American Seed Co. v. Monsanto Co.

271 F. App'x 138
CourtCourt of Appeals for the Third Circuit
DecidedApril 1, 2008
DocketNo. 07-1265
StatusPublished
Cited by4 cases

This text of 271 F. App'x 138 (American Seed Co. v. Monsanto Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Seed Co. v. Monsanto Co., 271 F. App'x 138 (3d Cir. 2008).

Opinion

[139]*139OPINION

BARRY, Circuit Judge.

Appellants in this case are five corn farmers and one family-owned corn seed company who claim to be purchasers of transgenic corn seed, that is, corn seed that has been genetically engineered to include traits that make the seed resistant to parasites or herbicides or .both. They claim that appellees, sellers of transgenic corn seed, have monopolized certain American corn-seed markets in violation of section 2 of the Sherman Act, sections 4 and 16 of the Clayton Act, and the antitrust laws of Iowa and Minnesota, by undertaking actions that have unlawfully driven out competitors and allowed them to gain from the resulting artificially-raised pricing. Appellants sought class certification under Federal Rule of Civil Procedure 28(b)(8), which requires a putative class to demonstrate that common issues of law and fact predominate over any individual inquiries and that class resolution is superior to any other method of adjudication. The District Court denied class certification on the ground that appellants failed to satisfy the predominance requirement. For the following reasons, we will affirm.

I.

Appellees are the Monsanto Company (“Monsanto”) and a number of its subsidiary corn-seed companies. Through its subsidiaries, Monsanto grows and sells to other seed companies “foundation seed,” i.e., seed that can be crossbred with other seed in order to produce a new “hybrid seed.” Appellees also sell their own hybrid seed to farmers and other retailers for planting. Finally, appellees license the corn-seed “traits” that they have developed (the attributes of a seed that make it resistant to parasites or herbicides or both) to other seed companies who in turn incorporate those traits into them hybrid seeds.

Appellants allege that appellees have unlawfully required licensees of their corn-seed traits to agree to certain exclusive-dealing obligations that penalize them for licensing traits from any of appellees’ competitors. They further allege that appel-lees have entered into unlawful “bundling” agreements that require corn-seed companies to sell a minimum percentage of Monsanto-traited corn seeds for any particular line of corn seeds or else face monetary penalties with respect to every line of Monsanto-traited corn seed that they sell. These monopolistic tactics, appellants allege, have allowed appellees to unlawfully (1) exclude competitors from entering any of the various trait markets, (2) restrict competitors’ ability to license traits from companies other than Monsanto or its affiliates, and (3) limit competitors’ ability to distribute their own seeds.

Appellants seek to certify three classes of individuals who have directly purchased corn seed from appellees: one national class of such purchasers, one class of purchasers who are citizens of Iowa, and one class of purchasers who are citizens of Minnesota. Each of these three classes is further broken down into four sub-classes based on the particular type of corn seed they purchased from appellees.1

Appellants filed them complaint on July 26, 2005 and, after a number of iterations, an amended complaint naming class representatives for all three classes was filed on September 20, 2006. Meanwhile, class-certification discovery had begun and concluded on March 15, 2006. The District Court denied appellants’ motion for class certification in a memorandum opinion and [140]*140order dated November 13, 2006, and we granted appellants’ petition for leave to appeal under Federal Rule of Civil Procedure 23(f) on January 25, 2007.

II.

We have jurisdiction under 28 U.S.C. § 1292(e) and Federal Rule of Civil Procedure 23(f). We review a district court’s grant or denial of class certification under an abuse-of-discretion standard. In re Linerboard Antitrust Litig., 305 F.3d 145, 149 (3d Cir.2002). A district court abuses its discretion where its decision “rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 165-66 (3d Cir.2001) (internal quotation marks and citation omitted). While a district court must not decide a class-certification motion based on its assessment of the case’s merits, we recognize that “[i]n reviewing a motion for class certification, a preliminary inquiry into the merits is sometimes necessary to determine whether the alleged claims can be properly resolved as a class action.” Id. at 168.

III.

The -District Court denied class certification on the ground that appellants failed to demonstrate adequately that common questions predominated over individual questions as to injury (or, as it is interchangeably referred to, “impact”) to each class member. The basis for its decision was that appellants failed to carry their burden of demonstrating that such class-wide impact can be established through the use of common proof.

Once an antitrust plaintiff proves a violation of the antitrust laws, it must still prove a “fact of damage” suffered as a result of the defendant’s antitrust-violative conduct. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 454 (3d Cir.1977). We held in Bogosian that “when an antitrust violation impacts upon a class of persons who do have standing, there is no reason in doctrine why proof of the impact cannot be made on a common basis so long as the common proof adequately demonstrates some damage to each individual.” Id. The use of common proof would be appropriate where, by reason of the anticompetitive conduct, the class was forced to pay supra-competitive prices:

If, in this case, a nationwide conspiracy is proven, the result of which was to increase prices to a class of plaintiffs beyond the prices which would obtain in a competitive regime, an individual plaintiff could prove fact of damage simply by proving that the free market prices would be lower than the prices paid and that he made some purchases at the higher price. If the price structure in the industry is such that nationwide the eonspiratorially affected prices at the wholesale level fluctuated within a range which, though different in different regions, was higher in all regions than the range which would have existed in all regions under competitive conditions, it would be clear that all members of the class suffered some damage, notwithstanding that there would be variations among all dealers as to the extent of their damage.

Id. This presumption of class-wide injury through the use of common proof is now referred to as the “Bogosian short cut.” Linerboard, 305 F.3d at 151.

Over twenty-five years later, in Liner-board, we affirmed a grant of class certification based on our determination that the district court had used a “belt and suspenders rationale to support its conclusion that the putative class had met its burden of showing impact.

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271 F. App'x 138, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-seed-co-v-monsanto-co-ca3-2008.