AMERICAN SEED CO., INC., On Behalf of Itself v. Monsanto Company

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-1265
AMERICAN SEED CO., INC., On Behalf of Itself and Others
Similarly Situated; JERRY ELLEFSON; BENJAMIN REIN;
DAVE JOHNSON; KENT DUXBURY;
DARRELL SOUHRADA (Intervenors in D.C.)
v.
MONSANTO COMPANY; AMERICAN SEEDS INC, Monsanto Controlled
Subsidiaries; CORN STATES HYBRID SERVICE INC., Monsanto Controlled
Subsidiaries; ASGROW SEED CO INC, Monsanto Controlled subsidiaries; HOLDEN
FOUNDATION SEEDS, INC., Monsanto Controlled Subsidiaries; DEKALB SEEDS,
Monsanto Controlled Subsidiaries; CALGENE LLC, Monsanto Controlled
Subsidiaries; CHANNEL BIO CO., Monsanto Controlled Subsidiaries; NC+HYBRIDS,
Monsanto Controlled Subsidiaries; SEMINIS INC, Monsanto Controlled Subsidiaries;
GREENLEAF GENETICS LLC
American Seed Co., Inc., Jerry Ellefson,
Benjamin Rein, Dave Johnson, Kent
Duxbury and Darrell Souhrada,
Appellants
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
(D.C. Civil No. 05-cv-00535)
District Judge: The Honorable Sue L. Robinson, Chief Judge
Submitted Under Third Circuit LAR 34.1(a)
January 14, 2008

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Before: BARRY, CHAGARES and ROTH, Circuit Judges
(Opinion Filed: April 1, 2008)
OPINION
BARRY, Circuit Judge
Appellants in this case are five corn farmers and one family-owned corn seed
company who claim to be purchasers of transgenic corn seed, that is, corn seed that has
been genetically engineered to include traits that make the seed resistant to parasites or
herbicides or both. They claim that appellees, sellers of transgenic corn seed, have
monopolized certain American corn-seed markets in violation of section 2 of the Sherman
Act, sections 4 and 16 of the Clayton Act, and the antitrust laws of Iowa and Minnesota,
by undertaking actions that have unlawfully driven out competitors and allowed them to
gain from the resulting artificially-raised pricing. Appellants sought class certification
under Federal Rule of Civil Procedure 23(b)(3), which requires a putative class to
demonstrate that common issues of law and fact predominate over any individual
inquiries and that class resolution is superior to any other method of adjudication. The
District Court denied class certification on the ground that appellants failed to satisfy the
predominance requirement. For the following reasons, we will affirm.

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I.
Appellees are the Monsanto Company (“Monsanto”) and a number of its
subsidiary corn-seed companies. Through its subsidiaries, Monsanto grows and sells to
other seed companies “foundation seed,” i.e., seed that can be crossbred with other seed
in order to produce a new “hybrid seed.” Appellees also sell their own hybrid seed to
farmers and other retailers for planting. Finally, appellees license the corn-seed “traits”
that they have developed (the attributes of a seed that make it resistant to parasites or
herbicides or both) to other seed companies who in turn incorporate those traits into their
hybrid seeds.
Appellants allege that appellees have unlawfully required licensees of their corn-
seed traits to agree to certain exclusive-dealing obligations that penalize them for
licensing traits from any of appellees’ competitors. They further allege that appellees
have entered into unlawful “bundling” agreements that require corn-seed companies to
sell a minimum percentage of Monsanto-traited corn seeds for any particular line of corn
seeds or else face monetary penalties with respect to every line of Monsanto-traited corn
seed that they sell. These monopolistic tactics, appellants allege, have allowed appellees
to unlawfully (1) exclude competitors from entering any of the various trait markets, (2)
restrict competitors’ ability to license traits from companies other than Monsanto or its
affiliates, and (3) limit competitors’ ability to distribute their own seeds.
Appellants seek to certify three classes of individuals who have directly purchased
corn seed from appellees: one national class of such purchasers, one class of purchasers
who are citizens of Iowa, and one class of purchasers who are citizens of Minnesota.

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Each class is broken down into purchasers of seed (1) tolerant of glyphosate herbicide, 1
(2) resistant to the European Corn Borer pest, (3) resistant to the rootworm pest, and (4)
containing two or more of the traits identified in the first three sub-classes.
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Each of these three classes is further broken down into four sub-classes based on the
particular type of corn seed they purchased from appellees.1
Appellants filed their complaint on July 26, 2005 and, after a number of iterations,
an amended complaint naming class representatives for all three classes was filed on
September 20, 2006. Meanwhile, class-certification discovery had begun and concluded
on March 15, 2006. The District Court denied appellants’ motion for class certification in
a memorandum opinion and order dated November 13, 2006, and we granted appellants’
petition for leave to appeal under Federal Rule of Civil Procedure 23(f) on January 25,
2007.
II.
We have jurisdiction under 28 U.S.C. § 1292(e) and Federal Rule of Civil
Procedure 23(f). We review a district court’s grant or denial of class certification under
an abuse-of-discretion standard. In re Linerboard Antitrust Litig., 305 F.3d 145, 149 (3d
Cir. 2002). A district court abuses its discretion where its decision “rests upon a clearly
erroneous finding of fact, an errant conclusion of law or an improper application of law to
fact.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 165-66 (3d
Cir. 2001) (internal quotation marks and citation omitted). While a district court must not
decide a class-certification motion based on its assessment of the case’s merits, we
recognize that “[i]n reviewing a motion for class certification, a preliminary inquiry into

