Dial Corp. v. News Corp.
2015 U.S. Dist. LEXIS 79686
S.D.N.Y.2015Background
- Plaintiffs are consumer packaged goods companies (CPGs) who bought in-store promotions (ISPs) and FSIs from News Corporation; they allege News Corp. monopolized the ISP market and overcharged customers.
- News Corp. operates a national ISP network (~52,500 stores) and acquired competitors and distribution networks, resulting in an ~80% market share. Plaintiffs allege exclusionary conduct (exclusive long-term retailer contracts, exclusive CPG tactics, cash guarantees, staggering contract terms, and other acts).
- Plaintiffs seek certification of a nationwide class of non-retailer CPGs that directly purchased ISPs from News Corp. on or after April 5, 2008, excluding purchasers bound by mandatory arbitration.
- Plaintiffs proffered expert economic models (Dr. MacKie-Mason) using regression and a benchmark/yardstick approach to show classwide impact and measure damages; News Corp. offered rebuttal (Dr. Hausman) arguing price variation is largely customer-specific and challenging the models.
- The court evaluated Rule 23(a) factors (numerosity, commonality, typicality, adequacy) and Rule 23(b)(3) predominance and superiority, applying Comcast and related authority on classwide damages proof.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 23(a) factors are met | Class meets numerosity, commonality, typicality, adequacy; representatives purchased ISPs during the period | Representatives differ in purchase patterns and geography, so not representative | Court: Rule 23(a) satisfied — differences do not defeat typicality or adequacy |
| Whether liability elements (market, monopoly, exclusion) are provable by common evidence | Liability focuses on News Corp.’s conduct toward retailers/competitors and is amenable to classwide proof | Argues many individual issues implicate class predominance | Court: Liability issues are common and amenable to classwide proof |
| Whether antitrust impact and damages are provable on a classwide basis under Comcast | MacKie-Mason’s regression and benchmark model show common drivers of price and a common method to compute overcharge and damages | Hausman: omitted variables and customer-specific factors dominate price variation; model not tethered to single theory as in Comcast | Court: Plaintiffs’ methodology is sufficiently workable; Comcast does not preclude certification here because plaintiffs’ theories are cumulative and can be proven with common evidence |
| Whether Rule 23(b)(3) predominance and superiority are met given individualized damages and possible benefits to some class members | Predominant common issues (liability, market definition); individual damages manageable; class action superior given cost/efficiency | Network effects, bundling, and transactional benefits may mean some class members uninjured, undermining predominance | Court: Predominance and superiority satisfied; individual damages issues do not defeat certification and can be managed (liability-focused class or subclasses possible) |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (class-certification "rigorous analysis" and commonality standard)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (requires damages model to be tied to the theory of classwide injury)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (class predominance standard and relation between Rule 23(a) and 23(b)(3))
- Roach v. T.L. Cannon Corp., 778 F.3d 401 (2d Cir. 2015) (Comcast read narrowly; classwide damages model not always required at certification)
- In re Am. Int’l Group, Inc. Sec. Litig., 689 F.3d 229 (2d Cir. 2012) (district court’s duty to conduct rigorous review at certification)
- Bazemore v. Friday, 478 U.S. 385 (failure to include variables affects probativeness, not necessarily admissibility, of regression evidence)
- Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013) (qualitative predominance assessment; subclasses and management tools)