Plaintiffs Must Present Methodology For Assessing Damages

The U.S. Supreme Court recently issued a ruling in an antitrust case that could have far-reaching effects on employment litigation. In this case, the Court considered whether a district court and the Third Circuit Court of Appeals appropriately certified a class of over two million under Federal Rule of Civil Procedure 23(b)(3), which permits certification only if “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members.” The Court found that the class was improperly certified, thereby reinforcing its prior cases requiring a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim. Comcast Corp. v. Behrend (March 27, 2013).

Lower Court Certifies Class

In this case, the trial judge certified the class holding that to meet the Rule 23(b)(3) predominance requirement, the plaintiffs must show that: (1) the existence of individual injury resulting from the alleged violation, the “antitrust impact,” was “capable of proof at trial through evidence that [was] common to the class rather than individual to its members”; and (2) the damages resulting from that injury were measurable “on a classwide basis” through use of a “common methodology.”

The trial judge accepted one of the plaintiffs’ theories of antitrust impact as capable of classwide proof and found that the resulting damages could be calculated on a classwide basis. The Third Circuit affirmed the ruling that the plaintiffs must “assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations.”

Justices Weigh In

The U.S. Supreme Court agreed to review the case and reversed the Third Circuit’s ruling. The Court recognized that to determine whether certification is proper will frequently entail overlap with the merits of the underlying claim. Thus, according to the Court, the Third Circuit ran afoul of Supreme Court precedent “[b]y refusing to entertain arguments against respondents’ damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination.” The Court considered the expert testimony regarding the respondents’ damages model and concluded that the damages model did not establish that damages were capable of measurement on a classwide basis. Thus that the plaintiffs could not show Rule 23(b)(3) predominance.

Practical Impact

According to Craig Cleland, a shareholder in Ogletree Deakins’ Atlanta office: “Behrend essentially holds that in an antitrust case, plaintiffs must present a full-scale methodology for assessing damages at the class-certification stage (and the court must approve that methodology after challenges from defendants). In those cases, plaintiffs must prove that damages can be assessed on a classwide basis using various disputed methods of proving antitrust impact. That is the crux of an antitrust case and, once proved, may be used to establish not merely damages but also liability.”

Cleland continued: “Granted, Behrend could well extend beyond the antitrust context and may require more formal damages models in certain cases. It is the first serious (b)(3) ruling from the Roberts court. But our cases are not antitrust cases, and the proof required there is different and unique.”

Patrick Hulla, a shareholder in the firm’s Kansas City office added: “Keep in mind that the plaintiffs’ bar is going to great lengths, and to a significant degree succeeding, to limit the scope of Supreme Court decisions (witness the multiple district court cases limiting Dukes to employment discrimination claims, the class arbitration rulings, etc.).”