Source: http://www2.bloomberglaw.com/public/desktop/document/Comcast_Corp_v_Behrend_No_11864_2013_BL_80435_57_CR_1487_US_Mar_2
Timestamp: 2016-02-11 23:20:30
Document Index: 719765281

Matched Legal Cases: ['§ 1', '§ 2', '§ 1', '§ 1778', '§ 1781', '§ 4', '§ 18', '§ 4', '§ 1', '§ 1', '§ 2', '§ 2', '§ 15', '§ 2', '§ 5', '§ 5', '§ 2', '§ 4']

Bloomberg Law - Document - Comcast Corp. v. Behrend, 133 S. Ct. 1426, 185 L. Ed. 2d 515, 57 CR 1487, 81 U.S.L.W. 4217 (2013), Court Opinion
133 S. Ct. 1426
185 L. Ed. 2d 515
2013 BL 80435
Comcast Corp. v. Behrend, 133 S. Ct. 1426, 185 L. Ed. 2d 515, 57 CR 1487, 81 U.S.L.W. 4217 (2013) [2013 BL 80435]
On Writ of Certiorari to the United States Court of Appeals for the Third
Argued November 5, 2012, Decided March 27, 2013 October TERM, 2012
[**517] [*1428] Hide Headnotes
[1] Cable television operators; class action alleging antitrust violations related to clustering; class certification. ►Gen.110(G) [Show Topic Path]
The Third Circuit erred in affirming the district court's certification of a class of Comcast subscribers who sought damages for Comcast's alleged violations of the federal antitrust laws by engaging in clustering its cable television operations within the Philadelphia market [55 CR 967]. The class was certified under Federal Rule of Civil Procedure 23(b)(3), which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.” The district court accepted only one of the plaintiffs' four proposed theories of antitrust impact:
that Comcast's actions lessened competition from overbuilders. Therefore, if they prevailed, plaintiffs would be entitled only to damages resulting from reduced overbuilder competition. The district court, however, while correctly requiring plaintiffs to demonstrate damages that were measurable on a classwide basis through a common methodology, erred by not requiring that the damages model measure only those damages attributable to the overbuilder theory. The district court reasoned, and the Third Circuit affirmed, that tying each theory of antitrust impact to a calculation of damages would involve consideration of the merits, and that such consideration has no place in the class certification inquiry. That reasoning was flatly contradictory to Supreme Court cases requiring a determination that Rule 23 is satisfied even when that requires inquiry into the merits of the claim. Since the damages model put forth by plaintiffs could not distinguish between the anticompetitive effects attributed to all four of plaintiffs'
antitrust theories combined and the effects attributed only to the overbuilding theory, Rule 23(b)(3) could not authorize treating subscribers within the Philadelphia cluster as members of a single class.
Petitioners, Comcast Corporation and its subsidiaries, allegedly "cluster"
their cable television operations within a particular region by swapping
their systems outside the region for competitor systems inside the region.
Respondents, named plaintiffs in this class-action antitrust suit, claim
that they and other Comcast subscribers in the Philadelphia "cluster" are
harmed because Comcast's strategy lessens competition and leads to
supra-competitive prices. They sought class certification under Federal Rule
of Civil Procedure 23(b)(3), which requires that "questions of law or fact
common to class members predominate over any questions affecting only
individual members." The District Court required them to show (1) that the
"antitrust impact" of the violation could be proved at trial through
evidence common to the class and (2) that the damages were measurable on a
classwide basis through a "common methodology." The court accepted only one
of respondents' four proposed theories of antitrust impact: that Comcast's
actions lessened competition from "overbuilders," i.e., companies that build
competing networks in areas where an incumbent cable company already
operates. It then certified the class, finding that the damages from
overbuilder deterrence could be calculated on a classwide basis, even though
respondents' expert acknowledged that his regression model did not isolate
damages resulting from any one of respondents' theories. In affirming, the
Third Circuit refused to consider petitioners' argument that the model
failed to attribute damages to overbuilder deterrence because doing so would
require reaching the merits of respondents' claims at the class
Held: Respondents' class action was improperly certified under Rule
23(b)(3). Pp. 5-11.
(a) A party seeking to maintain a class action must be prepared to
show that Rule 23(a)'s numerosity, commonality, typicality, and
adequacy-of-representation requirements have been met, Wal-Mart
Stores, Inc. v. Dukes, 564 U. S. ___, ___, and must satisfy through
evidentiary proof at least one of Rule 23(b)'s provisions. The same
analytical principles govern certification [*1429] under both Rule 23(a) and
Rule 23(b). Courts may have to "`probe behind the pleadings before
coming to rest on the certification question,' and [a] certification
is proper only if `the trial court is satisfied, after a rigorous
analysis, that [[**518] Rule 23's] prerequisites . . . have been
satisfied.'" Ibid. The analysis will frequently "overlap with the
merits of the plaintiff's underlying claim" because a "`class
determination generally involves considerations that are enmeshed in
the factual and legal issues comprising the plaintiff's cause of
action.'" Ibid. Pp. 5-6.
