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Inside Privacy Updates on Developments in Global Privacy & Data Security from Covington & Burling LLP

Supreme Court Rules In Favor of Comcast; Class Improperly Certified

Posted in Litigation, United States

Last week, in Comcast Corp. et. al. v. Behrend et al., the United States Supreme Court reversed the Third Circuit’s decision to certify a class of Comcast subscribers allegedly harmed due to practices of Comcast in the Philadelphia “cluster” that supposedly lessened competition and resulted in supra-competitive prices.  A 5-4 majority of the Court held that respondents’ class had been improperly certified under Rule 23(b)(3), because respondents had not established that damages tied to the alleged “wrong” were capable of measurement on a classwide basis. 

Rule 23(b)(3) requires a court to find that “the questions of law or fact common to class members predominate over any questions affecting only individual members.”  Here, the Court found instead that “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.”  This was because the model used by the respondents’ expert assumed the validity of all four theories of antitrust liability initially advanced by respondents, even though one theory—“overbuilder deterrence” —was the sole theory of antitrust impact that still survived in the case.  As such, the Court found the model “cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).”    

The Court also took issue with the lower courts’ determinations that respondents need not tie each theory of antitrust impact to a calculation of damages because this exercise would involve a consideration of the “merits” having “no place in the class certification inquiry.”  This reasoning, the Court found, contradicted precedent such Wal-Mart v. Dukes, “requiring a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim.”

The Comcast ruling could heighten the threshold for class certification under Rule 23(b)(3) by requiring a more rigorous damages inquiry–and so may have a meaningful impact on how privacy class actions proceed to certification. That said, the four dissenting Justices sought to cabin the significance of the decision, writing that “[t]he Court’s ruling is good for this day and case only.” The view of these dissenting Justices was that the writ of certiorari should have been dismissed as improvidently granted because the question presented had been reformulated by the Court in a misguided manner—from whether a district court may certify a class action without resolving “merits arguments” that bear on Rule 23’s prerequisites for certification, to whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, such that the Court had abandoned the question it instructed the parties to brief.