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Raising the Bar: Supreme Court Holds Merits Inquiry Requires Link Between Plaintiff’s Liability and Damages Theories at Certification Stage of Class Action Case

Two questions (among many) tend to vex class action practitioners. Does a court have to look at the merits of the Plaintiff’s case at the certification stage of a class action? Similarly, does the Plaintiff have to link his theory of liability and his theory of damages at the class certification stage? The Supreme Court provided significant insight into the answers to both of these questions when it reversed the judgment of the Third Circuit Court of Appeals in the case of Comcast v. Behrend yesterday.

Plaintiffs were cable television subscribers who sued Comcast claiming that Comcast monopolized Philadelphia's cable market and excluded competition in violation of federal antitrust laws. To prove their case, Plaintiffs used an expert damages model that was not based on their particular theory of liability, but rather evidence supposedly common to everyone in the class. Comcast argued the model was based on erroneous assumptions and common proof of damages was impossible given significant differences among the class members.

Both the District Court and the Third Circuit certified the class on the grounds that Comcast’s arguments were "attacks on the merits of the [Plaintiffs’ experts’] methodology" which have "no place in the class certification inquiry." Indeed, because the expert damages model "establish[ed] that the alleged damages are capable of measurement on a class-wide basis using common proof," Plaintiffs had met their burden.

The Supreme Court found this reasoning erroneous. It repeated language from its recent decision in Wal-Mart v. Dukes that a "rigorous analysis" must be performed at the class certification stage, and that it "may be necessary for the court to probe behind the pleadings before coming to rest on the certification question." Specifically, the Supreme Court held that the Third Circuit erred in refusing to decide whether the plaintiff expert's proposed damages model could show damages on a class-wide basis.

The Supreme Court also found error in that the Third Circuit's approach to class certification would have allowed plaintiffs to obtain certification without showing a link between their damages model and their theory of liability. "[A]t the class-certification stage (as at trial), any model supporting a ‘plaintiff’s damages case must be consistent with its liability case’." Citing the Federal Judicial Center's Reference Manual on Scientific Evidence, the majority held, "'the first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event.' The District Court and the Court of Appeals ignored that first step entirely."

If the Third Circuit’s reasoning had been allowed to stand, this would have significantly lowered class plaintiffs' burden under Rule 23 and resulted in the certification of many more non-meritorious class actions. The vote was 5-4. Justice Scalia wrote the majority decision, with Justices Breyer, Ginsburg, Sotomayor and Kagan dissenting.

©2022 MICHAEL BEST & FRIEDRICH LLPNational Law Review, Volume III, Number 87
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About this Author

Paul E. Benson, product and tort liability litigator, michael best law firm
Partner

For more than 25 years, Paul has specialized in product liability defense, class action defense, insurance litigation, and complex commercial litigation. He is particularly well known for his work in the class action and food and beverage sectors, where he is a nationally and locally recognized speaker and thought leader on product liability issues and regulatory trends.

In all of these areas, Paul has established a reputation for outstanding results. He has used motion practice to obtain summary judgment and/or dismissal in more than half of the cases he has defended in Wisconsin...

414-225-2757
Joseph Olson, Michael Best Law Firm, Employee Benefits Litigation Attorney
Partner

Joe is a trial attorney practicing primarily in the areas of class action defense, wage and hour litigation, employee benefits litigation, regulatory compliance, and complex commercial litigation. In this capacity, he:

  • Routinely helps clients deal with class actions suits across all subject matters

  • Handles all aspects of complex employment litigation including wage and hour suits arising under the federal Fair Labor Standards Act (FLSA) and applicable state laws, plus benefits litigation...

414-277-3465
Benjamin Kaplan, Michael Best, product liability litigation, class action defense attorney,
Associate

Ben focuses on consumer protection, business tort, and class action litigation, providing careful analysis of complex issues and practical advice for resolving disputes and concerns. Ben has jury trial experience in both state and federal courts, as well as appellate experience in multiple federal appellate circuits.  

414-223-2504
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