In Comcast, No. 11-864, 2013 WL 1222646 (S. Ct. March 27, 2013) (Scalia, J.), cable television customers brought an antitrust class action against their cable company, alleging that it engaged in anti-competitive conduct via market swap transactions and other anti-competitive conduct, which enabled it to maintain prices above competitive levels.
In the proceedings below, Plaintiffs initially presented four theories of antitrust impact, of which one survived—that Defendants’ activities reduced the level of competition from “overbuilders,” defined as companies that build competing cable networks in areas where an incumbent cable company already operates. In permitting this theory to go forward, the district court determined that damages stemming from this theory could be calculated on a class-wide basis, which Plaintiff showed by relying on expert testimony and a regression model.
Although the selected model did not isolate damages resulting from any one theory of antitrust impact (such as the only theory that survived), the district court certified the class, and the Third Circuit affirmed, reasoning that at the class certification stage, Plaintiffs were not required to tie each theory of antitrust impact to an exact calculation of damages.
Granting certiorari, the United States Supreme Court reversed, and, noting that deciding motions for class certification may require a court to go beyond the pleadings to conduct a thorough and rigorous analysis of whether Rule 23 was satisfied, an inquiry which may overlap with the merits of an underlying claim, the Third Circuit had erred by refusing to entertain arguments challenging Plaintiffs’ damages model on grounds that those arguments would also be pertinent to the merits determination. Furthermore, the Court found that under the proper standard for evaluating class certification, Plaintiffs’ damages model failed to establish that damages could be measured on a class-wide basis, reasoning that the damages model addressed antitrust impact as a whole, as opposed to antitrust impact from the surviving theory of damages. The Court therefore ruled that without a more tailored methodology for calculating damages specific to the surviving overbuilder theory, Plaintiffs could not establish predominance, as questions of individual damages (that is, whether a given class member was damaged by one theory or another) would inevitably overwhelm questions common to the class.
The Court reversed the Third Circuit’s decision.