Shortly after the Supreme Court’s decisions in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and AT&T Mobility LLC v. Concepcion, 563 U.S. 321 (2011), I appeared before a federal district judge on a motion to dismiss a WARN Act class action. I was arguing that the plaintiffs’ complaint should be dismissed because it did not satisfy the pleading requirements that the Court set out in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). To my astonishment, the judge interrupted me at that point in the argument to say “If the Supreme Court had its way, no class action could ever be brought.” I knew he was alluding to the recent decisions.
At the end of the hearing, the judge ruled from the bench, denying the motion to dismiss and setting a schedule for discovery and class certification. As I reflected on what had just happened, I was reminded of how powerful federal district judges are. This judge would allow the case to go forward, correctly or incorrectly, and there was nothing I could do about it. And rightly or wrongly, I could take solace in the thought that the judge ruled against me not because my position was wrong or I hadn’t argued it effectively, but because he disagreed with the Supreme Court.
I play this scenario in my mind every time I learn of a federal appellate court reacting to the Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), as I often wonder whether courts interpret Comcast narrowly not because the Comcast majority intended a narrow interpretation, but because they disagree with the majority opinion. And as with the WARN Act case, unless a circuit split develops and the Supreme Court again takes up the issue, there is very little defendants can do about what may be a growing rift.
The Comcast Decision
As class action lawyers know, Comcast was an antitrust case involving allegations that the defendant “clustered” its cable television operations within certain regions in order to achieve an anti-competitive effect, allowing it to charge high prices. To support class certification, plaintiffs relied on an expert witness who offered four theories that he claimed would allow him to prove damages on a class-wide basis. The district court rejected all but one of the theories but still certified the class, even though the expert admitted that the regression model he intended to use could not isolate the sole permissible theory. A divided panel of the Third Circuit affirmed the class certification decision. It refused to consider the merits of plaintiffs’ proffered expert testimony, finding that it was sufficient for class certification that plaintiffs could assure the court that damages resulting from the expert’s methodology “will not require labyrinthine individual calculations.” Id. at 1431.
The Supreme Court granted certiorari to consider whether a district court must determine the admissibility of a plaintiff’s expert testimony to show that the class should be certified. After it became apparent that that issue had not been properly preserved for appeal, the Court proceeded to rule on the different issue -- whether certification was improper because plaintiffs had failed to establish that damages could be determined on a classwide basis. A divided Court held that the case should not have been certified, reversing the Third Circuit’s decision.
As with Wal-Mart and Concepcion, the majority opinion was authored by Justice Scalia. After reviewing the standards for class certification, Justice Scalia summarized the basis for the majority’s decision:
By refusing to entertain arguments against respondents’ damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry. And 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. Without presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage calculations will inevitably overwhelm questions common to the class.
Id. at 1432-33. (emphasis added). The opinion went on to hold that class certification was improper because the model proposed by plaintiff’s expert to prove damages did not measure only those damages attributable to the permissible damages theory. “If the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).” Id. at 1433. In the course of his...
