Duane Morris Antitrust Class Action Review – 2024

Class action litigation in the consumer fraud area has exponentially increased over the past several years. Most consumer fraud class actions come with the possibility of excessive payouts for corporations. We hope the Duane Morris Consumer Fraud Class Action Review – 2023 will demystify some of the complexities of consumer fraud class action litigation through our analysis of trends and significant rulings that enable corporate counsel to make informed decisions in dealing with complex litigation risks.

DISCLAIMER The material in this Review is of the nature of general commentary only. It is not meant as or offered as legal advice on any particular issue and should not be considered as such. The views expressed are solely those of the authors. In addition, the authors disclaim any and all liability to any person in respect of anything and of the consequences of anything done wholly or partly in reliance on the contents of this Review. This disclaimer is from the Declaration of Principles jointly adopted by the Committee of the American Bar Association and a Committee of Publishers and Associations.

CITATION FORMATS All citations in the Duane Morris Class Action Review are designed to facilitate research. If available, the preferred citation of the opinion included in the West bound volumes is used, such as Baysal, et al. v. Midvale Indemnity Co., 78 F.4th 976 (7th Cir. 2023). If the decision is not available in the preferred format, a Lexis cite from the electronic database is provided, such as Moehrl, et al. v. National Association of Realtors, 2023 U.S. Dist. LEXIS 53299 (N.D. Ill. Mar. 29, 2023). If a ruling is not available in one of these sources, the full case name and docket information is included, such as Yates, et al. v. Traeger Pellet Grills , Case No. 19-CV-723 (D. Utah Sept. 7, 2023). eBOOK HIGHLIGHTS The Duane Morris Antitrust Class Action Review is available for use on a smartphone, laptop, tablet, or any personal electronic reader by using any eBook reader application. eBook reading allows users to quickly scroll, highlight important information, link directly to different sections of the Review, and bookmark pages for quick access at a later time. The eBook is designed for easy navigation and quick access to informative data. The eBook is available by scanning the below QR code:

Duane Morris Antitrust Class Action Review – 2024

NOTE FROM THE EDITORS The stakes at issue in class action litigation are typically significant and are apt to keep corporate counsel and senior management up at night. A company ’ s market share and corporate reputation are often implicated by a class action and these exposures and risks put immense pressure on corporate decision- makers. The purpose of the Duane Morris Antitrust Class Action Review is multi-faceted. We hope it will demystify some of the complexities of antitrust class action litigation, and keep corporate counsel updated on the ever-evolving nuances of Rule 23 issues. In this respect, we hope this book will provide our clients with an analysis of trends and significant rulings that enable them to make informed decisions in dealing with complex litigation risks. Defense of class actions is a hallmark of the litigation practice at Duane Morris. We hope this book – manifesting the collective experience and expertise of our class action defense group – will assist our clients by identifying developing trends in the case law and offering practical approaches in dealing with antitrust class action litigation.

Sincerely,

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Duane Morris Antitrust Class Action Review – 2024

CONTRIBUTORS

Duane Morris Antitrust Class Action Review – 2024

GLOSSARY AND KEY U.S. SUPREME COURT DECISIONS Adequacy Of Representation – Plaintiffs must show adequacy of representation per Rule 23(a)(4) to secure class certification. It requires representative plaintiffs and their counsel to be capable of fairly and adequately protecting the interests of the class. Amchem Products, Inc. v. Windsor, et al. , 521 U.S. 591 (1997) – Windsor is the U.S. Supreme Court decision that elucidated the requirements in Rule 23(b), insofar as common questions must predominate over any questions affecting only individual class members and class resolution must be superior to other methods for the adjudication of the claims. Ascertainability – Although not an explicit requirement of Rule 23, some courts hold that the members of a proposed class must by ascertainable by objective criteria. Comcast Corp. v. Behrend, et al. , 569 U.S. 27 (2013) – Comcast is the U.S. Supreme Court decision that interpreted Rule 23(b)(3) to require that, for questions of law or fact common to the class, the plaintiffs’ damages model must show damages are capable of resolution on a class-wide basis. Commonality – Plaintiffs must show commonality per Rule 23(a)(2) to secure class certification. This requires that common questions of law and fact exist as to the proposed class members. Class – A group of individuals that has suffered a similar loss or alleged illegal experience on whose behalf one or more representatives seek to bring suit. Class Action – The civil action brought by one or more plaintiffs in which they seek to sue on behalf of themselves and others not named in the suit but alleged to have suffered the same or similar harm. Class Certification – The judicial process in which a court reviews the submissions of the parties to determine whether the plaintiffs have met their burden of showing that class treatment is the most appropriate form of adjudication. In federal courts, the process is governed by Rule 23 of the Federal Rules of Civil Procedure. Cy Pres Fund – In class action settlement agreements, this is the money set aside for distribution to a § 501(c) organization when class members do not return a settlement claim form and money is left over after distribution to the class. Epic Systems Inc. v. Lewis, et al. , 138 S. Ct. 1612 (2018) – Epic Systems is the U.S. Supreme Court decision holding that arbitration agreements requiring individual arbitration and waiving a litigant ’ s right to bring or participate in class actions are enforceable under the Federal Arbitration Act. Opt-Out Procedures – If a court certifies a class under Rule 23(b)(3), class members are bound by the court ’ s judgment unless they opt-out after receiving notice of the lawsuit. Numerosity – Plaintiffs must show that their proposed class is sufficiently numerous that adding each class member to the complaint would be impractical. This is a requirement for class certification imposed by Rule 23(a)(1). Ortiz, et al. v. Fibreboard Corp., 527 U.S. 815 (1999) – Ortiz is the U.S. Supreme Court ruling that interpreted Rule 23(b)(3) to require personal notice and an opportunity to opt-out of a class action where money damages are sought in a class action. Predominance – The Rule 23(b)(3) requirement that, to obtain class certification, the plaintiffs must show that common questions predominate over any questions affecting individual members.

