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Comcast v. Behrend | The Oyez Project at IIT Chicago-Kent College of Law
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Docket No. 11-864 Petitioner Comcast Corp., et al. Respondent Caroline Behrend, et al. Decided By Roberts Court (2010- ) Opinion 569 U.S. ___ (2013) Granted Monday, June 25, 2012 Argued Monday, November 5, 2012 Decided Wednesday, March 27, 2013 Advocates
Miguel A. Estrada(for the petitioners)Barry Barnett(for the respondents) Term:
Philadelphia, Pennsylvania Facts of the Case In 2003, Caroline Behrend, along with Stanford Glaberson, Joan Evanchuk-Kind, and Eric Brislawn, brought an antitrust class action suit against Comcast Corporation. The petitioners were all Comcast cable customers, alleging that the company obtained a monopoly on the cable market in violation of the Sherman Antitrust Act. By contracting with competitors to swap customers and subsume the regional cable markets, the company excluded and prevented competition amongst cable providers in the Philadelphia area. The proposed class of plaintiffs included all cable television customers in the Philadelphia area who subscribe or subscribed to Comcast’s video programming services since December 1999.
In May 2007, the US District Court for the Eastern District of Pennsylvania certified the class, allowing the case to move forward. In light of a new antitrust decision in 2008 on class certification from the U.S. Court of Appeals for the Third Circuit, the District Court reconsidered its certification decision. The court held evidentiary hearings in October 2009, which consisted of dozens of expert testimonies and depositions. Following the hearings, the District Court recertified the class, finding sufficient evidence of a common impact amongst class members and a common methodology available to measure damages on a class-wide basis. Comcast subsequently appealed and the Court of Appeals affirmed the lower court decision. Question Is a district court allowed to certify a class without adequate admissible evidence that damages may be measured and quantified on a class-wide basis?
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No. 11–864
COMCAST CORPORATION, et al., PETITIONERS v. CAROLINE BEHREND et al.
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 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, Delaware, and New Jersey.
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 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, 26Stat.
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.
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,” 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 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.
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. 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).
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
–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
–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 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
–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 that bore on the propriety of class certification, 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 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 from the particular antitrust injury on which petitioners’ liability in this action is premised.
The scheme devised by respondents’ 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 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 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 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.
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 Circuit is reversed.
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.
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.
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 forthe 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 individual actions.
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 address here.
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
, 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 exceptional[ly]” erroneous.
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 certifica-tion, 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 added).
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, devoted much of their briefing to the question whether the standards for admissibility of expert evidence set out 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 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 re-spondents “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 that 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 order is both unwise and un-fair to respondents, the opinion breaks no new ground on the standard for certifying a class action under Federal Rule of Civil 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, 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.*
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 Law ¶331, p. 56 (3d ed. 2007) (hereinafter Areeda & Hovenkamp); 6 A. Conte & H. Newberg, Newberg 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 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 208.
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 necessary. Plaintiffs below, re-spondents 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
–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 & Ho-venkamp ¶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 prices.
If, as respondents contend, Philadelphia is a separate well-defined market, and the alleged exclusionary 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 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 “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 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 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 (1984)
. See also United States v. Virginia, 518 U. S. 515
, 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 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 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., dissenting)).
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 overbuilder competition.” Ante, at 7. In most §2 cases, how-ever, 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 pos-sibility 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?
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 rea-sons, we would not disturb the Court of Appeals’ judgment and, instead, would dismiss the writ as improvidently granted.
* 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).
Transcript: ORAL ARGUMENT OF MIGUEL ESTRADA ON BEHALF OF THE RESPONDENTS
Chief Justice John G. Roberts: We'll hear argument first this morning in Case 11-864, Comcast Corporation v. Behrend.
Mr. Estrada.
Miguel Estrada: Thank you, Mr. Chief Justice, and may it please the Court:
The Third Circuit held in this case that the assessment of the adequacy of expert evidence offered in support of class certification is a merits question that has no place in the class certification inquiry.
According to the Third Circuit and to the plaintiffs in this Court, what is sufficient is for the proponents of class certification to point to some abstract methodology, such as econometrics or regression analysis, that conceivably might be applied to the problem at hand in a way in which in the fullness of time will evolve into admissible evidence by the time of the class trial.
