[00:00:19] Speaker 01: Stand, please. [00:00:31] Speaker 01: This honorable court is again in session. [00:00:33] Speaker 01: Be seated, please. [00:00:35] Speaker 01: Case number 18-7010, Henry Rail Freight Fuel Surcharge Antitrust Litigation, MDL number 1869, Dakota Granite Company on behalf of itself and all others similarly situated at L Appellate versus B. [00:00:52] Speaker 01: company at L. Ms. [00:00:54] Speaker 01: Sullivan for the Appellants, Mr. Phillips for the Appellees. [00:00:58] Speaker 05: Ms. [00:00:58] Speaker 05: Sullivan, before we start, I just want to ask counsel on both sides, some of the material is listed as sealed, I assume for commercial reasons, some is not. [00:01:08] Speaker 05: It's very difficult. [00:01:10] Speaker 05: For us to tell which is and which isn't, we intend to ask you questions. [00:01:14] Speaker 05: If for some reason this requires a sealed answer, somebody needs to say that. [00:01:22] Speaker 05: If no one says that, we're going to assume either that it's not sealed or that both sides are agreeing to unseal it. [00:01:29] Speaker 05: And also to be clear, it would be highly unlikely for us to agree that any of the material we're going to discuss today would remain sealed. [00:01:37] Speaker 05: So keep that as sort of a threshold before you jump up and claim it's sealed. [00:01:42] Speaker 05: Is that fair with everybody? [00:01:57] Speaker 03: Good morning, Your Honors, and may it please the Court, Kathleen Sullivan of the Quinn Emanuel Firm along with Michael Hausfeld of the Hausfeld Firm here on behalf of the plaintiff class of businesses who ship freight by rail. [00:02:12] Speaker 03: The sole question before the Court today is whether the plaintiff class [00:02:17] Speaker 03: has met the requirements of Rule 23B3 that common issues predominate over individual ones. [00:02:26] Speaker 03: And on the record here, we amply meet that requirement. [00:02:30] Speaker 03: We have common evidence from the mouths. [00:02:33] Speaker 04: Before you get into the merits, could I just ask, for purposes of appealability, [00:02:38] Speaker 04: Which prong do you seek to bring your case under? [00:02:44] Speaker 04: Because you either have to show manifest error or you have to show an unsettled question plus evading end of case review. [00:02:55] Speaker 03: We actually think all three prongs are triggered here. [00:02:59] Speaker 03: We think that it would be the death knell for most of the class if only the named plaintiffs were allowed to proceed on an individual basis, because very few of the shippers in this case have a claim sufficient to warrant the prosecution of individual lawsuits. [00:03:14] Speaker 03: Second, we think there is manifest error, and I want to devote most of my argument to the legal error here. [00:03:20] Speaker 03: We're not here on clear error. [00:03:22] Speaker 03: We're here on legal error. [00:03:23] Speaker 03: the application of the wrong standard under 23B3. [00:03:26] Speaker 04: Right, but manifest error, that's how you argued it in your 23F papers. [00:03:32] Speaker 03: That's right, Your Honor. [00:03:32] Speaker 04: That's a much heavier lift for you than simply showing error. [00:03:37] Speaker 04: We've said there's never been a case where we've found manifest error for 23F purposes. [00:03:42] Speaker 03: Your Honor, we actually think this is the case. [00:03:44] Speaker 03: There is an unprecedented legal ruling in this case. [00:03:48] Speaker 03: that 23B3 imposes a second separate super reliability screen on expert evidence. [00:03:56] Speaker 03: That has never been held in any other case. [00:03:58] Speaker 03: It's manifestly erroneous. [00:04:00] Speaker 03: It was not dictated by this panel's prior opinion, which nowhere instructed the district court on remand to look to the persuasiveness of the expert evidence. [00:04:10] Speaker 03: We do think we meet that, but Your Honor, if you have any doubt . [00:04:12] Speaker 04: . [00:04:12] Speaker 04: . [00:04:13] Speaker 04: If I think it's a close case and maybe you haven't met that burden, I think you have a stronger case on unsettling. [00:04:24] Speaker 04: So just give me 30 seconds on why this issue might evade end of case review. [00:04:29] Speaker 03: Yes, your honor. [00:04:30] Speaker 03: So if the class is decertified, it will not be possible for the named plaintiffs necessarily or any individual plaintiffs who bring individual suits to restore the status quo ante of decertification here. [00:04:46] Speaker 04: You go to final judgment and then you appeal the denial of class certification. [00:04:50] Speaker 03: Yes. [00:04:50] Speaker 03: So your honor, here's why we think you should resolve it now. [00:04:53] Speaker 03: We think that it is a very important issue of class action jurisprudence. [00:04:58] Speaker 03: The misinterpretation of the court's prior opinion by the district court below this court's prior opinion may wreak considerable havoc in the meantime on other class actions if the persuasiveness standard is picked up and therefore it's an important question affecting class action jurisprudence. [00:05:17] Speaker 04: I agree with you but our cases seem to say you need something more. [00:05:22] Speaker 03: Yes, so Your Honor, we think that it will be difficult to unwind if individual cases are prosecuted what would have or would not have been shown by class-wide proof. [00:05:33] Speaker 03: And that record problem in review after final judgment in an individual case should lead you to retain your 23F jurisdiction here. [00:05:42] Speaker 03: If I may turn to the merits, Your Honor, and Chief Judge Garland, I can tell already that we may run out of some time here. [00:05:49] Speaker 03: If I hit the red light, I'll ask your permission to go further than ten minutes. [00:05:54] Speaker 05: The practice in the court is the red light governs you, but not the bench. [00:05:58] Speaker 05: If we have further questions, we will ask further questions. [00:06:02] Speaker 05: You could be here all day, but if nobody has any questions, then we'll end. [00:06:07] Speaker 03: Thank you, Your Honor. [00:06:08] Speaker 03: If I may just return to what I think is the core legal error here, this was a case in which we presented voluminous common evidence that the big four railroads engaged during the class period in an effort to impose rate-based fuel surcharges industry-wide without exception. [00:06:31] Speaker 03: And that effort was successful. [00:06:33] Speaker 00: So help me understand exactly what the district court is supposed to do when it rigorously examines. [00:06:43] Speaker 00: You cite, and of course Tyson's food references, a summary judgment standard. [00:06:51] Speaker 00: Walmart talks about proving your case twice, both at certification and then again at trial. [00:06:57] Speaker 00: What I'm trying to understand in my own mind is, is the district court making a finding that the plaintiffs would not be entitled to judgment as a matter of law with this evidence? [00:07:12] Speaker 00: Expert evidence, it's an issue, and the non-expert evidence. [00:07:16] Speaker 00: Or is it deciding that no reasonable juror [00:07:21] Speaker 00: could be persuaded by this evidence or is it sort of backing up and making what I'll call sort of a technical argument that you have a reliable mechanism in the sense that there's a recognized ways to measure something but you simply don't have the evidence to produce the result you need? [00:07:46] Speaker 03: Judge Rogers, in answer to that question, we think that what the district court should have done is assess the defendant's admissions by the ordinary evidentiary standards and the expert evidence by the ordinary evidentiary standards. [00:07:59] Speaker 03: That's step one. [00:08:00] Speaker 03: Look at everything for admissibility under federal rules of evidence 401, 403, 702, and Daubert. [00:08:06] Speaker 03: And then, and then, Your Honor, this is the key, there is another step involved in 23B3. [00:08:12] Speaker 03: But it is not the step the district court took. [00:08:15] Speaker 03: It is not for the district court itself to make an assessment of the persuasiveness of the expert report on the merits. [00:08:23] Speaker 03: So I would revert your honor to the uniform language of the cases, which is is the common evidence lay evidence and expert evidence together. [00:08:32] Speaker 03: capable of or susceptible to class-wide proof. [00:08:37] Speaker 03: It's different from the summary judgment standard because when we get to the summary judgment standard, and my friends on the other side may want to get there with most of their arguments, those are merits arguments. [00:08:46] Speaker 00: And it's not a rule 50 argument. [00:08:48] Speaker 