by: Richard E. Shevitz, Attorney
The Supreme Court’s recent reversal of class certification in Comcast Corporation v. Behrend has generated commentary as divided as the Court’s 5 to 4 opinion. But while Comcast will no doubt be trumpeted by those opposing class certification as a major shift in precedent, the opinion never purports to do anything other than apply existing procedural law to the particular facts of the case before it. Thus, as even the dissent points out, the opinion does not signal a wholesale change in the legal landscape of class actions, and is better seen as merely providing guidance for class certification in antitrust matters.
In Comcast, plaintiffs brought an antitrust claim alleging that Comcast’s practice of concentrating cable operations in certain geographic regions, by swapping such assets with companies in other locations, created an unlawful local monopoly that eliminated competition and raised prices. In support of class certification, the plaintiffs submitted the report of an expert witness to establish that the element of “antitrust impact” involving an economic injury to class members could be established on a classwide basis through the use of a common methodology. Relying in part on the expert’s report, the District court certified a class of cable subscribers, and the Court of Appeals affirmed.
The Supreme Court, however, held that a failure to link the economist’s expert model for calculating damages to “the particular antitrust injury on which [the defendant’s] liability in this action is premised” required a reversal of class certification. The Plaintiffs’ expert report initially advanced four different theories of antitrust impact, which were supported by a “regression model comparing the actual cable prices in the [local area] with hypothetical prices that would have prevailed but for [Comcast’s] allegedly anticompetitive activities.” In ruling on class certification, the district court rejected three of the plaintiffs’ “impact” theories, but certified the class under the fourth theory. The district court did not expressly address whether the expert’s damages methodology could be applied to the one theory of liability which it found to be viable.
In reversing, the Supreme Court held that the damages “model failed to measure damages resulting from the particular antitrust injury on which the action” was then premised. The Supreme Court emphasized that the “damages model assumed the validity of all four theories of antitrust impact” initially advanced by the plaintiffs, and that the expert testified that his damages model did not attribute damages to any one particular theory of damages. Under those circumstances, the Court held that class certification was not appropriate, because the damages model presumably included higher prices caused by factors the theory of antitrust harm accepted by the Court. According to the opinion, such prices “are not ‘anticompetitive’ in any sense relevant here.”
As a strongly-worded, four-justice dissent noted, however, the Comcast decision has limited application outside of the antitrust context, and even then should be limited to the unusual and complex situation before the Court. As the dissent suggests, the majority opinion in Comcast may have no application to typical consumer claims involving defective products, claims for excessive fees, and similar cases in which complex economic damages models are not required to obtain class certification. According to the dissent, “The [majority opinion] is good for this day and case only. In the mine run of cases, it remains the ‘black letter rule’ that a class may obtain class certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members”). And as Justice Scalia himself states, the opinion rests on “an unremarkable premise.”
Even in the context of antitrust class actions, the lesson from Comcast may simply be that an expert’s damages model must apply specifically to whatever remains as the viable theory of the case. In many antitrust actions there will only be one proposed theory of measuring damages. When the determination of viable theories may shift as a case progresses, antitrust plaintiffs are likely to demand a more multi-faceted expert analysis. An antitrust damages analysis that can reliably anticipate and discretely address potential outcomes as they develop will satisfy the “unremarkable premise” on which the Comcast opinion is based.
Comcast Corporation v. Behrend
by: Richard E. Shevitz, Attorney