Antitrust Bulletin

McGuireWoods Defeats Class Certification in Antitrust Case

February 5, 2008

McGuireWoods, representing Circuit City Stores, Inc., has defeated a bid for class certification in a lawsuit brought by a group of independent music CD retailers alleging price discrimination in violation of the Robinson-Patman Act and other practices in violation of the California Business and Professions Code. On January 14, 2008, the U.S. District Court for the Central District of California denied plaintiffs’ motion for class certification, holding that the proposed class was insufficiently defined, that the individualized issues implicated by plaintiffs’ claims rendered them unsuitable for class treatment, and the fact that plaintiffs sought only injunctive relief did not affect this analysis.

A group of eight independent music CD retailers had filed a complaint against retailers Circuit City, Best Buy, Target, and Wal-Mart as well as music distributors BMG, Sony, EMI, Universal, and Warner-Elektra-Atlantic, alleging violations of the Robinson-Patman Act as well as certain California statutes prohibiting below-cost sales. Plaintiffs claimed that the named retailers obtained preferential discounts from music distributors for the first two weeks of certain “Superstar Releases” and that the retailer defendants sold CDs at prices below wholesale cost, in violation of California state law.

In rejecting plaintiffs’ bid for nationwide class certification of their price discrimination claims, the court first held that plaintiffs’ proposed class definition of “smaller independent retailers who purchase music CDs directly from the Distributor Defendants and resell them at locations in the United States in competition with at least one of the Retailer Defendants” was not ascertainable. According to the court, because plaintiffs’ proposed class could only be defined after an analysis of the merits of plaintiffs’ claims, it was not presently ascertainable and could not support class certification.

In addition, the court found that class certification was precluded by the individualized nature of plaintiffs’ claims themselves. Specifically, the court held that determining whether class members were forced to pay higher prices than the retailer defendants would involve the sort of individualized inquiry that precludes class certification.

Plaintiffs had repeatedly argued that class certification was appropriate because the requirements for showing a right to injunctive relief under the Robinson-Patman Act are less stringent than the showing required in an action for damages. The court rejected this argument, finding that even if it were to accept that the standard for injunctive relief were less stringent than for damages, the case nevertheless presented too many individualized issues for class certification to be proper.

The court also denied plaintiffs’ motion to certify a California-only class of independent music CD retailers challenging the retailer defendants pricing practices under California state law. The court found that plaintiffs’ California state law claims, like their Robinson-Patman claims, required individualized analysis that could not be conducted on a class-wide basis.

The Antitrust team representing Circuit City consisted of Howard Feller and Brent Justus.

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