By Anne Nardacci
The increasing popularity of antitrust opt-out actions has led to new trends in the use of procedural devices to manage these actions — largely driven by defendants.
Companies should be aware of these trends and weigh the options when considering whether and how to file an antitrust opt-out action.
Over the last 10 to 15 years, the U.S. Department of Justice has been active in prosecuting price-fixing cartels that have inflated the price of billions of dollars' worth of consumer goods.
Following the announcement of these DOJ investigations, direct and indirect purchasers of the goods at issue typically file private class actions.
Increasingly, companies that had previously remained members of class actions in price-fixing cartel cases have opted out of the class litigation and filed their own lawsuits.
This trend toward opt-out litigation has been driven by a growing recognition over the last five years in particular of the fact that opt-out plaintiffs have more control over their claims than absent class members and can often maximize their recoveries by filing their own actions.
The broader availability of litigation funding has also fueled this trend.
The rise in opt-out lawsuits has, in part, engendered new trends in the use of procedural devices to manage the increased number of actions.
In fact, defendants facing the risk of treble damages have often found creative ways to defend these actions, even where the liability cases are strong.
Previously, it was nearly a foregone conclusion that a price-fixing cartel case would lead to a multidistrict litigation, and many of the first wave of cartel cases in the 2000s did just that.
Defendants now sometimes seek to informally coordinate or consolidate actions, however, rather than pursue an MDL.
This use of coordination and consolidation procedures in lieu of MDLs means companies have new considerations when determining whether and how to bring an opt-out action.
MDL or No: What Plaintiffs Must Consider
Where there is an MDL, an opt-out plaintiff has the option of filing its action in the MDL court or filing in another court, often its home court, and having the case transferred to the MDL court for pretrial proceedings.
If the plaintiff files in another court, the MDL court will remand the plaintiff's case back to that court for trial at the conclusion of the pretrial proceedings.
Remand gives the plaintiff full control over the trial of its case, without regard for how the class cases or other opt-out cases will be tried.
However, the plaintiff must then try its case before the remand court, which is unfamiliar with the pretrial proceedings, and without the potential benefit of sharing the trial workload with other plaintiffs.
Moreover, there may be differences in the substantive law of the MDL and remand courts, which may invite the relitigation of certain issues on remand.
For these reasons, opt-out plaintiffs have sometimes chosen to file their cases in the MDL court.
However, if an opt-out plaintiff elects to file in an MDL court, it must try its case there, as do all the other plaintiffs that have elected to file there.
Historically, the number of opt-out plaintiffs was relatively low and the number of opt-out plaintiffs electing to file in the MDL court was even lower, and thus coordination for trial among plaintiffs in the MDL court was often a reasonably manageable matter.
When there is no MDL, but rather only coordinated or consolidated proceedings, and in addition there is the likelihood of a significant number of opt-out actions, opt-out plaintiffs have somewhat different considerations in determining when and where to file.
Today, it is not uncommon for more than half of a direct purchaser class to opt out and bring their own suits, which can result in dozens of opt-out actions related to one cartel case.
If there is no MDL, all of these opt-out actions may be brought in the same court where the class actions are pending, and then all of these cases are coordinated or consolidated — including for trial.
These class and opt-out plaintiffs likely represent different levels of the distribution chain, and there may be substantive differences in the claims they are pursuing.
Working out a trial structure that serves all plaintiffs, including both classes and all of the opt-out plaintiffs, each of which has a significant claim standing alone, can become a substantial challenge.
Defendants, perhaps recognizing this challenge, no longer automatically seek to MDL cartel cases.
Plaintiffs can pursue a number of options in this scenario. First and foremost, where all cases are filed in the court handling the coordinated proceedings, opt-out plaintiffs can increase coordination among all plaintiffs and at earlier phases of these litigations in order to facilitate manageable trial structures.
These trial structures may become more sophisticated in order to fairly balance the interests of all the parties, at least where courts are amenable to it.
In addition, opt-out plaintiffs can consider filing in other federal courts and opposing transfer of their cases to the court handling the coordinated proceedings, or they can seek the creation of an MDL on their own.
It is also possible that opt-out plaintiffs will increasingly turn to state court as a potential venue where state law provides adequate causes of action.
Defendants also face risks from having all or nearly all plaintiffs' cases filed in one court. For example, one adverse ruling or trial outcome could apply to all cases, potentially increasing exposure for defendants.
As this trend continues to develop and these types of cases play out, we will see whether and how much the use of coordinated proceedings bears fruit for defendants.
In any event, these procedural developments are likely to help define the next evolution in antitrust opt-out actions. Plaintiffs considering opting out of an existing class action will want to weigh their options carefully and begin that process as early in the litigation as possible.
There is no one-size-fits-all answer, but careful consideration in light of these trends will lead to the best outcomes.
This article was first published by Law360 on April 20, 2021.