(b) The Third Circuit ran afoul of this Court's precedents when it
refused to entertain [***2] arguments against respondents' damages model
that bore on the propriety of class certification simply because
they would also be pertinent to the merits determination. If they
prevail, respondents would be entitled only to damages resulting
from reduced overbuilder competition. A model that does not attempt
to measure only those damages attributable to that theory cannot
establish that damages are susceptible of measurement across the
entire class for Rule 23(b)(3) purposes. The lower courts' contrary
reasoning flatly contradicts this Court's cases, which require a
determination that Rule 23 is satisfied, even when that requires
inquiry into the merits of the claim. Wal-Mart, supra, at ___, and
n. 6. Pp. 6-8.
(c) Under the proper standard for evaluating certification,
respondents' model falls far short of establishing that damages can
be measured classwide. The figure respondents' expert used was
calculated assuming the validity of all four theories of antitrust
impact initially advanced by respondents. Because the model cannot
bridge the differences between supra-competitive prices in general
and supra-competitive prices attributable to overbuilder deterrence,
Rule 23(b)(3) cannot authorize treating subscribers in the
Philadelphia cluster as members of a single class. Pp. 8-11.
SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and
KENNEDY, THOMAS, and ALITO, JJ., joined. GINSBURG and BREYER, JJ., filed a
dissenting opinion, in which SOTOMAYOR and KAGAN, JJ., joined.
The District Court and the Court of Appeals approved certification of a
class of more than 2 million current and former Comcast subscribers who seek
damages [*1430] for alleged violations of the federal antitrust laws. We consider
whether certification was appropriate under Federal Rule of Civil Procedure
23(b)(3).
Comcast Corporation and its subsidiaries, petitioners here, provide
cable-television services to residential and commercial customers. From 1998
to 2007, petitioners engaged in a series of transactions that the parties
have described as "clustering," a strategy of concentrating operations
within a particular region. The region at issue here, which the parties have
referred to as the Philadelphia "cluster" or the Philadelphia "Designated
Market Area" (DMA), includes 16 counties located in Pennsylvania, [**519] Delaware,
and New Jersey.[fn1] Petitioners pursued their
clustering strategy by acquiring competitor cable providers in the region
and swapping their own systems outside the region for competitor systems
located in the region. For instance, in 2001, petitioners obtained Adelphia
Communications' cable systems in the Philadelphia DMA, along with its
464,000 subscribers; in exchange, petitioners sold to Adelphia their systems
in Palm Beach, Florida, and Los Angeles, California. As a result of nine
clustering transactions, petitioners' share of subscribers in the region
allegedly increased from 23.9 percent in 1998 to 69.5 percent in 2007. See
264 F. R. D. 150, 156, n. 8, 160 (ED Pa. 2010).
The named [***3] plaintiffs, respondents here, are subscribers to Comcast's
cable-television services. They filed a class-action antitrust suit against
petitioners, claiming that petitioners entered into unlawful swap
agreements, in violation of § 1 of the Sherman Act, and monopolized or
attempted to monopolize services in the cluster, in violation of § 2. Ch.
647, 26 Stat. 209, as amended, 15 U. S. C. §§ 1, 2. Petitioners' clustering
scheme, respondents contended, harmed subscribers in the Philadelphia
cluster by eliminating competition and holding prices for cable services
above competitive levels.
Respondents sought to certify a class under Federal Rule of Civil
Procedure 23(b)(3). That provision permits certification only if "the court
finds that the questions of law or fact common to class members predominate
over any questions affecting only individual members." The District Court
held, and it is uncontested here, that to meet the predominance requirement
respondents had to show (1) that the existence of individual injury
resulting from the alleged antitrust violation (referred to as "antitrust
impact") was "capable of proof at trial through evidence that [was] common
to the class rather than individual
to its members"; and (2) that the damages resulting from that injury were
measurable "on a class-wide basis" through use of a "common methodology."
264 F. R. D., at 154.[fn2]
Respondents proposed four theories of antitrust impact: First, Comcast's
clustering made it profitable for Comcast to withhold local sports
programming from its competitors, resulting in decreased market penetration
by direct broadcast satellite providers. Second, Comcast's activities
reduced the level of competition from "overbuilders," [*1431] companies that build
competing cable networks in areas where an incumbent cable company already
operates. Third, Comcast reduced the level of "benchmark" competition on
which cable customers rely to compare prices. Fourth, clustering increased
Comcast's bargaining power relative to content providers. Each of these
forms of impact, respondents alleged, increased cable subscription rates
throughout the Philadelphia DMA.
The District Court accepted the [**520] overbuilder theory of antitrust impact as
capable of classwide proof and rejected the rest. Id., at 165, 174, 178,
181. Accordingly, in its certification order, the District Court limited
respondents' "proof of antitrust impact" to "the theory that Comcast engaged
in anticompetitive clustering conduct, the effect of which was to deter the
entry of overbuilders in the Philadelphia DMA." App. to Pet. for Cert.
192a-193a.[fn3]
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 [***4] class. App.
