Supreme Court Rejects Class Certification In Comcast Lawsuit

On March 27, the Supreme Court ruled in favor of Comcast Corporation (“Comcast”) in an antitrust case brought by a group of its subscribers in the Philadelphia area on the basis of the group’s improper class certification. In Comcast Corporation v. Behrend, --- S. Ct. ----, 2013 WL 1222646 (U.S. Mar. 27, 2013). the Court held that issues of damages can preclude class certification, and that district courts must conduct a “rigorous analysis” of whether a group of plaintiffs satisfies the certification criteria under the Federal Rules of Civil Procedure, even if certain issues in the analysis are also addressed in the merits of the case. The decision provides companies with a substantial defense to class certification in antitrust cases.

In 2010, a group of Philadelphia-area cable television subscribers sued Comcast, alleging that the company engaged in unlawful swap agreements with local competitor cable providers in violation of federal antitrust laws. The plaintiffs proposed four theories of antitrust impact, including the theory that Comcast’s activities reduced the level of competition from “overbuilders,” companies that build competing cable networks in the area where the incumbent provider already operates. The District Court accepted the “overbuilder” theory of antitrust impact, but rejected the other three theories. The District Court also found that the damages could be assessed on a classwide basis, relying on a regression model submitted by the plaintiffs. The model sought to establish a “but for” baseline – a figure that would show what competitive prices would have been if no antitrust violations had occurred. However, the model also incorporated all four theories of antitrust impact advanced by the respondents, and the lower courts only permitted the respondents to proceed under the “overbuilding” theory.

The Court held that the respondents’ class action was improperly certified under Fed. R. Civ. Pro. 23(b)(3). Specifically, the Court held that the regression model did not establish that damages are capable of measurement on a classwide basis because it was not based solely on the overbuilding theory, but incorporated elements of the three other theories that the District Court rejected. The Court further held that the Third Circuit erred in refusing to entertain arguments challenging the regression model at the class certification stage on the basis that they were pertinent to the merits of the case (specifically, the calculation of damages).

WSH’s Litigation Division routinely represents private businesses, governmental bodies, and individuals at every level of the justice system. In addition to the Litigation Division, our Appellate Practice Group uses its trial, negotiation and appellate skills to put our clients in the best leverage position at every phase of a lawsuit. Our attorneys try cases in front of juries, judges, administrative panels, arbitrators and appellate panels. We have prosecuted and defended a wide variety of general commercial and business dispute issues in both individual and class action settings, including those establishing law in the areas of business torts, class actions, fraudulent transfers, insurance and securities. Recent successes include Member and Miami-Dade Partner-In-Charge Michael S. Popok’s representation of Cantor Fitzgerald in a multimillion dollar suit involving the purchase of a life settlements firm, and a $10 million action concerning the attempt to broker the sale of life insurance policies in the secondary market, as well as Founding Member Joseph H. Serota’s defense of a South Florida municipality in a class action claim alleging violations under the Fair Labor Standards Act, and the defense of a municipality in a class action based upon an allegedly unconstitutional ordinance.

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Author(s): Brooke P. Dolara