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The Supreme Court will delve further next term into the
interplay between class certification and rulings on the merits,
reviewing the Third Circuit's affirmance of class certification
in an antitrust suit against Comcast.
The Court today granted certiorari in Comcast v. Behrend, in
which consumers allege that the cable provider engaged in an
anticompetitive "clustering" scheme designed to
concentrate its market power in and around Philadelphia. The
alleged "clustering" scheme involved swapping various
Comcast cable systems and subscribers scattered across the country
to competing cable providers in exchange for cable systems and
subscribers in the Philadelphia area. In addition, the plaintiffs
allege that Comcast engaged in conduct designed to exclude a
potential competitor from the Philadelphia market by denying it
access to Comcast-owned programming, requiring contractors to enter
non-compete agreements, and inducing potential customers to sign up
for long-term contracts with special discounts and penalty
provisions in the area the potential competitor sought to
penetrate. As a result, the complaint alleges, Philadelphia-area
consumers paid artifically high prices for cable services as a
result of diminished competition.
An Eastern District of Pennsylvania court granted class
certification, and a divided Third Circuit panel affirmed. At issue is whether the action
qualifies for certification under Rule 23(b)(3), which requires a finding that
common legal or factual questions predominate over individual
questions. In particular, the dispute involves whether the
plaintiffs have properly defined the relevant geographic market as
the Philadelphia area and whether they can prove antitrust impact
and damages on a classwide basis.
The Third Circuit repeatedly defended the district court's
refusal to resolve these issues, on the grounds that inquiring into
the merits beyond the extent necessary to determine whether Rule
23(b)(3) is met would contravene the Supreme Court's 1974
opinion in Eisen v. Carlisle & Jacquelin. The Third
Circuit thus held that (i) it was sufficient for the district court
to determine that the class could establish the Philadelphia area
as the relevant market through common proof, (ii) the element of
antitrust impact is capable of proof through evidence common to the
class, and (iii) plaintiffs' expert provided a common
methodology to measure and quantify damages on a classwide
basis.
Comcast contends that the Supreme Court's 2011 decision in
Wal-Mart Stores, Inc. v. Dukes requires more.
Comcast argues that Wal-Mart effectively disavowed any limitations
on merits inquiries articulated in Eisen, and that the district
court has an obligation to affirmatively resolve any merits issues
that impact class certification. Thus, according to Comcast, the
district court was required to affirmatively define the relevant
market and determine whether the plaintiffs had actually proven
classwide antitrust impact, as well as resolve various disputes
regarding the methodology used by the plaintiffs' damages
expert.
Regardless of how the Supreme Court decides the issue, this case
will not have the impact of either Wal-Mart or the Court's
other major 2011 class action decision, AT&T Mobility v. Concepcion. It does not
have the far-reaching consequences for any particular group of
class actions, or for the future of class actions generally, that
the 2011 decisions potentially had, and its application to future
class certification decisions will be highly fact-intensive. But
Comcast v. Behrend will provide clarification as to how far Rule 23
requires a district court to go in addressing issues whose ultimate
resolution is for a jury.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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