Duane Morris Antitrust Class Action Review – 2024

Rule 23 – This rule from the Federal Rules of Civil Procedure governs class actions in federal courts and requires that a party seeking class certification meet four requirements of section (a) and one of three requirements under section (b) of the rule. Rule 23(a) – It prescribes that a class meet four requirements for purposes of class certification, including numerosity, commonality, typicality, and adequacy of representation. Rule 23(b) – To secure class certification, a class must meet one of three requirements of Rule 23(b)(1), Rule 23(b)(2), or Rule 23(b)(3). Rule 23(b)(1) – A class action may be maintained if Rule 23(a) is satisfied and if prosecuting separate actions would create a risk of inconsistent or varying adjudications with respect to individual class members or adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests. Rule 23(b)(2) – A class action may be maintained if Rule 23(a) is satisfied and the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole. Rule 23(b)(3) – A class action may be maintained if Rule 23(a) is satisfied and questions of law or fact common to class members predominate over any questions affecting only individual members and a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Superiority – The Rule 23(b)(3) requirement that a class action can be permitted only if class resolution is the superior method of adjudicating the claims. Typicality – The plaintiffs’ claims and defenses must be typical to those of proposed class members’ claims. This is required by Rule 23(a)(3).

Duane Morris Antitrust Class Action Review – 2024

TABLE OF CONTENTS

Page Overview ........................................................................................................................ 1 I. Introduction......................................................................................................... 1 II. What Should Companies Expect In 2024? ....................................................... 1 Antitrust Class Actions ................................................................................................. 4 I. Executive Summary............................................................................................ 4 II. Significant Rulings In Antitrust Class Actions In 2023 ................................... 5 1. Per Se Treatment Versus Quick-Look Analysis Versus Rule Of Reason Test................................................................................................................. 5 2. Class Certification Rulings In Antitrust Cases ........................................... 8 3. Rule 23’s Numerosity Requirement And The Impracticability Of Joinder ......................................................................................................... 13 4. Rulings On Changes To Multi-District Litigation, Baseball’s Antitrust Exemption, The Right-To-Repair, And Pricing Algorithms...................... 15 III. Top Antitrust Class Action Settlements In 2023 ............................................ 16 Table Of 2023 Antitrust Class Action Litigation Rulings ........................................... 19

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Overview I. Introduction

Class action litigation presents one of the most significant risks to corporate defendants today. Procedural mechanisms like the one set forth in Rule 23 of the Federal Rules of Civil Procedure have the potential to expand a claim asserted on behalf of a single person into a claim asserted on behalf of a behemoth that includes every employee, customer, or user of a particular company, product, or service, over an extended period. A class action allows one or more individuals to pursue claims on behalf of a defined and sometimes sprawling group of similarly situated individuals. When the plaintiffs’ bar aggregates the claims of many individuals in a single lawsuit, a class action can present substantial implications for a corporate defendant. As a result, class action litigation poses some of the most significant legal risks that companies face. By joining the claims of many individuals in a single lawsuit, class actions have the potential to increase potential damages exponentially. A negative ruling in a class action has the potential to reshape a defendant’s business model, to impact future cases, as well as to set guidelines for the entire industry. This can make the outcome of a class action lawsuit significant and potentially devastating for a company. Due to their potential implications, class actions are often costly to defend. Defending against a class action can be a time-consuming and resource-intensive process that diverts management attention from core business activities. Plaintiffs can attempt to leverage this reality to make class actions as expensive and disruptive as possible, in an effort to bring about litigation fatigue and to extract a sizable settlement. Given the potential size and impact of class actions, class actions and class action settlements inevitably attract media attention and lead to public scrutiny. Negative publicity surrounding a class action or class action settlement can have widespread implications, including potential harm to a company's reputation, potential damage to its brand, and potential drop in consumer trust. It sometimes spells the end of the career of a general counsel or chief executive officer if the problems at the heart of the lawsuit happened on their watch. Class actions are often complex legal proceedings with uncertain outcomes. The complexity can arise from managing multiple claims, myriad legal issues, and assorted class members, making it challenging for corporate defendants to predict and control the result. Due to these factors, corporate defendants should approach class actions from a broad vantage point with a thoughtful and multi-faceted defense strategy. We developed this one-of-a-kind resource to provide a practical desk reference for corporate counsel faced with defending antitrust class action litigation, which provides a rundown of the trends in this particular area of class action litigation, along with the key decisions from courts across the country that Class action litigation is a staple of the American judicial system. The volume of class action filings has increased each year for the past decade, and 2024 is likely to follow that trend. In this environment, corporate programs designed to ensure compliance with existing laws and strategies to mitigate class action litigation risks are corporate imperatives. The plaintiffs’ bar is nothing if not innovative and resourceful. Given the massive class action settlement figures in 2022 and 2023 (a combined total of $113 billion), coupled with the ever-developing law, corporations can expect more lawsuits, expansive class theories, and an equally if not more aggressive companies can use to shape their defense strategies. II. What Should Companies Expect In 2024?

