The U.S. Court of Appeals for the Seventh Circuit recently clarified that courts deciding class certification must decide contested issues even where they overlap with the merits of the case, including grappling with expert testimony and other complex evidence.  In Arandell Corp. v. Xcel Energy, an antitrust case involving competing expert opinions as to whether common issues predominate, the Seventh Circuit announced that this analysis may go well beyond a “peek” at the merits, furthering a trend toward more rigorous analysis at class certification. 149 F.4th 883, 893 (7th Cir. 2025).  Though the Seventh Circuit provided some “guidelines” for this rigorous analysis, it is unclear what effect conducting this analysis at the class certification stage will have on the issues remaining at the merits stage.  And it remains ambiguous—in the Seventh Circuit and elsewhere—how many uninjured class members is too much to prevent certification.

Background

The plaintiffs in Arandell allege under Wisconsin state law that a conspiracy to increase natural gas prices caused them harm.  Although the defendants did not dispute the existence of a natural gas price-fixing conspiracy, they do contest the scope of that conspiracy and who suffered injury as a result.  In particular, the parties disagree whether natural gas is a nationwide market, such that prices in one geographic region will impact another region in the country.  Plaintiffs’ experts opined that natural gas is “a fungible commodity sold at standardized prices and transported through a nationwide network of pipelines” such that prices are “tightly correlated” from region to region, thus creating a nationwide market.  Defendants’ experts in rebuttal opined that a host of issues undermine a national market, including prices fluctuating both up and down depending on location and price type, plaintiffs’ failure to account for varieties in contractual terms, and anomalies in the data indicating that prices did not move as predicted according to plaintiffs’ experts.

The district court denied Daubert motions to exclude the plaintiffs’ expert reports and while the court granted the plaintiffs’ motion for class certification, it reserved making any decision crediting the expert reports or plaintiffs’ theory of a nationwide natural gas market.  Instead, the court determined only that the plaintiffs “articulated a facially credible basis for a jury to determine their conspiracy claims at a class level” and that defendants and their experts were “free to challenge plaintiff’s theory” at trial.  2022 WL 2314717, at *10 (W.D. Wis. June 28, 2022).  The district court emphasized prior Seventh Circuit decisions cautioning that factual disputes “should not turn the class certification proceedings into a dress rehearsal for the trial on the merits.”  Id. (quoting Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012)).

The Seventh Circuit’s Opinion

On appeal, the Seventh Circuit vacated the district court’s order and remanded for further consideration.  Although it cited its earlier decision in Messner, it instead relied on the Supreme Court’s decisions in Dukes and Comcast to recognize that an overlap between class certification and the merits “does not allow a district court to skip over an issue critical to certification just because it overlaps with the merits.” 149 F.4th at 892.  Under its earlier decisions the Seventh Circuit articulated that courts may need to “take a peek at the merits before certifying a class,” but in Arandell the court acknowledged that “more than a ‘peek’” may be required. Id. at 893.

Specifically, the Seventh Circuit emphasized that “[i]n the face of material disputes bearing on class certification, the trial court must receive evidence, whether by affidavit, evidentiary hearings, or otherwise, and then resolve the disputes or choose between competing perspectives.”  Id.  Thus, it directed the district court to resolve the disputed question of whether the “plaintiffs have shown the existence of a national market in which defendants’ manipulations of prices affected the prices plaintiff class members paid for the natural gas in Wisconsin.” Id. at 895.  Though the Seventh Circuit briefly summarized the conflicting expert testimony regarding the propriety of plaintiffs’ proposed market definition, it was not its “role to decide which experts have the better of their debates with one another” and that it fell to the district court to “engage with these debates and make findings of fact.”  Id.

The Seventh Circuit also provided several “guardrails” to help guide the district court’s class certification assessment on remand, including whether certain issues need to be decided at the certification stage.  The court first identified the parties’ dispute about the relevance of evidence showing differences in defendants’ conduct; the Seventh Circuit noted that if such conduct was relevant to the question of nationwide market definition, the district court must address it, but that it need not be resolved if the evidence was aimed at whether or not a conspiracy existed.  Id. at 895.

The court next addressed the parties’ dispute about variation in defendants’ pricing, with the court rejecting the argument “that the plaintiffs cannot win certification unless they can show ‘a single market that uniformly impacted all class members’ or else ‘unique circumstances’ of each plaintiff’s purchase. Id. at 896.  Although the Seventh Circuit left to the district court whether evidence of pricing differences defeated plaintiffs’ market definition, it emphasized that “perfect proof is not required” and that it “can be a mistake” for a court to “look so hard for perfect evidence that the search becomes the enemy of quite good evidence.” Id. at 897.  The Seventh Circuit further instructed that the plaintiffs must “show that the common method accounts for differences in methods of purchasing and pricing natural gas.” Id.

Further, the Seventh Circuit recognized that under its precedent, “a class should not be certified if it is apparent that a great many persons who suffered at the hands of the defendant” are included in the proposed class.  Id. at 898.  Similarly, the plaintiffs did not have to show that every transaction of every class member was impacted.  Id.  The extent to which uninjured class members in a proposed class impacts class certification remains uncertain across the courts of appeals.  The Supreme Court dismissed as improvidently granted Laboratory Corp. of America Holdings v. Davis, which could have clarified whether, and under what circumstances, inclusion of uninjured class members would defeat class certification.  Even within its own jurisdiction, the Seventh Circuit acknowledged that there is “no precise measure” to determine how many uninjured class members are permissible.  Id.

Takeaway

Arandell is yet another example of appellate courts requiring district courts to deeply engage with factual disputes that pertain to both class certification and the merits, with the Seventh Circuit candidly acknowledging that “more than a peek” may be needed to resolve disputes prior to ruling on class certification.  Requiring district courts to make findings of fact on hotly disputed issues, often implicating substantial expert analysis, will impact strategy and procedure going forward in at least three ways.

First, class certification is more likely to require evidentiary hearings (and potentially more involved or longer hearings), which may include cross-examination of expert witnesses and questions from the court.  Second, class certification briefing and expert reports are more likely to require a robust factual record, which may tend to push class certification back or make bifurcation of class and merits discovery less likely.  Third, courts are more likely to include findings of fact necessary to support their decisions on class certification.  While this will demonstrate that the requisite “rigorous analysis” was employed, such findings may present more opportunities for parties to seek appellate review after an unfavorable decision.  And, until the Supreme Court weighs in on the problem of uninjured class members being included in proposed classes, there will continue to be widespread uncertainty about how courts should deal with potentially overbroad classes comprising persons entirely uninjured by the conduct at issue.