OPINION
This matter is opened before the Court upon the motion of plaintiffs for certification of this action as a class action pursuant to Federal Rule of Civil Procedure 23. Defendants have filed a related motion to strike the testimony of plaintiffs’ expert Dr. John C. Beyer pursuant to Federal Rule of Evidence 702, as interpreted by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc.,
DISCUSSION
Familiarity with the basic facts in this case is assumed. They are set forth in this Court’s opinion reported at
Federal Rule of Civil Procedure 23 sets forth a two-part scheme for class certification. The first part, subsection (a), states the threshold requirements for all class actions. The second, subsection (b), sets forth the three varieties of class actions contemplated by the Rule and the special requirements peculiar to each in addition to those of subsection (a). The content of each of the criterion is illuminated by substantial case law.
Rule 23(a) states that a class action may be certified
only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
These requirements are known familiarly as “numerosity,” “commonality,” “typicality,” and adequacy of representation.
Plaintiffs invoke two of the threе alternatives of subsection (b), paragraphs (b)(2) and (b)(3). They argue that certification under Rule 23(b)(2) is appropriate, because “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final in-junctive relief or corresponding declaratory relief necessary with respect to the class as a whole[.]” Plaintiffs also contend that the Court should certify the class under Rule 23(b)(3), finding that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” The Rule gives a non-exhaustive list of factors that would weigh in favor of such findings and certification under paragraph (b)(3).
The law places the burden of establishing each of these elements on the party seeking class certification. See Amchem Prods., Inc. v. Windsor,
The Third Circuit has held that the “interests of justice require that in a doubtful case ... any error, if there is to be one, should be committed in favor of allowing a class action.” Eisenberg v. Gagnon,
Indeed, it has been held that price fixing cases may be well-suited for class certification, in the right circumstances. Alabama v. Blue Bird Body Co.,
1. The 23(a) Requirements
The numerosity requirement is intended to limit the class action device to those cases in which the number of parties makes traditional joinder of parties unworkable. By modern, complex litigation standards the minimum number of parties is not large; in Eisenberg the Court of Appeals approved a class of 90 plaintiffs.
The Rule also requires that there be “questions of law or fact common to the class.” Commonality does not require an identity of claims or facts among class members; instead, “[t]he commonality requirement will be satisfied if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class.” Johnston v. HBO Film Management, Inc.,
Under Rule 23(a), the claims of the representative parties must be typical of the claims of the class. “The typicality requirement is said to limit the class claims to those fairly encompassed by the named plaintiffs claims.” General Tel. Co. of the Northwest, Inc. v. EEOC,
Defendants contend that the automobile purchase transaction is too complex for any group of plaintiffs to be representative of the claims of a class. This argument merely illustrates that typicality, like commonality, overlaps with the analysis of whether common issues predominate under Rule 23(b)(3). See DeLoach,
Typicality does not require that the claims of the named plaintiffs be identical to those of the proposed class members. In re Prudential,
It follows from the foregoing that the typicality requirement is satisfied in this case. The central claim for the named plaintiffs is that they were harmed by an illegal price-fixing conspiracy. This will be the same for all of the class members. The amount of damages due the named plaintiffs should their allegations prevail will not be disproportionate to that of the other class members. In short, the named plaintiffs are typical of the class. Potential differences in the individual class members’ transactions will be discussed elsewhere in this opinion.
The Court will not long delay over whether the class representatives and their counsel will adequately represеnt the interests of the class. Plaintiffs’ counsel’s conduct of this case to date has led to a sophisticated and professional exposition of the issues to the Court. Counsel has cooperated with the Court’s case management directives. No conflict of interest has been alleged that would impede the effectiveness of counsel in representing the class. The Court can ask no more at this stage of the litigation.
2. Certification under 23(b)(2)
Under Rule 23(b)(2), plaintiffs argue that injunctive or declaratory relief is appropriate on a class basis, because defendants have “acted or refused to act on grounds generally applicable to the class.” Certification under 23(b)(2) is not appropriate where
The Court does not believe that the relief sought in this matter is appropriate for certification under 23(b)(2). Plaintiffs seek compensation for a past wrong allegedly perpetrated when they bought their Mercedes-Benz automobiles. The complaint seeks an injunction against continuing the conspiracy, but there is nothing to suggest that class members will buy more automobiles from the defendants in the future. Thus any prospective harm that an injunction might prevent is speculative.
Moreover, the prayer for damages in this case is not incidental or ancillary to some morе central equitable remedy sought by plaintiffs. On the contrary, this case focuses squarely on a claim for compensatory money damages. See In re School Asbestos Litig.,
3. Certification under 23(b)(3)
a. Predominance of Common Issues
Rule 23(b)(3) requires two elements. Legal and factual questions common to the class must predominate over questions affecting only individual class members and the class action must be superior to other available methods of adjudicating the controversy. The Rule sets forth a non-exhaustive list of factors to be weighed:
(A) the interest of the members of the class in individually controlling the proseсution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
Fed.R.Civ.P. 23(b)(3).