03: Correct, Your Honor. [00:08:49] Speaker 03: The argument is capable or susceptible of class-wide proof. [00:08:54] Speaker 03: So the best way I can put it is the rigorous analysis under 23b3 is to determine whether [00:09:01] Speaker 03: there's commonality, whether the evidence can be shown through class-wide proof. [00:09:07] Speaker 03: And here we had two forms of class-wide proof. [00:09:10] Speaker 03: And I think it's very important to focus on what I think is the manifest error here. [00:09:15] Speaker 03: The district court pulled the expert evidence out of the pile of evidence as a whole. [00:09:22] Speaker 03: And he said, I'm going to subject the expert report to a second separate reliability screen. [00:09:28] Speaker 03: I'm letting it in under Daubert. [00:09:30] Speaker 03: He did a Daubert analysis. [00:09:32] Speaker 03: He said it's reliable, admissible, relevant, methodologically sound, but I'm going to subject it to a second separate reliability screen. [00:09:41] Speaker 03: And that's the manifest legal error right there. [00:09:43] Speaker 04: One point that seems pretty clear from both Walmart and Comcast [00:09:49] Speaker 04: is there's a Rule 23 inquiry for rigorous analysis. [00:09:58] Speaker 04: There's a Rule 702 inquiry for admissibility, and there are merits inquiries where the district court screens for evidentiary sufficiency. [00:10:10] Speaker 04: They are all different, and there is no problem with overlap. [00:10:17] Speaker 04: Either overlap of the rule 23 inquiry with the admissibility inquiry or with the merits inquiry [00:10:24] Speaker 03: Well, I slightly disagree, Your Honor. [00:10:26] Speaker 03: I would say there's no problem with overlap between the Rule 23B3 inquiry and the admissibility inquiry. [00:10:33] Speaker 03: Here, we think once there was admissibility, that was the end for the expert evidence. [00:10:39] Speaker 03: And the expert evidence then should have been viewed under 23B3 under a capable of common proof test, not a persuasiveness test. [00:10:47] Speaker 03: And Judge Rogers, I want to be clear in answering your question. [00:10:50] Speaker 03: We should never have gotten here. [00:10:52] Speaker 03: to the question of Rule 50 sufficiency or a summary judgment standard. [00:10:59] Speaker 03: That's for later. [00:11:00] Speaker 03: And that was the key error here. [00:11:01] Speaker 03: And I want to be very clear, and I want to give you pinpoint sites to why I'm not misstating what the district court did. [00:11:08] Speaker 03: The district court said there are two separate reliability screens, the Daubert screen and then a separate 23b3 reliability screen [00:11:16] Speaker 03: for the expert evidence. [00:11:17] Speaker 03: And he announces that standard at A2858-59 and A2946. [00:11:25] Speaker 03: And then just because I don't want you to think I'm mischaracterizing it, he uses the word persuasive over and over and over again when he does the analysis under the second screen. [00:11:33] Speaker 05: Can I ask you to apply this to the actual findings in the case? [00:11:37] Speaker 05: Yes, Your Honor. [00:11:37] Speaker 05: That will make it a little easier for me to understand the various different things. [00:11:42] Speaker 05: The judge finds, and I think your expert agrees, that there are about 2,000 shippers for whom the model, the regression model, doesn't show antitrust injury. [00:11:56] Speaker 05: Is that right? [00:11:57] Speaker 05: Just the model itself. [00:11:59] Speaker 05: Leave aside the documentary evidence. [00:12:00] Speaker 03: Slight disagreement, Your Honor. [00:12:01] Speaker 03: The model shows 2,000 shippers with negative damages. [00:12:05] Speaker 03: It's our position that that does not show them to be uninjured as defendant's own expert conceded. [00:12:10] Speaker 03: Hold for one second. [00:12:11] Speaker 05: The model itself does not show that they were injured, right? [00:12:16] Speaker 05: Correct. [00:12:16] Speaker 05: It just shows negative for 2,000, right? [00:12:19] Speaker 05: Now that evaluation, you don't have any problem with the judge making that [00:12:24] Speaker 05: pointing to that statement by the expert, right? [00:12:28] Speaker 03: Well, we have a problem with it, Your Honor, because we think that the common evidence, including the non-expert evidence, shows injury. [00:12:35] Speaker 05: That's why I'm trying to take this in little pieces. [00:12:37] Speaker 05: Understood, Your Honor. [00:12:38] Speaker 05: Just that, just the regression model. [00:12:41] Speaker 05: It doesn't show injury by itself. [00:12:44] Speaker 05: The model by itself doesn't show antitrust injury to 2,000 shippers, correct? [00:12:50] Speaker 05: Correct. [00:12:50] Speaker 05: Okay. [00:12:51] Speaker 05: What is the other evidence? [00:12:54] Speaker 05: And you agree that there has to be evidence which shows injury to those 2,000, right? [00:13:03] Speaker 05: A common evidence. [00:13:04] Speaker 03: No, we think there has to be common evidence that could at trial [00:13:07] Speaker 03: be capable of showing injury to all those persons. [00:13:10] Speaker 03: We don't have to prove it now. [00:13:11] Speaker 03: OK. [00:13:12] Speaker 05: Well, if the expert just says theoretically, and I'm not going to tell you how, I have some evidence in my back pocket that would show this, that wouldn't be enough, would it? [00:13:25] Speaker 03: If that were all there was, no, but you have to take it together with the other evidence, the non-expert evidence. [00:13:34] Speaker 05: Only talking about the non-expert evidence now. [00:13:36] Speaker 05: If the expert says, I believe, would that be sufficient to show? [00:13:45] Speaker 03: If that were the only evidence in the case? [00:13:48] Speaker 05: What I want to know is what is the documentary evidence [00:13:51] Speaker 05: that shows the common documentary evidence that shows all 2,000 were subject to antitrust entry. [00:14:01] Speaker 05: What is that evidence? [00:14:02] Speaker 03: So there's two sources, Your Honor. [00:14:05] Speaker 03: There's common, non-expert evidence that the imposition of overcharging fuel surcharges in the class period was applied ubiquitously, in the words of the prior panel in this case, and enforced without exception. [00:14:22] Speaker 03: And the district court agreed with us on that finding about the common evidence. [00:14:27] Speaker 05: Was there evidence that [00:14:32] Speaker 05: Assuming that was all correct, that that would raise the price above the competitive price. [00:14:39] Speaker 05: Not just that there were fuel surcharges, not just that it raised the price. [00:14:44] Speaker 05: but common evidence that it raised it above the competitive price. [00:14:48] Speaker 03: Yes, Your Honor. [00:14:49] Speaker 03: What was that? [00:14:50] Speaker 03: Two sources. [00:14:51] Speaker 03: Number one is the general evidence that the uniform enforcement made it impossible to discount. [00:14:59] Speaker 03: And in the pre-class period, there was [00:15:02] Speaker 03: There was either theoretical fuel surcharges because the trigger wasn't reached, or there was widespread practice of waiver or programmatic reduction. [00:15:12] Speaker 03: So you have a pre-class period in which bargaining pushback and competitive pressure is possible. [00:15:17] Speaker 03: In the post-class period, all that disappears. [00:15:20] Speaker 03: And so the common non-expert evidence shows that uniform enforcement would extend the overcharges to everyone in the class. [00:15:27] Speaker 03: Second, Your Honor, there's expert evidence supporting our view that the 2,000 were injured. [00:15:32] Speaker 03: The district court conspicuously failed to look at Dr. McClave's testimony, our second of our three experts. [00:15:41] Speaker 03: Mr. McClave showed that there was, in fact, a pattern of overcharges to those 2,000. [00:15:48] Speaker 03: That is, to refer your honor to the exact space where you can see it in the sealed portion of the record, it's A6403 to 6404. [00:15:59] Speaker 03: In the district court, there's a lacuna in the district court's opinion. [00:16:02] Speaker 03: He does not address that aspect of the claims report. [00:16:07] Speaker 05: What was the reason, let me just back you up for a minute, we'll get back to this. [00:16:11] Speaker 05: What was the reason for Rausser's regression analysis? [00:16:15] Speaker 05: Why did he bother with that in the first place? [00:16:17] Speaker 03: Your honor, the regression analysis was designed to isolate causation and show damages. [00:16:23] Speaker 03: It had two purposes. [00:16:24] Speaker 03: The purpose of the regression analysis was to show here are the common factors that normally dictate