Supreme Court To Decide Important Class Certification Issue Regarding Class-Wide Damages Evidence

On June 26, 2012, the U.S. Supreme Court granted certiorari in Comcast Corp. v. Behrend, No. 11-864, to decide how closely the trial court must examine the plaintiff's proposed proof of damages when deciding whether to certify a class. Under Rule 23(b)(3) of the Federal Rules of Civil Procedure, a class may be certified only if "the questions of law or fact common to class members predominate over any questions affecting only individual members." Last year, in Wal-Mart Stores, Inc. v. Dukes,1 the Supreme Court reaffirmed that trial courts must perform a "rigorous analysis" to determine if the requirements of Rule 23 can be met. Since the Third Circuit's decision in In re Hydrogen Peroxide Antitrust Litigation,2 courts have closely examined whether the plaintiff can prove with common evidence that every member of the class was injured by an alleged antitrust violation. This has led to extensive litigation on class certification about whether the alleged violation impacted putative class members so differently that some did not suffer any antitrust injury at all.

For damages, however, some courts have said that individual determinations of damages are not sufficient to defeat class certification.3 Those decisions suggest that a class could be certified even though each class member would have to prove its damages individually rather than with common, class-wide evidence. The Supreme Court will address that question in Comcast. In Comcast, the plaintiffs claim that the defendants had foreclosed cable television competition by acquiring cable systems in adjacent franchise areas and creating so-called "clusters." The plaintiffs alleged that clustering frustrates other cable companies from "overbuilding" competing cable systems in the same franchise areas, and thus leads to supra-competitive prices. The plaintiffs sought to certify a class of all cable television customers in the Philadelphia area, which covers many different cable franchise areas. The defendants argued that the circumstances in each franchise area are different, and therefore the plaintiffs could prove neither antitrust impact nor damages on a class-wide basis. The trial court rejected those arguments and certified a class.

A divided panel of the Third Circuit affirmed.4 The panel held unanimously that plaintiffs could prove antitrust impact on a class-wide basis. For damages, however, the court divided...