Policy

Supremes Overturn Decision That Allowed Suit Against Comcast

Says Third Circuit Should Have 'Probed Behind Pleadings' Before Authorizing Class in Class Action Suit 3/29/2013 5:01 AM Eastern

It looks like Comcast won't have to settle a class action suit for hundreds of millions of dollars after all.

The Supreme Court has ruled that a lower court improperly authorized subscribers in Comcast's Philadelphia cluster of cable systems as a single class able to file a class action lawsuit, and has reversed that finding of class action status.

The High Court back in November heard Comcast's appeal of a Third Circuit decision in Comcast vs. Behrend that sufficient grounds had been established to create a "class" in the class action suit against the nation's largest cable operator. Comcast had tentatively settled the suit, reportedly for several hundred million dollars, but backed off when the Supremes agreed to hear the challenge.

The High Court was only hearing the question of whether a district court can certify a class (give it standing to sue collectively) without looking at evidence that would determine whether the class qualifies for damages on a class-wide basis. Comcast says it can't. The lower court said it could. The Supremes agreed with Comcast.

"The case is incredibly important for any class action lawsuit dependent upon expert analysis to cross the class certification threshold," blogged Rebecca Bjork and Gerald Maatman, Jr., attorneys with Seyfarth Shaw who had been following the case closely.

"This is so because previously, you just knew that a plaintiff’s attorney was going to be able to convince a district judge to allow the class action to proceed to the merits, even though serious doubts about their expert analysis were present. Now, you can rest easier because today, the Supreme Court clarified that to certify a [particular] class, the plaintiffs will need to establish that their expert analysis has adequately explained how the data show that a classwide determination of damages is possible."

In August 2011, the Third Circuit federal court of appeals affirmed a district court ruling that the plaintiffs in the suit had established "by a preponderance of evidence" that they could prove through antitrust impacts -- higher prices for basic -- that they would quantify for damages as a class if they established that Comcast, through system swaps with other operators had "abused its dominance to stifle competition from [overbuilders]."

Comcast had countered that the district court had gotten ahead of itself by failing to first resolve arguments of merit that directly bore on whether or not the class could be certified. Comcast had argued that any deterrent effects on overbuilders of the system swaps would not be felt on a class-wide basis in the Philadelphia market at issue, and that the market was not a relevant geographic market for testing theories of antitrust impact.

Writing for the majority (a 5-4 decision), Justice Antonin Scalia said the Third Circuit had gone against Supreme Court precedent by not weighing evidence in the "class" determination phase simply because it was also pertinent to the "merits" phase of the argument.

"Courts may have to 'probe behind the pleadings before coming to rest on the certification question,' " Scalia wrote. "The analysis willfrequently “overlap with the merits of the plaintiff ’s underlying claim” because a ‘class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the laintiff’s cause of action.’ ”

 

September