1388a (sealed). As Dr. McClave acknowledged, however, the model did not
isolate damages resulting from any one theory of antitrust impact. Id., at
189a-190a. The District Court nevertheless certified the 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."
Ibid. In the court's view, that burden was met because respondents' model
calculated "supra-competitive prices regardless of the type of
anticompetitive conduct." Id., at 205.
We granted certiorari. 567 U. S. ___ (2012).[fn4]
[**521] [*1432] II
The class action is "an exception to the usual rule that litigation is
conducted by and on behalf of the individual named parties only." Califano
v. Yamasaki, 442 U. S. 682, 700-701 (1979). To come within the exception, a
party seeking to maintain a class action "must affirmatively demonstrate his
compliance" with Rule 23. Wal-Mart Stores, Inc. v. Dukes, 564 U. S. ___, ___
(2011) (slip op., at 10). The Rule "does not set forth a mere pleading
standard." Ibid. Rather, a party must not only "be prepared to prove that
there are in fact sufficiently numerous parties, common questions of law or
fact," typicality of claims or defenses, and adequacy of representation, as
required by Rule 23(a). Ibid. The party must also satisfy through
evidentiary proof at least one of the provisions of Rule 23(b).
The provision at issue here is Rule 23(b)(3), which requires a court to find
that "the questions of law or fact common to class members predominate over
any questions affecting only individual members."
Repeatedly, we have emphasized that it "`may be necessary for the court to
probe behind the pleadings before coming to rest on the certification
question,' and that certification is proper only if `the trial court is
satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a)
have been satisfied.'" Ibid. (quoting General Telephone Co. of Southwest v.
Falcon, 457 U. S. 147, 160-161 (1982)). Such an analysis will frequently
entail "overlap with the merits of the plaintiff `s underlying claim."
564 U. S., at ___ (slip op., at 10). That is so because the "`class
determination generally involves considerations that are enmeshed in the
factual and legal issues comprising the plaintiff `s cause of action.'"
Ibid. (quoting Falcon, supra, at 160).
The same analytical principles [***5] govern Rule 23(b). If anything, Rule
23(b)(3)'s predominance criterion is even more demanding than Rule 23(a).
Amchem Products, Inc. v. Windsor, 521 U. S. 591, 623-624 (1997). Rule
23(b)(3), as an "`adventuresome innovation,'" is designed for situations
"`in which "class-action treatment is not as clearly called for."`"
Wal-Mart, supra, at ___ (slip op., at 22) (quoting Amchem,
521 U. S., at 614-615). That explains Congress's addition of procedural
safeguards for (b)(3) class members beyond those provided for (b)(1) or
(b)(2) class members (e.g., an opportunity to opt out), and the court's duty
to take a "`close look'" at whether common questions predominate over
individual ones. Id., at 615.
Respondents' class action was improperly certified under Rule 23(b)(3). By
refusing to entertain arguments against respondents' damages model [**522] that bore
propriety of class certification, [*1433] simply because those arguments would also
be pertinent to the merits determination, the Court of Appeals ran afoul of
our precedents requiring precisely that inquiry. And it is clear that, under
the proper standard for evaluating certification, respondents' model falls
far short of establishing that damages are capable of measurement on a
classwide basis. Without presenting another methodology, respondents cannot
show Rule 23(b)(3) predominance: Questions of individual damage calculations
will inevitably overwhelm questions common to the class. This case thus
turns on the straightforward application of class-certification principles;
it provides no occasion for the dissent's extended discussion, post, at 5-11
(GINSBURG and BREYER, JJ., dissenting), of substantive antitrust law.
We start with an unremarkable premise. If respondents prevail on their
claims, they would be entitled only to damages resulting from reduced
overbuilder competition, since that is the only theory of antitrust impact
accepted for class-action treatment by the District Court. It follows that a
model purporting to serve as evidence of damages in this class action must
measure only those damages attributable to that theory. If the model does
not even attempt to do that, it cannot possibly establish that damages are
susceptible of measurement across the entire class for purposes of Rule
23(b)(3). Calculations need not be exact, see Story Parchment Co. v.
Paterson Parchment Paper Co., 282 U. S. 555, 563 (1931), but at the
class-certification stage (as at trial), any model supporting a "plaintiff
`s damages case must be consistent with its liability case, particularly
with respect to the alleged anticompetitive effect of the violation." ABA
Section of Antitrust Law, Proving Antitrust Damages: Legal and Economic
Issues 57, 62 (2d ed. 2010); see, e.g., Image Tech. Servs. v. Eastman Kodak
Co., 125 F. 3d 1195, 1224 (CA9 1997).
And for purposes of Rule 23, courts must conduct a "`rigorous analysis'" to
determine whether that is so. Wal-Mart, supra, at ___ (slip op., at 10). The
District Court and the Court of Appeals saw no need for respondents to "tie
each theory of antitrust impact" to a calculation of damages.
