Today the U.S. Supreme Court decided Comcast Corp. v. Behrend, No. 11-864 (slip opinion), which presented the question of whether a class action can be certified in federal court without admissible evidence that damages are susceptible to proof on a class-wide basis.  The Court’s answer was that, under Rule 23(b)(3)’s predominance requirement, the plaintiffs had failed to satisfy their obligation to establish that damages were susceptible to class-wide proof.  This decision appears to be a big win for defendants, substantially raising the bar for plaintiffs in class actions.  It effectively rejects lower court decisions stating that a need for individual damages calculations may not prevent a class from being certified.  What’s the downside for defendants?  The decision is likely to increase litigation costs on both sides and further complicate class certification proceedings in federal courts because of the need to focus on damages at the class certification stage.

Comcast is an antitrust case in which the plaintiffs allege that Comcast, by acquiring competitors in the greater Philadelphia area, improperly enabled itself to charge higher prices.  The district court certified the class on one theory, that Comcast deterred “overbuilders” (i.e., companies that would compete in areas where Comcast already was operating).  The plaintiffs’ expert, however, calculated damages that were not limited to the “overbuilder” theory but also took into account three other theories that were rejected by the district court for purposes of class certification.  This failure to segregate the damages calculation to the “overbuilder” theory ultimately was the death knell when the case reached the Supreme Court.  (For more detailed background on the case, see my previous blog posts about the oral argument and grant of certiorari.) 

Justice Scalia, writing for a 5-4 majority (including the Chief Justice and Justices Kennedy, Thomas and Alito), issued an 11-page opinion.  These short opinions are great because it makes it so much easier for lower courts and counsel to get through them and apply the Court’s reasoning (and for bloggers like me to get their posts out more quickly).  Here are the key points: 

  • Rigorous Analysis Requirement:  The Court reiterated that a “rigorous analysis” of the class certification requirements is necessary, and that this extends to both Rule 23(a) requirements and Rule 23(b) requirements, including the requirement of predominance of common questions of law or fact where certification is sought under (b)(3).  This “will frequently entail ‘overlap with the merits of the plaintiff’s underlying claim.”  The Court described Rule 23(b)(3) as an “adventuresome innovation” designed for cases where class treatment may not be called for, and noted that the district court has a “duty to take a ‘close look’ at whether common questions predominate over individual ones.”  (Slip op. at 6.)  This largely reiterates what the Court said in Wal-Mart v. Dukes, except that the Court did not reach Rule 23(b) issues in Wal-Mart.  But lower courts have generally viewed the “rigorous analysis” requirement as applicable to Rule 23(b), including predominance. 
  • Damages Requiring Class-Wide Proof:  The Court found that “respondents’ model falls far short of establishing that damages are capable of measurement on a classwide basis,” and that “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.”  (Slip op. at 7.)  The Court further explained that “a model purporting to serve as evidence of damages in this class action must measure only those damages attributable to that theory [i.e., the theory on which the class was certified].  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.
  • Consideration of the Merits at Class Certification:  The Court rejected the Third Circuit’s view that a more detailed calculation of damages was a merits issue not appropriate for resolution at class certification.  Justice Scalia wrote that the Third Circuit’s reasoning “flatly contradicts our cases requiring a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim.”  (Id.)  This further emphasizes that lower courts must dig into the merits at class certification.  Of course, that increases the litigation cost and the time it takes to reach a decision on certification.

The dissent, authored jointly by Justices Ginsburg and Breyer, and joined by Justices Sotomayor and Kagan, argued that the Court should have dismissed certiorari as improperly granted.  When it granted certiorari, the Court had reformulated the question presented in a manner that suggested that the question presented was a Daubert question regarding whether admissibility of expert testimony was a proper consideration at the class certification stage.  In fact, Comcast had never filed a Daubert motion (but the majority concludes that the Court could still properly address whether the evidence, assuming it was admissible, satisfied Rule 23 requirements). 

The dissent also attempts at length (at pp. 3-5) to suggest that the Comcast decision is limited to the circumstances of this case, where apparently there was no dispute between the parties that the damages issue was an appropriate consideration at class certification.  The dissent suggests that the majority is not rejecting prior lower court decisions concluding that a need for individual damages calculations often does not prevent a class from being certified.  But Justice Scalia’s majority opinion says nothing of that sort, and does not suggest any agreement with the dissent on that point.  When the Court’s majority wishes to limit the scope of its decision, it typically says so expressly, and there was no such statement here.  The majority opinion appears to require that plaintiffs present, with admissible evidence, a method for proving damages on a class-wide basis.  While I’m sure plaintiffs’ lawyers will cite the dissent in attempting to limit the reach of the majority opinion, lower courts bound to follow the majority opinion may not be inclined to read it so narrowly.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.