. He even questioned their legitimacy.

Justice Scalia’s focus on class actions and his ability to deliver majorities opposing them led to existential worries. The ABA Section of Antitrust Law devoted its Spring 2016 issue of Antitrust to the question of “Class Actions on the Precipice?” Verbal strutting by forces opposing class actions prevailed.*

But with Justice Scalia’s death on February 13, 2016, the tide at last turned. And it did so quickly.

The settlement of a large price-fixing class action provided the first evidence of receding water. On February 26, Dow Chemical surrendered hope that the Court would review and then toss a $1.2 billion verdict and judgment. Dow agreed to pay the class $835 million t0 settle.

Another blow fell on March 22. The Court, by a 6-2 margin, upheld the use of “statistical evidence, or so-called representative evidence,” to prove “classwide liability” for overtime pay. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1046 (2016).

The dissenters cited Justice Scalia’s 5-4 majority opinion in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), in claiming that the Court had grievously erred by “redefining the predominance standard” for class certification under Rule 23(b)(3).

The skeptics of class actions have lost their strongest judicial ally. The disappearance of his outsize influence as a rallying point and the absence of him as a leader weaken the class skeptics’ cause. They also increase the likelihood of a class action rebound.

The Seventh Circuit surge

One court of appeals has steadfastly defended class actions against those who would curtail use of the class action mechanism. The Seventh Circuit’s previously defiant stance may swiftly become the norm.

A decision on August 4, 2016, shows the way forward.

Writing for a unanimous panel, Chief Judge Diane Wood dispatched a series of defense arguments that have given other courts of appeals more trouble.

In Kleen Products LLC v. Int’l Paper Co., No. 15-2385 (7th Cir. Aug. 4, 2016), buyers of “containerboard” accused  firms that held 74 percent of the market of conspiring to raise prices. The scheme cut manufacturing capacity, limited inventory, and pushed up the “Pulp & Paper Week” index that “is widely used within the industry as a benchmark.” Id., slip op. at 6.

The district court granted class certification over vigorous objections . It rejected the containerboard makers’ arguments that class plaintiffs hadn’t carried their burden of meeting the “predominance” and “superiority” requirements of Rule 2(b)(3). The Seventh Circuit affirmed the district court in all respects. I will highlight a few of them.

Common impact of conspiracy on class

Chief Judge Wood does such a stellar job with the all-important common impact issue that I will not try to improve on them.

In order to secure class certification, the Purchasers had to demonstrate (not merely allege) that there is proof common to all class members, and that this proof would show that they suffered “injuries that reflect the anticompetitive effect of either the violation or the anticompetitive acts made possible by the violation.” James Cape & Sons Co. v. PCC Const. Co., 453 F.3d 396, 399 (7th Cir. 2006); see Brunswick Corp. v. Pueblo Bowl-O- Mat, Inc., 429 U.S. 477 (1977). Purchasers tendered extensive evidence that, if believed, would be enough to prove the existence of the alleged con- spiracy. Not surprisingly, it is largely circumstantial. But they offered voluminous written materials of various types, which in the aggregate pointed to the existence of both agreement and actions to violate the antitrust laws. Indeed, Defendants do not contest that the existence of the conspiracy could be (perhaps had to be) proven by evidence common to the class.

The more difficult question (though not too difficult in the end) is whether the common evidence could show the fact of injury on a classwide basis. See Messner, 669 F.3d at 819 (“The ability to use such common evidence and common methodology to prove a class’s claims is sufficient to support a finding of predominance on the issue of antitrust impact for certification under Rule 23(b)(3).”). At base, Defendants argue that it is not enough for Purchasers to prove aggregate injury and one aggregate overcharge, without allocating how much of that overcharge was paid by each individual class member. They urge that Purchasers have the burden of showing that every class member must prove at least some impact from the alleged violation. For that proposition, they rely on In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 311 (3d Cir. 2008), and In re Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244, 252 (D.C. Cir. 2013). While we have no quarrel with the proposition that each and every class member would need to make such a showing in order ultimately to recover, we have not insisted on this level of proof at the class certification stage. To the contrary, we said in Suchanek v. Sturm Foods, Inc., 764 F.3d 750 (7th Cir. 2014), that “[i]f the [district] court thought that no class can be certified until proof exists that every member has been harmed, it was wrong.” Id. at 757; see also Parko v. Shell Oil Co., 739 F.3d 1083, 1084–85 (7th Cir. 2014); McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 491 (7th Cir. 2012). There is no evidence to make us think that the class defined by the district court either excludes too many purchasers or contains troublesome internal conflicts, either of which would indicate it should be rejected. We therefore move on to the adequacy of the Purchasers’ showing that the conspiracy had an effect on the prices they paid.

The parties have jousted over the need for some kind of “but-for” analysis, by which Defendants mean an expert con- struction of a hypothetical market free of any anticompetitive restraint, to which the actual market can be compared. See Blades v. Monsanto Co., 400 F.3d 562, 569 (8th Cir. 2005). That might be one way in which a plaintiff could satisfy its burden, but we think that the formulation is too narrow. What is essential is whether the class can point to common proof that will establish antitrust injury (in the form of cartel pricing here) on a classwide basis. Like the district court, we are satisfied that Purchasers have done so.

The Purchasers built up their case with several types of evidence. First, expert Harris’s report showed that the structure of the containerboard market was conducive to successful collusion. He pointed to the concentration of manufacturers; the vertical integration of the market; the capital-intensive manufacturing process (which affected the pace and likelihood of new entry); weak competition from imported containerboard; no good substitutes for the product; a low elasticity of demand; and a standardized, commodity product. These are all well accepted characteristics of a market that is subject to cartelization. See, e.g., In re Text Messaging Antitrust Litig., 782 F.3d 867, 872 (7th Cir. 2015); Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 859–60 (7th Cir. 2012) (en banc); In re High Fructose Corn Syrup Litig., 295 F.3d 651, 657 (7th Cir. 2002); Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 710–11 (7th Cir. 1984).

I have run out of electrons for now and will finish up in the next post.


* The cover note for the issue asserted that “consumers . . . will pay for the litigation process and the settlement recoveries in the form of higher prices”, suggested “the substitution of restitution in place of class actions”, and asked “whether the costs are worth the benefit”.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.