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noting impropriety of blanket designations, and reminding the designating party that it "b[ore] the burden of proving the propriety of [its] confidentiality designations as to each document"
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02 Civ. 4911 (HB).
July 15, 2003
OPINION ORDER
Plaintiffs move to certify this matter as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure. Defendants oppose the motion on the grounds that plaintiffs have failed to show commonality, typicality, adequacy of representation, and predominance of law and fact. For the following reasons, plaintiffs' motion is granted.
Pursuant to a May 21, 2003 Order, plaintiffs' counsel dismissed without prejudice all plaintiffs who are no longer named on the latest amended complaint or who do not have damages within the applicable statute of limitations period. Accordingly, this action was re-captioned to reflect the present named plaintiffs in the latest amended complaint.
I. LEGAL STANDARDS
A. Class Certification
Plaintiffs bear the burden of proving that the putative class has satisfied all four prerequisites of Rule 23(a) and at least one of the requirements of Rule 23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997); Caridad v. Metro-North Commuter RR, 191 F.3d 283, 291 (2d Cir. 1999). Rule 23(a) requires that: (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a). In addition, the party seeking class certification under Rule 23(b)(3) must show that common questions of law or fact predominate and that a class action is a superior means to adjudicate the claims. Fed.R.Civ.P. 23(b)(3).
B. Level of Inquiry
In deciding a motion for certification, the court should accept the underlying allegations in the complaint as true. Shelter Realty Corp. v. Allied Maintenance Corp., 574 F.2d 656, 661 n. 15 (2d Cir. 1978). A court may examine not only the pleadings, but also the evidentiary record and any affidavits and other results of pre-certification discovery. Sirota v. Solitron Devices, Inc., 673 F.2d 566, 571 (2d Cir. 1982). Defendants contend that I must perform a fact intensive inquiry, going beyond the complaint to decide whether to certify the putative class action before me. Defendants note that the Second Circuit had commented that "in making a certification decision, a judge must look somewhere `between the pleading and the fruits of discovery. . . . (E)nough must be laid bare to let the judge survey the factual scene on a kind of sketchy relief map, leaving for later view the myriad of details that cover the terrain.'" Sirota, 673 F.2d at 571-72 (citing Professional Adjusting Systems of America, Inc. v. General Adjustment Bureau, Inc., 64 F.R.D. 35, 38 (S.D.N.Y. 1974)). The United States Supreme Court, after Sirota, stated in General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147 (1982):
Sometimes the issues are plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiffs claim, and sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question. Even after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation. For such an order, particularly during the period before any notice is sent to members of the class, "is inherently tentative." This flexibility enhances the usefulness of the class-action device; actual, not presumed, conformance with Rule 23(a) remains, however, indispensable.Id. at 160 (emphasis). Thus, although Sirota may suggest that the Court must look beyond the pleadings, the Supreme Court deemed, in its later opinion, that courts should take a flexible stance, depending on circumstance, in regard to how much the Court must look beyond the pleading, if at all, to decide whether to certify a class action. "In some cases, it may be possible to conduct the required inquiry by looking no further than the pleading," In re Visa Check/Mastermoney Antitrust Litig., 192 F.R.D. 68, 79 (E.D.N.Y. 2000), whereas in other instances, plaintiffs may not rest solely on the complaint. See Pecere v. Empire Blue Cross Blue Shield, 194 F.R.D. 66, 70 (E.D.N.Y. 2000). Although defendants have maintained and continue to characterize plaintiffs' complaint as thread bare in facts and full of conclusory statements, which fails to meet the minimal pleading requirements of Rule 8(a), I find, as further discussed below, that the allegations set forth within the complaint along with the material incorporated by reference and other pre-certification discovery materials, including the Expert Report of Martin Asher, submitted with plaintiffs' motion is adequate, at this juncture, to support this Court's analysis and decision to certify the proposed class.
The Court assumes familiarity with the facts and allegations by plaintiff, as set forth in Masters v. Wilhelmina Model Agency, Inc., 2003 WL 1990262 (S.D.N.Y. Apr 29, 2003) and Masters v. Wilhelmina Model Agency, Inc., 2003 WL 145556 (S.D.N.Y. Jan 17, 2003), and will not repeat them here.
Defendants argue that the putative class should not be certified because plaintiffs have allegedly failed to provide or show: (1) a precise and definite definition of the class; (2) common impact on putative class members; (3) typicality and adequacy to meet the requirements of Rule 23(a); and (4) the proposed class action is not the best way to proceed as required by Rule 23(b)(3). I find all of defendants' arguments to be without merit.
