United States: The Hard Stop On 'Adventurous Innovation' In Class Action Litigation: The United States Supreme Court's Decision In Comcast v. Behrend, Remand Of Whirlpool v. Glazer And The Probable Return Of Defect Manifestation To Class Certification Determination

Last Updated: May 5 2013
Article by Michael Mallow and Livia Kiser

I. Comcast v. Behrend: The Class Action Mechanism Under Scrutiny

Comcast v. Behrend is the latest opinion issued by the U.S. Supreme Court interpreting and applying the procedural rules governing class actions set out in Federal Rule Civil Procedure 23. Writing for a 5-4 majority, Justice Antonin Scalia tags the class action mechanism as an ''exception to the usual rule that litigation is conducted by and on behalf of the individual named parties,'' which should only be utilized when circumstances clearly warrant its application.1

Rule 23 governs class actions in federal court. In order to obtain certification of a class under Rule 23, a plaintiff has to demonstrate that all of the factors enumerated in Rule 23(a) are satisfied (e.g., numerosity) and also meet at least one of the criterion identified in Rule 23(b) (e.g., that common issues of fact and law predominate).2

In Behrend, the Court expressly stated that the ''rigorous analysis'' that must be undertaken by a trial court to determine whether plaintiffs have met the Rule 23(a) factors also applies to the Rule 23(b) prerequisites. Further, the Court held the predominance criterion set forth in Rule 23(b)(3) includes the question of whether damages are capable of measurement on a classwide basis. If they are not, the ''adventuresome innovation'' of Rule 23(b)(3) is not available to plaintiffs, and a class may not be certified on that basis.3

II. Do Merits Matter For Purposes Of Rule 23(b)(3)?

The plaintiffs in Behrend sought class treatment of claims grounded in antitrust. Plaintiffs' proposed class included more than 2 million current and former Comcast subscribers, and plaintiffs sought certification under Rule 23(b)(3). In determining whether to certify the class, the trial court addressed whether any of plaintiffs' four theories of antitrust impact were viable such that damages were measurable on a classwide basis.4 Ultimately, although the trial court rejected three of the four theories put forth by plaintiffs, it certified a class based on the theory that Comcast's actions purportedly lessened competition from so-called ''overbuilders,'' companies that build competing networks in areas where an incumbent cable company already operates.

The trial court then determined that the damages suffered by the proposed class as a result of overbuilder deterrence could be determined on a classwide basis.5 In support of this finding, the trial court relied on the damages model prepared by Plaintiffs' expert that compared actual cable prices in the Philadelphia market area with hypothetical prices that purportedly would have prevailed but for petitioners' allegedly anticompetitive activities. This model, however, did not identify the damages that were separately attributable to each of respondents' four theories of antitrust impact. Rather, it identified the alleged ''damages'' that the class had purportedly suffered based on all four theories taken together, including the three that had been rejected by the trial court.6

A divided panel of the Third Circuit affirmed.7 Before the Third Circuit, Comcast argued that the trial court had improperly certified the class because plaintiffs' damages model, among other shortcomings, failed to identify damages resulting solely from overbuilder deterrence — the only theory of injury the trial court considered viable. The Third Circuit refused to consider Comcast's argument on this point, however, because doing so, the appellate court reasoned, would have required an improper evaluation of the merits of plaintiffs' damages theory at the class certification stage.8 To meet their burden under Rule 23, the Third Circuit held that plaintiffs need only establish that, assuming they can prove antitrust impact, the resulting damages are theoretically capable of classwide measurement. The appellate court then concluded that plaintiffs met this burden because their model calculated ''supra-competitive prices regardless of the type of anticompetitive conduct'' (which, as noted, included the overbuilder deterrence theory as well as other theories that had been rejected).9

III. The Supreme Court Answers: Merits Do Matter

The Supreme Court reversed, finding that plaintiffs failed to meet their burden under Rule 23(b)(3) that ''questions of law or fact common to class members predominate over any questions affecting only individual members.''10 Noting that a district court's Rule 23 analysis must necessarily in many cases ''overlap with the merits of the plaintiff's underlying claim,'' the Court concluded that the trial court (and appellate court) applied an improper legal standard when they failed to consider the ''merits'' of plaintiffs' flawed damages model. Moreover, when the Court undertook its own analysis of plaintiffs' damages model, it determined that the model fell ''far short of establishing that damages are capable of measurement on a classwide basis,'' thus precluding class certification.11

As the Court explained, plaintiffs' damages model failed to measure damages attributable solely to the impact of overbuilder deterrence. Thus, the model ''[could] not possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).''12 Indeed, the Court observed that the ''first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event.''13 Because both the trial and appellate court simply ''ignored'' this first step entirely, and plaintiffs demonstrably failed to meet their burden under the correct standard, the Court held that a class could not be certified under Rule 23(b)(3).14

IV. Behrend's Aftermath: Whirlpool v. Glazer

Subsequently, and in light of its decision in Behrend, on April 1, 2013, the Supreme Court summarily vacated and remanded the Sixth Circuit's decision in Glazer v. Whirlpool for further consideration.15 In Glazer, Ohio purchasers of certain Whirlpool washing machines brought claims for breach of warranty, negligent design and negligent failure to warn under Ohio law. Plaintiffs claimed that the design of the washing machines contributed to residue buildup resulting in ''rapid fungal and bacterial growth.''16 Whirlpool objected to class certification, including on grounds that ''the vast majority'' of the members of the proposed class (some 97 percent) had not actually had the problem of which plaintiffs complained. The trial court certified a class over Whirlpool's objection, and Whirlpool appealed, reasserting its argument that a class could not be certified where so few class members had actually been injured by the alleged wrongdoing.17

The Sixth Circuit affirmed the decision of the trial court, rejecting Whirlpool's argument that the lack of injury to nearly all class members precluded certification under Rule 23(b)(3). To the contrary, the appellate court found that ''[e]ven if some class members have not been injured by the challenged practice, a class may nevertheless be appropriate.''18 In so holding, the Sixth Circuit approved a proceeding under which vast numbers of members of the proposed class would be eligible to recover ''damages'' despite having no legally-cognizable injury.

