Shifting Sands In Class Action Litigation

Last November 5, the Supreme Court Justices spent the morning listening to two important class action cases that may offer the opportunity for the Court to impose stricter standards for the certification of class actions. Comcast Corp. v. Behrend is a Sherman antitrust claim brought by cable subscribers in the Philadelphia market asserting that they paid too much for cable.1 The plaintiffs alleged a conspiracy to "cluster" licenses in geographical areas where the company could then more effectively control cable prices. At the outset of the case, the plaintiffs advanced four theories to support their damages claim. The lone theory found creditable by the district court was that Comcast's clustering deterred "overbuilders"companies that can offer a competitive alternative where a cable company already operatesfrom entering the Philadelphia market. On the basis of that theory of damages, the district court certified the class under Fed. R. Civ. P. 23(b)(3). On appeal to the Third Circuit, Comcast argued that the plaintiffs had not satisfied Rule 23(b)(3)'s predominance requirement. According to Comcast, the plaintiffs' expert relied on a damages model tied to all four theories but could not measure damages under the sole remaining theory credited by the district court. A divided panel affirmed class certification. It did so on the heels of Wal-Mart Stores, Inc. v. Dukes, where the Supreme Court suggested that Daubert's standards for the admission of expert testimony applied in class certification proceedings.2 The Third Circuit, however, refused to fault the district court for not scrutinizing the expert's damages model under Daubert standards. The panel stated, "We understand the Court's observation to require a district court to evaluate whether an expert is presenting a model which could evolve to become admissible evidence, and not requiring a district court to determine if a model is perfect at the certification stage." (Emphasis supplied.) Rather, according to the Third Circuit, expert opinions need only be "plausible" at the class certification stage. The majority's rationale elicited a strong dissent from Judge Jordan. He found the evidentiary standard which had been applied to be deficient, noting that "simple logic indicates that a court may consider the admissibility of expert testimony at least when considering pre-dominance [under Rule 23(b)(3)]." In the dissent's view, a "court should be hard pressed to conclude that the elements of a claim are capable of proof through evidence common to a class if the only evidence proffered would not be admissible as proof of anything." Thus, Comcast raises the critical question of whether the "plausible" prospect that admissible evidence will be admitted at trial can satisfy the standards for class certification, or whether admissible evidence, including competent expert opinion, must be advanced at the time certification is considered by the district court. In the second case, Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, the plaintiffs claimed to be representatives of a class of securities holders suing under Section 10(b) of...