D.C. Circuit Reverses Certification of Class Following SCOTUS Decision
On Aug. 9, in
In re Rail Freight Fuel Surcharge Antitrust Litigation, MDL No. 1869, No. 12-7085, 2013 U.S. App. LEXIS 16500 (D.C. Cir. Aug. 9, 2013), the U.S. Court of Appeals for the District of Columbia applied the U.S. Supreme Court’s decision in
Comcast v. Behrend to reverse a district court decision certifying a class of 30,000 direct purchasers of rail shipping services,
holding that proof of injury on a classwide basis was a prerequisite to certification. Plaintiffs alleged that several major railroad freight companies
conspired to fix, raise, maintain or stabilize fuel surcharges on shipping from mid-2003 until 2008.
While both the 6th and 7th Circuits have downplayed the significance of
Comcast and have upheld class certifications on the basis that the
Supreme Court’s decision “breaks no new ground,” the D.C. Circuit appeared
to breathe new life into the Supreme Court’s decision by overturning
certification on the basis that plaintiffs failed to “show that they can
prove, through common evidence, that all class members were in fact injured
....” Indeed, In re Rail Freight falls in line with the Supreme
Court’s apparent recent disfavor of class actions and suggests a higher
standard for plaintiffs seeking to pursue a class action after Comcast.
Major Airlines Hit Back at DOJ, Claim Challenge to Merger Ignores “Economic Realities”
AMR Corp., bankrupt parent company of American Airlines, and US Airways
Group Inc. responded to the Department of Justice’s challenge of the merger
of the two airlines, claiming that the DOJ fails to offer any “coherent
rationale” supporting its lawsuit filed to block the merger.
filed on Aug. 13 by DOJ, six state attorneys general and the District of
Columbia, claims that the merger, if permitted, would reduce competition and
increase airfares for consumers. American and US Airways, however, claim
that the challenge ignores that the combined network of the two major
carriers will increase competition against other major carriers, while
opening up new routes for travelers and generally meeting the increased
demand of consumers.
One of DOJ’s arguments against the merger is that competition on connecting
service would be reduced. The airlines argue, however, that DOJ’s focus on
“more than 1,000” overlapping routes is misleading. Of the 623 domestic
nonstop routes operated by American and US Airways, there is competition
between the two carriers on 17 nonstops, with most of those overlaps being
served by other carriers. The remaining 994 are one-stop connecting routes
that American claims represent a mere fraction of the 13,000 operated by it
and US Airways. American also points out that on almost half the routes
cited by DOJ in its challenge, the airlines carry less than 10 percent of
the passengers in those respective markets, and once the merger is complete,
“almost 90% of the passengers on these routes will continue to be served by
at least three airlines.”
Trial is set for November 2013.
DOJ’s Auto Parts Industry Investigation Yields Grand Jury Indictment
An executive for a Japanese auto parts manufacturer recently was indicted by
a federal grand jury in Kentucky for violating U.S. antitrust laws by colluding
with competitors to sell speed sensor wire assemblies for antilock braking
systems. The indictment stemmed from several alleged meetings with unnamed
competitors to coordinate bidding and fix prices of the speed sensors sold into
the United States. Former G.S. Electech Executive Director of Sales Shingo
Okuda, a Japanese citizen, was charged after G.S. Electech pleaded guilty in May
2012. The company was required to pay $2.75 million in criminal fines for its
role in the conspiracy. The charges represent the 16th indictment of an
executive in the DOJ’s ongoing investigation of price-fixing in the auto parts
industry. Eleven companies have been charged, and over $874 million in criminal
fines have been imposed,
according to DOJ.
UBS Japan Fined $100 Million for LIBOR Rate Manipulation
On Sept. 18, a U.S. federal judge in Connecticut approved a $100 million fine
payable by UBS Securities Japan, the latest development in the global LIBOR rate
manipulation investigation. Authorities have been investigating more than a
dozen banks that they believe falsified reports to influence benchmark interest
(LIBOR) rates. Prosecutors largely have focused on Japanese units because email
traffic exposed how traders there had routinely manipulated rates to increase
The fine imposed on UBS Japan (jointly proposed by prosecutors and UBS Japan)
follows the foreign subsidiary’s guilty plea to felony wire transfer in December
2012, the first global bank subsidiary to plead guilty in more than two decades.
The fine is in addition to almost $1 billion in regulatory penalties and
disgorgement already imposed.
The guilty pleas secured by regulation authorities may be indicative of a
larger strategy by the DOJ to prosecute big banks and the financial industry in
general following criticism for not pursuing Wall Street more vigorously after
the 2008 financial crisis.
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