Justice Ruth Bader Ginsburg: Mr. Estrada, you are limiting your argument to the determination of damages, as I understand it.
Miguel Estrada: I think you limited my argument to determination of damages, Justice Ginsburg.
Justice Ruth Bader Ginsburg: Because the -- because the Third Circuit agreed that as far as any antitrust impact--
Miguel Estrada: Yes.
Justice Ruth Bader Ginsburg: --that could be established on a class basis.
Miguel Estrada: We -- we obviously -- as is obvious from our cert petition, we do not agree with that.
For purposes of inquiring into the damages question in this Court, I think we have to assume that that is so.
I think it doesn't change the outcome with--
Justice Ruth Bader Ginsburg: But why -- why not?
Because generally -- at least it's my impression -- that in class certifications, if the liability question can be adjudicated on a class basis, then the damages question may be adjudicated individually.
Take a -- take a Title VII case.
A liability -- pattern of practice of discrimination, therefore liability.
But damages can be assessed on an individual basis, so why isn't bifurcation possible here?
Miguel Estrada: --Well, let me make two points in response to that question, Justice Ginsburg: One about what the legal standards are, and, you know, the second one, which is as important, about what the record in this case is.
With respect to the first point, what the rule asks us to look at is not questions of damages versus liability, but whether the common questions predominate over those that are individual to the class members.
I don't disagree, and it is not my position today, that there may be cases in which individual damages questions are consistent with class certification.
But as the lower courts have recognized, it is not the case that all damages questions may -- may remain individual consistently with class certification.
Indeed, the 1966 advisory notes expressly say that questions of damages with respect to class members may or may not predominate in cases like this; i.e., antitrust class actions.
Let--
Justice Elena Kagan: Mr. Estrada, doesn't Justice Ginsburg's question actually point out that the -- the law that both the district court and the circuit court used in this case was actually quite favorable to you.
Unlike some courts, both the district court and the circuit court said that the plaintiffs needed to show that there was a class-wide measurement of damages.
And then in addition, both courts said really, it was -- the burden was on the plaintiffs to demonstrate that that class-wide measure of damages existed.
Now, I understand that you have problems with the way in which the plaintiffs met that burden.
You say that they didn't meet that burden.
But it seems to me that the legal standard that was used was exactly the legal standard that you wanted, that the plaintiffs had to come in and show by a preponderance that they had a class-wide way to measure damages in this case.
Miguel Estrada: --I don't think that's right, Justice Kagan.
I think we can have a healthy debate about whether the district court did what you just finished saying.
I think there can be no debate that the court of appeals did so, because repeatedly throughout its opinion said that the questions as to the adequacy of whether they had complied with the Hydrogen Peroxide standard was a merits question that was for later adjudication in this case.
Justice Elena Kagan: Well, here's what the district court said.
"The experts' opinions raise substantial issues of fact and credibility that we are required to resolve to decide the pending motion. "
That is the motion for class certification.
"Having rigorously analyzed the experts' reports, we conclude that the class has met its burden to demonstrate that the elements of antitrust impact is capable of proof at trial through evidence that is common to the class, and that there is a common methodology available to measure and quantify damages on a class-wide basis. "
So that seems to me exactly what you say they should have done.
Now, you disagree with their ultimate determination, but not with the statement of the law.
Miguel Estrada: Well, I think that it is true that our position in the district court was that Hydrogen Peroxide controlled, and that the district court correctly stated the holding of the Third Circuit ruling in that case.
Beyond that, I don't think that we do agree, because in the Third Circuit, once the case got there, we got a rule of law saying that although this court prescribed the rule amendment, 23(f), precisely to enable courts of appeals to review whether the district court got it right for important policy questions, that the job of the court of appeals under 23(f) can be fully discharged by saying that providence will provide; we'll think about it in the morning.
And that is not consistent with the proposition that the correct law was applied in the lower courts.
Furthermore, although the district court did enounce the correct standard in reflecting the holding of Hydrogen Peroxide, it is far from apparent -- and this is part of our point to the Third Circuit -- excuse me; to the Third Circuit -- which was not actually heard on the merits, that what he did was different from simply saying that econometrics and regression analysis are well established methodologies for dealing with problems of this kind.
And I will ask you to look at the top of page 145 of the Pet.
