On March 27, 2013, the Supreme Court of the United States decided Comcast Corp. v. Behrend, No. 11-864, holding that, in determining whether common issues predominate over individual issues for purposes of certifying a class action under Rule 23(b)(3), courts cannot refuse to consider a defendant's challenges to an expert's claimed method for determining class-wide injury and impact simply because those challenges would also be pertinent to the merits determination.
Plaintiffs sued Comcast Corporation and its subsidiaries (collectively "Comcast") for engaging in a practice known as "clustering," in which Comcast increased its market share in the Philadelphia region by acquiring competitors' cable systems there in exchange for giving them Comcast's systems outside the Philadelphia region. Plaintiffs argued that Comcast's clustering violated the antitrust laws and offered four theories of antitrust injury. The trial court held that only one theory—the "overbuilder" theory, which argued that clustering reduced competition from companies that build cable networks in areas where an incumbent cable company already operates (so-called "overbuilders")— could allow damages to be determined on a classwide basis.
To establish that antitrust injury and damages could be proved on a classwide basis, plaintiffs offered testimony from an expert. But the expert conceded that his model was based on all four theories of antitrust injury that plaintiffs offered and did not identify damages caused solely by the "overbuilder" theory. The trial court nonetheless certified a class of plaintiffs. The Third Circuit affirmed, holding that it could not consider the argument that the experts' model failed to isolate "overbuilder"-related injury because that would constitute an impermissible "attac[k] on the merits of the methodology" at the class certification stage.
The Supreme Court reversed. Reiterating its recent holding in Wal-Mart Stores, Inc. v. Dukes that courts must determine whether each case "in fact" meets the requirements of Rule 23, the Court held that, "[b]y refusing to entertain arguments against [plaintiffs'] damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry."
Turning to the inquiry, the Court found that "under the proper standard for evaluating certification, respondents' model falls far short of establishing that damages are capable of measurement on a classwide basis." Because only the "overbuilder" theory potentially allowed a determination of damages on a classwide basis, the Court found it obvious that plaintiffs had to prove that damages could in fact be determined on a classwide basis for that theory. But plaintiffs' expert had conceded that his model failed to measure damages resulting from the particular antitrust injury, and hence no evidence existed to establish damages on a classwide basis. Because it was undisputed on appeal that this showing was required to establish the predominance of common issues under Rule 23(b)(3), the Court reversed certification of the class.
Justice Scalia delivered the opinion of the Court, in which Chief Justice Roberts and Justices Kennedy, Thomas, and Alito joined. Justices Ginsburg and Breyer filed a dissenting opinion, in which Justices Sotomayor and Kagan joined.