freight rates in a competitive market, weight, commodity, to and from, origins, interlines. [00:16:35] Speaker 03: These are the common factors and if we . [00:16:37] Speaker 03: . [00:16:37] Speaker 03: . [00:16:37] Speaker 05: And to take those out of the analysis. [00:16:39] Speaker 03: Take those out of it and you'll show the conspiracy accounts causally for the antitrust entry. [00:16:43] Speaker 05: In either the uniform evidence of the inability to discount or in McClave's evidence of a pattern of overcharges, was there anything that took out the common factors in the same way the regression model did for all the other shippers? [00:17:00] Speaker 03: Well, Your Honor, we think that Rausser's model does prove that the overcharges were applied class-wide as a result of the uniform enforcement in the class period, and that the 2000 come from statistical noise. [00:17:13] Speaker 03: This is the key point. [00:17:15] Speaker 03: Certainly, this court does not want to rule that you can't use regression analysis anymore in large class actions because it leads to prediction error and statistical noise. [00:17:23] Speaker 05: I don't think the question is whether you can use it or not. [00:17:26] Speaker 05: The question is what do you do for the ones that it doesn't give you a prediction. [00:17:31] Speaker 03: Here's what you do, Your Honor, and here I go back to my discussion with Judge Rogers. [00:17:35] Speaker 03: You take this dispute about the weight of the expert evidence in light of the common evidence to summary judgment or to trial. [00:17:43] Speaker 03: And you have the debate there. [00:17:44] Speaker 03: Dr. Calt, the defendant's expert, admitted that negative damages doesn't mean injury. [00:17:51] Speaker 03: Negative damages doesn't mean injury. [00:17:53] Speaker 03: That admission bolsters our account that it was just statistical noise or prediction error. [00:17:58] Speaker 03: That battle of the experts as to the weight of the common evidence [00:18:03] Speaker 03: is not a matter for class certification. [00:18:05] Speaker 03: It's a matter for summary judgment or for trial. [00:18:08] Speaker 03: And that was the key error here. [00:18:09] Speaker 00: So when the district court finds, he says, the problem with the plaintiff's argument is that there is no evidence in the record to support the notion that intermodal shippers receive massive discounts or waivers from the published intermodal formulas. [00:18:26] Speaker 00: That's at A3007. [00:18:29] Speaker 00: Yes, Your Honor. [00:18:31] Speaker 00: There is one, you're saying that's erroneous as a matter of fact of what was in the record, but also that it's imposing a finding that is nowhere required at the certification point. [00:18:48] Speaker 03: Yes, Your Honor. [00:18:49] Speaker 03: Let me start with the second one first. [00:18:51] Speaker 03: The reason why the district court gets to that finding, and we're shifting now from the 2,000 small shippers who had negative damages. [00:18:57] Speaker 03: That was one of the flaws. [00:18:59] Speaker 03: Now if we shift to the intermodal flaw, another new thing since the last panel. [00:19:03] Speaker 03: Your Honor, there's two answers there. [00:19:04] Speaker 03: First, the judge was applying the wrong legal standard there, and that's going to be my core argument to you. [00:19:11] Speaker 03: A persuasiveness second screen for the expert evidence is legal error. [00:19:16] Speaker 03: It's not required or permitted by Rule 53B3. [00:19:20] Speaker 03: It violates the Rules Enabling Act because it imposes a second screen on class-wide evidence that wouldn't have a second screen in an individual case. [00:19:29] Speaker 00: Hypothetically, if you had an expert where the judge had ruled that the evidence was admissible under 702, [00:19:38] Speaker 00: It was a proper model under Dalbert. [00:19:41] Speaker 00: But in fact, for this model, you needed evidence A, B, and C. And all he could find in the record was A and B. There was no C. Now, is that a proper finding at certification, or is that something for the defense to point out at trial? [00:19:59] Speaker 03: So your honor, it depends on what C was. [00:20:01] Speaker 03: And let me try to, I'm not trying to, I think what the judge is allowed to do in the 23B3 screen is say, is the expert model falsified because the commonality [00:20:15] Speaker 03: He's not allowed to say the statistical validity is unsupported. [00:20:20] Speaker 03: That's a weight question for summary judgment or trial. [00:20:24] Speaker 03: Let me give you a counterfactual. [00:20:25] Speaker 03: Suppose here that the defendants had, which they did not, had come forward and said, look, in the class period, everything is bilaterally negotiated to a price. [00:20:35] Speaker 03: And we never start, we never start from the conspiratorial rates. [00:20:40] Speaker 03: Rates begin all over the map. [00:20:42] Speaker 03: In that world, if C were missing, what C might have been missing in that case was proof that there was a common or uniform policy. [00:20:49] Speaker 03: Here we're like the anti-Walmart. [00:20:50] Speaker 03: You know, Walmart, there was no common policy. [00:20:53] Speaker 03: Here we have a common uniform policy. [00:20:56] Speaker 03: Apply the fuel surcharges without exception, industry-wide, across the board, no waivers, no discounts. [00:21:02] Speaker 03: Make sure there's no competitive pressure. [00:21:04] Speaker 03: That common policy. [00:21:05] Speaker 03: If what was missing from the expert model was a way to account for bilateral negotiations, then the district court would be permitted under 23B3 to say, sorry, no commonality, not capable of purely class-wide proof under 23B3. [00:21:21] Speaker 03: But this is not that case. [00:21:22] Speaker 03: And don't take it from me. [00:21:23] Speaker 03: Take it from the district court. [00:21:25] Speaker 03: The district court held in the first decision certifying, and this is at 287 federal rules decisions at 51, that what changed in the class period is no more negotiability. [00:21:38] Speaker 03: No more negotiability. [00:21:40] Speaker 03: And no more negotiability means you can't, the uniform policy couldn't be disturbed through bilateral negotiations. [00:21:50] Speaker 03: And by the way, the district court at A2969 says the documentary evidence hasn't changed. [00:21:56] Speaker 05: So that finding- Is the lack of negotiability alone enough? [00:21:59] Speaker 05: If that were the case, Rausser wouldn't have had to have done a regression model at all. [00:22:03] Speaker 03: Well, correct. [00:22:04] Speaker 03: Well, no, his regression model is designed also to show damages. [00:22:07] Speaker 03: I didn't get to that part. [00:22:08] Speaker 03: It's to show the overcharges. [00:22:10] Speaker 05: Yes, but that's not the only reason it was presented. [00:22:13] Speaker 03: Correct. [00:22:13] Speaker 05: It was presented to show antitrust injury. [00:22:15] Speaker 03: That's right, Your Honor. [00:22:15] Speaker 03: Look, we actually think it might be an open question that whether we needed an expert model at all, given the lay evidence, it was so overwhelming. [00:22:25] Speaker 05: If you don't think the lay evidence is- Does the inability to negotiate by itself indicates antitrust injury? [00:22:32] Speaker 05: I guess that's the question. [00:22:33] Speaker 05: Doesn't it depend on all the other factors like actual fuel price, like other outside economic factors? [00:22:40] Speaker 03: Yes, Your Honor. [00:22:41] Speaker 03: Look, we think that together we had common evidence of antitrust injury, both from the fact of non-negotiability, which helps support and explain Rausser's model. [00:22:52] Speaker 03: And it may be law of the case. [00:22:54] Speaker 03: You may have decided we needed expert evidence here. [00:22:56] Speaker 03: And just assuming that we did, the two support each other. [00:22:59] Speaker 03: But let me try to separate two points, Your Honor. [00:23:03] Speaker 03: Judge Rogers asked me about intermodals, and I never got to the second answer to her. [00:23:07] Speaker 03: The answer to you, Your Honor, is non-negotiability supports Rausser's model as to legacies. [00:23:12] Speaker 03: But Judge Rogers, in answer to the intermodals, the lay evidence supports our model as to intermodals because the conspiracy involved coverage as well as rates. [00:23:26] Speaker 03: So my friends on the other side will say, oh, well, intermodals couldn't have had any class period antitrust injury because the formulas didn't change. [00:23:35] Speaker 03: Well, if you apply a rate to 5% of your volume, and then you multiply it 10, 20-fold in the amount of revenue it covers, the conspiracy to enforce, which