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International Law

Third Circuit Affirms Class Certification, Cautioning Against the Need for Mini Trials


By Louis M. Solomon

Our immediately prior posting addressed the issue of how a single case in a multiparty, multidistrict litigation raising industry-wide antitrust claims was plucked out and sent to arbitration.   How a plaintiff manages around that result is a question not just of international litigation practice but for the corporate or transactional lawyer/draftsman to avoid as well. 

How are antitrust claims faring these days in overcoming another major procedural hurdle, that of class certification?  Behrend, et al. v. Comcast Corp., et al., No. 10-2865 (3d Cir.  Aug. 2011) [enhanced version available to subscribers / unenhanced version available from lexisONE Free Case Law], addresses the issue extensively.  And despite the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) [enhanced version  / unenhanced version ], which we discussed here, the Third Cirtcuit affirmed the District Court's certification decision of antitrust claims.

The claims arise out of alleged series of transactions tht increased Comcast's share of the multichannel video programming distribution services offered in the Philadelphia area through alleged anticompetitive "clustering".  After the Third Circuit initially denied interlocutory appeal (permissible under Fed. R. Civ. P. 23 in certain cases) [enhanced version  ], the District Court held a four-day evidentiary hearing from both fact and expert witnesses, considered as part of that 32 expert reports, and examined depostion excerpts and documents.   The challenges on appeal centered around whether there was sufficient evidence of class-wide antitrust impact, whether the damages methodology was acceptable, and whether the District Court's certification of what the defendants' characterized as a per se antitrust claim was clear error.  The Third Circuit rejected all challenges.

Among other things, the Circuit rejected the invitation to decide the merits of the litigation, without discussing whether what the District Court did was tantamount to that trial nonetheless.  Admittedly, recent class-action jurisprudence "heightened the inquiry a district court must perform on the issue of class certification", nothing in the controlling cases requires "actual trials in which factual disputes are to be resolved".    The Court of Appeals differentiated requiring plaintiffs to establish the elements of certification by a preponderance of the evidence from requiring plaintiffs to "prove their case at the class certification stage" (the Court's emphasis).  The Court also noted "recent scholarship", which "uniformly has expressed concern over the trend towards converting certification decisions into mini trials".    The Court did however quote Oliver Wendell Holmes's classic comment from The Path of the Law, 10 Harv. L. Rev. 457 (1897) : "For the rational study of the law the black-letter man may be the man of the present, but the man of the future is the man of statistics and the master of economics".

The Circuit also rejected the suggestion that Wal-Mart supported the claim that the damages model proffered by plaintiffs' expert could be "safely disregarded".  The Court of Appeals, without more discussion, found that Wal-Mart "involved a massive discrimination class action and . . . neither guides nor governs the dispute before us".

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