by Joshua Yount
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.
* * *
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
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.