App., where you can look at discussions -- I'm sorry, it's 131 in footnote 24, where the district court made clear that his understanding of the capable class-wide proof involved the inquiry whether the plaintiffs actually had evidence that reflected the methodologies that had been used in this case -- in these kinds of cases.
"It is undisputed that multiple regression analysis is an acceptable and widely recognized statistical tool for cases of this kind. "
So at a very general level, I don't have a disagreement with you that in many cases where there is error, the district court started out with the right foot.
I don't agree with you that the correct standard either was applied by the district court or was even attempted by the court of appeals.
Now, if we were to go to the merits of the question -- and to answer, you know, the second part of the question that I started out with Justice Ginsburg, keep in mind that even on the assumption that the district court accepted that there was common class proof of antitrust impact, that is not the same as accepting -- and I don't think the district court accepted -- that there was common class-wide proof that the impact for every individual was the same.
And that is a key point about what the theory of impact here was.
Justice Ruth Bader Ginsburg: It doesn't have to be the same for every member of the class.
As the dissenting judge pointed out, you can have subclasses.
Miguel Estrada: Well, and I'm happy to also deal with that question.
There are cases, indeed, in which, you know, the variances of the classes can be dealt with, with subclasses.
No one on the plaintiffs' side has actually asserted here that the record would allow this.
And Mr. Jordan pointed out, there is considerable basis for skepticism in thinking that that could ever be accomplished because we are talking about 649 franchise areas with different competitive conditions.
But if you go back to the theory of impact, and the theory of impact was that RCN, this putative overbuilder, was, you know, the little engine that could, that it was going out to radiate out to the entire DMA area and completely overbuild the area.
So the theory of impact was if you drop a stone in the water, you are going to have ripples all the way out, so you have ripples as to every member of the class.
It doesn't mean that every ripple is the same.
So -- so that the key question for the damages issue in front of you now is whether what McClave came up with was an adequate methodology for measuring the size of the ripple--
Justice Anthony Kennedy: Are there cases in the -- in the ordinary course of class actions -- I know they are all different -- where the district court can find that common questions do predominate without addressing the question whether damages can be proven on a class-wide basis, or are they always interlinked?
Miguel Estrada: --No, I think the text of (b)(20) -- of (b)(3) expressly requires that questions, whether they be damages or liability, that are common to the class predominate over those that are individual as to class members.
And I fully accept, and I am not arguing, that the mere fact that there may be individual damages questions precludes class certification.
I am actually arguing for the flip side of that issue, which is that just because it -- it may not be preclusive in certain cases doesn't mean that it is preclusive in no case.
I would refer the Court to the Fifth Circuit's opinion by Judge Garwood in the Bell v. AT&T case, which was, like this, an antitrust case, where the Fifth Circuit acknowledged that in many of these cases it's almost hornbook law that there may be individual issues that would not preclude class cert, but that there are certain cases in which the theory of injury and -- and the proof that would be needed to make it out is so sui generous and individualized--
Justice Stephen G. Breyer: I completely agree with hornbook law.
Three pipe manufacturers get together and in January fix their prices, all right?
Fourteen wholesalers want to show that and each has different damages because they bought different amounts of pipe.
Hornbook law: Certify the class and leave the damages issues for later.
Miguel Estrada: --Right.
Justice Stephen G. Breyer: This case, this case, hornbook law: Section 2 forbids monopolization.
It is absolutely clear Comcast has that power.
That's why they're -- that's why they're regulated and, indeed, they engage in things that show that they did not achieve that through skill, foresight and industry.
And now we have a list of four and the district court says exactly what?
If we prove monopolization, which is relevant to all these people in the class, then what we do is we later look into how much that monopolization raised the prices above competitive levels.
And I offer a model to look at the competitive levels and look at what happened over here and there we are, it will help.
Now, hornbook law, whether that's so or not so is a matter for later, but see first if there is liability.
Okay, that's their argument.
Miguel Estrada: Well, I mean, the answer is -- I will take your first example and, in fact, I was going to give, you know, the example of a case that I had that was similar where, you know, three plastic cup manufacturers met in, you know, some airport and fixed the prices.
Now, this is like saying you fixing, you know, the price of widgets.
There is a preexisting but-for world and the question as to who bought what when is not really a question of adjudication but of computation.
