After months of anticipation, the Supreme Court finally released its decision in Comcast Corp. v. Behrend, No. 11–864. In a 5-4 decision authored by Justice Scalia, the Court reversed the certification of a 23(b)(3) class of Comcast cable-television customers located in the metropolitan Philadelphia market. The purported class was attempting to bring an antitrust case against Comcast for allegedly overcharging its cable subscribers. Why did the Court deny class certification and what does this mean for class-action defendants going forward?
As you will recall from oral argument, this case concerned what kind of evidence must be presented during the certification stages of class litigation, before a judge can allow a class action to proceed. The specific issue in Comcast dealt with whether a class could be certified without the district court considering whether plaintiffs’ damage models were actually tied to their class-based liability theory. Was the fact that damages could be calculated on a class-wide basis enough without determining the merits-related issue of whether the damages model had a sufficient “fit” with the specific, alleged basis for antitrust liability?
In its decision, the majority reiterated its Wal-Mart Stores, Inc. v. Dukes ruling from nearly two years ago. In addressing a putative Rule 23(b)(2) class, Wal-Mart held that prior to certifying a class, district courts must conduct a “rigorous analysis” under Rule 23 to determine the Rule’s prerequisites have been satisfied. Such “rigorous analysis” must take place during the early certification stages of litigation, even in circumstances that would require inquiry into the merits of the claim. Applying this concept to Comcast, a Rule 23(b)(3) case, the Court ruled that it is not enough for plaintiffs to merely offer damage models that may be subject to common proof. Rather, to satisfy the requirements of commonality under Rule 23(a) and predominance under Rule 23(b)(3) at the class certification stage, such damage models must actually match up or “fit” with the theory of impact or harm that allegedly resulted from the antitrust violation. Such a decision furthers the Court’s apparent willingness to tighten the requirements for establishing class actions. The Supreme Court is inviting litigants to delve even deeper into the merits of the case at the class certification stage and engendering further litigation over where the line falls between class certification and the substantive merits. Class-action defendants will be happy to accept such an invitation.
After Comcast, it appears that the Supreme Court has ratcheted-up the predominance inquire under Rule 23(b)(3) so as to reject damages models that are speculative or not specific enough – even if they might be common across the entire putative class. As Justice Scalia reasoned for the majority:
[A] model purporting to serve as evidence of damages in [a Rule 23(b)(3)] class action must measure only those damages attributable to [the class’s liability] theory. If the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3). Calculations need not be exact, but at the class-certification stage (as at trial), any model supporting a plaintiff’s damages case must be consistent with its liability case, particularly with respect to the alleged anticompetitive effect of the violation.