A. Ascertainability of the Class
As a preliminary issue, defendants' claim that the instant matter cannot be certified as a class action because plaintiffs' definition of the class is too indefinite to determine whether a particular individual is a member of the proposed class. "[W]hile Rule 23(a) does not expressly require that a class be definite in order to be certified, a requirement that there be an identifiable [aggrieved] class has been implied by the courts." In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liability Litig., 209 F.R.D. 323, 336 (S.D.N.Y. 2002) (internal quotes and citations omitted); Dunnigan v. Metropolitan Life Ins. Co., 214 F.R.D. 125, 135 (S.D.N.Y. 2003). "An identifiable class exists if its members can be ascertained by reference to objective criteria." MTBE Prods., 209 F.R.D. at 336. Membership should not be based on subjective determinations, such as the subjective state of mind of a prospective class member, but rather on objective criteria that are administratively feasible for the Court to rely on to determine whether a particular individual is a member of the class. Id. Further, the Court "must be able to make this determination without having to answer numerous fact-intensive inquiries." Id. at 336 n. 20 (quoting Daniels v. City of New York, 198 F.R.D. 409, 414 (S.D.N.Y. 2001). Although members of the class need not be ascertained before the class certification, they "must be ascertainable at some point in the case." MTBE Prods. Liability, 209 F.R.D. at 337 (quoting Rios v. Marshall, 100 F.R.D. 395, 403 (S.D.N.Y. 1983); Ashe v. Board of Elections in the City of New York, 124 F.R.D. 45, 47 (E.D.N.Y. 1989).
Here, plaintiffs propose a class consisting of "all current and former models who have or had oral or written contracts with any of the Defendants during the Class Period." Third Am. Compl. ¶ 31. Defendants contend that it is a "vague and unworkable definition of the proposed class." Def. Mem. at 9. I disagree. The class definition, as worded above, is sufficiently definite that the members can be objectively identified. Although those with oral contracts may be more difficult to identify compared to those with written contracts, it should still be administratively feasible to identify them, based on booker records and other objective criteria. In view of the allegations in the complaint, which I must take to be true, that defendants conspired to violate the antitrust laws by engaging in horizontal price fixing and charging commissions above those permitted by New York state law, plaintiffs have, at least for now, established the existence of an aggrieved class, whose members can be readily ascertained under the definition provided.
The Class Period runs from June 25, 1998. Masters, 2003 WL 1990262, at *3.
B. Satisfaction of Rule 23(a)
1. Numerosity
Defendants do not dispute that the proposed class is so numerous that joinder of all members would be impractical. In fact, from the deposition testimony of Katie Ford, CEO of defendant Ford Models, Inc. ("Ford Models"), the number of models working for Ford Models who would be class members, appears to number in the thousands. Katie Ford Depo. at 8, 9, 11, 12, 14, 17. There is a strong likelihood that the number of class members is substantially greater in view of the other defendants in this lawsuit The numerosity requirement under Rule 23(a)(1) is met.
2. Common questions of law and fact
Plaintiffs allege in their complaint that defendants engaged in a horizontal price fixing conspiracy to charge virtually all models commission rates of 20%, in excess of the 10% rate permitted by state law for employment agencies. The existence of this alleged conspiracy, whether defendants are employment agencies subject to N.Y. General Business Law §§ 170-190 (1988) ("Article 11"), whether the conspiracy set a 20% commission rate that violates the antitrust laws, and the amount of the artificiality of rates, stand, among other issues, as common questions of law or fact, which satisfy the commonality requirement under Rule 23(a)(2). See In re Auction Houses Antitrust Litig., 193 F.R.D. 162, 164 (S.D.N.Y. 2000); see also Arden Architectural Specialties, Inc. v. Washington Mills Electro Minerals Corp., 2002 WL 31421915, at *4 (W.D.N.Y. Sept. 17, 2002); In re Playmobil Antitrust Litig., 35 F. Supp.2d 231, 241 (E.D.N.Y. 1998) ("It is well established that class actions are particularly appropriate for antitrust litigation concerning price-fixing schemes because price-fixing presumably subjects purchasers in the market to common harm." (citing In re Plastic Cutlery Antitrust Litig., 1998 WL 135703, at *2 (E.D. Pa. 1998)); In re Alcoholic Beverages Litig., 95 F.R.D. 321, 324 (E.D.N.Y. 1982) ("The very nature of the case — involving allegations of antitrust conspiracy among defendants — appears to insure that the commonality requirement is satisfied.").