And those are the types of cases where the courts say that the individual damages questions really do not preclude a -- a certification.
Now, your second example may or may not be suitable for class treatment.
Justice Stephen G. Breyer: Well, here, since what they are saying is they have two theories: Section 1, the agreements to keep other people out of this area are unlawful in themselves.
Question 2 is whether they contribute to monopolization.
Miguel Estrada: No, but the question--
Justice Stephen G. Breyer: Now, that's the legal issue of liability.
Now, if they're right, why isn't the measure of damages just what you said?
We look to the people who are subject to the monopoly power, and we work out how much above the competitive level they had to pay.
Miguel Estrada: --But the legal--
Justice Stephen G. Breyer: Some paid some, some paid another.
We have some experts in to try to make that computation.
Miguel Estrada: --No, but it isn't, because one key point that is missing from the hypothetical, Justice Breyer, is exactly what the theory of liability that is present in this case is as the case comes to the court.
They had four theories of possible--
Justice Stephen G. Breyer: I saw the four theories and it seems to me that we are now on the theory of one of the pieces of exclusionary conduct was agreement through various mergers, et cetera, that potential competitors would not come in and compete.
Now, I don't know why the judge struck out the other one, the number 2, but number 3 and Number 4, I can see it.
But on monopolization theory, that's not relevant to damages.
Throughout we assume that the regulator is doing a terrible job, otherwise the prices wouldn't be so high in the first place.
But what's the difference in this case?
I just didn't hear it, and I put that to show you how it seemed to me there is very similar.
The difference--
Miguel Estrada: --No.
I mean, I think, you know, the key point that you are missing in your hypothetical--
Justice Stephen G. Breyer: --Is?
Miguel Estrada: --basically starts with the actual point of antitrust law, whether these people actually are potential competitors.
It's not actually relevant to the class certifications that we face today.
But I don't accept, for present purposes or for later, that these people that already have different clusters of cable service that were simply aggregated in these transactions actually were actual potential competitors.
They were not--
Justice Stephen G. Breyer: I mean, that's liability.
Miguel Estrada: --Well, you are right--
Justice Stephen G. Breyer: You have the right to prove that they weren't, fine.
Miguel Estrada: --I just said that.
But the point is that as the case comes to the -- to the Court the question is whether the class that was certified by the district court and validated in its own way by the court of appeals is one that is consistent and fits reliably with the legal theory that the plaintiffs are allowed to pursue--
Justice Stephen G. Breyer: And this does, too--
Miguel Estrada: --in this case.
Justice Stephen G. Breyer: --because if they prove their case, the question on damages is to what extent did the absence of competition from the overbuilders -- and it should have been DBS too from reading this, but nonetheless let me express no view on that -- but on -- on -- to what extent did the failure of competition from those people raise price above the competitive level?
Miguel Estrada: I mean, I hate--
Justice Stephen G. Breyer: And--
Miguel Estrada: --Justice Breyer--
Justice Stephen G. Breyer: --the pipes--
Miguel Estrada: --I mean, I really hate to be so prosaic and you mentioned something -- something so contrary to the facts, but the fact is that the fundamental question here is that there is one theory they are permitted to pursue.
It is that this overbuilder, RCN, would have radiator -- radiated out through the DMA area.
Now, you may think that they should have been allowed to pursue some other different theory.
It's not the case that you have in front of you.
And the fact is that -- that as the case comes to the Court, the theory that remains is based on the proposition that RCN was going to be the overbuilder that -- that was going to impact prices.
Justice Elena Kagan: Well, Mr.--
Miguel Estrada: --If I could just finish.
Two things follow from that.
You know, the first one which is directly pertinent to the issue here is that the McClave model purported to compute damages that were not limited to overbuilding, and that in fact expressly measured overbuilding only as to 5 out of the 16 counties.
The damage model just does not fit the legal theory that stays in the case.
The second aspect of it is that as a question of the factual fit with the record in the case, the transactions that added the largest number of subscribers here occurred in 2000 and very early 2001.
The record in this case includes public announcements by RCN, repeated by the FCC in its competition review, that they were not going to franchise any new franchises.
So there is a basic question of lack of fit between the ipse dixit of the expert and, you know, the record in this case.
