Edgeworth Analysis Cited in Indirect Purchasers' Class Certification Decision in Drywall Antitrust MDL
An Edgeworth Economics team—led by Chief Executive Officer Dr. John H. Johnson as the testifying expert and Partners Dr. Jesse David and Mr. Michael Kheyfets—was retained on behalf of Defendants in a multi-district class action alleging collusion among manufacturers of gypsum wallboard (or “drywall”). Indirect purchaser plaintiffs (“IPPs”)—defined to include purchasers of drywall as a “stand-alone product for their own use” or “through a contractor or other vendor for use in a property then-owned by the person or entity”—alleged a price-fixing agreement among manufacturers in violation of federal and state antitrust laws.
In denying class certification for the proposed IPPs class, Judge Michael M. Baylson, Senior Judge of the United States District Court for the Eastern District of Pennsylvania, found that “IPPs fail to show that antitrust impact can be proven on a classwide basis.” In drawing this determination, Judge Baylson cited “sufficient criticisms advanced by Defendants and [Edgeworth expert] Dr. Johnson,” which IPPs’ experts “do not adequately respond to.” For example, Dr. Johnson’s analysis indicated that in ignoring the complexity of the drywall distribution chain, IPPs have failed to show pass-through to the proposed end-user class. The Court agreed, rejecting IPPs’ expert’s opinion “as clearly contrary to the record and a vast oversimplification of the drywall market.”
In reaching his decision, Judge Baylson also cited Class 8 Transmission—another case in which Edgeworth’s analysis was probative to the denial of class certification. Specifically, he indicated that in Drywall, as in Class 8, IPPs’ failure to analyze “a substantial portion of the complex distribution scheme” and reliance on “selective data presentation” was “fatal to IPPs bid for certification.”
The case is In re: Domestic Drywall Antitrust Litigation, Case No. 2:13-md-02437, in the US District Court for the Eastern District of Pennsylvania.