Messner v. Northshore University HealthSystem: Seventh Circuit Approves Use of Statistical Methods in Class Actions
Following the U.S. Supreme Court’s decision in Dukes v. Wal-Mart, the federal circuit courts have re-defined class actions in far less restrictive terms than many had predicted. Recently, the Seventh Circuit approved the use of economic and statistical evidence to estimate the impact of defendant Northshore University HealthSystem’s anticompetitive conduct on putative class members. See Messner v. Northshore University HealthSystem, No. 10-2514 (7th Cir. Jan. 13, 2012) (order reversing denial of class certification) (available here).
In Messner, the plaintiffs sought certification of a class of patients and third-party payors who were purportedly charged inflated prices for health care by Northshore. Slip op. at 2. The Federal Trade Commission (FTC) previously found that the company had violated federal antitrust law. Id. The district court denied plaintiffs’ motion for certification, reasoning that their expert’s methodology could not show uniform price increases across the proposed class, and, consequently, the predominance standard could not be satisfied. See Slip op. at 26-29.
The Seventh Circuit granted an interlocutory appeal pursuant to Federal Rule 23(f) and concluded that the district court abused its discretion by requiring an impossible degree of commonality. Slip op. at 3. The panel noted that “it is important not to let a quest for perfect evidence become the enemy of good evidence.” Id. The panel also rejected the district court’s predominance analysis, concluding that its “approach would come very close to requiring common proof of damages for class members, which is not required” at the time of certification. Slip op at 28.
The 7th Circuit concluded that the plaintiffs’ proffered expert analysis of post-merger price increases was sufficient to show some common antitrust injury to putative class members. Slip op. at 26-27. Notably, the economic and statistical methods used by plaintiffs were also used by the FTC. Slip op. at 2.
Going forward, Messner may prove useful to plaintiffs in consumer class actions where it is alleged that consumers paid more for an item than they would have, had they been provided with full, accurate information.