Justice Elena Kagan: --Mr. Estrada, as -- as the case comes to the Court, I guess I wonder why any of this is relevant.
You mentioned earlier, you mentioned earlier that we reformulated the question presented in this case.
And we reformulated in a way which said that what we wanted to talk about was whether a district court at a class certification stage has to conduct a Daubert inquiry, in other words has to decide on the admissibility of expert testimony relating to class-wide damages.
And, you know, it would not be crazy to surmise that we reformulated the question because we wanted to present, we wanted to decide a legal question, rather than a question about who was right as to this particular expert's report and how strong it was.
And it turns out that as to that legal question, your clients waived their -- their argument that this was inadmissible evidence.
So -- so what do we do in that circumstance?
Miguel Estrada: Well, I don't agree with you that we waived.
And, you know, we covered this in, I think, 3 or 4 pages in the reply brief with all of the citations as to how we challenged the--
Justice Ruth Bader Ginsburg: But you challenged the probity, Mr. Estrada.
You said Comcast said it had no objection to McClave's qualification as an expert.
So what you were talking about was the probity of this report, not the admissibility.
Miguel Estrada: --No, that is not right, Justice Ginsburg.
Daubert and its progeny really encompasses three distinct prongs.
One of them is, of course, the qualifications of the expert.
The second one is the -- the reliability of the methodology; and the third is fit.
And all we said at the -- at the class hearing is that we had no objection to the proposition that these people have Ph.D. 's, which indeed they do.
But the issue still was both in the district court and in the court of appeals one that we urged that the methodology was not relevant and did not--
Justice Elena Kagan: The district court, Mr. Estrada, clearly understood you to be making an argument about weight and not about admissibility.
And indeed the district court in open court -- and -- and it's in the transcript -- suggests that it's doing something different from holding a Daubert hearing, explains how it's different from holding a Daubert hearing, and both lawyers agree to that statement.
Miguel Estrada: --Well, but I think we -- we agree that he needed to conduct more than a Daubert hearing because we agree with the holding of the Seventh Circuit in American Honda that the question at the class cert hearing is not solely one of whether the evidence would be admissible, but also one of -- of whether the district judge himself is persuaded that this is class-wide proof that has not been impeached in his own mind.
And so, you know, the mere fact that we all understood that what should have been ruled on at the class cert hearing encompassed more than pure Daubert admissibility is actually part of our complaint here.
I mean, I think if you read what the district court did, he basically looked at his job as looking at whether the model was capable, as in literally capable, of -- of -- of establishing, you know, the facts that the plaintiffs say it establishes without really weighing in his own mind whether it had been shown to be fit and, you know, reliable.
Justice Elena Kagan: Mr. Estrada, it seems like a remarkable proposition, honestly, especially with a client like yours that is well lawyered.
It seems like a remarkable proposition that somebody -- a party can say, we have objections about the weight of this evidence.
We don't think -- we don't think it's a strong expert report, and that -- and that we -- and that the Court should then infer that there is an objection to admissibility of evidence as opposed, again, to the weight and strength of evidence.
I mean, surely a district court confronted with an argument about the weight and strength of evidence does not have to say: Oh, I better go hold a Daubert hearing to rule on admissibility even though nobody's asked me--
Miguel Estrada: But, Justice Kagan--
Justice Elena Kagan: --to rule on admissibility.
Miguel Estrada: --But, Justice Kagan, I mean, I think we could go through chapter and verse to everything that we put in the reply brief.
But I think in fairness I have to point out to you that we never said that our objection was to the weight and not to the admissibility.
We agree that these people have properly scholarly credentials, and after that, as we say in the reply brief with citations to the record, we said: This model is so unreliable that it is just not usable period, full stop.
We went to the Third Circuit and said: This is not evidence of any kind, much less--
Justice Elena Kagan: Did you ever file a motion to strike the expert report?
Miguel Estrada: --No, we did not, and we actually don't think that that's needed, because it would actually be sort of silly to engage in a motion to strike the evidence that we are asking the district judge to consider in order to decide whether it actually is reliable.
Justice Sonia Sotomayor: Mr. Estrada, could you pronounce for me or give me the legal rule as you want us to articulate it?
Let me get you out of Daubert, okay, because I think you really can't deny that you never raised the word “ Daubert ” below until the very end.