655 F. 3d, at 206. That, they said, would involve consideration of the
"merits" having "no place in the class certification inquiry." Id., at
206-207. That [***6] reasoning flatly contradicts our cases requiring a
determination that Rule 23 is satisfied, even when that requires inquiry
into the merits of the claim. Wal-Mart, supra, at ___, and n. 6 (slip op.,
at 10-11, and n. 6). The Court of Appeals simply concluded that respondents
"provided a method to measure and quantify damages on a classwide basis,"
finding it unnecessary to decide "whether the methodology [was] a just and
reasonable inference or speculative." 655 F. 3d, at 206. Under that logic,
at the class-certification stage any method of measurement is acceptable so
long as it can be applied classwide, no matter how arbitrary the
measurements may be. Such a proposition would reduce Rule 23(b)(3)'s
predominance requirement to a nullity.
There is no question that the model failed to measure damages resulting
[**523] from the particular antitrust injury on which petitioners' liability in this
action is premised.[fn5]
The scheme devised by respondents' [*1434] expert, Dr. McClave, sought to
establish a "but for" baseline — a figure that would show what the
competitive prices would have been if there had been no antitrust
violations. Damages would then be determined by comparing to that baseline
what the actual prices were during the charged period. The "but for" figure
was calculated, however, by assuming a market that contained none of the
four distortions that respondents attributed to petitioners' actions. In
other words, the model assumed the validity of all four theories of
antitrust impact initially advanced by respondents: decreased penetration by
satellite providers, overbuilder deterrence, lack of benchmark competition,
and increased bargaining power. At the evidentiary hearing, Dr. McClave
expressly admitted that the model calculated damages resulting from "the
alleged anticompetitive conduct as a whole" and did not attribute damages to
any one particular theory of anticompetitive impact. App. 189a-190a, 208a.
This methodology might have been sound, and might have produced
commonality of damages, if all four of those alleged distortions remained in
the case. But as Judge Jordan's partial dissent pointed out:
"[B]ecause the only surviving theory of antitrust impact is that
clustering reduced overbuilding, for Dr. McClave's comparison to be
relevant, his benchmark counties must reflect the conditions that
would have prevailed in the Philadelphia DMA but for the alleged
reduction in overbuilding. In all respects unrelated to reduced
overbuilding, the benchmark counties should
reflect the actual conditions in the Philadelphia DMA, or else the
model will identify `damages' that are not the result of reduced
overbuilding, or, in other words, that are not the certain result of
the wrong." 655 F. 3d, at 216 (internal quotation marks omitted).
The majority's only response to this was that "[a]t the class
certification stage we do not require that Plaintiffs tie each theory of
antitrust impact to an exact calculation of damages, but instead that they
assure us that if they can prove antitrust impact, the resulting damages are
capable of measurement and will not require [***7] labyrinthine individual
calculations." Id., at 206. But such assurance is not provided by a
methodology that identifies damages that are not the result of the wrong.
For all we know, cable subscribers in Gloucester County may have been
overcharged because of petitioners' alleged elimination of satellite
competition (a theory of liability that is not capable of classwide proof);
while subscribers in Camden County may have paid elevated prices because of
petitioners' increased bargaining [**524] power vis-à-vis content providers (another
theory that is not capable of classwide proof); while yet other subscribers
in Montgomery County may have paid rates produced by the combined effects of
multiple forms of alleged antitrust harm; and so on. The permutations
involving four theories of liability [*1435] and 2 million subscribers located in 16
counties are nearly endless.
In light of the model's inability to bridge the differences between
supra-competitive prices in general and supra-competitive prices
attributable to the deterrence of overbuilding, Rule 23(b)(3) cannot
authorize treating subscribers within the Philadelphia cluster as members of
a single class.[fn6] Prices whose level above what an expert deems
"competitive" has been caused by factors unrelated to an accepted theory of
antitrust harm are not "anticompetitive" in any sense relevant here. "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."
Federal Judicial Center, Reference Manual on Scientific Evidence 432 (3d ed.
2011) (emphasis added). The District Court and the Court of Appeals ignored
that first step entirely. The judgment of the Court of Appeals for the Third
[fn1] A "Designated Market Area" is a term used by Nielsen Media Research to
define a broadcast-television market. Strictly speaking, the Philadelphia
DMA comprises 18 counties, not 16.
[fn2] Respondents sought certification for the following class: "All cable
television customers who subscribe or subscribed at any times since December
1, 1999, to the present to video programming services (other than solely to
basic cable services) from Comcast, or any of its subsidiaries or affiliates
in Comcast's Philadelphia cluster." App. 35a.
[fn3] The District Court did not hold that the three alternative theories of
liability failed to establish antitrust impact, but merely that those
theories could not be determined in a manner common to all the class
plaintiffs. The other theories of liability may well be available for the
plaintiffs to pursue as individual actions. Any contention that the
plaintiffs should be allowed to recover damages attributable to all four
theories in this class action would erroneously suggest one of two things —
either that the plaintiffs may also recover such damages in individual
actions or that they are precluded from asserting those theories in
[fn4] The question presented reads: "Whether a district court may certify a
class action without resolving whether the plaintiff class had introduced
admissible evidence, including expert testimony, to show that the case is
susceptible to awarding damages on a class-wide basis." 567 U. S., at ___.