Duane Morris Antitrust Class Action Review – 2024

plaintiffs’ bar in 2024. These conditions necessitate planning, preparation, and decision-making to position corporations to withstand and defend class action exposures. Defendants often have very little time to react to the plaintiff’s forum choice after a class action is filed, even though it may be one of the most important initial questions in the case. In turn, a cascading number of strategic considerations are typically faced by corporate decision-makers upon receipt of the class action filing. Should the company opt to remove the case from state court to federal court (and are there grounds to do so under the Class Action Fairness Act of 2005)? Is it better to have a federal judge who has the time and expertise to fully vet the parties’ briefs and arguments and likely will apply a more rigorous evidentiary standard to expert testimony and class certification requirements? However, will removing the case cause other plaintiff’s counsel to track the litigation and lead to more sophisticated counsel becoming involved or more “tag-along” class action filings? Will removing the case make settlement more difficult and potentially affect the structure of the settlement as well as its costs and the exposure in the class action? How will standing issues play out in each forum, and is standing a viable defense to gut the basis of the class theories? Can jurisdictional defenses fracture the class action by invoking Bristol-Myers Squibb ? Does the company have an arbitration agreement with employees, consumers, or third-parties that would support a motion to compel arbitration of the claims in the lawsuit on an individual, bilateral basis? Is the potential of a motion to transfer the case to an MDL after removal good or bad for the ultimate defense and handling of the litigation? What are the steps for a full and complete early case assessment, and is the company’s relevant electronically-stored information (ESI) available, assessable, and in a format that can be easily and quickly analyzed? Are there ways to resolve the individual complaint, either before filing responsive pleadings or by way of negotiation with plaintiffs’ counsel? Could early concessions or a voluntary change to a challenged practice moot the litigation, or lead to an argument by plaintiff’s counsel that they are entitled to attorneys’ fees if corporate changes are made? Once the parties are at issue in the litigation, another series of strategic decisions needs to be confronted. Should the company request a stay of discovery while the court is considering a motion to dismiss? Should the defendant agree to broader discovery in the hope of demonstrating the presence of individualized issues to set up its class certification defenses? How broadly should discovery be drafted and what type of agreement on ESI is appropriate? Can the defendant make predominance arguments regarding varying facts without allowing broad discovery on those facts? Is bifurcation of discovery between merits issues and class issues still a viable option after Rule 23 case law has made clear that merits issues can overlap with the elements of class certification? Are communications allowed with class members before and/or after certification and on what terms? Is the list of class members discoverable? Is discovery allowed from absent class members and, if so, in what forms? Can and should a corporate defendant move for summary judgment before class certification (as to the named plaintiffs’ claims individually or as to all class claims)? Are there advantages even if the motion will not win the case (for instance, narrowing the case, causing the plaintiff to respond in an individualized way, etc.)? As to the future opposition to the plaintiffs’ motion for class certification, can the class definition be attacked because it includes uninjured class members? Further, it is rare that a motion for class certification is filed without an accompanying expert witness report. Likewise, virtually every opposition brief uses expert testimony. When should a defense expert be retained, on what subjects, and how should they plan their support of the defense efforts to block class certification? The competing expert testimony typically centers on whether the claims can be proven with common evidence although they can be used for many other purposes (e.g., numerosity, feasibility of notice, merits issues, etc.). Daubert motions, which test the admissibility of expert testimony, are an essential part of almost every class certification battle, and the U.S. Supreme Court has focused on expert testimony in several of its recent class certification decisions. Does the court apply the same Daubert standard at class certification as it does before trial? Does the expert rely upon admissible evidence? Does the testimony “fit” the legal theory and claims? Would the testimony be admissible in an ordinary single plaintiff case? Should the plaintiff or defendant hire a consulting expert to assist in litigating the case? How can an expert use sampling to support claims of class-wide liability or impact?

Duane Morris Antitrust Class Action Review – 2024

Finally, corporations must consider settlement from the very beginning of a class action and the desire for a final global resolution can drive decision-making in terms of overall defense strategies. Defendants may decide not to remove or compel arbitration; plaintiffs may avoid issuing press releases to avoid copycat cases. Settlement on a class-wide basis pose myriad strategic issues. When the defense has decided to settle, a corporation will normally want the most expansive class definition and the broadest release, even though it has vociferously opposed any certification earlier in the case. When the terms of a settlement are finally hammered out, the plaintiff’s lawyers and defense counsel share a common goal of obtaining approval and will then join forces to this end and against any objectors who oppose the accord. These crucial questions are inevitably posed by any class action litigation. By their very nature, class actions involve decisions on strategy at every turn. The positions of the parties are constantly changing and corporate defendants must always be looking ahead and anticipating issues during every phase of the litigation. We hope the Duane Morris Antitrust Class Action Review provides practical insights into complex potential strategies relevant to all aspects of class action litigation and other claims that can cost billions of dollars and require changed business practices in order to resolve.