Your fight before the district court was on the probity of the model, not on a Daubert issue, correct?
Miguel Estrada: I don't think that's fair, because I think--
Justice Sonia Sotomayor: Did you use the word “ Daubert ” before the district court?
Miguel Estrada: --We cited Daubert cases in the court of appeals.
We did say to the district court that the model was not usable.
So you didn't use “ Daubert ” below--
Miguel Estrada: I think that's fair.
Justice Sonia Sotomayor: --so let's get out of the Daubert language, okay?
Tell me how and what rule we announce so that district courts find an expert's evidence probative, the other side argues it's not, and when does the district court let the jury decide between the two?
Where is the line that the district court draws between class certification and merits adjudication so that at some point it goes to the jury?
Miguel Estrada: There are two things that the district court has to do and both involve an assessment of the validity or, as you would put it, probity of the expert evidence.
You know, the first one keeps in mind that the focus of the class certification hearing is to decide whether the -- this case should be tried as a class, and therefore the first question that the district court has to ask is, even if I think that this is not ready now, do they have a methodology that sufficiently fits the facts and is reliably based on a scientific method so that these people will be capable of proving class-wide this issue at trial.
Justice Antonin Scalia: We must have thought that, I suppose, or else we wouldn't have reformulated the question this way, right?
Miguel Estrada: Well--
Justice Antonin Scalia: That's the way you put the question initially, and we reformulated it to be a Daubert question.
Miguel Estrada: --I was -- I was going to point out by reference to one of your opinions, Justice Scalia, that there is a question sort of based on the Williams case, 504 U.S., as to, you know, the extent to which these issues are open to the Respondent to challenge as well.
Because by the time we framed the cert petition, even though we framed it in terms of Daubert, it was abundantly clear, as we pointed out in the reply brief, that we were challenging the fit and the reliability of the methodology, and there was nary a word in the -- in the brief in opposition that actually took issue with that.
On the face of that, you reformulated the question.
Your ruling in Williams would say that that issue is now over and that we move to the consideration of the merits, and I would like to reserve the remainder of my time for rebuttal.
ORAL ARGUMENT OF BARRY BARNETT ON BEHALF OF THE RESPONDENTS
Barry Barnett: Mr. Chief Justice and may it please the Court:
Justice Ginsburg and Justice Kagan, you are exactly right, the petition for certiorari was framed not, as counsel just misspoke, in terms of Daubert, but it was framed in terms of whether you have to go into -- whether the district court and the court of appeals have to deal with merits issues, and that question was what was reformulated.
And to get a sense of how profoundly uninterested Comcast was in Daubert and in arguing weight and probativeness as opposed to admissibility, which is the question before this Court, they never, ever cited Daubert.
They didn't cite it in the district court, they didn't cite it in the court of appeals.
Justice Anthony Kennedy: One of my -- one of my questions in the case is this.
There was a question to Mr. Estrada with reference to a jury trial, but the judge doesn't really have a gate -- what do you call it, a gatekeeper function here.
There is no -- there's no jury.
And if the judge admits the evidence and if it turns out that that doesn't meet the standard of reliability, then he can exclude it.
I don't -- I don't see why the judge has to say: All right, now first I'm going to do Daubert, and next I'm going to do whether this is reliable.
This is just a magic words approach, it seems to me.
Barry Barnett: I don't think it is a magic word approach at all, Your Honor, because it has tremendous significance to people who are actually litigating the case.
It's -- I submit that it is disrespectful to a district judge not to object on Daubert grounds and then complain that what he did was completely unusable in the court.
They cited Daubert and Rule 702, 50 -- I quit counting at 50, but it was only after the question was reframed not to deal with merits questions, but to deal with Daubert specifically.
Justice Anthony Kennedy: Well, I -- I take it there is no argument over whether or not the expert is qualified.
Barry Barnett: Indeed, Your Honor.
Justice Anthony Kennedy: The question is just whether his -- his theory makes any sense.
Barry Barnett: That's true.
Justice Anthony Kennedy: And the Petitioner says it doesn't.
Barry Barnett: But, Justice Kennedy it's also the case that the judge saying,
"Do you have any objections to this witness as an expert? "
That's about as big an invitation you can get that if you have got a Daubert objection, you better make it now, you need to make it now.
