Comcast v. Behrend: Individual Damages v. Class Certification

Comcast v. Behrend: Individual Damages v. Class Certification

by Joshua Yount

Excerpt:

In Comcast Corp. v. Behrend, No. 11-864, 133 S. Ct. 1426, 2013 U.S. LEXIS 2544 (2013) [an enhanced version of this opinion is available to lexis.com subscribers], the U.S. Supreme Court reaffirmed and extended the rule that courts facing class certification requests must conduct a "rigorous analysis" to insure that the party seeking class certification has met its burden to "affirmatively demonstrate" compliance with Rule 23. In doing so, the Comcast Court reversed class certification in an antitrust suit because the plaintiffs failed to show that they could reliably prove damages on a class-wide basis, which prevented them from satisfying the Rule 23 requirement that common issues predominate over individual ones. Comcast should put an end to efforts both to soften the required "rigorous analysis" of class certification motions and to ignore damages and other individualized issues in judging Rule 23's predominance requirement.

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The plaintiffs in Comcast were subscribers to the defendant's cable television services. They alleged that Comcast violated the federal antitrust laws against monopolization and agreements in restraint of trade. According to the plaintiffs, Comcast illegally increased its share of cable subscribers in the Philadelphia area from 24% to 70% through a series of transactions that swapped Comcast's systems in other cities for the systems of competitors in Philadelphia. The plaintiffs asserted that Comcast's actions decreased competition and increased cable subscription rates in four distinct ways: (1) by allowing Comcast to withhold local sports programming from competitors; (2) by reducing "overbuilder" competition from companies that build cable networks; (3) by reducing "benchmark" competition used by customers to compare prices; and (4) by increasing Comcast's bargaining power with content providers.

The plaintiffs asked the district court to certify a class action to litigate their antitrust claims on behalf of all Comcast subscribers in the Philadelphia area. The district court granted class certification but limited the plaintiffs' proof of antitrust impact to the "overbuilder" theory because the other three theories were not capable of proof with class-wide evidence. The district court rejected Comcast's argument that damages could not be proved with class-wide evidence, accepting a method offered by the plaintiffs' expert for calculating "but for" prices that would have prevailed in the absence of Comcast's allegedly anti-competitive conduct.

Over a partial dissent, the Third Circuit affirmed. On the crucial question of whether common evidence could prove damages, the court of appeals ruled that the plaintiffs' damages model made damages a common issue even though the model computed a single "damages" figure for all four antitrust-impact theories without identifying any damages due to the "overbuilder" theory alone. The court declined to "require that Plaintiffs tie each theory of antitrust impact to an exact calculation of damages," because that would involve consideration of the "merits" of the damages model, which has "no place in the class certification inquiry." The dissenting judge noted several problems with plaintiffs' damages model, including its failure to isolate the price impact of the allegedly illegal reduction in "overbuilder" competition.

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Joshua Yount is a litigation partner in Mayer Brown's Chicago office and a member of the firm's top-ranked Supreme Court and Appellate practice. He focuses his practice on appellate litigation, class certification defense, and securities law. With experience successfully representing a wide variety of businesses in those and many other areas, he offers clients sophisticated legal analysis, careful strategic thinking, and vigorous advocacy.

Josh is a co-author of a chapter on class certification in the treatise, Litigating Securities Class Actions. He also contributes to Class Defense, Mayer Brown's blog on key issues affecting class action law and policy. 

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