Duane Morris Antitrust Class Action Review – 2024

Antitrust Class Actions I. Executive Summary

Class action litigation involving antitrust claims had several key developments in 2023, despite a relative lack of actual verdicts. Because antitrust remedies often allow recovery of treble damages, the incentive to settle these cases is often paramount. Additionally, plaintiffs are entitled to reasonable attorneys ’ fees that may be substantial because of the complexity of this kind of litigation. As a result, most antitrust class actions are settled before trial, and one of the most crucial phase in these cases is class certification. Thus, the order granting or denying a motion to certify a class in these cases is critical. Challenges to alleged restraints in the labor markets continued to be the most popular form of class action antitrust litigation in 2023. Growing recognition of the intersection between antitrust violations and the labor markets has led governmental antitrust authorities to increase their scrutiny of labor markets and the plaintiffs’ bar to push the limits of class actions to recover for compensation-related antitrust violations. Because courts have less familiarity with anticompetitive conduct within labor markets, the plaintiffs’ class action bar and the antitrust enforcement authorities in the Biden Administration have continued to push for labor market restraints to be treated differently from product or services markets for antitrust purposes. Traditionally, courts dealing with competitors agreeing to fix prices or allocate markets in product or services markets have treated such conduct as per se violations, or presumptively illegal, under the Sherman Act. Other anticompetitive conduct that does not deserve per se treatment has been reviewed under the rule of reason. The rule of reason test analyzes relevant antitrust markets, market power, anticompetitive effects, and procompetitive benefits related to the conduct at issue. Plaintiffs in no-poach, no-hire, or wage-fixing cases argue that such conduct is akin to price fixing and should be afforded per se treatment. In the alternative, plaintiffs argue that the alleged conduct should receive a “quick-look” analysis, which largely assumes the illegality of the alleged anticompetitive conduct, while defendants maintain that these types of restraints are ancillary to broader employment agreements and deserve full rule of reason review. Per se , quick-look, and rule of reason cases involve drastically different evidentiary burdens and presumptions, even at the pleading stage. As a result, litigants have contested this issue in vigorous fashion. In 2023, the question of whether per se treatment, quick-look analysis, or rule of reason review applies continued to be the primary battleground in antitrust class actions. Indeed, in the class action context, whether the court analyzes the no-poach agreements under the per se , quick-look, or rule of reason test is often the critical issue driving the outcome of whether the plaintiffs can satisfy the class certification requirements of Rule 23. This is because rule of reason analysis requires plaintiffs to define the market or markets where the alleged anticompetitive conduct occurred, which in and of itself requires allegations of cross-elasticity of demand and interchangeability of the labor services performed – a heavy burden for antitrust plaintiffs. Furthermore, such a requirement could implicate hundreds of thousands of local labor markets, each requiring an individualized inquiry that overwhelms the commonality necessary for class certification. Because per se and quick-look analysis presumes or largely presumes harm and does not consider procompetitive justifications, the plaintiffs in such cases are relieved of having to define any relevant market where harm occurred. Thus, the plaintiffs are able to avoid the threat that a court will foresee highly individualized market inquiries in the court ’ s class certification analysis. We are likely to see continued battles over per se , quick-look, and rule of reason treatment in labor market antitrust class actions in the future. Plaintiffs in antirust actions often seek class certification under Rule 23(b)(3), which, after all of the requirements of Rule 23(a) have been met, allows for class certification were common questions of law or fact predominate, and a class action is a superior method of adjudication. The predominance requirements

Duane Morris Antitrust Class Action Review – 2024

involve a fact intensive inquiry into the availability of adequacy of “class-wide evidence” and continued to be a battleground for antitrust litigants in 2023 as shown by National ATM Council, Inc., et al. v. Visa Inc., 2023 U.S. App. LEXIS 19028 (D.C. Cir. July 25, 2023). Even where class certification is contested on multiple fronts, predominance frequently becomes the locus of attention where dueling experts may impact a court ’ s analysis of how and to what extent a proposed class experiences distinct or common antitrust harms. This played out in 2023 in Moehrl, et al. v. National Association of Realtors, 2023 U.S. Dist. LEXIS 53299 (N.D. Ill. Mar. 29, 2023), and In Re Pork Antitrust Litigation, 2023 U.S. Dist. LEXIS 53505 (D. Minn. Mar. 29, 2023). While class certification in antitrust actions is determined by the criteria of Rule 23, like all other class actions, courts may take specialized

approaches to the Rule 23 requirements when dealing with antitrust cases. For example, Rule 23(a)(1) requires the plaintiffs to show that their proposed class is so numerous that joinder of the members would be impracticable. This element of class certification is often referred to as the “numerosity” requirement. Essentially the courts weigh the alleged advantages and efficiencies of class actions against the practicality of simply joining parties to the litigation. In the antitrust context, courts have found that fewer than 20 members is likely insufficient while more than 40 members is likely sufficient, and between 20 to 40 members requires an analysis of other circumstances in the case that affect impracticability of joinder. This analysis played out over the past year in In Re Niaspan Antitrust Litigation , 67 F.4th 118 (3d Cir. 2023), and Value Drug Co., et al. v. Takeda Pharmaceuticals, U.S.A. Inc., 2023 U.S. Dist. LEXIS 33102 (E.D. Pa. Feb. 28, 2023), where a proposed class of 49 members was deemed not impracticable of joinder and class certification was denied. In 2023, courts granted class certification in 75% of antitrust class actions, or in 15 of 20 motions.