Justice Anthony Kennedy: Well, I -- I can think of -- my initial reaction -- it has been an awful long time since I have been in the courtroom -- is that that's whether or not this man is -- is qualified to give an opinion.
Barry Barnett: That was--
Justice Anthony Kennedy: That's one.
The next thing is does this opinion make any sense.
Barry Barnett: --The second step is using the -- the Court's opinions in Daubert, as well as in Carmichael, as well as in Joiner, which the Court has held applies to all kinds of expert testimony in Federal court.
The district judge has an obligation to serve as a gatekeeper whether there is a jury in the box or not.
On a preliminary injunction, the court, if there is a proper Daubert objection, must make the objection at that time.
Justice Sonia Sotomayor: Excuse me, do you think -- that -- that's why I am trying to get away from magic words.
Why do you disagree with the simple proposition that a district court, by whatever magic words it uses, has to come to the conclusion that the expert's testimony is persuasive?
And isn't that at bottom line a judgment that it's reliable and probative?
Barry Barnett: I completely agree, Justice Sotomayor, and we -- we embrace whatever Daubert standard anybody wants to apply retroactively.
But the main point is Judge Padova--
Justice Sonia Sotomayor: So you are not disagreeing with your adversary on a legal standard.
Every judge on a -- this is the simple way I formulate the rule -- every judge before he certifies -- he or she certifies a class, has to decide whether the methods being used are probative and relevant, sufficient to prove common -- common question of damages.
Barry Barnett: --Justice Sotomayor, I agree with that proposition if such that there is a proper objection made such that the district court is put on notice that he or she needs to do the work.
Judge Padova had a 4-day hearing, heard a day and a half of Dr. McClave, and then had a separate hearing to ask specific questions about, what about, well there is one of the four mechanisms that the anticompetitive conduct translated into sky high prices throughout the Philadelphia DMA.
Justice Samuel Alito: In this case why doesn't the question of probative value subsume the Daubert question?
Barry Barnett: I don't think it does, Your Honor.
And again, it's not magic words.
Trial lawyers -- and I have been on this case for almost 10 years now -- once you say Daubert, once you say 702, or once you say
"I object, it's not reliable. "
at the time, contemporaneously, the district judge has an opportunity to fix whatever the problem is.
And the other side has a chance to fix whatever the problem is, too.
Justice Samuel Alito: I think the problem is -- let me ask my question in a different way.
If the problem is that the model that is being -- that was used by the expert does not fit the theory of liability that remains in the case, would that -- what is the difference in determining probative value there and determining whether it comes in under Daubert?
Barry Barnett: Well, it -- it certainly is not an admissibility question.
So, I mean that's what the question is before the Court.
That is definitely not an admissibility question, it's a question of probativeness, and you can analyze it however you want to under a clearly erroneous test, which is what applies both under a Daubert standard as well as a class certification, where the judge is--
Justice Antonin Scalia: You're -- you are saying it's inadmissible if it's inadequately probative, right?
So your objections boil down to the same, don't they?
If it's inadequately probative, it's inadmissible, isn't that right?
Barry Barnett: --If -- if you are talking about at the hearing for the class certification--
Justice Antonin Scalia: Well, whenever.
Barry Barnett: --as opposed to a trial.
Justice Antonin Scalia: I'm talking about what, what is the criterion for Daubert?
Barry Barnett: Daubert--
Justice Antonin Scalia: Is it adequately probative?
If not it's inadmissible.
Barry Barnett: --If it is unreliable then it is not admissible.
Justice Antonin Scalia: Well, you want to say--
Barry Barnett: It is not adequately or inadequately--
Justice Antonin Scalia: --You say unreliable, I say inadequately probative.
It's -- it is unreliable because it is inadequately probative.
Barry Barnett: --It's -- okay, Your Honor.
Justice Antonin Scalia: There--
Barry Barnett: I am not going to quibble with you about that, but this case, Comcast, at the heart of this appeal it's Comcast--
Justice Elena Kagan: Mr. Barnett, it's always true, isn't it, that evidence that is inadequately probative is inadmissible?
Barry Barnett: --Is it always the case?
Justice Elena Kagan: It's always been true, right, if evidence is not--
Barry Barnett: If there is an objection, if there is an objection, there is a lot of authority--
Justice Elena Kagan: --If that's the case.
