In Comcast Corp. v. Behrend, ___ S.Ct. ___ (Mar. 27, 2013), handed down on Wednesday, the U.S. Supreme Court addresed Rule 23(b)(3) class certification for the first time since Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, ___ U.S. ___ (Feb. 27, 2013) (discussed in this blog post).
The Supreme Court reversed the Third Circuit's judgment affirming the district court's class certification order. The Court held that the plaintiffs' expert's analysis in support of certification was deficient for various case-specific reasons. Slip op. at 7-11. The matter will now be remanded for further proceedings.
This is the most important passage in the opinion:
The District Court held, and it is uncontested here, that to meet the predominance requirement respondents had to show (1) that the existence of individual injury resulting from the alleged antitrust violation (referred to as “antitrust impact”) was “capable of proof at trial through evidence that [was] common to the class rather than individual to its members”; and (2) that the damages resulting from that injury were measurable “on a class-wide basis” through use of a “common methodology.” 264 F. R. D., at 154.
Slip op. at 4-5 (footnote omitted) (emphasis added).
In some news reports and blogs, the Comcast opinion has been characterized as changing the well-established rule that individualized damages questions do not defeat class certification if common questions predominate on liability.
The news reports that say this have all overlooked the language from the opinion emphasized above.
For unknown reasons, the plaintiffs in Comcast chose to concede (or at least not contest) that to obtain class certification, they would have to show that they could establish and measure the damages through common proof. As a result, the Court did not consider, let alone overturn, the long-established rule for the mine run of cases in which no such concession was made.
Instead, the Court reversed class certification after deciding that the expert report was not adequate to establish classwide damages -- a requirement that was relevant only for one reason: it was conceded -- because the expert's damages model was not consistent with the plaintiffs' liability theory. Slip op. at 7. The majority opinion acknowledged that damages calculations "need not be exact." Id. (citing Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931)).
It appears to me that on remand, the district court could deny the certification motion without prejudice, and afford the plaintiffs an opportunity to file a renewed motion supported by a new expert report that cures the deficiencies identified in the Supreme Court's opinion.
But what this opinion does not represent is a sea change in class action law, as some have characterized it. The opinion does not hold that class certification can be granted only if damages can be established by common proof. The earth did not just move. That mischaracterization stems from a careless reading of the opinion.
The only other substantive issue addressed in the opinion is the holding from Dukes regarding merits determinations at the class certification stage, but the discussion doesn't add much to what Dukes already said. Slip op. at 6. The opinion that does meaningfully elaborate on this part of Dukes is Amgen, decided last month.
For more on the Comcast opinion, Andrew Longstreth of Reuters reports that "Plaintiffs' bar dodges bullet in Comcast antitrust decision." [via]