Supreme Court to Review Grant of Certification in Comcast Class Action

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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