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Messner v. Northshore Univ. HealthSystem

United States Court of Appeals for the Seventh Circuit

February 8, 2011, Argued; January 13, 2012, Decided

No. 10-2514

Opinion

 [*808]  Hamilton, Circuit Judge. ] Under Federal Rule of Civil Procedure 23(b)(3), a class may be certified only if questions of law and fact common to members of the class predominate over questions affecting only individual members of the class. In this case, plaintiff-appellant Steven Messner and other named plaintiffs alleged that a merger between defendant-appellee  [**2] Northshore University HealthSystem and Highland Park Hospital violated federal antitrust law. In fact, the Federal Trade Commission found that the merger violated section 7 of the Clayton Act, 15 U.S.C. § 18. Plaintiffs seek treble damages and injunctive relief under section 4 of the Clayton Act, 15 U.S.C. § 15, and they seek certification of a class of individual patients and third-party payors who allegedly paid higher prices for hospital care as a result of the merger.

One key issue on the merits will be proof that the merger had an antitrust impact on the plaintiff class, primarily in the form of higher prices. To show the predominance of common questions regarding the merger's antitrust impact on class members, plaintiffs proposed to rely on the same economic and statistical methods used by the Federal Trade Commission staff and Northshore's own economic experts to analyze antitrust impact in the merger litigation before the FTC. The basic method, called "difference-in-differences," is designed to estimate the amount of Northshore's price increases that resulted from exercise of market power rather than from other factors. This analysis, plaintiffs claimed, will show that Northshore  [**3] leveraged its newfound market power to impose higher prices on insurers and patients.

The district court denied plaintiffs' motion for class certification, concluding that their expert had not shown that his proposed methodology could address the antitrust impact issue on a class-wide basis. The district court believed that plaintiffs' proposed methodology required proof that defendant raised its prices at uniform rates affecting all class members to the same degree. Finding a lack of uniformity in price increases, the district court concluded that plaintiffs could not show predominance and that class certification should be denied. The district court based this conclusion on its belief that plaintiffs' expert had conceded that the common methodological framework by which he proposed to demonstrate impact to members of the class was invalid absent uniform price increases. Plaintiffs sought interlocutory appeal under Rule 23(f).

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669 F.3d 802 *; 2012 U.S. App. LEXIS 731 **; 2012-1 Trade Cas. (CCH) P77,763; 2012 WL 129991

STEVEN MESSNER, et al., Plaintiffs-Appellants, v. NORTHSHORE UNIVERSITY HEALTHSYSTEM, Defendant-Appellee.

Subsequent History: Rehearing denied by Messner v. Northshore Univ. Healthsystem, 2012 U.S. App. LEXIS 4778 (7th Cir. Ill., Feb. 28, 2012)

Prior History:  [**1] Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 07-cv-04446—Joan Humphrey Lefkow, Judge.

In re Evanston Northwestern Healthcare Corp. Antitrust Litig., 268 F.R.D. 56, 2010 U.S. Dist. LEXIS 36488 (N.D. Ill., 2010)

Disposition:  The district court's order denying plaintiffs' motion for class certification was vacated and the case was remanded for further proceedings.

CORE TERMS

class certification, increased price, district court, prices, antitrust, merger, predominance, class member, plaintiffs', market power, methodology, certification, proposed class, contracts, merits, non-uniform, insurers, percent, Healthcare, questions, harmed, class action, proceedings, damages, argues, Clayton Act, restructuring, post-merger, negotiate, denial of class certification

Civil Procedure, Class Actions, Prerequisites for Class Action, Predominance, General Overview, Superiority, Special Proceedings, Certification of Classes, Evidence, Burdens of Proof, Allocation, Preponderance of Evidence, Appeals, Standards of Review, Abuse of Discretion, Appellate Review, Admissibility, Expert Witnesses, Daubert Standard, Expert Witnesses, Antitrust & Trade Law, Regulated Practices, Private Actions, Clayton Act, Claims, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Judgments, Summary Judgment, Evidentiary Considerations