3. Typicality
________ Rule 23(a)(3) requires that the claims asserted by plaintiffs be typical of the claims of the other proposed class members. "Typicality refers to the nature of the claim of the class representatives and not to the specific facts from which the claim arose or relief is sought." In re NASDAQ Market-Makers Antitrust Litig., 169 F.R.D. 493, 510 (S.D.N.Y. 1996). The proper inquiry is whether "each class member's claim arises from the same course of events and each class member makes similar legal arguments to prove the defendant's liability." In re Dreyfus Aggressive Growth Mut. Fund Litig., 2000 WL 1357509, at *3 (S.D.N.Y. Sept. 20, 2000) (citing In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir. 1992)); see also Dura-Bilt Corp. v. Chase Manhattan Corp., 89 F.R.D. 87, 99 (S.D.N.Y. 1981) (typicality is satisfied if "members of the [proposed] class have the same or similar injury" as the proposed class representatives). Defendants argue that the typicality requirement is not met because the proposed class representatives suffer individual flaws that bar them from being proper class representatives. Namely, several putative class representatives did not read the entire complaint, several are subject to counterclaims or defenses, several purportedly lied about their age, several allegedly were unable to provide any evidence of the alleged unlawful conspiracy, several have at most a tangential relationship with the New York modeling industry, most have not spoken to or contacted other models under the age of 30 or current New York models to determine if they support the action, and none are male. See Def. Mem. at 19-20. Defendants fail to grasp that "[t]ypicality refers to the nature of the claims of the representative, not the individual characteristics of the plaintiff[s]. Personal traits or variables . . . are irrelevant to the typicality criterion." Playmobil, 35 F. Supp.2d 231, 242 (E.D.N.Y. 1998). Put another way, none of these examples changes my view that the antitrust claims brought by plaintiffs are "the same or similar" to that of other members of the proposed class. Although some of the proposed representatives' may be subject to counterclaims or defenses, that fact alone will not defeat typicality. Davis v. Cash for Payday, Inc., 193 F.R.D. 518, 521-22 (N.D. 11. 2000); Dreyfus Aggressive Growth, 2000 WL 1357509, at *6. I am unconvinced, and indeed believe it unlikely, that the potential counterclaims or defenses will threaten to become a focus of the litigation here, which might make class certification inappropriate. See Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990).
Defendants further contend that each of the plaintiffs, within the limitations period, worked full time for model management companies in Philadelphia or California, and imply that the plaintiffs could not have incurred damages from defendants' conduct during the relevant time period. The invoices and engagement letters signed by Donna Gibbs, Pl. Suppl. Exh. A, Carole Alston, id. at Exh. B, Sharon Simon, id. at Exh. C, Carolyn Fears, id. at Exh. J, and Tiffany Connor, id. at Exh. K, however, show that they signed contracts with defendants within the limitations period, and indeed were charged a 20% commission rate and the cost of various expenses in the relevant time frame. Plaintiffs have demonstrated that each of them have standing to bring the instant lawsuit.
Defendants contend, in the alternative, that even if plaintiffs had incurred damages within the limitations period, plaintiffs are not qualified to be the proposed class representatives because the "quantity and quality of the modeling services [they rendered] is [sic] insufficient to support their viability as class representatives." Elite Model Mgmt. June 10, 2003 Letter. More specifically, defendants claim that because the proposed class representatives have made rather modest sums of money from modeling, they cannot satisfy the typicality requirement for class certification. Defendants are incorrect. "[I]t is settled in this Circuit that factual differences in the amount of damages, date, size or manner of [payment], . . . and other such concerns will not defeat class action certification when plaintiffs allege that the same unlawful course of conduct affected all members of the proposed class. In re Sumitomo Copper Litig., 182 F.R.D. 85, 92 (S.D.N.Y. 1998) (emphasis added) (citing Green v. Wolf, 406 F.2d 291, 299-301 (2d Cir. 1968)); see also Continental Orthopedic Appliances, Inc. v. Health Ins. Plan of Greater New York, Inc., 198 F.R.D. 41, 45 (E.D.N.Y. 2000) ("Differences in the amount of damages sustained by individual class members usually will not defeat class certification.") (citing Playmobil, 35 F. Supp.2d at 242). Here, plaintiffs have alleged in their complaint that defendants conspired to evade state pricing regulation laws by repackaging themselves as model management companies, when in reality they remained in substance employment agencies, still subject to the state's laws. Pursuant to the objectives of the alleged conspiracy to evade the pricing regulations, defendants allegedly set commission rates at artificially high prices, which was assessed virtually across the board, see Asher Affid. ¶¶ 13-16, and agreed to charge models various expenses that would have otherwise been plainly precluded or limited by state law, but for the conspiracy. Thus, the alleged actions undertaken by defendants to evade the state pricing laws and evade detection of such violations stand as unlawful conduct that affected all members of the proposed class, including the few models who may have even been able to negotiate rates below the industry "standard," i.e., currently 20%. All of the plaintiffs and proposed class members make the same or similar claims of antitrust violations arising from the same course of conduct committed by defendants, and thus, the typicality requirement of Rule 23(a)(3) is satisfied.