is part of the conspiracy, this is not just a conspiracy to set prices, it is to enforce them without competition. [00:23:52] Speaker 03: That is where the evidence comes from. [00:23:53] Speaker 05: Can I force you to go back to the question I was asking? [00:23:55] Speaker 05: Yes, Your Honor. [00:23:56] Speaker 05: The one about the 2,000 for whom the Rauster model doesn't show injury or shows negative injury, but doesn't show it. [00:24:04] Speaker 05: So when the judge at 3034 through 3036 actually addresses that, the judge says a number of things, and maybe you can just tell me whether this is a legal error or a factual error. [00:24:22] Speaker 05: Neither Dr. Rausser nor the plaintiffs explain how normal prediction error with respect to shippers, or even a substantial portion, the 2,337 shippers at the model show to be uninjured. [00:24:37] Speaker 05: Nor do they try to quantify what number or percentage of shippers are actually uninjured. [00:24:44] Speaker 05: Now, is that true or false as a fact matter? [00:24:49] Speaker 03: That we didn't quantify? [00:24:51] Speaker 03: Yes. [00:24:51] Speaker 03: Correct. [00:24:52] Speaker 05: It's true. [00:24:53] Speaker 03: Yes, but Rouser didn't, but McClave did. [00:24:57] Speaker 05: It says, nor do Dr. Rouser or Dr. McClave try to quantify what number of chippers are actually uninjured. [00:25:05] Speaker 05: Is that false? [00:25:06] Speaker 05: Is the judge wrong, as a matter of fact? [00:25:09] Speaker 05: I don't want to use the word false. [00:25:10] Speaker 05: It's just wrong. [00:25:10] Speaker 03: He's not, Your Honor, but negative damages and injury are two separate things. [00:25:14] Speaker 03: We think the key legal point is we should be entitled at trial to prove injury against anyone who might be injured. [00:25:20] Speaker 03: Nothing here says that they could not be injured. [00:25:22] Speaker 05: This point, though, is not an analysis of the claim, not analysis of how good the expert was or was not. [00:25:34] Speaker 05: It's just a flat statement by the judge that they didn't try to do these things, right? [00:25:38] Speaker 05: That sounds like not legal error. [00:25:41] Speaker 03: But factual error. [00:25:43] Speaker 03: Yeah. [00:25:43] Speaker 05: I'm not sure, but you told us you weren't going to make any factual error. [00:25:45] Speaker 03: I'm not making any factual error arguments, so let me tell you what the legal error is. [00:25:48] Speaker 03: The legal error here is twofold. [00:25:52] Speaker 03: The judge created an arbitrary threshold for how many members, potentially uninjured class members is too many, five to six percent arbitrary? [00:26:03] Speaker 05: I think just to put some cards on the table, I don't think that's the issue here. [00:26:06] Speaker 05: I'm not asking you the question that was left undecided by the Supreme Court. [00:26:12] Speaker 05: I'm not asking you the question whether a class can include some uninjured parties and whether money can go to them. [00:26:19] Speaker 05: I'm asking the question about predominance, and the first question I want to ask is, is there evidence in the record of injury to the 2000? [00:26:34] Speaker 05: The judge doesn't say that he's questioning your evidence, at least not in this section. [00:26:39] Speaker 05: He says there's no evidence. [00:26:41] Speaker 05: As a hypothetical, if there were no common evidence that 2000 members of the class were injured. [00:26:50] Speaker 05: Would that not be a ground for deciding against Rule 23? [00:26:57] Speaker 03: No, Your Honor, because Rule 23B3 wants individual issues to predominate, and the tail can't wag the dog. [00:27:05] Speaker 03: The lack of injury to a tiny . [00:27:07] Speaker 03: . [00:27:08] Speaker 03: . [00:27:08] Speaker 05: less than one tenth of a venue. [00:27:10] Speaker 05: I understand, but there your argument is no longer that the judge made some terrible [00:27:14] Speaker 05: error about the difference between Rule 23 and Daubert, now your argument is he abused his discretion as to the question of which thing predominates. [00:27:25] Speaker 05: Is that right? [00:27:26] Speaker 03: Well, no, Your Honor. [00:27:27] Speaker 03: We think he applied the wrong legal standard even as to the 2,000 shippers. [00:27:32] Speaker 05: That's what I'm trying to ask you. [00:27:34] Speaker 05: So in what way did he apply the wrong as to the 2,000 shippers? [00:27:38] Speaker 03: because he said that any indication that 2,000 shippers might not be injured is enough to defeat class certification. [00:27:47] Speaker 05: He says in this section that there's no evidence that they were not might, no evidence that they were injured. [00:27:55] Speaker 03: Correct, Your Honor, but here I have to back up a step. [00:27:57] Speaker 03: It comes from the legal error that he has isolated the expert evidence and is looking at it alone under a second reliability screen rather than the common evidence as a whole. [00:28:06] Speaker 03: And Your Honor, that statement is incorrect if he had taken into account the rest of the evidence as a whole. [00:28:12] Speaker 03: So the legal error of not taking the lay evidence into account leads him to ignore the common evidence that everyone was injured by the universally enforced conspiracy. [00:28:20] Speaker 04: I understand the point about assessing the evidence in its entirety, but didn't this court the last time around say that you need this model and if you don't have a model that works, you don't have class certification? [00:28:34] Speaker 03: Your honor, I think that that language in the decision truly expresses the holding. [00:28:42] Speaker 03: The holding was extremely specific, and the prior panel sent the case back to resolve the legacy shipper false positive issue, which we haven't discussed yet. [00:28:52] Speaker 03: on reliability grounds, not on persuasiveness grounds. [00:28:56] Speaker 03: And in fact, the citation that this court gave to the lower court in sending it back, and this is in the slip opinion at 13, was you sent it back to say, common questions of fact cannot predominate where there exists no reliable means of proving class-wide injury in fact. [00:29:14] Speaker 03: And you cited to the Eighth Circuit decision and conquered Boat, which was not a class action case, and it was a Daubert case. [00:29:20] Speaker 03: The word persuasive is true. [00:29:21] Speaker 03: nowhere in the prior opinion. [00:29:23] Speaker 04: We said rule 23 requires a hard look at the soundness, that's the word from the opinion, of the statistical model. [00:29:31] Speaker 03: Absolutely right, Your Honor. [00:29:32] Speaker 03: And the 23b3 analysis requires a hard look at all of the evidence for commonality versus need for individualized trial. [00:29:42] Speaker 03: And my argument to you is that taking the common evidence together here and subjecting it to a 23b3 hard look does not mean that experts can come in on the other side and poke a bunch of holes in the weight [00:29:56] Speaker 03: of the expert evidence at the certification stage. [00:30:00] Speaker 03: If they want to do that, they have to wait for summary judgment and trust. [00:30:02] Speaker 04: Well, but why not? [00:30:04] Speaker 04: Because in Walmart, [00:30:08] Speaker 04: The relevant question was, is there a class-wide pattern of discrimination? [00:30:15] Speaker 04: And they took as a given that that evidence would be admissible under Daubert, and they took as a given that it completely overlapped with the merits issue. [00:30:25] Speaker 04: And they held no certification because there wasn't significant proof, and proof is the court's own words, [00:30:37] Speaker 04: significant proof of a pattern of discrimination. [00:30:41] Speaker 03: Your Honor, we have proof of commonality. [00:30:45] Speaker 03: So we're the anti-Walmart. [00:30:46] Speaker 03: That was individualized discretionary decisions. [00:30:48] Speaker 03: This is uniform policy. [00:30:50] Speaker 03: So I'm not saying that we don't have to have proof. [00:30:54] Speaker 03: What I'm saying is that we have to have proof that is capable [00:30:57] Speaker 03: of class-wide or common evidence such that a class action is superior to individualized trials. [00:31:04] Speaker 03: And that is so here because the very same evidence that we would use if we were suing individually, the models plus the admissions of the defendants who all set out of their own mouths in the class period, let's enforce uniformly these rate-based fuel surcharges, that we have to come up with proof that's capable of class-wide [00:31:24] Speaker 03: treatment, but we don't have to come up with proof that is persuasive on the merits of antitrust injury. [00:31:29] Speaker 03: That's for