Respondents contend that petitioners forfeited their ability to answer this
question in the negative because they did not make an objection to the
admission of Dr. McClave's testimony under the Federal Rules of Evidence.
See Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U. S. 579 (1993). Such
a forfeit would make it impossible for petitioners to argue that Dr.
McClave's testimony was not "admissible evidence" under the Rules; but it
does not make it impossible for them to argue that the evidence failed "to
show that the case is susceptible to awarding damages on a class-wide
basis." Petitioners argued below, and continue to argue here, that
certification was improper because respondents had failed to establish that
damages could be measured on a classwide basis. That is the question we
[fn5] The dissent is of the view that what an econometric model proves is a
"question of fact" on which we will not "undertake to review concurrent
findings . . . by two courts below in the absence of a very obvious and
exceptional showing of error." Post, at 9 (quoting United States v.
Virginia, 518 U. S. 515, 589, n. 5 (1996) (SCALIA, J., dissenting) (internal
quotation marks omitted)). To begin with, neither of the courts below found
that the model established damages attributable to overbuilding alone.
Second, while the data contained within an econometric model may well be
"questions of fact" in the relevant sense, what those data prove is no more
a question of fact than what our opinions hold. And finally, even if it were
a question of fact, concluding that the model here established damages
attributable to overbuilding alone would be "obvious[ly] and exceptionally]"
[fn6] We might add that even if the model had identified subscribers who
paid more solely because of the deterrence of overbuilding, it still would
not have established the requisite commonality of damages unless it
plausibly showed that the extent of overbuilding (absent deterrence) would
have been the same in all counties, or that the extent is irrelevant to
effect upon ability to charge supra-competitive prices.
JUSTICE GINSBURG and JUSTICE BREYER, with whom JUSTICE SOTOMAYOR and
JUSTICE KAGAN join, dissenting.
Today the Court reaches out to decide a case hardly fit for our
consideration. On both procedural and substantive grounds, we dissent.
This case comes to the Court infected by our misguided reformulation of
the question presented. For that reason alone, we would dismiss the writ of
certiorari as improvidently granted.
Comcast sought review of the following question: "[W]hether a district
court may certify a class action without resolving `merits arguments' that
bear on [Federal Rule of Civil Procedure] 23's prerequisites for
certification, including whether purportedly common issues predominate over
individual ones under Rule 23(b)(3)." Pet. for Cert. i. We granted review of
a different question: "Whether a district court may certify a class action
without resolving whether the plaintiff class has introduced admissible
evidence, including expert testimony, to show that the case is susceptible
to awarding damages on a class-wide basis." 567 U. S. ___ (2012) (emphasis
Our rephrasing shifted the focus of the dispute from the District Court's
Rule 23(b)(3) analysis to its attention (or
lack thereof) to the admissibility of expert testimony. The parties,
responsively, [**525] devoted much of their briefing to the question whether the
standards for admissibility of expert evidence set out [***8] in Federal Rule of
Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U. S. 579
(1993), apply in class certification proceedings. See Brief for Petitioners
35-49; Brief for Respondents 24-37. Indeed, respondents confirmed at oral
argument that they understood our rewritten question to center on
admissibility, not Rule 23(b)(3). See, e.g., Tr. of Oral Arg. 25.
As it turns out, our reformulated question was inapt. To preserve a claim
of error in the admission of evidence, a party must timely object to or move
to strike the evidence. Fed. Rule Evid. 103(a)(1). In [*1436] the months preceding
the District Court's class certification order, Comcast did not object to
the admission of Dr. McClave's damages model under Rule 702 or Daubert. Nor
did Comcast move to strike his testimony and expert report. Consequently,
Comcast forfeited any objection to the admission of Dr. McClave's model at
the certification stage. At this late date, Comcast may no longer argue that
respondents' damages evidence was inadmissible.
Comcast's forfeiture of the question on which we granted review is reason
enough to dismiss the writ as improvidently granted. See Rogers v. United
States, 522 U. S. 252, 259 (1998) (O'Connor, J., concurring in result)
("[W]e ought not to decide the question if it has not been cleanly
presented."); The Monrosa v. Carbon Black Export, Inc., 359 U. S. 180, 183
(1959) (dismissal appropriate in light of "circumstances . . . not fully
apprehended at the time certiorari was granted" (internal quotation marks
omitted)). The Court, however, elects to evaluate whether respondents
"failed to show that the case is susceptible to awarding damages on a
class-wide basis." Ante, at 5, n. 4 (internal quotation marks omitted). To
justify this second revision of the question presented, the Court observes
Comcast "argued below, and continue[s] to argue here, that certification was
improper because respondents had failed to establish that damages could be
measured on a classwide basis." Ibid. And so Comcast did, in addition to
endeavoring to address the question on which we granted review. By treating
the first part of our reformulated question as though it did not exist, the
Court is hardly fair to respondents.
