Damage issues become more important in class certifications

In Comcast Corp. v. Behrend, No. 11-864 (March 27, 2013), in a 5 to 4 ruling, the Supreme Court of the United States (“SCOTUS”) determined that damage issues need to be addressed as part of the class certification process, and that such damages need to be consistent with the alleged liability issues. Trial counts must not rely solely on the pleadings, but are now required to obtain damages evidence and conduct a “rigorous analysis”. In so doing, individual damage issues may preclude class certification.

In overturning the prior class certification ruling, the SCOTUS majority defined the issue as follows:

“The District Court further found that the damages resulting from overbuilder-deterrence impact could be calculated on a classwide basis. To establish such damages, respondents had relied solely on the testimony of Dr. James McClave. Dr. McClave designed a regression model comparing actual cable prices in the Philadelphia DMA with hypothetical prices that would have prevailed but for petitioners’ allegedly anticompetitive activities. The model calculated damages of $875,576,662 for the entire class. …

A divided panel of the Court of Appeals affirmed. On appeal, petitioners contended the class was improperly certified because the model, among other shortcomings, failed to attribute damages resulting from overbuilder deterrence, the only theory of injury remaining in the case. The court refused to consider the argument because, in its view, such an “attac[k] on the merits of the methodology [had] no place in the class certification inquiry.” 655 F. 3d 182, 207 (CA3 2011). The court emphasized that, “[a]t the class certification stage,” respondents were not required to “tie each theory of antitrust impact to an exact calculation of damages.” Id., at 206. According to the court, it had “not reached the stage of determining on the merits whether the methodology is a just and reasonable inference or speculative.” Ibid. Rather, the court said, respondents must “assure us that if they can prove antitrust impact, the resulting damages are capable of measurement and will not require labyrinthine individual calculations.”…”

The majority framed the issue as being unremarkable, but the dissenting justices thought otherwise. The dissent described the majority’s ruling as a sweeping change from current class certification practice.

The Comcast decision provides defendants with an additional means to defeat class certification. Although the Comcast case involved antitrust allegations, the concept could easily be applied to other allegations.


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