The issue of predominance of common issues is the most hotly contested on this motion. Predominance requires more than that common issues exist. Predominance requires that the common issues be both numerically and qualitatively substantial in relation to the issues peculiar to individual class members. Cf. Amchem,
The mere existence of individual issues will not of itself defeat class certification. Weisfeld v. Sun Chem. Corp.,
The antitrust violation would be established in this case by proof of the existence and scope of the alleged price-fixing conspiracy. As noted in the Flat Glass case, common issues predominate when the focus is on the defendants’ conduct and not on the conduct of the individual class members.
The Court identified fraudulent concealment in its prior opinion as a possible issue in this case. While class members’ individual actions may be relevant, this issue too depends primarily on defendants’ actions. Id. at 487-88. In fact, the courts.have typically held that common issues predominate where a proposed class has alleged fraudulent concealment. Linerboard,
“[T]he issue of liability in an antitrust case includes not only the question of violation, but also the question of fact of injury, or impact.” Blue Bird Body Co.,
Here defendants argue that predominance on the issue of impact is impossible given the relationship between their cars and the luxury car market in general and because of the nature of the automobile purchase transaction. Defendants contend that, if the relevant market were properly defined to include all luxury cars, Mercedes-Benz dealers would lack sufficient market power to affect prices in that market, and thus antitrust impact would bе impossible. Defendants dispute the testimony of plaintiffs’ expert Dr. Beyer that Mercedes-Benz automobiles are differentiated products from other luxury cars, and they contend that market power of the Mercedes-Benz dealers must be evaluated over all luxury car sales.
According to defendants, the idiosyncraeies of each transaction also preclude the possibility that common issues will predominate on the element of impact. The purchase prices of some, probably most, cars is negotiated individually between the customer with the dealer. Each customer will vary in her or his ability to get a good price. Some will not negotiate at all, but act simply as a “price taker” paying either the manufacturer’s suggestеd retail price (“MSRP”) or whatever other price the dealer demands.
The import of this line of argument is that the Court will have to sort out the attributes of each individual transaction, including each claimant’s negotiating skill, financing, options
Plаintiffs contend that defendants’ lack-of-market power argument is merely an attempt to reintroduce an issue defendants lost when the Court ruled that the alleged conspiracy was a per se violation of the antitrust laws for which no showing of market power was required. In re Mercedes-Benz AntiTrust Litig.,
The Court will concede for the sake of argument that some eases involving an alleged per se antitrust violation might still require a showing of market рower to establish the antitrust impact element. The Court will leave for academic discussion the tension between the two principles. The Court doubts that this is such a case, however.
The Third Circuit recently revisited this area in In re Linerboard Antitrust Litig.,
If, in this case, a nationwide conspiracy is proven, the result of which was to increase prices to a class of plaintiffs beyond the prices which would obtain in a competitive regime, an individual plaintiff could prove fact of damage simply by proving that the free market prices would be lower than the prices paid and that he made some purchases at the higher price. If the price structure in the industry is such that nationwide the eonspiratorially affected prices at the wholesale level fluctuated within a range which, though different in different regions, was higher in all regions than the range which would have existed in all regions under competitive conditions, it would be clear that all members of the class suffered some damage, notwithstanding that there would be variations among all dealers as to the extent of their dam-age____ Under these circumstances proof on a common basis would be appropriate.
This portion of the Bogosian opinion can be read either of two ways. It can, as the language of the Linerboard opinion implies, simply establish a “concept of presumed impact.”
Alternatively, the “Bogosian short-cut” may be applied in the spirit of that case’s admonition that common proof of damage must “depend on the circumstances of the ease.” There, as the Court of Appeals observed in the passage quoted above, the allegations involved a “nationwide conspiracy.” Likewise, in Linerboard, the manufacturers’ conspiracy to reduce supply apparently
So it is here. That defendants conspired and raised their prices is the predicate antitrust activity, and must be assumed before the Court can even consider the question of impact. Every member of the proposed class bought a Mercedes-Benz from the alleged conspirators. That a prospective customer could have bought a Lexis automobile or a Mercedes-Benz from a non-participating Internet dealer does not matter. They did not — they bought a Mercedes-Benz from one of the defendants.
It therefore does not matter for the impact inquiry whether the defendants had sufficient market power to influence the prices of all luxury cars. The conspiracy influenced in an anti-competitive way the price of the automobiles in the limited universe of the Mercedes-Benz New York region. All of the class members are within that universe. As in Linerboard and Bogosian, the logic of the circumstances leads to no other conclusion but that the anti-competitive activity had an impact on all of the class members.