4. Adequacy of representation
Rule 23(a)(4) requires that the class representatives be adequately representative of the class. To qualify, plaintiffs must show that the interests of the putative class representatives: (1) do not conflict with the class members' interests, and (2) the representatives and their attorneys must be able to prosecute the action vigorously. General Tel. Co., 457 U.S. at 157. Defendants observe that the class representatives are all female, over the age of 30, who allegedly earned "minimal" sums of money over their career or are purportedly "no longer active in the modeling industry." Def. Mem. at 21. "The mere fact that a representative plaintiff stands in a different factual posture is not sufficient to refuse certification . . . The atypicality or conflict must be clear and must be such that the plaintiffs interests are placed in significant jeopardy." Hedges Enterprises, Inc. v. Continental Group, Inc., 81 F.R.D. 461, 466 (E.D. Pa. 1979); see also NASDAQ, 169 F.R.D. at 513. I do not find that the representative plaintiffs' gender, age, amount of money earned, quantity of work performed for defendants, or currently modeling inactivity, create such a conflict that "is apparent, imminent, and on an issue at the very heart of the suit," NASDAQ, 169 F.R.D. at 513, as to defeat their ability to adequately represent the interests of the other class members. Furthermore, none of the alleged flaws raised by defendants in connection with typicality convince me that plaintiffs, who have taken time to consult with their counsel and undergo depositions, do not understand their role in this litigation or are unable or unwilling to vigorously pursue their claims here. See Baffa v. Donaldson, Lufkin Jenrette Sec. Corp., 222 F.3d 52, 62 (2d Cir. 2000) (finding individual who had knowledge of the subject matter of the litigation and was willing and able to work with counsel to litigate the action is an adequate class representative).
Defendants note that some of the models perform free lance and thus "they have a vested interest in destroying the model management companies" because they would then have more modeling opportunities. Def. Mem. at 24. Furthermore, defendants note several of the models spent virtually their entire career outside of New York, and contend that plaintiffs have failed to supply any evidence that the representatives share the same interests as active models in the continuing vitality of New York's modeling industry. Notwithstanding defendants' prognosis of a potential conflict, I find insufficient evidence to conclude that the proposed conflict, if any, is "so palpable as to outweigh the substantial interest of every class member in proceeding with the litigation." Littlewolf v. Hodel, 681 F. Supp. 929, 936-37 (D.C. 1988). All the class members share a common interest in proving the existence, scope and effect of defendants' ongoing price fixing, which allegedly led to inflated and unlawful commission rates and expenses. Furthermore, I find that Boies, Schiller, Flexner, which has taken a leading role in representing plaintiffs, are experienced counsel, and I find nothing to suggest that the firm would be unqualified to conduct the proposed class action and adequately protect the interests of the putative class.
C. Satisfaction of Rule 23(b)(3)
To certify a class action under Rule 23(b)(3), a court must find that common issues of law and fact predominate. The predominance requirement will be generally met along with typicality unless "it is clear that individual issues will overwhelm the common questions." NASDAQ, 169 F.R.D. at 517. To prevail on this point, courts have required plaintiffs to establish that common proof will predominate with respect to (1) defendants' alleged violations of the antitrust laws, (2) direct antitrust injuries suffered by plaintiffs as a result of the violations, and (3) the extent the injuries can be quantified with the requisite precision. Id.
Plaintiffs have alleged the existence of a single conspiracy, and thus the relevant proof of this will not vary among class members. Accordingly, this action clearly presents a common question that is fundamental to all class members. Id. ("Courts repeatedly have held that the existence of a conspiracy is the predominant issue in price fixing cases, warranting certification of the class even where significant issues are present.").