II. Significant Rulings In Antitrust Class Actions In 2023 1. Per Se Treatment Versus Quick-Look Analysis Versus Rule Of Reason Test In 2023, per se treatment versus quick-look analysis versus the rule of reason test was the ultimate battleground for adjudication of antitrust class action claims, in particular in the context of alleged “no poach” or “no hire” agreements. The most significant development on this battleground occurred in Deslandes, et al. v. McDonald’s USA, LLC , 2023 U.S. App. LEXIS 22509 (7th Cir. Aug. 28, 2023), where the U.S. Court of Appeals for the Seventh Circuit overturned a federal district court decision that held that the rule of reason test – and not per se treatment – applies to no-poach provisions in franchise agreements. The underlying dispute involved a group of former McDonald ’ s workers who brought a class action over alleged antitrust violations. The defendants operate fast-food restaurants, or do so through a subsidiary, and until recently, every McDonald ’ s franchise agreement contained a provision prohibiting any franchise

Duane Morris Antitrust Class Action Review – 2024

operator from hiring any person employed by a different franchise or by McDonald ’ s itself until six months after the last date that person had worked for McDonald ’ s or another franchise. The plaintiffs alleged that they were unable to earn higher wages at other franchises while these provisions were in effect. The district court in Deslandes, et al. v. McDonald’s USA, LLC, 2022 U.S. Dist. LEXIS 113524 (N.D. Ill. June 28, 2022), reasoned, in part, that the no-poach provisions in McDonalds’ franchise agreements could not be illegal per se because they were “ancillary” to the underlying franchise agreements, which served a procompetitive purpose in that the underlying agreements “increased output of burgers and fries.” Id. at *6. On appeal, the Seventh Circuit disagreed because the district court ’ s reasoning “treats benefits to consumers (increased output) as justifying detriments to workers (monopsony pricing)” as an ancillary restraint. Deslandes , 2023 U.S. App. LEXIS 22509 at *8. While the Seventh Circuit recognized the possibility that the no-poach clause could have been protecting franchises’ investment in training, it found that selling more burgers and fries to consumers is immaterial to justifying any detriment to workers from the provision and remanded the case for further proceedings on the question. The Deslandes decision is important in the antitrust class action context because it supports the U.S. Department of Justice ’ s position that no-poach agreements can be adjudicated as per se violations of Section 1 of the Sherman Act. As a very general matter, it will be easier for plaintiffs in antitrust class actions to secure class certification and win on the merits if the alleged anticompetitive conduct at issue is treated as per se anticompetitive rather than analyzed under the so-called “quick-look” analysis or full rule of reason analysis. In another important “no-poach” antitrust class action, a court left open the possibility that certain no-poach agreements could constitute per se violations of Section 1 of the Sherman Act. In Borozny, et al. v. Raytheon Technologies Corp., 2023 U.S. Dist. LEXIS 9914 (D. Conn. Jan. 20, 2023), the plaintiffs filed a class action alleging that that six corporate defendants engaged in a conspiracy to restrain wages in violation of Section 1 of the Sherman Act by secretly agreeing to restrict competition for the recruitment and hiring of aerospace engineers and other skilled workers in the jet propulsion systems industry. The defendants moved to dismiss on the grounds that the plaintiffs failed to allege conduct deemed a per se antitrust violation and also failed to state a claim under the “rule of reason” test. The court denied the defendants’ motion. The defendants first argued that the alleged anticompetitive agreement was vertical in nature and horizontal; therefore, it could not be considered a per se violation of the Sherman Act. Even though the defendants operated at different levels of the aerospace products supply chain, i.e ., some were manufacturers and some were distributors, they all participated in the aerospace labor market horizontally. The plaintiffs also adequately alleged that the labor market restraint at issue was a naked restraint on trade and not ancillary to any legitimate or competitive purpose. Therefore, the court concluded that the alleged conduct could potentially constitute a per se violation of the Sherman Act. While some courts were keeping open the possibility that no-poach agreements could be per se violations, the court in Giordano, et al. v. Saks, 2023 U.S. Dist. LEXIS 17154 (E.D.N.Y. Feb. 1, 2023), concluded that no-hire agreement must be adjudicated under the rule of reason test and was not suitable for per se treatment. In that case, a group of former Saks employees filed a class action alleging that no-hire agreements between Saks and luxury brand defendants, including Louis Vuitton and Gucci, decreased their compensation and mobility in violation of Section 1 of the Sherman Act. The plaintiffs specifically asserted that they were denied opportunities to transfer to competitors with higher compensation or better work locations. The plaintiffs argued that the no-hire agreement – the existence of which several managers at the defendants allegedly admitted – deserved per se treatment, or in the alternative, quick-look analysis, because it was a naked, horizontal restraint among competitors. The court disagreed. It determined that the alleged anticompetitive agreement could not be considered a per se violation of the antitrust laws