later, and Walmart didn't say otherwise. [00:31:32] Speaker 04: Well, so let's try to isolate the Real 50 standard. [00:31:40] Speaker 04: I'm sorry, the Rule 23 standard, independent of this weird business about what you call the second daubed screen. [00:31:47] Speaker 03: Yes, Your Honor. [00:31:48] Speaker 04: So let's just focus on Rule 23. [00:31:51] Speaker 04: It can't be wrong as part of the hard look that Rule 23 requires to screen for reliability, correct? [00:32:05] Speaker 03: Correct. [00:32:06] Speaker 04: And it can't be wrong as part of a hard look. [00:32:10] Speaker 04: Well, maybe you'll disagree with this. [00:32:11] Speaker 04: I don't know. [00:32:14] Speaker 04: If a model makes some prediction that seems hard to explain or obviously wrong, is it a cognizable argument for the party-resisting class certification to say that [00:32:35] Speaker 04: Problem with the model is so grave that it's not significant proof for Walmart purposes of the commonality or predominance element. [00:32:46] Speaker 03: So and the answer is it depends on what the weakness is. [00:32:50] Speaker 03: It's the same as my answer to Judge Rogers earlier. [00:32:53] Speaker 03: If the weakness in the model is that it doesn't explain as a common class-wide phenomenon where the antitrust injury came from, that is cognizable on Rule 23B3. [00:33:05] Speaker 03: Again, my counterfactual is if the model had been supported by lay evidence that showed [00:33:11] Speaker 03: wildly individualized bilateral negotiations to a price, never starting from the conspiratorial fuel surcharge. [00:33:20] Speaker 03: That kind of evidence might falsify the model for 23b3 purposes, but nothing here was of that nature. [00:33:28] Speaker 04: What happened here is that the weakness... Suppose the model predicted that people who [00:33:38] Speaker 04: made the purchases and paid the money prior to the class period suffered massively more damages than people who did so in the class period. [00:33:49] Speaker 04: Could the defendant come in and say, that's just crazy? [00:33:53] Speaker 04: And you can assess that on rule 23. [00:33:57] Speaker 03: And my answer to that, Your Honor, is no, because that is a common defense. [00:34:03] Speaker 03: And that is all my friend Mr. Phillips really has here, is a common defense. [00:34:08] Speaker 03: The overcharges were caused by the conspiracy. [00:34:11] Speaker 03: Look, they were theoretical or under enforced before. [00:34:15] Speaker 03: They're ubiquitous, uniformly enforced, and without discounts or waivers in the class period. [00:34:23] Speaker 03: We say conspiracy caused injury. [00:34:27] Speaker 03: And Mr. Phillips says, [00:34:28] Speaker 03: Nah, it didn't necessarily cause it. [00:34:31] Speaker 03: It could just be interdependent doligopolistic parallel behavior. [00:34:34] Speaker 03: It could be consistent with the but for world. [00:34:37] Speaker 03: That is a common defense and we decide that at trial. [00:34:40] Speaker 04: The only... If that's true, why do you concede, why do you take as a given that [00:34:50] Speaker 04: the Rule 23 inquiry, you don't quarrel with the district court screening for reliability to the extent that Daubert requires it. [00:35:03] Speaker 03: We're fine with that. [00:35:04] Speaker 03: And he admitted everything under Daubert. [00:35:06] Speaker 04: But that's part of, I mean, that's the district court assessing the evidence in a Rule 23 context, even where the Rule 23 issue overlaps with the merits. [00:35:20] Speaker 03: Your Honor, let me be clear on what I'm not arguing. [00:35:22] Speaker 03: I'm not arguing he can't peek at the merits, he can. [00:35:25] Speaker 03: I'm not arguing he can't screen for Daubert, he can. [00:35:28] Speaker 03: Here the district court let the expert report in under Daubert, and that should have been the only reliability screen for the expert. [00:35:35] Speaker 03: What I am saying to you is Rule 23B3 does impose a screen, but you've got to do several things. [00:35:40] Speaker 03: You've got to look at the expert evidence, not in isolation, but together with the lay evidence, which if there isn't enough lay evidence to show a conspiracy here, [00:35:49] Speaker 03: I'm not sure what case would show it, because we've got admissions out of the mouths of all four railroads that they engaged in common uniform practices of rate fuel surcharges. [00:36:00] Speaker 03: And what he can do in assessing that evidence is say, is there anything that falsifies commonality? [00:36:06] Speaker 05: He may not say- That's not the question we're asking about. [00:36:10] Speaker 05: It has to be commonality, not just as to whether a conspiracy exists. [00:36:14] Speaker 05: Is there words out of their mouths that say we have common practices that lead to antitrust injury? [00:36:22] Speaker 03: Your Honor, we have common practices. [00:36:26] Speaker 05: As far as I understand, the other side is not challenging the common evidence of the conspiracy. [00:36:34] Speaker 05: The question is injury. [00:36:36] Speaker 03: Causation, Your Honor. [00:36:37] Speaker 03: Absolutely. [00:36:39] Speaker 03: We stand by putting the common evidence of enforceability together with our model. [00:36:44] Speaker 03: The reason I'm stressing the common evidence about enforcement, the conspiracy was two parts. [00:36:49] Speaker 03: It was set the prices, don't compete on them, enforce them uniformly. [00:36:53] Speaker 03: The reason why I'm mentioning the common evidence about uniform enforcement is that is what is being attacked in our model. [00:37:00] Speaker 03: So in other words, [00:37:03] Speaker 03: The defendant's argument is the conspiracy didn't cause the overcharges. [00:37:11] Speaker 03: independent parallel oligopolistic behavior did. [00:37:14] Speaker 03: That is their defense. [00:37:15] Speaker 03: We say causation, they say no causation. [00:37:18] Speaker 03: That is a merits issue, and the District Court should not have preemptively decided that under a persuasiveness screen that's manifest legal error. [00:37:26] Speaker 04: Your Honor, the reason I raised the evidence about commonality is- Well, but at the Rule 23 stage, they can say that you don't have a sufficiently sound [00:37:40] Speaker 04: I'll just use sound to take a synonym for reliability. [00:37:45] Speaker 04: You don't have a sufficiently sound way of proving that through common evidence. [00:37:51] Speaker 03: Yes, the key is common. [00:37:54] Speaker 03: And the error the district court made here, the legal error. [00:37:58] Speaker 04: And I invite you to- The common evidence is your expert's model. [00:38:03] Speaker 03: Well, no. [00:38:04] Speaker 03: So your honor, the district court here admitted the expert's models under Daubert. [00:38:09] Speaker 03: He said they're reliable, they're sound methodology. [00:38:12] Speaker 03: They follow common econometric practices. [00:38:15] Speaker 03: Rausser was verified by McClave and Leitzinger. [00:38:18] Speaker 03: He lets it in. [00:38:19] Speaker 03: The conclusion is at 2887 and 2892. [00:38:22] Speaker 03: The legal error, the manifest legal error, comes in when he says, at age 30, 15, oh, well, no. [00:38:29] Speaker 03: Under my second screen, I think, oh, for legacies, you didn't quantify the but-for waiver world and the class period waiver world. [00:38:38] Speaker 03: Or for intermodals, you didn't quantify. [00:38:40] Speaker 03: the waivers in the but for world and the waivers in the second world. [00:38:43] Speaker 05: That was where the legal error- And for the 2000 uninjured? [00:38:47] Speaker 03: And the 2000 uninjured, that was the legal error there was he allowed, he mistook people who could not have been injured, people who might have been injured for people who could not have been injured. [00:39:00] Speaker 03: I think this is a useful distinction that you explored in the previous argument. [00:39:05] Speaker 03: Obviously, if there are somebody who a priori cannot be injured by the anti-competitive conduct, [00:39:13] Speaker 03: group of people, if they are sufficiently predominant, could shred the class. [00:39:17] Speaker 03: But if they are people who might be injured, and we simply haven't proved it yet at class certification to the judge's satisfaction, but there's . [00:39:28] Speaker 05: . [00:39:28] Speaker 05: . [00:39:28] Speaker 05: You do agree you have to offer common evidence as to all of those two thousands, right? [00:39:34] Speaker 03: We did offer common evidence as to the two thousands. [00:39:36] Speaker 03: That's the documentary evidence you're talking about. [00:39:37] Speaker 03: That's the documentary evidence plus McClave. [00:39:40] Speaker 03: Remember, it's not disputed that most