Comcast Corp. v. Behrend, 133 S. Ct. 24 (2013)
In Comcast, the putative class of more than 2 million current and former Comcast Cable subscribers alleged that a practice of clustering cable television operations within a particular region violated antitrust laws by lessening competition and raising prices above competitive levels. (source: edgewortheconomics)
According to the Supreme Court, the Third Circuit erred by not conducting the rigorous analysis required to ascertain whether the prerequisites of Rule 23 had been met. In particular, the Third Circuit disregarded arguments from the defendants pertaining to the damages model put forward by plaintiffs on the grounds that those arguments overlapped with the merits of the plaintiffs’ claim (it is this part that Supreme Court decision now effects; now the Comcast case basically says that you DO have to consider the merits somewhat at the class stage).
An analysis of class certification asks whether the type of economic analysis that would be required to (1) prove injury and (2) quantify damages is inherently individualized.
…If proof of injury (or impact) for an individual class member requires an analysis of factors that are specific to that class member, then class certification is not appropriate.
On the other hand, if proof of injury for all class members requires the same evidence for all class members, then class certification is appropriate. This is often referred to as an assessment of common impact.
In practice, this assessment requires economists to address two questions:
- (1) Were all or substantially all class members impacted (or injured) by the alleged conduct?
- (2) And if so, can class member impact be demonstrated using common proof?
The inquiry into damages requires the determination of whether a formulaic method exists for the calculation of damages for the proposed class. That is is there a method that relies on class-wide evidence and not evidence that is unique or individual to each class member.
In this case, Of the four theories of antitrust harm put forward by the plaintiffs, the district court accepted only one as being amenable to classwide proof — the overbuilder theory (overbuilder theory: Comcast’s activities reduced the level of competition from overbuilders, companies that build competing cable networks in areas where an incumbent cable company already operates;).
The Supreme Court took issue with the approach that the proposed damages model measured damages “regardless of the type of anticompetitive conduct.”[4] The Supreme Court held that if the damages model put forward by plaintiffs did not attempt to causally link damages to the particular anti-competitive conduct at issue, then “it cannot possibly establish that damages are susceptible of measurement across the entire class for purposes of Rule 23(b)(3).”[5]
Generally, this case suggest a stronger emphasis going forward on the role of rigorous empirical testing in the class certification phase related to both impact and damages analyses…. The use of a scientific approach also would increase the likelihood that economic testimony would survive Daubert challenges, which may become more common in class certification cases after this Supreme Court decision.
See also: Wiggins motion
