StarKist Tuna Spat Opens Can of Questions About Class Actions

Welcome back to Opening Argument, a reported column where I dig into interesting issues in high-profile cases and unpack disputes that are dividing appeals courts. Today: a look at a general rule for class actions that courts disagree on whether to follow.

StarKist still has to fight off a horde of angry tuna customers in a class action even though nearly a third of the class may not have actually paid more for their chicken of the sea.

In affirming a trial court’s decision to certify three classes—consumers, restaurants, and large retailers—to sue the tuna supplier and its parent company for violating antitrust laws, the US Court of Appeals for the Ninth Circuit created the appearance of a division among the lower courts over just how to handle people in prospective class actions who aren’t injured.

How many is too many to OK a class? It’s an important question because setting such a limit would make it harder to bring lawsuits as a class and hold corporations accountable when they hurt people. That’s why it’s in corporations’ best interest to argue for one.

Kate Spelman, who co-chairs the consumer law practice group at Jenner & Block and defends companies in these types of disputes, said the question that’s up in the air right now is whether courts should recognize as a general rule that more than a minimal number of uninjured plaintiffs in and of itself precludes class certification.

The Ninth Circuit wasn’t willing to do it. The appeals court said it’s up to the trial court to decide if the issues that are going to be litigated are predominantly common to all the class members. Meaning, can the jury decide all the class members’ claims based on common evidence? Predominance is one of the many requirements for class certification.

Jonathan Rubin, a partner at MoginRubin LLP who represents antitrust plaintiffs, said class actions give people an opportunity to correct wrongs that on an aggregate level are substantial, but on an individual level wouldn’t be worth the legal expense to pursue.

“Nobody’s going to bring a claim for a $3 overcharge except if the $3 overcharge happened 1.4 million times,” he said. “We would not want corporations to be able to cause widespread harm with no legal consequences, and that’s really the only method by which many claims are going to be brought.”

Class actions though rarely go to trial. They often settle once a court certifies the class.

As Judge Kenneth Lee, who was nominated to the court by President Donald Trump, noted in his dissenting opinion, companies settle settle even if they have a meritorious defense because their potential liability at trial could be enormous, maybe even catastrophic.

This case is unique because Bumble Bee, StarKist, and three tuna industry executives already pleaded guilty to conspiracy after the US Justice Department investigation found evidence of a price-fixing scheme among the StarKist, Bumble Bee Foods LLC, and Chicken of the Sea International. Bumble Bee’s former CEO was convicted by a jury of a conspiracy to fix prices and Chicken of the Sea chose to cooperate with the Justice Department in exchange for leniency.

It’s clear these companies colluded to increase the price of tuna, but that doesn’t mean all the purchasers involved in the class action were actually injured by the alleged conspiracy.

Gregory Garre, a partner at Latham & Watkins LLP who defended StarKist Co. and its owner Dongwon Industries Co. Ltd., said the tuna purchasers suing vary widely in terms of their size, negotiating power, store type, and how they typically buy tuna.

“You can’t claim there’s a common question or way in which people were impacted,” he said

But Rubin said if there are too many uninjured people in a class, that doesn’t mean there’s a predominance issue and the class shouldn’t be certified. The class just needs to be better defined.

“If it’s not well defined, the thing is to tweak the class definition not throw everyone out of court, which is what the de minimis rule does,” he said.

Garre said his clients are planning to appeal the Ninth Circuit’s decision to the US Supreme Court. Though a division among lower courts typically makes a case more attractive to the justices, not everyone agrees the April 8 decision created one.

“No court has said there’s a maximum, numerically, of uninjured class members or proportion of uninjured class members beyond which certification may not be granted nor has anyone ever said there is a floor below which certification must always be granted,” said Thomas Burt, a partner at Wolf Haldenstein. who represented the consumer plaintiffs.

Judge Sandra Ikuta , who was nominated to the court by President George W. Bush, wrote in the court’s majority ruling that neither the District of Columbia nor the First Circuit adopted the rule that there can be no more than a minimal number of uninjured members in a class for a class to be certified as some claimed they did.

If the Supreme Court takes the case, it could definitively create one. Rubin said that’s what corporations want. It’s in their interest to set up rules that make it more difficult for people to bring class actions.

“If they can try to put a roadblock to certification and say this is in the interest of efficient and proper administration of the rules of civil procedure, they’ll do it but it really isn’t,” he said. “It has nothing to do with proper rules of civil procedure and has everything to do with cutting back the number of class actions.”

If you know of a case or interesting legal dispute that’s worth writing about, email me at lwheeler@bloombergindustry.com. And if you want to read more Opening Argument, sign up for our newsletter The Brief. You’ll get Bloomberg Law’s top stories delivered free to your Inbox every weekday afternoon and you’ll catch this column every time it runs.