The Court pauses to note its disagreement with cases cited by defendants, such as In re Electric Weld Steel Tubing Antitrust Litig.,
Plaintiffs, however, eschew reliance on any short-cuts or presumptions of impact, and claim that the opinions of Dr. Beyer establish that common proofs will be available for the fact of injury. Dr. Beyer has opined that defendants were homogeneous, selling mass-produced luxury automobiles and providing essentially inter-changeable services. Beyer Rpt. H15. Because of the lack of inter-dealer differentiation, in the absence of a conspiracy customers would avoid the dealer that attempted to raise its prices in favor of a lower priced Mercedes-Benz dealer. The conspiracy permitted all of the dealers to raise priсes by eliminating the risk that customers would be able to avoid the non-competitive price, thus working an antitrust injury on the entire class. Beyer Rpt. 11119, 26. Thus, prices were raised for all New York-region Mercedes-Benz customers. Variations in the negotiating skill of the purchaser would not eliminate the injury; the hard bargainer might have gained a good price, but would have done better yet in the absence of the conspiracy. Beyer Rpt. 1130.
Dr. Beyer tracked both prices and dealer gross profits and opines that both figures remain within a small range for the seven dealers he sampled. He explains that this fact means that inter-dealer coordination of pricing would therefore affect all Mercedes-Benz purchasers within the class period. From this, Dr. Beyer сlaims that using either a benchmark formula or multiple regression analysis could establish a reliable, class-wide measure of damages, and that other variables such as the cost of different equipment options and model differences could be controlled for. Beyer Rpt. H25, 32-41. It is worth noting that Dr. Beyer is the same expert who appeared in the Linerboard case, and that the Court of Appeals approved of his use of both the benchmark and multiple regression methods of analysis.
Defendants’ arguments miss the mark in part because they are directed to supposed difficulties in quantifying the amount of the claimants’ individual damages, as opposed to the core issue of the fact of antitrust injury. There is ample authority that the need for individualized damages calculations should not automatically preclude class certification. In re Industrial Diamonds Antitrust Litigation,
Of course, this presupposes that common issues predominate on liability. Bogosian,
Defendants use much of their briefs to mount an attack on the merits of plaintiffs’ expert’s opinion. They repeat this attack in what is styled a motion to strike the testimony of Dr. Beyer under Federal Rule of Evidence 702. Some of their criticisms have more substantive bite than others, which simply amount to a disagreement with Dr. Beyer’s conclusions. The fundamental flaw in the defendants’ approach, however, is to misapprehend the precise issue to be decided on this motion, and thus to mis-characterize plaintiffs’ burden. “ ‘In determining the propriety of a class aсtion, the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.’ ” Eisen v. Carlisle and Jacque-lin,
The Court is not to conduct a preliminary inquiry into the merits of plaintiffs case. Id. Consequently, Dr. Beyer need not establish now that there is class-wide antitrust impact. In re Cardizem CD Antitrust Litig.,
That is not to say that the Court would grant class certification on fanciful or improbable suppositions on what the common evidence might be. That is clearly not the situation before the Court, however. On fun-gibility, Dr. Beyer opined in effect that a Mercedes-Benz automobile sold by one dealer is very like a Mercedes-Benz automobile sold by another, such that antitrust impact would be felt by all who purchased from the alleged conspirators as a class. This intuitively obvious proposition is bolstered by the fact that the automobiles are advertised on a national basis without any reference to a particular dealer. Plaintiffs point out that Dr. Beyer’s opinion that the dealers are homogenous is supported by the fact that each has contractual obligations to provide the same services. This Court is not the first to recognize that common proof of impact is possible in the automobile market “notorious for haggling and negotiations in purchasing.” Rosack v. Volvo of Am. Corp., 131 Cal.App.3d
Defendants’ objection that Dr. Beyer’s report did not delve into such issues as cross-elasticity of demand, supplier perception and consumer preference in determining product fungibility does not undermine the value of Dr. Beyer’s opinion at this procedural stage of the case. If plaintiffs feel it necessary, they will no doubt present theories under these headings at trial, and defendants will remain free to attack them on those grounds. Defendants also argue that dealers are not homogeneous, because they have different reputations and customer goodwill based upon such intangibles as friendliness and convenience to the customer’s residence. Opp. Brf. at 18. Again, this point attempts to substantively counter the ultimate merits of the plaintiffs’ ease, it does not rebut plaintiffs’ showing at this point in the litigation that the common evidence they intend to adduce may show antitrust impact on a class-wide basis.
Defendants also complain that Dr. Beyer reviewed the details of far too few transactions to provide a statistically reliable basis for his conclusions. The Court is aware that there has been controversy over production of the so-called “deal jackets.” These are files in which are preserved the records of each automobile purchase, files which were maintained or supposed to have been maintained by the individual dealers. The production of these deal jackets has been the subject of rulings by the Special Master appointed by this Court. Defendants have requested permission to file a surreply directed to a disputed interpretation of the history of the deal jacket controversy.
