Richmond, VA, September 5, 2023 – Plaintiffs in an antitrust conspiracy case involving coupon processing filed a Rule 23(f) petition today with the Fourth Circuit Court of Appeals requesting permission to file an interlocutory appeal of an order denying certification of a class of manufacturers who paid shipping fees to Carolina Coupon Clearing, Inc. (“CCC”) or International Outsourcing Services (“IOS”).

Plaintiffs allege that Defendants CCC, Inmar, Inc., Carolina Manufacturer’s Services, Inc., and Carolina Services (collectively “Inmar”) entered into a per se unlawful anti-competitive conspiracy with IOS that resulted in overcharges in coupon processing shipping fees.

Plaintiffs moved to certify a class of manufacturers and a class of retailers that paid shipping fees. District Court Judge William Osteen, Jr. denied certification of a manufacturer class, while certifying a significantly smaller retailer class. 

Plaintiffs offered several alternative proposed class definitions for the manufacturer class, including a class composed of a fixed list of manufacturers for which a regression analysis showed observable overcharges. The court rejected the proposed fixed-list class as “fail-safe” on the grounds that “Plaintiffs generated the list[] of manufacturers … from [their expert’s] regressions which sought to determine which manufacturers [suffered harm].”

The existence of a fail-safe requirement independent of Rule 23 is subject to a circuit split. See In re White, 64 F.4th 302, 313-14 (D.C. Cir. 2023) (“[C]ourts should stick to Rule 23’s specified requirements … and, in doing so, will likely find any ‘fail-safe’ concerns assuaged.”); In re Rodriguez, 695 F.3d 360, 370 (5th Cir. 2012) (“our precedent rejects the fail-safe class prohibition”). The Fourth Circuit has not directly addressed the issue. See White, 64 F.4th at 310.

In addition, the proposed class does not fit the definition of a fail-safe class because it is not dependent on a final merits determination by the fact-finder. White, 64 F.3d at 303 (explaining that a fail-safe class definition is one in which “membership can only be ascertained through ‘a determination on the merits of the case,’” such as “a class defined as ‘those shareholders whom Company X defrauded’”); Adair v. EQT Prod. Co., 320 F.R.D. 379, 420 (W.D. Va. 2017) (“A fail-safe class is a class ‘that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim.’”) (quoting Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012)).

The manufacturers offered two other proposed class definitions, which they seek leave to appeal in the alternative.

The case is Mr. Dee’s Inc. v. Inmar, Inc., No. 1:19-cv-141-WO-LPA (M.D.N.C.), No.  23-249 (4th Cir.).