By William A. Ruskin
The Foley Hoag Product Liability Update is a good source of information concerning developments in product liability and related law for product manufacturers and sellers. Published quarterly, the Update is prepared under the aegis of David R. Geiger, the chair of Foley Hoag's product liability and complex tort practice.
Although any of the six articles in the April 2013 Update are worthy of comment, the Update's discussion of Comcast Corp. v. Behrend, 133 S. Ct. 1426, 2013 WL 1222646 (Mar. 27, 2013) [enhanced version available to lexis.com subscribers] is the most significant. Behrend was filed as a hope-to-be antitrust class action in the U.S. District Court of the Eastern District of Pennsylvania.
Among other Rule 23 requirements, plaintiffs were required to prove that the damages resulting from the alleged injury were measurable on a classwide basis through use of a common methodology. Although plaintiffs proposed four distinct theories as to how they had been injured by defendants' anti-competitive conduct, the trial court held that only one theory of damages was capable of class-wide proof. Nevertheless, the court certified a class under that single theory.
On appeal to the Third Circuit, defendants argued certification was inappropriate because plaintiffs' expert had acknowledged that his model measured damages resulting from all four of plaintiffs' theories of harm, not just a single theory.
The Third Circuit affirmed class certification on the ground that defendant's objections to the scope of the expert's damages model were not appropriate at the class certification stage; such an inquiry would improperly require the trial court to reach the merits of plaintiffs' claims. Any consideration of the objections to the scope of the expert's damages assessment should await the merits phase of the case, according to the court.
After granting certiorari, the Supreme Court reversed, holding that the Third Circuit had erred in refusing to consider defendants' arguments that plaintiffs' damages model was insufficient to establish their alleged damages on a class-wide basis. The Court reaffirmed the legal principle that class certification requires the trial court to determine that the prerequisites of Rule 23 are satisfied, even if that analysis necessitates some degree of inquiry into the merits of plaintiffs' claim.
Although damages calculations need not be exact at the class-certification stage, the Court held that any model supporting a plaintiff's damages case must at least be consistent with its liability case, particularly with respect to the anti-competitive effect of the alleged violation at issue in the case. The trial court certified only one of plaintiffs' four theories of harm, all of which theories plaintiffs' experts had modeled for damages purposes. The Supreme Court held that a model that does not even attempt to measure the damages attributable to the lone surviving theory of damages is insufficient under Rule 23.
The Behrend holding is significant for class action practitioners. As much as possible, class action plaintiffs want to reserve any discussion of the merits of their claim until after class certification. Behrend should now permit defendants to place merits issues before the court at an earlier stage in the litigation if they can argue that such an inquiry is necessary to establish that Rule 23 prerequisites have been satisfied.
Going forward, defense counsel should be able to argue that a plaintiff's damages model should be able to withstand rigorous Daubert scrutiny prior to class certification. The certification of a class creates enormous pressure on defendants to settle regardless of the merits of the case. The practical result of the decision is that the bar for class certification has been raised and the playing field leveled.
For more cutting edge commentary on developing issues, visit Toxic Tort Litigation Blog by William A. Ruskin of Epstein Becker & Green.
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