The Court will not еntertain the proposed surreply nor take a stand on the issue ruled upon by the Special Master. For the purposes of this motion, the Court finds that plaintiffs and Dr. Beyer have sustained their burden. Dr. Beyer represents that he and his staff reviewed “over a thousand” of the deal jackets. Beyer Rpt. 1124. This may have been a small, even a statistically meaningless cross-section of the total universe of documents, as defendants suggest. From the small number of deal jackets Dr. Beyer reviewed, he may not have been able to reliably opine on the average class-member’s transaction. But that was not his task. He has established a method by which he or another expert might be able to derive an analytical model to determine the existence of clаss-wide impact. That is all that is required.
b. Superiority of class-action adjudication
The Court is satisfied that a class action is the superior method of adjudication for the class members’ claims. The factors listed in the Rule either favor certification or do not decisively disfavor it. Acknowledging the inter-relation of these factors and the considerations already discussed and taking into account other issues not listed in the Rule, the Court finds that this last requirement of Rule 23 is fulfilled.
In determining whether a class-action is a superior method of adjudication, Rule 23 first instructs the Court to consider the potential interest of class members in individually prosecuting their claims. The high price of Mercedes-Benz automobiles notwithstanding, the evidence supports a preliminary presumption that an alleged illegal overcharge will range from a few hundred to a few thousand dollars at most. The Court finds that the relatively small amount at stake for each claimant vitiates any argument that each has an interest in controlling the prosecution of the case. Crawford v. Equifax Payment Servs., Inc.,
Defendants warn that the difficulty of managing the litigation, the last of the Rule 23(b)(3) factors, will prove the undoing of this class action. They emphasize the size of the proposed class and posit the need for a jury determination to calculate each claimant’s damages. The discussion thus far will have alerted the reader to the fact that, while common issues may predominate, individual ones exist as well, particularly with respect to damages.
The courts have learned much since Wind-ham v. American Brands, Inc.,
It may be that individual damages calculations may be more complex than for cases in which the underlying transaction has fewer variables. If so, there are a number of devices that may be used to avoid the threat of “over a hundred thousand ‘mini trials’ ” surmised by defendants. Variables such as optional equipment packages and financing incentives may be accounted for by damages formulae which allow for these factors to determine the anti-competitive overcharge for the particular claimant. The Special Master may be pressed into service, with a final damage report to be confirmed by a jury. Another avenue may be available if this case is amenable to proof of an aggregate judgment of liability, which, it might be argued, would leave allocation between class members as an internal class issue to which defendants would have no right to insist on a jury. See generally 1 Newberg & Conte, Newberg on Class Actions, supra, § 4.26 at 4-99. Without committing now to any one solution, it is apparent that many exist that may prove both efficient and protective of defendants’ jury rights.
Conversely, the Court will remain sensitive to the possibility that, once liability is decided, manageability issues may require some different treatment. This may involve amending the class, establishing sub-classes, or even de-certification for damages purposes. See Bogosian,
The Court notes finally an interest not explicitly enumerated in the Rule. There is a public interest consideration that must underlie the Court’s decision. It is apparent that were this motion to fail, the case would be over. The Court will not strain to provide a remedy where none exists in the positive law of the statute and the rules of procedure binding on the Court. However, the Court will examine with care an argument by an alleged wrongdoer that the complexity of the very wrong alleged places it beyond the reach of the law. Here plaintiffs have carried their burden and convinced the Court that this is not so and that this case should proceed.
CONCLUSION
For the reasons set forth above, the Court will grant the motion for class certification under Federal Rule of Civil Procedure 23(b)(3). The motion to grant class certification under Rule 23(b)(2) will be denied. Defendants’ motion to strike the report of Dr. Beyer will be denied without prejudice to their ability to renew this motion with re-
Notes
. It will be seen infra in the discussion of predominance of common issues under Rule 23(b)(3) that the existence and operation of the alleged conspiracy is far from the only issue cоmmon to all parties in this case.
. The price taker who agrees to pay MSRP poses an interesting question. A price taker who accepts without demur a price set by the dealer, whether above or below MSRP, would be harmed by the conspiracy on the theory that the dealer was naming a price inflated by the conspiracy. An MSRP price taker, however, would be paying a price set by the manufacturer, and this price might be the same nationwide and not just in the region affected by the conspiracy. Of course, this situation rests on two assumptions. First, that there are an appreciable number of true MSRP price takers, distinguished from merely failed negotiators, in the proposed class. Second, that the MSRP is in fact nationally uniform and not tailored to the region in which the car will be sold. The Court has no information on either of these points, and, therefore, must leave this issue for another day.