Coordinating Direct And Indirect Purchaser Cases

Competition Law360
July 9, 2012

By Christopher T. Micheletti and Patrick B. Clayton
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It has been seven years since provisions of the Class Action Fairness Act of 2005[1] began forcing into federal court the kind of state-law-based indirect purchaser antitrust and consumer protection class actions that previously were heard in state court. These indirect purchaser cases typically have companion federal-law direct purchaser class actions against the same defendants alleging the same conduct, and the operation of CAFA (along with the multidistrict litigation statute)[2] has almost invariably wedded the two actions into a coordinated proceeding before a single federal district judge.

Federal district judges and parties face a host of questions that arise as coordinated cases progress toward a trial date: Can or should direct purchaser and indirect purchaser claims be tried to the same jury or separate juries? Can common issues be tried to a single jury? Can there be two juries, sitting side by side, and what can they hear? If there are to be separate trials, who goes first? These questions raise thorny issues that are both substantive (the collateral effect of separate trials is unclear) and practical (courtrooms do not have unlimited juror seats).

Owing perhaps to the general rarity of any case proceeding all the way to trial, or perhaps to the specific dynamics of antitrust cases,[3] post-CAFA, there has never been a combined indirect purchaser and direct purchaser antitrust trial in federal court. At least two such coordinated cases — both, by coincidence, proceeding in the Northern District of California — have gone to the proverbial “eve of trial” before last-minute developments brought resolutions that mooted the difficult questions surrounding how, and whether, to try what are factually similar but legally distinct claims in a combined proceeding.

With little guidance from the past, practitioners are well advised to think through some of the hard problems that arise in these situations in advance so that they can effectively advocate the best solution for their clients.

In In re Static Random Access Memory (SRAM) Antitrust Litigation,[4] Judge Claudia Wilken of the Northern District of California faced certified classes of direct purchaser plaintiffs and indirect purchaser plaintiffs that, because of various settlements in the separate actions, had distinct line-ups of defendants, but one defendant in common. Each party weighed in with seemingly irreconcilable suggestions for how to proceed to trial: The direct purchasers argued for completely separate trials, the indirect purchasers argued for a single conspiracy trial and a bifurcated damages phase, and the defendants responded with a host of concerns about the potential prejudice they would face under any of the proposals.

With about one month to go before jury selection was to begin, the SRAM court orally informed the parties what the trial structure would look like, using the common shorthand for indirect purchasers and direct purchasers: “[Try the] conspiracy for IPs and DPs first. ... Reach a verdict on that. ... Send the IPs home. ... And then go on to impact and damages for the DPs only. And then after that, bring the IPs back and try impact and damages ... with the IPs.”[5]

This “trifurcation” approach utilizing a single jury ensured that common liability evidence was heard only once, but also tasked these same jurors with awarding two rounds of damages under two sets of laws. The feasibility of this proposal was never tested, because soon after the court’s announcement, a settlement with the direct purchasers broke the overlap in the line-up of defendants. At that point, the SRAM court ordered separate trials, and soon thereafter all parties reached settlements that fully resolved the cases.

About a year-and-a-half later, the common trial issue was confronted by Judge Susan Illston, also of the Northern District of California, in In re TFT-LCD (Flat Panel) Antitrust Litigation.[6] As in SRAM, the LCD court had before it certified classes of direct and indirect purchasers with one overlapping defendant. The court solicited proposals from the various parties, and received an equal number of suggestions — separate trials, joint trial, indirect purchasers first, direct purchasers first, etc.

The LCD court ordered a single trial, bifurcated into two phases: In the first phase, jurors would hear common liability evidence of the alleged conspiracy presented by the direct and indirect purchasers, and a direct purchaser presentation on impact and damages. In the second phase, the indirect purchasers would present evidence on impact and damages under their state-law claims.[7] Again, the proposed structure was never tested due to tentative settlements reached shortly thereafter that concluded the indirect purchaser case. (The direct purchaser case proceeded to trial and, on July 3, 2012, the jury returned a verdict in favor of the plaintiffs.)

In both SRAM and LCD, the courts expressed a strong preference to use a single jury to hear common evidence, and then determine each plaintiffs’ damages. The appeal of this approach, at least for the court, is obvious: It has the potential to resolve both cases without repetition and without requiring a novel use of jury panels. If these two cases can be said to represent the rough “model” for trials, then parties in other coordinated direct and indirect purchaser cases would be well-served to keep an eye on the following issues as their cases progress:

  • Settlements: If a settlement includes a provision for the settling defendant to provide cooperation to the plaintiffs in the ongoing prosecution of the case, then the settling parties must be prepared to address the situation where the defendant does not settle with the other plaintiff group, and both plaintiff groups are then required to give a common presentation of evidence in a joint trial.
  • Jury Instructions: Variations in state laws can result in the need for multiple instructions on what are otherwise similar claims; this complexity can be magnified where instructions on state and federal claims must be given jointly. All parties have an interest in keeping jury instructions manageable, and the sooner the parties begin discussing potential instructions, the better.
  • Liability Allegations: While direct and indirect purchaser class actions often are based on substantially similar liability allegations, seemingly small differences in alleged class periods, products or services at issue, and damages methodologies, can quickly become magnified in a joint trial. Keeping an inventory of these differences and how they change over time can help a party inform the court of advantages or disadvantages of proceeding jointly.


So long as CAFA continues to drive indirect purchaser cases into federal court alongside direct purchaser cases, the issue of how to effectively try such coordinated cases will continue to linger. Eventually, the near-encounters with joint trials as seen in SRAM and LCD will become actual trials, and the next chapter of CAFA’s impact on federal courts and litigants will finally be written.

--By Christopher T. Micheletti and Patrick B. Clayton, Zelle Hofmann Voelbel & Mason LLP

Christopher Micheletti is a partner and Patrick Clayton is an associate in Zelle Hofmann's San Francisco office.

Zelle Hofmann served as co-lead counsel for the indirect purchaser plaintiffs in the SRAM matter, and serves as co-lead counsel for the indirect purchaser plaintiffs in the LCD matter.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.



[1]           28 U.S.C. § 1332(d).

[2]           28 U.S.C. § 1407.  While the MDL statute provides for the return of a transferred case to the district in which it was filed following the conclusion of pretrial proceedings, as a practical matter, such transferred class action cases usually remain in the MDL court.

[3]           See Admin. Office, U.S. Courts, “Statistical Tables for the Federal Judiciary,” Table C-4, “U.S. District Courts – Civil Cases Terminated, by Nature of Suit and Action Taken, During the 12-Month Period Ending March 31, 2011” (stating that 0.5% of private antitrust cases reached trial).

[4]           Case No. 4:07-md-01819 CW (N.D. Cal.).

[5]           Dec. 14, 2010 Hr’g Tr. 27-28, In re Static Random Access Memory (SRAM) Antitrust Litig., Case No. 4:07-md-01819-CW (N.D. Cal.).

[6]           Case No. 3:07-md-01827-SI (N.D. Cal.).

[7]           Apr. 20, 2012 Order Re Trial Structure, In re TFT-LCD (Flat Panel) Antitrust Litig., Case No. 3:07-md-01827-SI (N.D. Cal.).