ALM Properties, Inc.
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In another significant blow against large class actions, the U.S. Supreme Court in March overturned an appellate ruling that had certified a class of about 2 million existing and former subscribers who had sued Comcast Corporation in a dispute over the alleged monopolization of the Philadelphia cable television market. A divided high court ruled that the U.S. Court of Appeals for the Third Circuit had failed to properly assess Comcast's arguments.
The plaintiffs alleged that Comcast had violated antitrust law in an attempt to eliminate competition and keep cable service prices above competitive levels. Their case was bolstered when the appellate court ruled that at the certification stage, plaintiffs need not "tie each theory of antitrust impact to an exact calculation of damages."
But the Supreme Court disagreed. In the 5-to-4 decision, Justice Antonin Scalia, writing for the majority, quoted from an earlier case that said class determination "generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action." He continued, "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."
The case, he said, turned on "the straightforward application of class certification principles." He dismissed the dissent's "extended discussion" of antitrust law. Chief Justice John Roberts Jr. and justices Anthony Kennedy, Samuel Alito Jr., and Clarence Thomas joined Scalia in the 11-page ruling.
Justices Stephen Breyer and Ruth Bader Ginsburg wrote the dissent, joined by justices Elena Kagan and Sonia Sotomayor. (Breyer and Ginsburg read aloud parts of the dissent in court.)
"Incautiously entering the fray at this interlocutory stage, the court sets forth a profoundly mistaken view of antitrust law," Breyer and Ginsburg wrote. "And in doing so, it relies on its own version of the facts, a version inconsistent with factual findings made by the district court and affirmed by the court of appeals."
Comcast was represented by Gibson, Dunn & Crutcher partner Miguel Estrada, cochair of the firm's appellate and constitutional law practice. He issued a formal statement noting that the Supreme Court previously "has held that courts must rigorously scrutinize evidence pertaining to liability elements and defenses to ensure that class adjudication would be fair for all parties."
Estrada continued: "Today's decision confirms that the same scrutiny must be applied to damages evidence at the class certification stage." The high court ruling, he added, "will help ensure that only those cases truly suited for collective adjudication will be certified as class actions."
Mayer Brown partner Archis Parasharami, who is cochair of his firm's consumer litigation and class action practice, and had no role in the case, added: "In the past, a number of lower courts of appeal have been willing to certify first, ask questions later. The court's decision today makes clear that some 'inquiry into the merits of the claim' may be required at the class certification stage."
The decision is expected to be influential. Raul Zermeno, a Fisher & Phillips labor and employment associate in Los Angeles, who also played no role, said that he expects the case to have a limiting effect on the number of class actions filed. "The decision in Comcast v. Behrend will significantly impact the future of employment-related class action lawsuits nationwide," Zermeno predicted.
A version of this story appeared in The National Law Journal, a sibling publication of Corporate Counsel.