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the merits is sometimes necessary to determine whether the alleged claims can be
properly resolved as a class action.” Id. at 168.
III.
The District Court denied class certification on the ground that appellants failed to
demonstrate adequately that common questions predominated over individual questions
as to injury (or, as it is interchangeably referred to, “impact”) to each class member. The
basis for its decision was that appellants failed to carry their burden of demonstrating that
such class-wide impact can be established through the use of common proof.
Once an antitrust plaintiff proves a violation of the antitrust laws, it must still
prove a “fact of damage” suffered as a result of the defendant’s antitrust-violative
conduct. Bogosian v. Gulf Oil Corp., 561 F.2d 434, 454 (3d Cir. 1977). We held in
Bogosian that “when an antitrust violation impacts upon a class of persons who do have
standing, there is no reason in doctrine why proof of the impact cannot be made on a
common basis so long as the common proof adequately demonstrates some damage to
each individual.” Id. The use of common proof would be appropriate where, by reason
of the anticompetitive conduct, the class was forced to pay supracompetitive prices:
If, in this case, a nationwide conspiracy is proven, the result of which
was to increase prices to a class of plaintiffs beyond the prices which would
obtain in a competitive regime, an individual plaintiff could prove fact of
damage simply by proving that the free market prices would be lower than
the prices paid and that he made some purchases at the higher price. If the
price structure in the industry is such that nationwide the conspiratorially
affected prices at the wholesale level fluctuated within a range which,
though different in different regions, was higher in all regions than the
range which would have existed in all regions under competitive conditions,
it would be clear that all members of the class suffered some damage,

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notwithstanding that there would be variations among all dealers as to the
extent of their damage.
Id. This presumption of class-wide injury through the use of common proof is now
referred to as the “Bogosian short cut.” Linerboard, 305 F.3d at 151.
Over twenty-five years later, in Linerboard, we affirmed a grant of class
certification based on our determination that the district court had used a “belt and
suspenders rationale to support its conclusion that the putative class had met its burden of
showing impact. In addition to relying on the Bogosian short cut, it credited the
testimony of plaintiffs’ experts, opinions that were supported by charts, studies and
articles from leading trade publications.” Id. at 153. In affirming the district court’s
decision, we found it important that plaintiffs’ expert witnesses had utilized supporting
data to conduct analyses that authenticated their professional opinions. For that reason,
we held “that this was not a case where plaintiffs relied solely on presumed impact and
damages.” Id. at 155. Thus, post-Linerboard it is important that a putative class’s
presumption of impact under Bogosian be supported by some additional amount of
empirical evidence.
The District Court so interpreted Bogosian and its progeny: “The Bogosian
presumption of impact does not support class certification where there is no additional
evidence of class-wide impact.” Am. Seed Co. v. Monsanto Co., 238 F.R.D. 394, 398 (D.
Del. 2006). The Court described the proof of common injury offered by
plaintiffs/appellants as follows:
As proof of common injury, plaintiffs’ expert, Dr. Kamien, opines
that it is economically reasonable to conclude that, if defendants’ conduct is

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proven to have restrained competition, this had the effect of raising or
maintaining prices for all purchasers in the GM corn seed market above
what they would have been.
Id. at 397. The Court held that this alone was inadequate, because under our caselaw a
putative class must, in accordance with Linerboard, support a presumption of impact with
an analysis of the relevant data. It detailed this inadequacy as follows:
Plaintiffs have not provided any actual data for the court’s review as to the
‘factual setting of the case,’ against which to evaluate these formulas. Dr.
Kamien cites absolutely no factual authority in his declaration in support of
his theory of common injury and damages. . . There is no indication that
Dr. Kamien conducted at least a preliminary study of the market . . . Dr.
Kamien’s submissions are not supported by charts, studies, and articles
from leading trade publications . . . .
Dr. Kamien did not independently analyze the documents produced
during class discovery. Dr. Kamien did not study the pricing and/or pricing
variability for any of the varieties of GM cord seeds.
Id. at 400-01.
The District Court did not abuse its discretion in concluding that appellants had
failed to adduce evidence demonstrating that class-wide impact may be proven by
evidence common to all class members. As the Court noted, Dr. Kamien conceded
multiple times in his deposition that his theory was based solely on his assumption that all
of the allegations in the complaint were true. He admitted that he had not substantiated
his assumed theory by, for example, performing any analysis of the data made available
to appellants in discovery.
On appeal, appellants argue that Dr. Kamien performed sufficient analyses, but his
declarations and his deposition do not bear this out. The transcript of the certification
hearing indicates that appellants believed, as a matter of law, that they could establish that

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Because this alone warranted denial of certification, we need not address the District 2
Court’s other reasons in support of its holding.
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the question of class-wide injury predominated over any individual questions of injury by
presuming impact based on the allegations in the complaint that appellees violated the
antitrust laws, and that, therefore, there was a class-wide injury. The District Court,
however, made clear that it believed our caselaw required more. But appellants stuck to
their theory that a presumption of impact alone was adequate; indeed, when asked
specifically to address what the factual basis of its arguments was, appellants’ counsel
stated that that issue was a “red herring.”
In sum, the District Court did not abuse its discretion in denying class certification
based on its determination that common questions concerning injury did not predominate.
Because its conclusion did not rest upon a clearly erroneous finding of fact, an errant
conclusion of law, or an improper application of law to fact, we will affirm the order of
the District Court.2

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