of the 2,000 are small shippers. [00:39:45] Speaker 03: The documentary evidence makes clear that small shippers with fewer shipments would be more vulnerable to coercive leverage from the conspiracy rather than less. [00:39:56] Speaker 03: McClave actually quantified it in a part of his report that the judge ignored by saying that actually the small shippers in the 2,000 paid higher overcharges. [00:40:06] Speaker 03: That factual dispute should have gone to trial. [00:40:09] Speaker 03: It shouldn't have been a basis for denying class certification. [00:40:13] Speaker 03: And we'd agree with the district court statement of this court's remand. [00:40:17] Speaker 03: You didn't say that every class member must be proved injured at certification. [00:40:22] Speaker 03: That would radically alter class action law and would be divergent from every other case that's ever decided the question before or after Tyson. [00:40:30] Speaker 03: And it would diverge from Tyson. [00:40:32] Speaker 03: Tyson allowed class action distribution to proceed. [00:40:36] Speaker 03: even though there were hundreds of uninjured members in the class concededly. [00:40:41] Speaker 03: So we agree that the fact that we shouldn't have to prove injury conclusively at class certification, the law's uniform on that, Tyson confirms it if there was any doubt. [00:40:51] Speaker 03: But we did provide common evidence that could have proved it if we were allowed to go to trial. [00:40:55] Speaker 03: And it could have been Colt versus McClave. [00:40:57] Speaker 03: Were the 2,000 uninjured or were they? [00:40:59] Speaker 03: And Colt himself admitted that just because there's negative damages doesn't mean there isn't injury. [00:41:04] Speaker 03: And that should be conclusive on why we should have been allowed to proceed. [00:41:08] Speaker 05: Questions? [00:41:09] Speaker 05: All right, you'll see, as I promised, you got almost 25 extra minutes there. [00:41:12] Speaker 03: Thank you very much, Your Honor. [00:41:14] Speaker 03: And I hope you'll give me a little bit of time for rebuttal. [00:41:17] Speaker 03: Thank you. [00:41:19] Speaker 05: Now, Mr. Phillips, don't count on those 25 for you. [00:41:23] Speaker 06: So you discriminate, Your Honor. [00:41:25] Speaker 06: Good morning, Your Honors. [00:41:28] Speaker 06: May it please the Court? [00:41:31] Speaker 06: I have a hard time sort of listening to Ms. [00:41:33] Speaker 06: Sullivan's description of this case, both because it seems to me to fundamentally ignore the fact that this case was before this court. [00:41:40] Speaker 06: Five years ago, the court looked at exactly the same evidence of conspiracy, the same evidence of ubiquity and everything else and said, that's not enough. [00:41:49] Speaker 06: Flat out, not enough. [00:41:50] Speaker 06: You've got to have a model. [00:41:52] Speaker 05: Was it the same evidence? [00:41:53] Speaker 05: I thought additional evidence was offered. [00:41:55] Speaker 06: Actually, to the extent there's been more evidence since you and I were here before, all of that evidence actually goes the other way and demonstrates that, in fact, there is no such thing as ubiquity. [00:42:05] Speaker 06: That if you look at pages 15, 16, 17 of our brief, what we demonstrate is exactly what my friend calls the counterfactual world. [00:42:16] Speaker 06: The factual world is that [00:42:18] Speaker 06: the vast majority of these arrangements are negotiated on a one-on-one basis. [00:42:24] Speaker 06: And there are lots and lots of discounts, huge percentages of discounts, lots of people who had fuel surcharges prior to the class, lots of people who did them after the class, some who did, some who didn't. [00:42:37] Speaker 06: It's all over the lot on that score. [00:42:39] Speaker 06: The fact that there was evidence of a potential conspiracy [00:42:44] Speaker 06: That part hasn't changed at all, but we didn't challenge that. [00:42:47] Speaker 06: I mean, there's a whole fight about whether 107.06 allows all of that evidence to come in in any event on that point. [00:42:54] Speaker 06: But the bottom line from the prior decision of this court is that's not enough to get you home. [00:43:01] Speaker 06: At the end of the day, you're going to have to show common evidence to prove all class members suffered some injury. [00:43:08] Speaker 04: Could we talk about what Ms. [00:43:12] Speaker 04: Sullivan describes as the overarching legal error here? [00:43:17] Speaker 04: So let's just assume, I think, that the Rule 23 inquiry [00:43:26] Speaker 04: encompasses a reliability component and it encompasses other things as well. [00:43:33] Speaker 04: What is the legal support for the proposition that the reliability component of the Rule 23 inquiry is something more heightened than what you would apply in a Rule 702 context? [00:43:50] Speaker 04: That proposition seems to me very strange. [00:43:53] Speaker 06: Well, see, I think the problem, at least from my perspective, I guess I'd hate to sort of fight the premise of the argument or the question. [00:44:02] Speaker 06: But I don't think that Judge Friedman did the reliability component of the Daubert analysis when he analyzed the issue on Daubert. [00:44:11] Speaker 06: What he said was, these are experts. [00:44:14] Speaker 06: They're using econometric methods. [00:44:16] Speaker 06: And they are analyzing a very large data pool in a way that experts do. [00:44:19] Speaker 06: And therefore, I'm not knocking it out at that stage. [00:44:23] Speaker 06: He said, I'm going to take up the reliability issue as part of the Rule 23 analysis, because the question is, under Dalvert, [00:44:32] Speaker 06: What is the expert evidence fit to achieve? [00:44:37] Speaker 06: And let me just quote from Judge Friedman's opinion. [00:44:40] Speaker 06: When he gets to the conclusion of the entire analysis on the legacy shippers, what does he say? [00:44:46] Speaker 06: The court therefore cannot find that Dr. Rouser's damages model reliably distinguishes overcharges due to the alleged conspiracy from competitively negotiated conduct. [00:44:58] Speaker 06: This flaw is fatal to the plaintiff's motion for class certification. [00:45:02] Speaker 06: So could he have analyzed reliability as a Daubert point in the first instance and knocked it out there? [00:45:08] Speaker 06: Sure, but he chose to do it this way. [00:45:10] Speaker 04: Yeah, it's a little confusing what he did, and he arguably truncated the Daubert analysis and folded it into Rule 50, but what he said [00:45:22] Speaker 04: I think it's what I just said, which is that the reliability screen in the Rule 23 context is higher than the same screen in the 702 context. [00:45:33] Speaker 06: I think at the end of the day it shouldn't make any difference in this case, because at bottom, right, there are three fundamental flaws with the expert evidence. [00:45:44] Speaker 06: and all three shred the basis for class certification, regardless of what standard you want of reliability. [00:45:53] Speaker 04: The reality is... If he's applying the correct Rule 23 standard. [00:46:00] Speaker 06: I think if he applies the correct Rule 23 standard or the correct Rule 703 standard, the point here is that if you have a model that cannot distinguish collusive behavior [00:46:14] Speaker 06: and the effects of collusive behavior from the effects of any other kind of behavior, then you have no basis upon which to say that there is class-wide injury of any sort. [00:46:24] Speaker 06: And this model fails on three different counts. [00:46:27] Speaker 06: It fails from the legacy shippers, [00:46:30] Speaker 06: because the model proves. [00:46:33] Speaker 06: And this court said, well, move back. [00:46:35] Speaker 06: Maybe the problem with legacy shippers is the antitrust problems start sooner. [00:46:39] Speaker 06: We moved the analysis back. [00:46:42] Speaker 06: The damages for the legacy shippers go above 10% over charges as opposed to the 9.8%. [00:46:47] Speaker 06: 8% that you get for the class period. [00:46:50] Speaker 06: So there's no way to distinguish one from another on that basis. [00:46:54] Speaker 06: And the intermodal, the court says, the intermodal doesn't change. [00:46:59] Speaker 06: Their theory is that there has to have been some massive waivers. [00:47:02] Speaker 06: But the evidence demonstrated categorically that waivers in the pre-class period were 2.9%. [00:47:08] Speaker 06: And that's not a part of collusion. [00:47:10] Speaker 06: And there's no reason in the world why somebody who has a contract [00:47:14] Speaker 06: that says I'm allowed to increase prices to reflect fuel increased prices would waive those categorically as those prices are going up and up and