Posted Mar 27, 2013 03:07 pm CDT
A federal class action against Comcast was improperly certified because the trial court failed to consider whether the plaintiffs’ theory of damages can be applied to the entire class, the U.S. Supreme Court has ruled in a 5-4 opinion.
The opinion makes it more difficult for the plaintiffs to obtain class certification, contrasting with a February ruling that lowered the class action hurdle for plaintiffs in securities fraud cases.
Justice Antonin Scalia wrote the majority opinion (PDF) Wednesday in Comcast v. Behrend. “It is clear that, under the proper standard for evaluating certification, respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis,” he wrote.
The plaintiffs had claimed Comcast and its subsidiaries increased its market share in certain regions by acquiring competitors inside those regions and selling them to Comcast systems outside the regions. The unlawful swap arrangements, the plaintiffs alleged, eliminated competition and raised prices.
The federal district court had accepted just one of four of the plaintiffs’ theories: that Comcast’s activities reduced the level of competition from “overbuilder” companies that built competing cable networks in Comcast areas. But the plaintiffs’ expert did not confine his estimate of damages to the overbuilder theory, Scalia said. “At the class-certification stage (as at trial), any model supporting a ‘plaintiff ’s damages case must be consistent with its liability case,’ ” he wrote.
Justices Ruth Bader Ginsburg and Stephen G. Breyer wrote a joint dissent joined by Justices Sonia Sotomayor and Elena Kagan. Ginsburg and Breyer argued that the case should have been dismissed as improvidently granted, partly because the holding “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 certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members.”
The dissenters also accused the majority of setting forth “a profoundly mistaken view of antitrust law” based on “its own version of the facts, a version inconsistent with factual findings.” Scalia disagreed.
“This case thus turns on the straightforward application of class-certification principles; it provides no occasion for the dissent’s extended discussion … of substantive antitrust law,” he wrote.
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