United States: Supreme Court Rules That Rigorous Analysis Of Plaintiffs’ Damages Claims Is Required For Class Certification

Last Updated: April 10 2013
Article by Alden L. Atkins and Hannah Carrigg Wilson

The Supreme Court just issued an important decision reinforcing the need for rigorous analysis of class action plaintiffs' claims that damages can be determined on a class-wide basis. In Comcast Corp., et al. v. Behrend, et al., No. 11-864, 569 U.S. __ (March 27, 2013), a five-member majority of the Court reversed a judgment of the Third Circuit Court of Appeals upholding the certification of a class of antitrust plaintiffs. The Supreme Court held that the plaintiffs' damages model failed to show that plaintiffs could prove damages on a class-wide basis. The Court's decision makes clear that the rigorous analysis required by Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), applies to damages claims in antitrust class actions, even when it requires courts to inquire into the merits of the plaintiffs' claims.


The case arose from Comcast Corporation's practice of "clustering" its cable operations within certain geographic regions. Comcast's clustering strategy involved acquiring competitor cable providers in particular regions, including by swapping Comcast's systems in other regions in exchange for the competitor's systems in the region where it wanted a cluster of cable systems. In the Philadelphia region, Comcast entered into nine clustering transactions that increased its subscriber share in Philadelphia from 23.9 percent in 1998 to 69.5 percent in 2007. 264 F.R.D. 150, 156, n.8, 160 (E.D. Pa. 2010).

Certain subscribers of Comcast's cable television services filed a class action lawsuit, alleging that the clustering transactions violated Sections 1 and 2 of the Sherman Act by eliminating competition and increasing prices. The plaintiffs moved to certify a class under Federal Rule of Civil Procedure 23(b)(3), asserting four theories of antitrust impact. The plaintiffs relied on an expert to calculate damages for the entire class based on those four theories of antitrust harm. The expert admitted that the model incorporated damages from each theory, and that his model did not isolate damages for any one particular theory.

The district court rejected three of those theories for the purposes of the class action, and limited plaintiffs to "the theory that Comcast engaged in anticompetitive clustering conduct, the effect of which was to deter the entry of overbuilders in the Philadelphia" area. App. to Pet. for Cert. 192a-193a. Despite the fact that the plaintiffs' damages model combined all four theories of antitrust impact, the district court certified the class. The Third Circuit affirmed 2-1, with Judge Jordan issuing a strongly worded partial dissent.

The Supreme Court's Decision

The Supreme Court reversed and held that plaintiffs had failed to show that damages could be proven on a class-wide basis. Rule 23 establishes a two-step process for class certification: first, a court must determine if the requirements for all class actions under Rule 23(a) have been met; and, second, the court must determine if the class meets one of the requirements of Rule 23(b). For most antitrust cases, plaintiffs seek to certify the class under Rule 23(b)(3), which requires that questions of law or fact common to the class predominate over individual questions. The Court reiterated its prior holdings that courts must probe behind the pleadings before determining if the requirements of Rule 23(a) have been met. Importantly, the Court went on to say "[i]f anything, Rule 23(b)(3)'s predominance criterion is even more demanding than Rule 23(a)," Comcast, slip op. at 6, the subsection that was at issue in Wal-Mart. The Court said that Rule 23(b)(3) is an "adventuresome innovation" because "class action treatment is not as clearly called for" in "predominance" class actions compared to other types of class actions. Id. (quotation omitted).

The Supreme Court emphasized that the lower courts refused to examine the plaintiffs' damages model closely because they viewed it as going to the merits rather than to class certification. In reversing, the Supreme Court ruled that "[b]y refusing to entertain arguments against [plaintiffs'] damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry." Id. at 6-7. The lower courts erred when they failed to link the plaintiffs' theory of antitrust harm to their damages model. Id. at 8. Because the damages model did not isolate the increased prices attributable to the lone permissible theory of liability, the plaintiffs had not shown that damages could be proven on a class-wide basis.

There are lower court decisions holding that individual questions of antitrust damages do not preclude class certification. The Court did not directly address that issue in Comcast. However, in a concluding footnote, it said that even if the plaintiffs' model had been limited to the accepted theory of antitrust harm, "it still would not have established the requisite commonality of damages unless it plausibly showed that the extent of overbuilding (absent deterrence) would have been the same in all counties, or that the extent is irrelevant to effect upon ability to charge supra-competitive prices." Id. at 10-11, n.6. The footnote suggests that plaintiffs must show that the extent of the harm is the same for all proposed class members.

The Comcast decision illustrates the burdens that plaintiffs bear when they seek to certify a class, particularly under Rule 23(b)(3). The lower courts have, in recent years, agreed that plaintiffs must prove antitrust impact — that class members have suffered some harm from the allegedly anticompetitive conduct — with common proof on a class-wide basis. In Comcast, the Supreme Court said the same is true of damages. Plaintiffs must be able to prove damages with common evidence for the entire class to ensure that common questions predominate. Citing the Court's Wal-Mart decision, the Court said that class certification questions would "frequently entail 'overlap with the merits of the plaintiff's underlying claim.'" Id. at 6. When performing that review, the Supreme Court instructed that courts must rigorously analyze the plaintiffs' damages model to determine whether it can prove damages for the anticompetitive conduct that is alleged.

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