In a narrowly tailored 5-4 decision, the Supreme Court held that a federal district court improperly certified a class of Philadelphia consumers in an antitrust case against Comcast Corp. because the plaintiffs did not establish that their damages could be measured on a classwide basis. But plaintiff attorneys say they can breathe a collective sigh of relief for now, because the ruling is not the broad indictment of class actions that some feared. (Comcast Corp. v. Behrend, No. 11-864 (U.S. Mar. 27, 2013).)
“The case does not make the pronouncements that people expected it to make, which was obvious from the oral arguments,” said John Vail, vice president and senior litigation counsel at the Center for Constitutional Litigation in Washington, D.C., who wrote an amicus brief for AAJ in the case. “Comcast opines on one narrow issue on one type of particular proof of one complex antitrust case. I expect the Court will break doctrinal ground in the future, but it didn’t here.”
The plaintiffs alleged that Comcast and other cable providers “swapped” market share in major cities, allowing each company to cover a major metropolitan area and inhibiting competition by “overbuilders,” or providers not participating in the swaps, in violation of antitrust laws. The trial court dismissed all but one of the plaintiffs’ antitrust liability theories—the claim that Comcast acquired a significant market share through the swaps, which deterred overbuilders from competing. After lengthy expert testimony, the court certified the class of about 2 million existing and former subscribers, holding that the plaintiffs had satisfied Rule 23(b)(3) because common issues predominated over individual ones. Comcast appealed.
The Third Circuit affirmed, ruling that during certification, a class must show that the alleged antitrust violations were capable of being proved at trial through common evidence, but it does not need to argue the merits of the case.
Comcast sought certiorari on whether a district court may grant certification “without resolving ‘merits arguments’ that bear on Rule 23” certification requirements, including “whether purportedly common issues predominate over individual ones under Rule 23(b)(3),” as Trial News previously reported. But the Supreme Court reformulated the question after all parties submitted their briefs: Can a court certify a class “without resolving whether the plaintiff has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a classwide basis”?
During oral arguments, the Court focused on a Daubert analysis and evidence admissibility, but the majority opinion sidestepped those issues. Justice Antonin Scalia wrote for the majority that “without presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage calculations will inevitably overwhelm questions common to the class.”
Justices Ruth Bader Ginsburg and Stephen Breyer coauthored the dissent, joined by Justices Elena Kagan and Sonia Sotomayor. It was a scathing indictment of the Court’s decision to grant certiorari and its rephrasing of the question presented. Comcast “forfeited any objection to the admission of the plaintiff’s damages model at the certification stage,” which should have been sufficient reason for the majority to dismiss the writ as “improvidently granted,” the dissenters wrote.
The dissent emphasized that “the Court’s ruling is good for this day and case only. . . . The opinion breaks no new ground on the standard for certifying a class action under Rule 23(b)(3). In particular, the decision should not be read to require, as a prerequisite to certification, that damages attributable to a classwide injury be measurable on a ‘classwide basis.’”
Vail said the dissent was “unusually bitter,” and it “validates the notion that the Court has been seeking to hear cases in which it could constrain the capacity to bring class actions.”
Philadelphia attorney Michael Donovan, who represents class action plaintiffs, said the decision was surprising because the Court altered the question presented. He added that, “as with other Supreme Court opinions dealing with class actions, the decision will be misread and misinterpreted by the defense bar.”
Following the decision, the Court issued grant, vacate, and remand (GVR) orders in two cases—Whirlpool Group v. Glazer and RBS Citizens v. Ross—asking the Sixth and Seventh Circuits, respectively, to review their previous decisions granting class certification in light of Comcast. The Whirlpool case is a products liability class action involving allegedly defective front-loading washing machines, and RBS Citizens is a wage-and-hour class action.
While some defendants have been quick to argue that Comcast will affect these two cases and other certification battles across the class action spectrum, plaintiff attorneys disagree.
“The Comcast opinion ought to have no significant effect on either of those decisions,” said Donovan. “The majority opinion emphasizes it is applying a straightforward application of class action law and wasn’t breaking any new ground with predominance.”
Joseph Barton of Washington, D.C., who also handles class actions, said the decision was too narrow to apply broadly. “I’m sure that defense attorneys will try to make something of the Court’s decision, but there just isn’t that much in the opinion for them to use,” said Barton.