Abandoning the question we instructed the parties to brief does "not
reflect well on the processes of the Court." Redrup v. New York,
386 U. S. 767, 772 (1967) (Harlan, J., dissenting). Taking their cue from
our order, respondents did not train their energies on defending the
District Court's finding of predominance in their briefing or at oral
argument. The Court's newly revised question, focused on predominance,
phrased only after briefing was done, left respondents without an unclouded
opportunity to air the issue the Court today decides against them. And by
resolving a complex and fact-intensive question without the benefit of full
briefing, the Court invites the error into which it has fallen. See infra,
at 5-11.
While the Court's decision to review the merits of the District Court's
certification [**526] order is both unwise and unfair to respondents, the opinion
breaks no new ground on the standard for certifying a class action under
Federal Rule of Civil [***9] Procedure 23(b)(3). In particular, the decision should
not be read to require, as a prerequisite to certification, that damages
attributable to a classwide injury be measurable "`on a class-wide basis.'"
See ante, at 2-3 (acknowledging Court's dependence on the absence of contest
on the matter in this case); Tr. of Oral Arg. 41.
To gain class-action certification under Rule 23(b)(3), the named
plaintiff must demonstrate, and the District Court must find, "that the
questions of law or fact common
to class members predominate over any questions affecting only individual
members." This predominance requirement is meant to "tes[t] whether proposed
classes are sufficiently cohesive to warrant adjudication by
representation," Amchem Products, Inc. v. Windsor, 521 U. S. 591, 623
(1997), but it scarcely demands commonality as to all questions. See 7AA C.
Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 1778, [*1437] p. 121
(3d ed. 2005) (hereinafter Wright, Miller, & Kane). In particular, when
adjudication of questions of liability common to the class will achieve
economies of time and expense, the predominance standard is generally
satisfied even if damages are not provable in the aggregate. See Advisory
Committee's 1966 Notes on Fed. Rule Civ. Proc. 23, 28 U. S. C. App., p. 141
("[A] fraud perpetrated on numerous persons by the use of similar
misrepresentations may be an appealing situation for a class action, and it
may remain so despite the need, if liability is found, for separate
determination of the damages suffered by individuals within the class.");
7AA Wright, Miller, & Kane § 1781, at 235-237.[fn*]
Recognition that individual damages calculations do not preclude class
certification under Rule 23(b)(3) is well nigh universal. See 2 W.
Rubenstein, Newberg on Class Actions § 4:54, p. 205 (5th ed. 2012)
(ordinarily, "individual damage[s] calculations should not scuttle class
certification under Rule 23(b)(3)"). Legions of appellate decisions across a
range of substantive claims are illustrative. See, e.g., Tardiff v. Knox
County, 365 F. 3d 1, 6 (CA1 2004) (Fourth Amendment); Chiang v. Veneman,
385 F. 3d 256, 273 (CA3 2004) (Equal Credit Opportunity Act); Bertulli v.
Independent Assn. of Continental Pilots, 242 F. 3d 290, 298 (CA5 2001)
(Labor-Management Reporting and Disclosure Act and Railway Labor Act);
Beattie v. CenturyTel, Inc., 511 F. 3d 554, 564-566 (CA6 2007) (Federal
Communications Act); Arreola v. Godinez, 546 F. 3d 788, 801 (CA7 2008)
(Eighth Amendment). Antitrust cases, which typically involve common
allegations of antitrust violation, antitrust impact, and the fact of
damages, are classic examples. See In re Visa Check/MasterMoney Antitrust
Litigation, 280 F. 3d 124, 139-140 (CA2 2001). See also 2A P. Areeda, H.
Hovenkamp, R. Blair, & C. Durrance, Antitrust [**527] Law ¶ 331, p. 56 (3d ed. 2007)
(hereinafter Areeda & Hovenkamp); 6 A. Conte & H. Newberg, New-berg on Class
Actions § 18:27, p. 91 (4th ed. 2002). As this Court has rightly observed,
"[p]redominance is a test readily met" in actions alleging "violations of
the antitrust laws." Amchem, 521 U. S., at 625.
The oddity of this case, in which the need to prove damages on a classwide
basis through a common methodology was never challenged by respondents, see
Brief for Plaintiffs-Appellees in No. 10-2865 (CA3), pp. 39-40, is a further
reason to dismiss the writ as improvidently [***10] granted. The Court's ruling is
good for this day and case only. In the mine run of cases, it remains the
"black letter rule" that a class may obtain certification under Rule
23(b)(3) when liability questions common to the class predominate over
damages questions unique to class members. 2 Rubenstein, supra, § 4:54, at
Incautiously entering the fray at this interlocutory stage, the Court sets
forth a profoundly mistaken view of antitrust law. And in doing so, it
relies on its own version of the facts, a version inconsistent with factual
findings made by the District Court and affirmed by the Court of Appeals.