V. The Viability Of Wolin-Type Reasoning In Light Of Behrend

Glazer, however, is not an outlier. Rather, it is progeny of a line of cases where courts simply have taken at face value the damages and liability theories as pled in the complaint without subjecting them to ''rigorous analysis'' to determine whether and how they plausibly satisfy Rule 23(b)(3). For example, one of the principal cases the Glazer court relied upon is Wolin v. Jaguar LandRover.19 Glazer cited Wolin to support the notion that the named plaintiffs in Glazer satisfied the Rule 23 prerequisites by pleading a theoretical common injury (i.e., that proposed class members paid a ''premium'' for the washing machines as designed) even though most of the members of their proposed class in fact had never suffered injury (and thus presumably got what they paid for).

Like Glazer, Wolin is difficult to square with Behrend. In Wolin, a car manufacturer successfully argued before a district court that class certification under Rule 23(b)(3) was inappropriate because the named plaintiffs failed to introduce any evidence that a so-called ''alignment geometry defect'' alleged to cause premature tire wear manifested in the vehicles of the members of plaintiffs' proposed class.20 The district court denied Plaintiffs' motion for class certification, and Plaintiffs appealed. The Ninth Circuit reversed and directed a Rule 23(b)(3) class be certified, reasoning that ''proof of the manifestation of the defect is not a prerequisite to class certification.''21 Not only did the Wolin court certify a Rule 23(b)(3) class without requiring Plaintiffs to provide any evidence of legally-cognizable harm on a classwide basis, it failed to address how liability and damages could possibly be calculated by reference to common proofs given the admittedly numerous causes of tire wear, the lack of proof in the record as to the existence of a classwide ''defect,'' and the myriad factors that impact vehicle value.22

VI. Analysis Of Liability And Damages In Rule 23(b)(3) Class Actions Post-Behrend

As Glazer now has been vacated and remanded, the Sixth Circuit has the opportunity to review its opinion through the lens of Behrend. Although it is unclear how the Sixth Circuit will come out after reconsideration, the reasoning underpinning the analysis in Behrend clearly is in tension with the Sixth Circuit's holding in Glazer (and, for that matter, the Ninth Circuit's holding in Wolin). Behrend teaches that courts must engage in a ''rigorous analysis'' with respect to both Rule 23(a) factors and Rule 23(b) prerequisites, including reaching the merits as necessary to determine whether any plausible damage theory has been put forth that satisfies the predominance criterion of Rule 23(b)(3).23 Such analysis must include identification of ''the legal theory of the harmful event'' allegedly suffered not only by plaintiff but also each member of the proposed class. Behrend further holds that in order to satisfy Rule 23(b)(3), the harm must be legally cognizable, and damages suffered by all members of the proposed class must be susceptible to common proof.24

Fair application of Behrend would appear to warrant different analysis (and, perhaps, different results) in Glazer, Wolin and other cases similarly reasoned. Indeed, where the evidence suggests that few, if any, proposed class members actually have experienced the ''injury'' alleged in the complaint, Behrend suggests that a class is not certifiable based on the ''adventuresome innovation'' of Rule 23(b)(3) unless a plaintiff can set forth a coherent legal theory of harm that both satisfies Rule 23 and can properly be applied to all proposed class members, whether or not they have actually suffered injury. Behrend gives credence to the reality that plaintiffs bear the burden of establishing all of the Rule 23 factors, including predominance, particularly as such relates to injury and damages.

Footnotes

1. Comcast v. Behrend, ___ U.S. ___, 2013 U.S. LEXIS 2544 (Mar. 27, 2013).

2. Fed. R. Civ. P. 23.

3. Comcast, ___ U.S. at ___, 2013 U.S. LEXIS 2544 at *13.

4. Behrend v. Comcast, 264 F.R.D. 150, 156 (E.D. Pa. 2010).

5. Id. at 166.

6. Id. at 191.

7. Behrend v. Comcast, 655 F.3d 182 (3d Cir. 2011).

8. Id. at 204.

9. Id. at 205.

10. Comcast, ___ U.S. at ___, 2013 U.S. LEXIS 2544 at *6.

11. Id. at *14.

12. Id. at *15.

13. Id. at *20.

14. Id.

15. Whirlpool v. Glazer, 2013 U.S. LEXIS 2695 (Apr. 1, 2013).

16. Glazer v. Whirlpool, 678 F.3d 409, 414 (6th Cir. 2012).

17. Id. at 420.

18. Id.

19. Wolin v. Jaguar Land Rover, 617 F.3d 1168 (9th Cir. 2010).

20. Id. at 1170.

21. Id. at 1173.

22. Id. at 1173-74.

23. Comcast, ___ U.S. at ___, 2013 U.S. LEXIS 2544 at *13.

24. Id. at *20. _

Previously published by MEALEY'S LITIGATION REPORT: Class Actions, Vol. 13, #4 April 19, 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.