Duane Morris Antitrust Class Action Review – 2024

because it was ancillary to collaborative business relationships between the defendants. Id. at *41. The court also concluded that the so-called “quick look” analysis was not appropriate because the alleged anticompetitive harm was not plainly obvious and the alleged no-hire agreement had both vertical and horizontal elements. Therefore, the court analyzed the adequacy of the plaintiffs’ Sherman Act claim under the rule of reason, and dismissed the plaintiff ’ s claim for failure to allege sufficient information about the labor market to prove the agreements had an anticompetitive impact. Id. at *55. Numerous important class action cases in 2023 involved allegations that compensation for athletes had been artificially depressed due to anticompetitive restraints. One in particular utilized the so-called “quick- look” analysis to adjudicate the plaintiff ’ s claims. In Smart, et al. v. NCAA, 2023 U.S. Dist. LEXIS 130570 (E.D. Cal. July 27, 2023), a group of Division I Volunteer Coaches filed a class action alleging that the defendants, the National Collegiate Athletic Association (NCAA) and its member schools, violated the Sherman Act by illegally conspiring to fix the compensation of category of Division I coaches at $0. According to the rules at issue, Division I sports limit the number of paid coaches per team. However, through a NCAA bylaw, member schools agreed to allow one additional coach, a “Volunteer Coach,” who was unpaid . Volunteer Coaches generally worked over 40 hours per week and performed most of the same duties as paid coaches, such as attending all practices and games, traveling for away games, and preparing game strategies. Id. at *5. The plaintiff Volunteer Coaches alleged that they suffered antitrust injury because their compensation of $0 was below the compensation they would have received in a competitive market. Id. at *13. The defendants moved to dismiss, arguing that the plaintiffs’ antitrust allegations were conclusory because they failed to allege facts showing that they would have received more compensation without the bylaw dictating the number of paid coaches. In denying the motion, the court concluded that the plaintiffs sufficiently alleged an antitrust injury because it was plausible that the plaintiffs would have been paid a salary above $0 but for the NCAA ’ s adoption of the bylaw. The court applied a “quick-look analysis,” under which “anticompetitive effect is established . . . where the plaintiff shows that a horizontal agreement to fix prices exists, that the agreement is effective, and that the price set by such an agreement is more favorable to the defendant than otherwise would have resulted from the operation of market forces.” Id. at *18. The plaintiffs’ alleged that the NCAA and its member schools established the additional coaching position as a “volunteer” position and set the salary at $0, and that other non-volunteer coaches received high salaries with significant increases. Thus, the plaintiffs alleged, the bylaw was successful in allowing non-volunteer coaching salaries to raise without paying for additional coaches. Under a quick-look analysis, the court found that the plaintiffs alleged facts that were sufficient to state a claim for violation of the Sherman Act. Two other cases involving so called no-poach or no-hire agreements received full rule of reason analysis, rather than per se treatment over the past year. The first, Southern California Electric Firm, et al. v. Southern California Edison Co., 2023 U.S. Dist. LEXIS 54428 (S.D. Cal. Jan. 10, 2023), involved allegations by the defendant ’ s former employees that the defendant ’ s policy banning them from acting as independent line installation contractors in regions that the defendant served as an electrical utility violated the Sherman Act. The defendant is a utility company that generates, transmits, and distributes electric power throughout Central, Coastal, and Southern California, and controls an exclusive market comprising more than 87 billion kWh of electricity distributed to hundreds of cities, counties, and tribal lands in a region spanning 50,000 square miles. Id. at *2. When a new or existing customer within the territory applied for electrical service from the defendant through a distribution line extension or service extension, the applicant had to either (i) pay the defendant directly to plan, design and/or install the new distribution line extension or service extension; or (ii) hire a “qualified” third-party contractor or sub-contractor to design (Applicant Designer) and/or install (Applicant Installer) the new distribution line extension or service extension in accordance with the defendant ’ s design and specifications. Id. at *3. The defendant ’ s tariff rules set forth certain minimum requirements for a contractor to be qualified, and the plaintiffs asserted that the requirements ultimately prohibited them from working in any manner on construction projects requiring the defendant ’ s approval, oversight, or involvement. Id. The plaintiffs alleged that the defendant violated

