In re: Class 8 Transmission Indirect Purchaser Antitrust Litigation

Court Relies on Edgeworth Analysis to Deny Class Certification to Purchasers of Truck Transmissions

On October 21, 2015, Judge Sue L. Robinson, federal judge for the US District Court for the District of Delaware, denied indirect purchaser plaintiffs’ motion for class certification and dismissed the case entirely on Article III standing grounds.

In the matter In Re: Class 8 Transmission Indirect Purchaser Antitrust Litigation, purchasers of Class 8 heavy duty trucks alleged that Eaton Corporation, manufacturer of truck transmissions, and the truck original equipment manufacturer (OEM) companies (Daimler Trucks, Freightliner, Navistar, International, PAACAR, Kenworth, Peterbilt, Volvo and Mack) conspired to enhance Eaton’s market power for Class 8 transmissions and eliminate Eaton’s biggest competitor, ZF Meritor.  

A joint defense group representing Eaton and the OEM truck manufacturers and sellers retained Edgeworth Economics to analyze class certification and damages issues related to the allegations. The Edgeworth team, led by Chief Executive Officer Dr. John H. Johnson IV and former Partner Dr. Parker Normann, identified flaws in the methodology plaintiffs put forward to certify a class.

In her opinion, Judge Robinson referenced Edgeworth’s finding that the opposing expert’s model for direct purchasers analyzes only a “small slice of data,” and “assumes, rather than analyzes, several important points.” As a result, Judge Robinson concluded that the plaintiffs’ expert’s “compartmentalized view of damages does not comprise common proof that Eaton overcharged the direct purchasers,” and “[b]ecause plaintiffs have failed to demonstrate that there is common proof showing that direct purchasers paid an overcharge, the indirect purchaser class cannot be certified.”

Additionally, Judge Robinson addressed plaintiffs’ pass-through arguments, concluding that “plaintiffs have failed to identify common evidence that any alleged overcharges were passed on to the indirect purchasers.” In supporting this conclusion, the opinion echoed Dr. Johnson’s critiques of plaintiffs’ pass-through regression: “the complex distribution chain frustrates the process of determining the amount of pass-through on a transmission based on the price of a truck, and ‘there has been no effort to correlate transmission . . . cost to truck price.’” Judge Robinson further noted that the plaintiffs’ model “fails to account for transmission price in the sale of the truck as a whole,” and that any alleged overcharge on transmissions “cannot be determined simply by the overall purchase price of the truck.”

Judge Robinson’s decision is published at: In Re: Class 8 Transmission Indirect Purchaser Antitrust Litigation, 140 F. Supp. 3d 339 (D. Del. 2015).