up. [00:47:23] Speaker 06: And so the court said there again, that shreds the basis for class certification. [00:47:28] Speaker 00: But I thought there was evidence about the pre-class period that contradicts what you just said. [00:47:38] Speaker 06: I don't think so. [00:47:39] Speaker 06: Actually, I think that the evidence actually went the other way was was when when their experts said, you know, my explanation for how you end up in this situation is because it should have been massive waivers. [00:48:02] Speaker 06: The answer to that is [00:48:04] Speaker 06: All we know, what we know from the pre-class period is that they waived about 2.9% of the time, and there is no evidence, and the judge said specifically, no evidence that there would be widespread waivers in the class period. [00:48:19] Speaker 06: Candidly, whether or not individual shippers and the railroads are going to engage in negotiations that lead to either discounting or waiving [00:48:28] Speaker 06: is inherently an individualized determination. [00:48:32] Speaker 06: You can't undo the problem of not having a class-wide proof of injury by saying, well, we'll substitute now an individualized negotiations between the parties to see whether there was a waiver. [00:48:45] Speaker 06: They don't have a theory of waiver. [00:48:48] Speaker 06: Ms. [00:48:48] Speaker 06: Sullivan also talks about a theory of coverage, the problem there again. [00:48:53] Speaker 06: Rouser specifically disavowed having any model to test coverage. [00:48:58] Speaker 06: He said, I didn't do it. [00:48:59] Speaker 06: I didn't try to do it. [00:49:00] Speaker 06: Don't know if I could do it. [00:49:01] Speaker 06: And so the notion that somehow you're going to be able to prove wider coverage on in one stroke as Walmart requires. [00:49:09] Speaker 06: is impossible. [00:49:10] Speaker 06: You're going to have to look at every individual case. [00:49:13] Speaker 05: So wouldn't in one stroke, if you're correct, wouldn't that cause them to lose at summary judgment? [00:49:20] Speaker 02: No. [00:49:20] Speaker 05: That is, if they present an argument [00:49:24] Speaker 05: The only evidence they have across the class is something that you think is unreliable, or passes reliability, but is debatable or whatever. [00:49:35] Speaker 05: And why isn't that the end of it? [00:49:37] Speaker 05: Or at that point, or even in front of a jury, why isn't that the end of it? [00:49:42] Speaker 05: If that's their only evidence, then in one stroke, you eliminate their case. [00:49:46] Speaker 06: Well, I think you're putting the cart before the horse in that context because. [00:49:52] Speaker 06: I'm not sure of the metaphor, but okay. [00:49:55] Speaker 06: Because the question here is, should this be tried as an aggregate undertaking in the first instance, not what do you do if it is being tried. [00:50:04] Speaker 05: Oh, summary judgment then. [00:50:05] Speaker 05: If the fact is that [00:50:07] Speaker 05: It turns out they have no evidence other than this. [00:50:09] Speaker 05: Why isn't this like . [00:50:11] Speaker 05: . [00:50:11] Speaker 05: . [00:50:11] Speaker 05: ? [00:50:12] Speaker 06: That's the reason why this is not the death knell of this litigation, both Judge Katz and Judge Garland. [00:50:18] Speaker 06: Let's assume for the moment we're here, so leave the death knell issue out. [00:50:22] Speaker 06: No, no, I get that. [00:50:23] Speaker 06: But I'm not trying to fight the 23f point. [00:50:27] Speaker 06: I'm just trying to explain what would happen if the court says there's no class. [00:50:31] Speaker 06: So now you go back. [00:50:32] Speaker 06: You have individualized claims worth tens of millions of dollars. [00:50:35] Speaker 06: They're going to bring that action. [00:50:37] Speaker 06: They're not going to rely on browser. [00:50:39] Speaker 06: Nobody in individual antitrust cases relies on class-based evidence, because it's irrelevant to the individual claims. [00:50:47] Speaker 06: What are they going to claim? [00:50:49] Speaker 06: We went, we put in our bid to get our goods shipped and the prices went way up and we tried to negotiate. [00:50:56] Speaker 05: You're saying if they're tried individually. [00:50:58] Speaker 05: Right. [00:50:59] Speaker 05: What if they're tried as a class? [00:51:02] Speaker 05: What if it certified and went forward in a single stroke, wouldn't you win the case? [00:51:09] Speaker 05: We would win the case under those circumstances. [00:51:10] Speaker 05: I believe that's true. [00:51:12] Speaker 05: Isn't that sort of what the court has said in Tyson and Angen and other cases where a single stroke would eliminate the only evidence? [00:51:20] Speaker 05: The question is whether it is or isn't. [00:51:25] Speaker 05: And where it is or isn't, it can be certified as a class. [00:51:30] Speaker 06: No, Judge Garland, it's the flip side of that problem. [00:51:32] Speaker 06: Because in Tyson, the only evidence each plaintiff had or could bring forward was the representative evidence, because there was no documentation. [00:51:43] Speaker 06: That's the problem in the case. [00:51:45] Speaker 06: Every one of these plaintiffs has evidence to prove whatever it is that company wants to prove. [00:51:52] Speaker 06: different from and it does not need in any way and candidly would never use Rouser's model in any way to try to prove anything in connection with this. [00:52:02] Speaker 06: Because it doesn't tell you anything about any of those individual claims. [00:52:07] Speaker 06: And so you're back to the fundamental question is what is the argument for aggregating this litigation when in the face of Walmart and Comcast the Supreme Court has said categorically [00:52:20] Speaker 06: It should be the exception. [00:52:21] Speaker 06: It should not be the rule. [00:52:23] Speaker 06: It is their burden to demonstrate that this model will reliably prove injury on a class-wide basis. [00:52:30] Speaker 06: That is precisely [00:52:32] Speaker 06: what this panel said. [00:52:33] Speaker 06: I don't know what . [00:52:34] Speaker 06: . [00:52:34] Speaker 06: . [00:52:34] Speaker 06: I think Judge Rogers asked this question. [00:52:36] Speaker 06: What could Judge Friedman have done differently than he did other than I think he could have probably dispensed with the first 150 pages of the opinion and just finished it off on the last 50 in which he identified the fatal flaw in the model as it was presented and why that precludes . [00:52:54] Speaker 06: . [00:52:54] Speaker 05: . [00:52:54] Speaker 05: Could you do me a favor and look at the 2000 uninjured question? [00:52:58] Speaker 05: So opposing counsel said there are two forms of evidence, two additional forms of evidence, non-expert. [00:53:04] Speaker 05: Well, I guess McClave is an expert, but. [00:53:08] Speaker 05: documentary non-model evidence. [00:53:11] Speaker 05: One was uniform evidence that they were not able to discount, and number two, McClave's evidence of a pattern of overcharges. [00:53:20] Speaker 05: What do you say about those as to whether they'll? [00:53:22] Speaker 06: Well, the first one still doesn't get you anywhere, because again, I mean, there's a huge dispute about this pattern of overcharges and whether or not there were negotiations, and candidly, the evidence is absolutely undeniable. [00:53:36] Speaker 06: That there are negotiations, there are discounts, the base rates. [00:53:40] Speaker 05: Is that a completely merits question or is that a 23? [00:53:43] Speaker 06: No, it goes to, because you have to figure out what are you going to do with those 2,000 people? [00:53:49] Speaker 06: And how are you going to prove what to do with those 2,000 companies? [00:53:52] Speaker 06: And the answer is you're going to have to look at every single one of them to figure out whether or not they got a discount or didn't get a discount, asked for a discount, didn't ask for a discount, or to explain how is it possible that for every single shipment they had, they ended up with their shipment being for a price that was lower than what you would have expected in their world. [00:54:12] Speaker 05: Is the evidence that opposing counsel was referring to as uniform evidence, was that [00:54:18] Speaker 05: a statement by an expert or a general summary witness or was that a collection of evidence, individualized evidence with respect to all the 2000s? [00:54:27] Speaker 06: Well, what McClave did was he came in and he sort of lumped various elements [00:54:33] Speaker 06: of the 2000 into different categories and said shippers and small shippers and large shippers, et cetera. [00:54:39] Speaker 06: But at the end of the day, those categories don't cover everybody in a uniform