Duane Morris Antitrust Class Action Review – 2024

the Sherman Act by interfering with the plaintiff company ’ s contacts such that the company could not work with the contacts. The court ultimately determined that the plaintiff failed to properly define an economic market that could have been distorted by the policy. The court ruled that the complaint failed to provide specific facts establishing the existence of any business relationship between the plaintiffs and any identifiable third parties. Id. at *30. The court found that the complaint alleged that the “relevant geographic market in this case” was “Central, Coastal, and Southern California,” and the “relevant product market is the business of generating, transmitting, and distributing electricity and other related services, such as application designers and installers and their construction services relating to the product market.” Id. at *27. The court determined that the market definition was facially overbroad, and thereby granted the defendant ’ s motion to dismiss. In the second case, Alvarado, et al. v. Western Range Association, 2023 U.S. Dist. LEXIS 122127 (D. Nev. Mar. 21, 2023), the plaintiff – a Peruvian citizen who came to the United States on a temporary H-2A visa to work as a sheepherder – filed a putative class action against Western Range Association (WRA), an association of sheep ranches located throughout the Western United States. The plaintiff alleged that WRA and its members unlawfully restrained trade in violation of Section 1 of the Sherman Act by conspiring and agreeing to fix the wages offered to both domestic and foreign sheepherders at or near the wage floor set by the U.S. Department of Labor for H-2A sheepherders, and instructed all members to pay the minimum wage. Id. at *3-4. The plaintiff also alleged that the WRA allocated the market for foreign H-2A sheepherders among its members by assigning them to ranches and not allowing them to seek employment elsewhere. Id. The defendant WRA and its member sheep ranches argued that the plaintiff failed to state a viable Sherman Act claim because its allegations were nothing more than conclusory recitations of the elements of a violation. The court disagreed because the plaintiffs alleged parallel and concerted conduct in the form of similar wages across the board and that testimony from a former executive at WRA supported the inference that a tacit agreement between WRA and its members existed. Moreover, the fact that WRA did not pay the same precise wage to every sheepherder was not enough to defeat the plaintiff ’ s allegations of an unlawful agreement or overall wage-fixing scheme. Accordingly, the court rejected the defendant ’ s motion to dismiss under the rule of reason. Another important per se versus rule of reason case did not involve a no-poach agreement but instead involved a dispute between a group of subscribers of YouTube TV, Disney, ESPN, and Hulu. In Biddle, et al. v. The Walt Disney Co., et al. , 2023 U.S. Dist. LEXIS 176547 (S.D. Cal. Sept. 30, 2023), plaintiffs alleged that Disney entered into anticompetitive carriage agreements with YouTube TV and conspired to inflate prices of monthly subscriptions in the Streaming Live Pay TV (SLPTV) market in violation of Section 1 of the Sherman Act. Specifically, the plaintiffs alleged that Disney ’ s ESPN charges cable companies high affiliate fees to broadcast its channels, leading to increased costs for consumers. The plaintiffs argued that Disney ’ s control of ESPN, Hulu, and its position in the SLPTV market has allowed it to have substantial influence on pricing and carriage agreements. The plaintiffs claimed that Disney ’ s actions, particularly after acquiring Hulu, led to substantial price increases in SLPTV subscriptions, reducing competition, and harming consumers. Disney moved to dismiss the claims. The court concluded that the alleged arrangement was not appropriate for per se treatment, and granted Disney ’ s motion in that respect; however, under a rule of reason analysis, the court denied Disney ’ s motion and allowed the plaintiff ’ s antitrust claims to proceed. 2. Class Certification Rulings In Antitrust Cases Several important antitrust lawsuits in 2023 went to decision on class certification. The Court of Appeals for the D.C. Circuit upheld class certification of a group of ATM operators and debit

Duane Morris Antitrust Class Action Review – 2024

card holders in National ATM Council, Inc., et al. v. Visa Inc., 2023 U.S. App. LEXIS 19028 (D.C. Cir. July 25, 2023). The ATM operators and debit card holders alleged violations of Section 1 of the Sherman Act in connection with Visa and Mastercard ’ s requirement that ATM operators seeking to use their networks agree to rules governing the access fees that ATMs may charge cardholders. Plaintiffs specifically asserted that these access fee rules constituted an unlawful agreement and that defendants engaged in anticompetitive conduct by preventing bank and non-bank ATM operators from offering cardholders lower access fees for transactions routed over cheaper networks, and by blocking independent ATM operators from competing with bank-owned ATMs by charging cardholders less. Id. at *6. The district court certified three classes, finding that each satisfied the requirements of Rule 23. On appeal, Mastercard and Visa argued that the district court failed to give a “hard” or “close look” at plaintiffs’ evidence or to perform a “rigorous analysis” as to whether plaintiffs met the predominance requirement. Id. at *12. The D.C. Circuit determined that the district court ’ s class certification decision sufficiently explained the basis on which it concluded that the plaintiffs “satisfy through evidentiary proof” that common issues predominated for each class. The D.C. Circuit further opined that the record clearly supported the district court ’ s finding that “all three plaintiff groups have demonstrated that common evidence will predominate in proving each element of their claims.” Id. at *18. The district court confirmed not only that the plaintiffs offered common proof of injury, but also that their methods of establishing injury were reasonable, well accepted, and reliable. Id. at *21. The D.C. Circuit agreed with the district court that all three certified classes established the predominance requirement, and thus class certification was appropriate. For these reasons, the D.C. Circuit affirmed the district court ’ s class certification orders. Another important antitrust class case in 2023 involved both sports and access to certain television content. In the litigation entitled In Re NFL’s Sunday Ticket Antitrust Litigation, 2023 U.S. Dist. LEXIS 21752 (C.D. Cal. Feb. 7, 2023), the court granted class certification to a group of subscription television subscribers who alleged that the defendant used interlocking broadcast licensing agreements to suppress competition for the sale of professional football game telecasts in violation of Sections 1 and 2 of the Sherman Act. Id. at *2. The plaintiffs specifically asserted that the NFL, acting on behalf of the 32 individual NFL teams through a pooled-rights agreement, entered into two licensing agreements, including: (i) an agreement in which CBS and Fox coordinated to create a single telecast for every Sunday afternoon NFL game and were permitted to broadcast only a limited number of games through free, over-the-air television; and (ii) an agreement allowing DirecTV to obtain all of the live telecasts produced by CBS and Fox and bundle them into a subscription package called NFL Sunday Ticket. Id. at *2-3. As a result of the two licensing agreements, Sunday Ticket subscribers are able watch both local and out-of-market games, but non-subscribers could only watch a limited number of games. The plaintiffs asserted that the licensing agreements prohibited them from having the option to purchase just one team or out-of-market telecast and that, absent the agreement, a greater number of telecast options for NFL games would be more accessible to more viewers at lower prices. Id. at *3. The court certified two classes – a residential subscriber class and a commercial subscriber class – because the plaintiffs established that the Sunday Ticket had an anticompetitive impact on a class-wide basis and that the claims and damages were all subject to common issues of law and fact. The court determined that although there could be individual issues with precisely how each class member was impacted, they were all impacted in some common way and had some common injury due to the defendants’ alleged conduct. The U.S. District Court for the Northern District of Illinois certified a damages class and an injunctive relief class both consisting of home sellers in Moehrl, et al. v. National Association of Realtors, 2023 U.S. Dist. LEXIS 53299, at *1-2 (N.D. Ill. Mar. 29, 2023). The plaintiff home sellers alleged that various rules between the National Association of Realtors and multiple real estate brokerages allegedly inflated the commission rates that plaintiffs pay to sell their homes. The court found that there was at least one central, common question sufficient to meet the commonality requirement of Rule 23(a)(2) – whether the defendants conspired to artificially inflate the buyer-broker commissions paid by the class by adopting the challenged restraints in violation of Section 1 of the

