United States: Hospital Seeks Second Opinion On Certifying Class With Uninjured Members

Ten years into litigation, a hospital has moved to decertify a class of plaintiffs who claim the hospital's merger caused them to overpay for medical services. Arguing there is insufficient proof that class members were harmed, the hospital's motion invites the court to jump into the fray about whether classes may be certified when they include members who were not actually injured.

Defendant NorthShore University HealthSystem and Highland Park Hospital, both located near Chicago, merged in 2000. After the Federal Trade Commission pursued a post-merger challenge in 2004 for alleged violations of Section 7 of the Clayton Act, a putative class of hospital patients filed suit in 2008 claiming the merger caused them to pay inflated prices for inpatient and outpatient hospital services. The District Court initially denied a motion to certify a class of patients who had paid for NorthShore's services, but the Seventh Circuit vacated that denial in 2012 – see Messner v. NorthShore Univ. HealthSystem, 669 F.3d 802 (7th Cir. 2012) – and on remand the District Court then certified the class in 2013.

In its current challenge to certification, NorthShore primarily argues that the class should be decertified because the plaintiffs' expert analysis relies on average prices and they cannot show that Rule 23's "predominance" factor is satisfied. Like most class actions, this case was brought pursuant to Rule 23(b)(3), which requires that courts find "questions of law or fact common to class members predominate over any questions affecting only individual members." This predominance inquiry is designed to ensure that class members' claims are sufficiently similar in order to justify class treatment. When a proposed class includes persons who have not been injured by the challenged conduct, as NorthShore argues here, individual issues may preclude establishing that common issues predominate as required by Rule 23(b)(3).

In arguing there is insufficient proof that all class members were harmed, NorthShore invites the District Court to weigh in on a developing rift over whether classes may be certified when they include members who have not been injured. Some circuit courts have explained that classes cannot be certified when they include uninjured members. See, e.g., In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244, 252 (D.C. Cir. 2013) ("plaintiffs must also show that they can prove, through common evidence, that all class members were in fact injured by the alleged conspiracy"); Denney v. Deutsche Bank AG, 443 F.3d 253, 263-64 (2d Cir. 2006) ("no class may be certified that contains members lacking Article III standing"); and New Motor Vehicles Canadian Export Litig., 522 F.3d 6, 28 (1st Cir. 2008) (holding certification required proof that "each member of the class was in fact injured").

In contrast, other circuit courts have held that a class may be certified even though some members are not injured. See, e.g., Torres v. Mercer Canyons Inc., 835 F. 3d 1125, 1136 (9th Cir. 2016) ("a well-defined class may inevitably contain some individuals who have suffered no harm as a result of a defendant's unlawful conduct"); In re Nexium Antitrust Litig., 777 F.3d 9, 14 (1st Cir. 2015) ("We conclude that class certification is permissible even if the class includes a de minimis number of uninjured parties"); and Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 757 (7th Cir. 2014) ("If the court thought that no class can be certified until proof exists that every member has been harmed, it was wrong").

While these divergent circuit court opinions may be explained by underlying factual differences, the courts' stating that plaintiffs must show "all members" were injured (Rail Freight, 725 F.3d at 252) appears at odds with the courts' explaining that the presence of uninjured members does not preclude certification (Suchanek, 764 F.3d at 757). And the Supreme Court declined during recent terms to address whether Rule 23(b)(3) classes may include uninjured members. In 2015, the Supreme Court accepted a petition that asked "whether a class may be certified if it contains 'members who were not injured and have no legal right to any damages.'" Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1049 (2016) (citation omitted). But the petitioners later dropped that question, and the Supreme Court did not address it. Similarly, three months ago, the Supreme Court declined to accept another petition that raised the same issue. Thus, uncertainty regarding class certification injury standards remains unresolved.

NorthShore attempts to avoid the differences in opinions by arguing that the class includes "vast numbers" of members who were not injured. But the plaintiffs undoubtedly will argue that enough class members were injured to satisfy Rule 23's predominance factor. However framed, these arguments appear to ask the District Court to determine how many uninjured class members is too many for Rule 23. Whether the District Court takes up that issue and how it is resolved remains to be seen. But with the potential to address this increasingly central Rule 23 issue, we will be on the lookout for the District Court's resolution of NorthShore's request for a second opinion on certification.

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