321 F.R.D. 64
S.D.N.Y.2017Background
- Plaintiffs allege a long-running price‑fixing conspiracy among major record labels to keep wholesale and retail prices of digital music artificially high (via joint ventures, MFN clauses, and uniform DRM practices), harming indirect purchasers.
- Defendants include major labels (Sony BMG, UMG, WMG, Capitol/EMI, Virgin); plaintiffs seek nationwide injunctive relief and nine state-based damages classes for indirect purchasers.
- Extensive expert evidence and Daubert challenges were filed: key experts include Plaintiffs’ economist Roger Noll and Defendants’ economist Janusz Ordover, and a digital‑forensics expert Aaron Read whose opinions concern metadata and proof of purchase.
- Court resolved multiple Daubert motions: Noll’s opinion admissible; Ordover’s opinions largely admissible except for a supplemental declaration (excluded) and limited portions on price variability; Read’s opinions admissible.
- The court denied class certification under Rule 23(b)(2) (no showing of threat of future harm; injunction would not benefit all class members) and under Rule 23(b)(3) (failed predominance/superiority: individualized issues—price variability in the but‑for world, pass‑through variability across DSPs, and unclean‑hands offsets from widespread piracy—would overwhelm common issues).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of expert testimony (Noll, Ordover, Read) | Noll provides common method for liability and damages; Ordover is proper rebuttal; Read shows metadata lacks price field and necessity of track‑by‑track analysis | Defendants said Noll shifted to a margin‑fixing theory; attacked methodologies; argued Ordover’s supplemental declaration was timely; challenged Read as non‑expert | Noll admissible; Ordover admissible in part but supplemental declaration excluded; Read admissible in full |
| Rule 23(b)(2) certification for injunctive relief | Injunction to enjoin collusive practices would benefit class as a whole | No evidence of ongoing or future anticompetitive conduct; injunction could harm some class members because in the but‑for world some prices would be higher | Denied: Plaintiffs did not show threat of future harm or that injunctive relief would benefit all class members |
| Rule 23(b)(3) certification for damages (predominance) | Common proof (Noll model comparing CD benchmark to downloads; uniform pass‑through) can establish injury and damages class‑wide | But‑for world likely had variable pricing; pass‑through not uniform across DSPs (Apple vs others); widespread piracy creates individualized unclean‑hands offsets | Denied: individualized inquiries (price tiers, DSP‑specific pass‑through, piracy offsets) would predominate and make class action unmanageable |
| Ascertainability and manageability | Class members identifiable via retailer records, purchasers’ proofs, and DSP transaction data; state laws harmonize with federal antitrust law | Many proposed reps lacked early proofs; no guarantee DSPs retain long‑term transaction records; significant state‑law variations and choice‑of‑law issues | Ascertainability narrowly satisfied via representative transaction records, but manageability problems (state law variances; individualized defenses) contributed to denial of Rule 23(b)(3) certification |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial courts act as gatekeepers to ensure expert testimony is reliable and relevant)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert gatekeeping applies to all expert testimony)
- General Elec. Co. v. Joiner, 522 U.S. 136 (1997) (court may exclude expert conclusions unsupported by the record)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (plaintiffs’ damages model must be consistent with their liability theory for class certification)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (classwide issues must generate common answers that resolve central claims)
- In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) (district courts must make definitive, evidence‑based findings on Rule 23 requirements)
- Amorgianos v. Nat’l R.R. Passenger Corp., 303 F.3d 256 (2d Cir. 2002) (rigorous examination of expert methodology required; only serious flaws justify exclusion)
- Gary Plastic Packaging Corp. v. Merrill Lynch, 903 F.2d 176 (2d Cir. 1990) (unique defenses to class representatives can defeat typicality)