Defendants contend that "[a]s a result of the personal services rendered by the models to their customers, and the personal services that are rendered to the models by the defendants, individualized inquiries are necessary to determine both liability and damage issues." Def. Mem. at 26. Defendants claim that because each model is unique, with different looks, talent, gender, age, and place of residence, and managed differently, there are no "regular" services provided to models. Defendants cite a handful of cases where the court determined that the putative class could not be certified because the issue of injury and damages could not be reconciled. See Ambrook Enter. v. Time Inc., 612 F.2d 604 (2d Cir. 1979), National Auto Brokers Corp. v. General Motors. Corp., 60 F.R.D.476 (2d Cir. 1973); Continental Orthopedic Appliances v. Health Ins. Plan of Greater New York, Inc., 198 F.R.D. 41 (E.D.N.Y. 2000); Kennett Corp. v. Massachusetts Furniture and Piano Movers Ass'n, Inc., 101 F.R.D. 313 (Mass. 1984); Dafforn v. Rousseau Assocs., Inc., 1976 WL 1358 (N.D. Ind. 1976). In each of these cases, the defendant engaged in activities from which the issue of injury could not be determined from any kind of general proof or formulae. That does not appear to be the case here. See Asher Affid. ¶ 19. Defendants suggest that because they provide a range of services that may vary amongst plaintiffs, the determination of actual injury cannot be dealt with on a group basis. Unlike the cases they cite, however, defendants present no evidence here to support the gravamen of their allegation, i.e., the commission rates vary according to the services required, which might make determination of liability and damages more difficult. See, e.g., Kennett, 101 F.R.D. at 317 (distinguishing cases where the fee charged was fixed, regardless of services expended, and thus the service could be viewed as a homogeneous product, with cases where the pricing varied on an individual basis and was not subject to class certification). A sampling of contracts with defendants show that around 95% or more of all models, with whom defendants contracted, were paid the "industry standard" 20% commission rate. See Asher Affid. ¶ 16; see also id. ¶ 13 (deposition testimony indicating that between 96 to 98 1/2 percent of all Ford models pay commissions equal to 20%). Given the plethora of differences between models, as laundry listed by defendants, the overwhelming number of models charged the same rate belies any claim that the rate vary as a function of services needed. Defendants neither suggest nor adduce evidence, which might reflect that this practice of charging a flat rate has changed. In regard to injury, the defendants allegedly conspired to fix benchmark commission rates and charge unlawful expenses, and thereby injure class members by making them pay fees and expenses that are disallowed by the federal antitrust laws. Whether the commissions charged were higher or lower than the commissions that would have been charged in the absence of the alleged conspiracy requires common proofs here. "Neither a variety of prices nor negotiated prices is an impediment to class certification if it appears that plaintiffs may be able to prove at trial that, as here, the price range was affected generally." NASDAQ, 169 F.R.D. at 522. Plaintiffs allege that the majority of plaintiffs were charged a 20% commission, and that for those who were able to negotiate a different rate, they began from the artificially elevated rate of 20%. Assuming these allegations are true, "the proof with respect to the `base' price from which these negotiations began, or the structure of the conspiracy to affect individual negotiations, would be common to the class. Accordingly . . . the fact of damage is predominantly, if not entirely, a common question." Hedges Enterprises, Inc. v. Continental Group, Inc., 81 F.R.D. 461, 475 (E.D. Pa. 1979).
Although defendants' expert, Robert Larner, opines that there are flaws in the analysis and conclusion by plaintiffs' expert, Martin Asher, in finding class-wide impact, I find there is sufficient reliable foundation in Asher's methodology, at this preliminary stage, to find that there is a common class-wide injury that predominates and that this injury can be quantified with the requisite precision. Even if it should turn out later that certain damages must be determined on an individualized basis, that does not preclude class action certification where, as here, common issues, which define liability, predominate. NASDAQ, 169 F.R.D. at 524; see also Shelter Realty, 75 F.R.D. at 37. In addition, because of the number of individuals in the proposed class who may have claims against defendants, a class action is clearly a superior and more efficient means to adjudicate this action. The requirements of Rule 23(b)(3) are therefore met.
III. CONCLUSION
For the foregoing reasons, plaintiffs' motion to certify the putative class action under Rule 23(b)(3) and appoint plaintiffs as class representatives is granted. Boies, Schiller Flexner is approved as lead class counsel. Fully briefed dispositive motions, if any, remain due on or before September 15, 2003, and the trial for this class action is scheduled on my December 2003 trailing trial calendar.