Wednesday, July 29, 2009
Posted by D. Daniel Sokol
ABSTRACT: With recent changes in case law requiring district courts to make deeper inquiries at the class certification stage, a systematic treatment of the economics of class certification is particularly relevant. This article offers an economic interpretation of the legal concept of common impact as it is used in antitrust class certification matters. It interprets the predominance requirement central to Rule 23(b)(3) as requiring that the only economically significant factors are common factors. These economic factors may or may not be related to the alleged conduct; thus, common impact should be investigated with respect to factors related to the alleged conduct ("conduct factors") as well as to other economic determinants ("non-conduct factors"). With an economic framework established, this article proceeds to examine empirical testing of common impact by describing three types of empirical tests that are likely to be applicable in a wide variety of antitrust class certification matters. Each type of test focuses on differences in prices paid by putative class members.