Corporate & Securities Law

Class Certification Reversed in In re New Motor Vehicles Canadian Export Antitrust Litigation

By Matthew S. Wild

On March 28, 2008, the United States Court of Appeals for the First Circuit reversed the grant of class certification in In re New Motor Vehicles Canadian Export Antitrust Litigation, Nos. 07-2257, 07-2258, 07-2259, 2008 WL (1st Cir. Mar. 28, 2008).  In that case, plaintiffs alleged a conspiracy among car manufacturers — a violation of Section 1 of the Sherman Act — to discourage U.S. customers from purchasing cars in Canada — which were cheaper at the time due to favorable exchange rates — for their use in the U.S.  The manufacturers allegedly used a variety of mechanisms to discourage this customer practice such as refusing to honor warranties on Canadian cars.  The United States District Court for the District of Maine certified two classes — (1) injunctive relief class under Section 16 of the Clayton Act and (2) damages class under various state antitrust and consumer protection laws.  Defendants argued that plaintiffs’ claim for injunctive relief was moot because there is no longer a “realistic threat” of future harm.  As a result of the weak dollar, there is no longer a realistic threat that manufacturers will conspire to keep consumers from importing cars from Canada.   The Third Circuit agreed and reversed class certification on the injunctive relief claim with instructions to dismiss that claim.  The Third Circuit also agreed with the District Court’s treatment of the damages class — that plaintiffs should have more time to develop their theories to support class certification.  The Third Circuit, nevertheless, vacated the preliminary grant of class certification because it was concerned that subject matter jurisdiction no longer existed.  With the federal claim now dismissed, there would have to be an independent basis for federal subject matter jurisdiction over the damages claims under state law.  The District Court was instructed to determine if jurisdiction existed.

Full post as published by Antitrust Commentary on April 03, 2008 (boomark / email).