Duane Morris Antitrust Class Action Review – 2024

Sherman Act. Id. at *43-44. The court also ruled that, while the claims may vary as to the nature of each of the defendant ’ s participation in the conspiracy, the same evidence will be relied upon by the plaintiffs and members of the class. The court held that plaintiffs’ expert reports demonstrated that the impact was class- wide, based upon evidence that sellers were hindered by constraints on negotiations and were forced to pay uniform and artificially inflated commission rates to buyer-brokers. Id. at *53. The court concluded that the plaintiffs demonstrated the existence of common questions concerning anticompetitive impact that could be answered with common evidence. The court also held that damages could be shown on a class- wide basis because the plaintiffs sought to recover damages equivalent to the amount of the overpayment by class members as opposed to a full refund of the buyer-broker commissions. The court also found that a class action would be the superior method of adjudication here, because the common issues predominated over individual claims. In a price-fixing multidistrict litigation (MDL) out of the U.S. District Court for the District of Minnesota, the court granted a motion for class certification of three classes of pork purchasers who claimed that they paid supracompetitive prices for pork as a result of the defendants’ conspiracy. In the litigation entitled In Re Pork Antitrust Litigation, 2023 U.S. Dist. LEXIS 53505 (D. Minn. Mar. 29, 2023), the court certified three classes of pork purchasers, including: (i) Direct Purchaser Plaintiffs (DPPs); (ii) Commercial and Institutional Indirect Purchaser Plaintiffs (Commercial IIPPs or CIIPPs); and (iii) Consumer Indirect Purchaser Plaintiffs (Consumer IPPs or CIPPs). Each class submitted expert testimony in support of their motion for class certification to show, inter alia , common impact from the conspiracy. DPP ’ s expert conducted a regression analysis, which led the court to conclude that “the structure and characteristics of the pork industry made it conducive to the formation and maintenance of the alleged price-fixing conspiracy.” Id. at *79-80. As to the Consumer IPPS, the court reasoned that their expert testimony demonstrated that the class was capable of proving class-wide impact using common evidence, including market concentration, lack of adequate pork substitutions, and standardization of pork which all made it easier for competing firms to collude. Id. at *82. Finally, the court found that the Commercial IIPPs were also capable of showing class-wide impact via common evidence because Commercial IIPPs presented common evidence of general price inflation, small profit margins, and a higher likelihood of overcharging. Relying on the plaintiffs’ experts, the court concluded that each class had common issues of law and fact that could be resolved on a class-wide basis, including that they “overpaid for pork due to the defendants’ conspiracy to restrict supply and stabilize prices in the pork market.” Id. at *63. The court also determined that the classes satisfied the Rule 23(b) predominance requirement, because there was common evidence that could be used to prove the existence of the alleged antitrust conspiracy and that each class member ’ s injury could be established by the alleged unlawful conduct. Similarly, the U.S. District Court for the District of Nevada granted the plaintiffs’ motion to certify a class of all persons who competed in one or more live professional UFC-promoted mixed-martial arts bouts taking place or broadcast in the United States from December 16, 2010 to June 30, 2017 in Le, et al. v. Zuffa, LLC , 2023 U.S. Dist. LEXIS 138702 (D. Nev. Aug. 9, 2023). The plaintiffs are current or former UFC fighters, and the defendant, Zuffa, LLC does business as UFC and is the preeminent MMA event promoter in the United States. The plaintiffs alleged that UFC used exclusive contracts, market power, and a series of acquisitions to suppress wages paid to UFC fighters during the class period by up to $1.6 billion. The plaintiffs moved to certify two classes, including: (1) all persons who competed in one or more live professional UFC-promoted MMA bouts taking place in the United States from December 16, 2010 to June 30, 2017; and (2) all UFC fighters whose identity was expropriated or exploited by the UFC. The defendant argued that class certification should be denied because the statistical model of the plaintiffs’ expert was flawed as it failed to include everyone in the sport and failed to consider the ways promoters help fighters develop into headliners. The court disagreed. It found that these arguments were

Duane Morris Antitrust Class Action Review – 2024

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