To understand the antitrust problem, some (simplified) background
discussion is [*1438] necessary. Plaintiffs below, respondents here, alleged that
Comcast violated §§ 1 and 2 of the Sherman Act. See 15 U. S. C. §§ 1, 2. For
present purposes, the § 2 claim provides the better illustration. A firm is
guilty of monopolization under § 2 if the plaintiff proves (1) "the
possession of monopoly power in the relevant market" and (2) "the willful
acquisition or maintenance of that power[,] as distinguished from growth or
development as a consequence of a superior product, business acumen, or
historic accident." United States v. Grinnell Corp., 384 U. S. 563, 570-571
(1966). A private plaintiff seeking damages must also show that (3) the
monopolization caused "injur[y]." 15 U. S. C. § 15. We have said that
antitrust injuries must be "of the type the antitrust laws were intended to
prevent and that flo[w] from that which makes defendants' acts unlawful."
Atlantic Richfield Co. v. USA Petroleum Co., 495 U. S. 328, 334 (1990)
(quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 489
(1977)). See 2A Areeda & Hovenkamp ¶ 391a, at 320 (To prove antitrust
injury, "[a] private plaintiff must identify the economic rationale for a
business practice's illegality under the antitrust laws and show that its
harm flows from whatever it is that makes the practice unlawful.").
As plaintiffs below, respondents attempted to meet these requirements by
showing that (1) Comcast obtained a 60% or greater share of the Philadelphia
market, and that its share provides it with monopoly power; (2) Comcast
acquired its share through exclusionary conduct consisting of a series of
mergers with competitors and "swaps" of customers and locations; and (3)
Comcast consequently injured respondents by charging them supra-competitive
If, as respondents contend, Philadelphia is a separate
well-defined market, and the alleged exclusionary [**528] conduct permitted Comcast
to obtain a market share of at least 60%, then proving the § 2 violation may
not be arduous. As a point of comparison, the government considers a market
shared by four firms, each of which has 25% market share, to be "highly
concentrated." Dept. of Justice & Federal Trade Commission, Horizontal
Merger Guidelines § 5.3, p. 19 (2010). A market, such as the one alleged by
respondents, where one firm controls 60% is far worse. See id., § 5.3, at
18-19, and n. 9 (using a concentration index that determines a market's
concentration level by summing the squares of each firm's market share, one
firm with 100% yielding 10,000, five firms with 20% each yielding 2000,
while a market [***11] where one firm accounts for 60% yields an index number of at
least 3,600). The Guidelines, and any standard antitrust treatise, explain
why firms in highly concentrated markets normally have the power to raise
prices significantly above competitive levels. See, e.g., 2B Areeda &
Hovenkamp ¶ 503, at 115.
So far there is agreement. But consider the last matter respondents must
prove: Can they show that Comcast injured them by charging higher prices?
After all, a firm with monopoly power will not necessarily exercise that
power by charging higher prices. It could instead act less competitively in
other ways, such as by leading the quiet life. See J. Hicks, Annual Survey
of Economic Theory: The Theory of Monopoly, 3 Econometrica 1, 8 (1935) ("The
best of all monopoly profits is a quiet life.").
It is at this point that Dr. McClave's model enters the scene. His model
first selects a group of comparable outside-Philadelphia "[*1439] benchmark"
counties, where Comcast enjoyed a lower market share (and where satellite
broadcasting accounted for more of the local business). Using multiple
regression analysis, McClave's model measures
the effect of the anticompetitive conduct by comparing the class counties to
the benchmark counties. The model concludes that the prices Philadelphia
area consumers would have paid had the Philadelphia counties shared the
properties of the benchmark counties (including a diminished Comcast market
share), would have been 13.1% lower than those they actually paid. Thus, the
model provides evidence that Comcast's anticompetitive conduct, which led to
a 60% market share, caused the class to suffer injuriously higher prices.
The special antitrust-related difficulty present here stems from the
manner in which respondents attempted to prove their antitrust injuries.
They proffered four "non-exclusive mechanisms" that allegedly "cause[d] the
high prices" in the Philadelphia area. App. 403a. Those four theories posit
that (1) due to Comcast's acquisitions of competitors, customers found it
more difficult to compare prices; (2) one set of potential competitors,
namely Direct Broadcast Satellite companies, found it more difficult to
obtain access to local sports broadcasts and consequently decided not to
enter the Philadelphia market; (3) Comcast's ability to obtain programming
material at lower prices permitted it to raise prices; and (4) a number of
potential competitors (called "overbuilders"), whose presence in the market
would have limited Comcast's power [**529] to raise prices, were ready to enter some
parts of the market but decided not to do so in light of Comcast's
anticompetitive conduct. 264 F. R. D. 150, 161-162 (ED Pa. 2010).
For reasons not here relevant, the District Court found the first three
theories inapplicable and limited the liability-phase proof to the
"overbuilder" theory. See App. to Pet. for Cert. 192a — 193a. It then asked
the parties to brief whether doing so had any impact on the viability of
McClave's model as a measure of classwide damages. See 264 F. R. D., at 190.
After considering the parties' arguments, the District Court found that
striking the three [***12] theories "does not impeach Dr. McClave's damages model"
because "[a]ny anticompetitive conduct is reflected in the [higher
Philadelphia] price [which Dr. McClave's model determines], not in the [the
model's] selection of the comparison counties, [i.e., the lower-price
`benchmark counties' with which the Philadelphia area prices were
compared]." Id., at 190-191. The court explained that "whether or not we
accepted all [four] . . . theories . . . is inapposite to Dr. McClave's
methods of choosing benchmarks." Ibid. On appeal, the Third Circuit held
that this finding was not an abuse of discretion. 655 F. 3d 182, 207 (2011).
