Third Circuit Confirms That Challenged Expert Testimony Must Survive Daubert Challenges in Order to Demonstrate Conformity with Rule 23

Drawing upon its own precedent and that of the Supreme Court in Comcast v. Behrend, the Third Circuit recently held in In re Blood Reagents Antitrust Litig. that a district court must resolve any Daubert challenges to proffered expert testimony as part of its “rigorous analysis” of the requirements for class certification.

In In re Blood Reagents Antitrust Litig., the plaintiffs filed a putative class action alleging a horizontal price-fixing conspiracy regarding the supply of blood reagents. The district court certified a class of all purchasers of blood reagents from defendant. In support of their motion, the plaintiffs relied upon expert testimony about antitrust impact and damages, which defendant had “consistently challenged” as unreliable. Relying upon the then-controlling Behrend v. Comcast Corp. decision of the Third Circuit, the district court explained that plaintiffs’ expert testimony “could evolve to become admissible evidence,” and therefore determined that plaintiffs satisfied the predominance requirement of Rule 23(b)(3). The district court reasoned that defendant’s reliability challenges went to the “merits of the [damages] models, … but they neither implicate[d] a need for individual proof nor convince[d] the court that the models could ‘not evolve to become admissible evidence.”

On the Rule 23(f) appeal, the Third Circuit vacated the class certification order and remanded to the district court to consider class certification in light of the United States Supreme Court’s decision in Comcast v. Behrend, which reversed Behrend v. Comcast Corp. The Third Circuit specifically explained that “Behrend’s ‘could evolve’ formulation of the Rule 23 standard did not survive Comcast,” because the Supreme Court specifically criticized Behrend for deeming it unnecessary to decide whether an expert’s damages model was reasonable or speculative. Thus, in the Court’s view, it is not sufficient that evidence “could evolve to become admissible,” it must be admissible in order to satisfy the “rigorous analysis” requirements of Rule 23. Because Supreme Court and Third Circuit precedents have required “a definitive determination that the requirements of Rule 23 have been met,” and by a “preponderance of the evidence,” and that assurances from a party that it intends to meet the requirements of Rule 23 are insufficient, only reliable expert testimony which satisfies Daubert scrutiny can be used to satisfy the Rule 23 requirements. The Court explained:

a plaintiff cannot rely on challenged expert testimony, when critical to class certification, to demonstrate conformity with Rule 23 unless the plaintiff also demonstrates, and the trial court finds, that the expert testimony satisfies the standard set out in Daubert… Expert testimony that is insufficiently reliable to satisfy the Daubert standard cannot “prove” that the Rule 23(a) prerequisites have been met “in fact,” nor can it establish “through evidentiary proof” that Rule 23(b) is satisfied.

The decision in Blood Reagents brings the Third Circuit in line with many district courts and the 7th, 8th, and 9th Circuits in holding that expert evidence at the class certification stage must satisfy Daubert, a ruling many thought would have been made by the Supreme Court in Comcast. Accordingly, district courts must adjudicate Daubert motions as part of the “rigorous analysis” of the Rule 23 requirements when deciding motions for class certification.

Michael R. McDonald is a Director in the Gibbons Business & Commercial Litigation Department. Caroline E. Oks, an Associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.
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