Messner v. Northshore Univ. HealthSystem (Summary)

ANTITRUST/MERGER

Messner v. Northshore Univ. HealthSystem, No. 10-2514 (7th Cir. Jan. 13, 2012)

The United States Court of Appeals for the Seventh Circuit vacated a district court’s order that denied a motion for class certification brought by individuals alleging that a merger between a Chicago health care system and a local hospital violated federal antitrust law. In its vacating order, the court of appeals found that the district court abused its discretion when it denied class certification on the grounds that the evidence did not exhibit uniform price increases within the proposed class.

When considering the requested class certification, the court of appeals focused on two questions. First, the court asked whether the individuals alleging harm provided sufficient evidence that questions of law and fact common to the proposed class predominated questions unique to individuals within the class. Second, the court asked whether the possibility that the proposed class included individuals who did not suffer, or could not have suffered, injury as a result of the challenged merger justified the rejection of the proposed class.

In its evaluation of whether questions common to the proposed class predominated, the court asked whether the individuals seeking class certification had offered evidence that showed that common evidence could prove that the merger injured the proposed class. Uniformity of price changes as a result of the merger was of no concern to the court. Relying on testimony from an economic expert for the individuals seeking class certification, the court concluded that proof of common evidence existed. The court’s reasoning focused on the expert’s testimony that he could apply accepted statistical methods to determine whether post-merger price increases were the result of increased market power. Thus, the court concluded that the economic expert’s testimony, that his proposed analysis would be derived from the set of facts shared by the proposed class, was sufficient to satisfy the predominance requirement for class certification.

The court also briefly addressed the health system’s argument that the class should not be certified because it includes members who were uninjured or could not have been injured by the alleged anticompetitive effects of the merger. The court rejected this argument on the grounds that class members’ abilities to prove individual entitlement to damages are generally irrelevant at the class certification stage. Furthermore, the court stated that the health system’s estimation that about 2.5% of the proposed class members could not have been injured did not amount to a large enough component of the proposed class to justify rejecting the certification of the class.