The Court, however, concludes that "the model failed to measure damages
resulting from the particular antitrust injury on which petitioners'
liability in this action is premised." Ante, at 8. To reach this conclusion
the Court must consider fact-based matters, namely what this econometric
multiple-regression model is about, what it proves, and how it does so. And
it must overturn two lower courts' related factual findings to the contrary.
We are normally "reluctant to disturb findings of fact in which two courts
below have concurred." United States v. Doe, 465 U. S. 605, 614 ([*1440] 1984). See
also United States v. Virginia, 518 U. S. 515, 589, n. 5 (1996) (SCALIA, J.,
dissenting) (noting "our well-settled rule that we will not `undertake to
review concurrent findings of fact by two courts below in the absence of a
very obvious and exceptional showing of error'" (quoting Graver Tank & Mfg.
Co. v. Linde Air Products Co., 336 U. S. 271, 275 (1949))).
Here, the District Court found McClave's econometric model capable of
measuring damages on a classwide basis,
even after striking three of the injury theories. 264 F. R. D., at 190-191.
Contrary to the Court's characterization, see ante, at 8-9, n. 5, this was
not a legal conclusion about what the model proved; it was a factual finding
about how the model worked. Under our typical practice, we should leave that
finding alone.
In any event, as far as we can tell, the lower courts were right. On the
basis of the record as we understand it, the District Court did not abuse
its discretion in finding that McClave's model could measure damages
suffered by the class — even if the damages were limited to those caused by
deterred overbuilding. That is because respondents alleged that Comcast's
anticompetitive conduct increased Comcast's market share (and market power)
by deterring potential entrants, in particular, overbuilders, from entering
the Philadelphia area market. See App. 43a — 66a. By showing [**530] that this was
so, respondents' proof tends to show the same in respect to other entrants.
The overbuilders' failure to enter deprives the market of the price
discipline that their entry would have provided in other parts via threat of
the overbuilders' expansion or that of others potentially led on by their
example. Indeed, in the District Court, Comcast argued that the three other
theories, i.e., the three rejected theories, had no impact on prices. See
264 F. R. D., at 166, 176, 180-181. If Comcast was right, then the damages
McClave's model found must have stemmed exclusively from conduct that
deterred new entry, say from "overbuilders." Not surprisingly, the Court
offers no support at all for [***13] its contrary conclusion, namely, that the
District Court's finding was "`obvious[ly] and exceptional[ly]' erroneous."
Ante, at 8-9, n. 5 (quoting Virginia, 518 U. S., at 589, n. 5 (SCALIA, J.,
We are particularly concerned about the matter because the Court, in
reaching its contrary conclusion, makes broad statements about antitrust law
that it could not mean to apply in other cases. The Court begins with what
it calls an "unremarkable premise" that respondents could be "entitled only
to damages resulting from reduced over-builder competition." Ante, at 7. In
most § 2 cases, however, the Court's starting place would seem remarkable,
not "unremarkable."
Suppose in a different case a plaintiff were to prove that Widget, Inc.
has obtained, through anticompetitive means, a 90% share of the California
widget market. Suppose the plaintiff also proves that the two small
remaining firms — one in Ukiah, the other in San Diego — lack the capacity
to expand their widget output to the point where that possibility could
deter Widget, Inc. from raising its prices. Suppose further that the
plaintiff introduces a model that shows California widget prices are now
twice those in every other State, which, the model concludes is (after
accounting for other possible reasons) the result of lack of competition in
the California widget market. Why would a court hearing that case restrict
damages solely to customers in the vicinity of Ukiah and San Diego?
[*1441] Like the model in this example, Dr. McClave's model does not purport to
show precisely how Comcast's conduct led to higher prices in the
Philadelphia area. It simply shows that Comcast's conduct brought about
higher prices. And it measures the amount of subsequent harm.
Because the parties did not fully argue the question the Court now
answers, all Members of the Court may lack a complete understanding of the
model or the meaning of related statements in the record. The need for
focused argument is particularly strong here where, as we have said, the
underlying considerations are detailed, technical, and fact-based. The Court
departs from our ordinary practice, risks inaccurate judicial
decisionmaking, and is unfair to respondents and the courts below. For these
reasons, we would not disturb the Court of Appeals' judgment
and, instead, would dismiss the writ as improvidently granted.
[fn*] A class may be divided into subclasses for adjudication of damages.
Fed. Rule Civ. Proc. 23(c)(4)-(5). Or, at the outset, a class may be
certified for liability purposes only, leaving individual damages
calculations to subsequent proceedings. See 2 W. Rubenstein, Newberg on
Class Actions § 4:54, pp. 206-208 (5th ed. 2012). Further, a certification
order may be altered or amended as the case unfolds. Rule 23(c)(1)(C).
Direct History (22)
Case Analysis (595)
11-00864 (U.S.)