way. [00:54:44] Speaker 06: And so whether it's a big shipper, because there are a lot of big shippers who obviously can negotiate pretty aggressively who are in this category. [00:54:51] Speaker 06: There are a lot of big shippers who can negotiate aggressively who are in a different category. [00:54:57] Speaker 06: There's no uniformity with respect to how any of those individuals were taken care of and there is no way for McClave to undo the need for individuality and there is certainly no way to make a conclusion that Judge Freeman abused his discretion by saying the only way I can figure out what to do with those 2,000 separate matters at a minimum and I should be clear about that. [00:55:22] Speaker 06: Remember, they get to 2,000 on the basis of prediction error. [00:55:26] Speaker 06: Prediction error goes two ways. [00:55:28] Speaker 06: So they're just as likely to have 2,000 people for whom they claim to have some damages who are, in fact, not injured. [00:55:34] Speaker 06: And again, no way to know how to discern that without actually having a trial. [00:55:39] Speaker 00: So McClave explained his groups and why he did it that way. [00:55:43] Speaker 00: So my question is, we've had [00:55:46] Speaker 00: class actions before that this court has affirmed the certification. [00:55:52] Speaker 00: And then the case has gone forward. [00:55:54] Speaker 00: And then at the end of the trial, where the plaintiffs have prevailed on some counts, the district court has set up a separate procedure for allocating damages. [00:56:07] Speaker 00: And at that point, the individuals come forward and say, I've got the proof of my injury. [00:56:15] Speaker 00: aren't you trying to lump those two together? [00:56:17] Speaker 02: No. [00:56:17] Speaker 00: When at the certification stage, we're really at the former. [00:56:21] Speaker 00: McClave has offered an explanation. [00:56:24] Speaker 00: You haven't attacked it in terms of it's not a scientifically, it's not a Daubert problem, it's not a 702 problem. [00:56:34] Speaker 00: You're saying it's a common evidence problem. [00:56:36] Speaker 00: So where you have [00:56:38] Speaker 00: commonality as to some features here, as McClave suggested. [00:56:44] Speaker 00: Why isn't what you're arguing really another stage of the proceeding? [00:56:48] Speaker 06: Because Judge Rogers, the evidence that McClay put forward is designed to try to undo what is already, to my mind, a fatal flaw in the way the model that Rauscher put forward failed to satisfy the obligations of the plaintiffs in this case. [00:57:05] Speaker 06: That's how you get the 2,000 shippers who appear to have absolutely no injury or no proof of injury, notwithstanding the claim that they have been injured. [00:57:14] Speaker 06: You now know you've got a flawed model. [00:57:16] Speaker 06: And then McClave is trying to backfill to get you some way to get out of that box by saying, well, if you mix and match and shift around and do this with the shippers, the problem's not as bad as it appears to be. [00:57:28] Speaker 06: And on this score, [00:57:31] Speaker 06: Judge Freeman looked at the McClave evidence and he looked at the plaintiff's evidence and he made a finding specifically that that evidence is not going to be able to get you to a class wide proof of injury. [00:57:45] Speaker 06: That is going to require at a minimum 2,000 individualized proceedings. [00:57:52] Speaker 06: I submit to you that that's not an abuse of discretion. [00:57:54] Speaker 05: You're not talking about the amount of individual injury. [00:57:58] Speaker 05: you're talking about whether there was class wide injury. [00:58:01] Speaker 06: In fact, that's correct. [00:58:03] Speaker 06: Your honor. [00:58:04] Speaker 06: That's what that's the fundamental point. [00:58:06] Speaker 06: I say, I don't, I don't know what more you could ask judge Friedman to have done under these circumstances. [00:58:12] Speaker 06: If uh, if there are no further questions, I hope you don't give Ms. [00:58:16] Speaker 06: Sullivan too many more hours. [00:58:19] Speaker 06: Thank you. [00:58:20] Speaker 05: We let you go one minute and 57 seconds. [00:58:22] Speaker 05: I appreciate it. [00:58:23] Speaker 05: I feel much better. [00:58:25] Speaker 05: Did anybody else have any questions? [00:58:27] Speaker 05: You're way over, but give him two extra minutes because he didn't take all the extra time he could have. [00:58:34] Speaker 03: Thank you very much, Chief Judge Garland. [00:58:37] Speaker 03: Five points. [00:58:38] Speaker 03: You don't need 2,000 trials. [00:58:39] Speaker 03: The 2,000 supposed negative damages folks are going to prove their case with the same class-wide evidence. [00:58:45] Speaker 03: And Judge Rogers, you're exactly right. [00:58:47] Speaker 03: Take them out later if they don't prove damages. [00:58:50] Speaker 03: Let McClave and Colt duke it out. [00:58:51] Speaker 03: Don't decertify the class. [00:58:53] Speaker 03: That would give new meaning to the tail wagging the dog. [00:58:55] Speaker 03: Point two. [00:58:56] Speaker 03: My friend said there's discounting galore. [00:58:59] Speaker 03: No discounting. [00:59:01] Speaker 03: Judge Freeman found, and I refer you to 287 federal rules decisions at 5960, and remember he says in this case, this round, the documentary evidence hasn't changed. [00:59:12] Speaker 03: He said, no discounting, and they always start from the conspiratorial rate. [00:59:16] Speaker 03: He found no credibility whatsoever in the defendant's suggestions of discounting. [00:59:20] Speaker 03: Point three, my friend says, oh, well, there are only 2.9. [00:59:23] Speaker 03: present waivers in the pre-class period and less waivers in the class period, waivers are irrelevant. [00:59:29] Speaker 03: There was evidence of non-enforcement and programmatic reductions rather than individual waivers. [00:59:35] Speaker 03: I'd refer you to the citations in our brief to the BNSF memo that says this is at record page 435 and 475. [00:59:45] Speaker 03: We were programmatically reducing our five percent rates to two or three percent on the eve of the class period. [00:59:51] Speaker 03: And you heard the other railroad saying the field surcharges are melting away. [00:59:55] Speaker 03: Waivers are a red herring because programmatic reductions happen in pre-class period didn't happen after coverage. [01:00:00] Speaker 03: My friend, fourth, my friend says coverage. [01:00:03] Speaker 03: Why didn't he do a coverage model? [01:00:05] Speaker 03: And Judge Rogers, the key point about the intermodals is even if the formulas stay the same, you're spreading the fuel surcharge formulas to a vastly greater number of shippers and shipments. [01:00:17] Speaker 03: That's why the conspiracy is causal. [01:00:19] Speaker 03: And the coverage point, I refer you to A2976, where the judge said he didn't need a coverage model. [01:00:25] Speaker 03: I'm persuaded. [01:00:26] Speaker 03: You don't need to build a model on top of the model. [01:00:29] Speaker 03: Fifth and last, I want to address your point about McClave, Your Honor, because he came up a lot. [01:00:33] Speaker 03: I want to be clear that McClave relied on Rausser's model, so he did take into account the common factors and he just added a customer ingredient, so the McClave model does go to antitrust injury, not just to conspiracy. [01:00:46] Speaker 03: And finally, I just want to say there is common documentary evidence more broadly beyond McClave. [01:00:51] Speaker 03: of antitrust injury as well as conspiracy, because Chief Judge Garland, you were very right to ask me that, and I want to be very clear. [01:00:58] Speaker 03: I'm not just citing uniformity and non-negotiability for common evidence of conspiracy. [01:01:03] Speaker 03: I'm citing it for the purpose that it helps to show antitrust injury, that the collusion was causal. [01:01:08] Speaker 03: And I think that my friend, Mr. Phillips, has only said exactly as you suggested that he doesn't think [01:01:14] Speaker 03: The evidence shows that collusion was causal. [01:01:17] Speaker 03: He thinks there was other causation. [01:01:19] Speaker 03: That's not a commonality problem. [01:01:20] Speaker 03: That's a merits problem. [01:01:22] Speaker 03: It should never have been decided at class certification. [01:01:25] Speaker 03: And you should reverse and direct certification of the class. [01:01:28] Speaker 03: If there are no further questions, thank you very much. [01:01:31] Speaker 03: Thank you. [01:01:32] Speaker 03: We'll take the matter under submission. [01:01:34] Speaker 01: Thank you. [01:01:35] Speaker 01: Stand, please. [01:01:36] Speaker 01: This article report now stands adjourned until Monday morning at 930 AM.