I mean, but have we ever said that -- that without an objection somebody can say, look, we -- we argued about this evidence and that should be just good enough, even though we didn't -- we didn't make an objection to exclude it?
Barry Barnett: --I -- I am unaware of any time this Court has said it's okay not to object.
Chief Justice John G. Roberts: We are having an elaborate discussion, and you did in -- in the briefs about whether or not this was a claim that was waived below.
No court has addressed that yet.
We're a court of review, not first view.
So it seems to me that one option for the Court, since we did reformulate the question, is to answer the question and then send it back for the court to determine whether or not the parties adequately preserved that option or not -- that objection or not.
Barry Barnett: Your Honor, I agree that that's one of the options that Your Honor has, but of course it goes back with all the scuffs and scars and mess-ups that preceded it up until today.
Chief Justice John G. Roberts: Well, fine.
I mean, and the district court presumably can decide based on the proceedings and all that below, all the scars and mess-ups, whether or not it was adequately preserved or not.
Barry Barnett: I agree, Mr. Chief Justice.
Justice Stephen G. Breyer: The strongest argument I think for that point of view would be simply this, the Sniff Company makes widgets.
The plaintiff says they monopolize the widget business.
That business is monopolized because they achieved the power to raise price above the competitive level through exclusionary practices.
For example, United Fruit used to pour garbage on the ships of its competitors.
Now we have here a class of people who have been injured by their monopoly power -- and here they are, and you give a list.
The judge says or the other side, how do you know that's the right list?
Well, we know; here's how we know.
We have an expert here who has used a model to pick out the right people who were injured by the monopoly power, its exercise.
And the other side says no, that model is no good.
Well, if it genuinely is no good, and really worthless, then I guess you haven't shown these are the right people for the class.
And I think that's what they're saying.
And so the response to that is, to answer this question, do we have to go look at the model?
I mean on its face, it seems okay.
I don't know, I haven't looked at the record.
Barry Barnett: I would love to talk about the model.
Justice Stephen G. Breyer: --Could you talk about that a little bit, please?
Barry Barnett: Yes, I--
Justice Stephen G. Breyer: Did I get my analysis right?
Barry Barnett: --I would love to talk about this model.
Justice Stephen G. Breyer: No, no, that isn't what I want to really know.
I want to know -- if you think of the examples I just -- as the plaintiff, when you draw up your list of class members, you have to have on that list people who really were hurt by the -- or plausibly were hurt by the exercise of market power, and you have to have some way of picking them out, and you have chosen this model as a way.
So, I guess they could object on the ground that model is worthless.
Is this analysis right?
And you would have to show no, it isn't worthless.
Barry Barnett: --Yes, Your Honor, we do have to show that this is a fantastic model, which it is.
Justice Stephen G. Breyer: You don't have to show that much.
I think you only have to show it's a plausible model.
Barry Barnett: All right.
I -- I agree.
I am not going to put the -- I am happy with whatever test you all want to apply is what I'm saying.
And two of the basic misconceptions that this case comes into this Court with is first, that there -- that Dr. McClave was talking about a causal connection between the anticompetitive conduct and the damages.
He was estimating, whatever the -- whatever the anticompetitive conduct is, whatever the judge or jury finds is the anticompetitive conduct that accounts for the sky-high prices throughout the Philadelphia area -- whatever it is, this is an accurate reflection of the damages on a class-wide basis aggregated across the class.
The -- Comcast--
Justice Antonin Scalia: --You didn't say what -- there -- there were four possibilities that he took into account, right, as to what the anticompetitive conduct was?
Barry Barnett: --And, Your Honor--
Justice Antonin Scalia: And as it turns out, only one of those was found to -- to be in the game.
Barry Barnett: --I do want to make sure I -- I make the correction.
Dr. Williams was the one who talked about this, not Dr. McClave.
Dr. Williams was the one who said this is the anticompetitive conduct and this is what caused there to be less competition.
It was Dr. McClave's job to figure out, well, what's the harm to the class as a result of that chain of events?
You are right, Your Honor, that -- Justice Scalia, that Judge -- Judge Padova excluded three of the four mechanisms that Dr. Williams talked about as having a causal connection.
And it turns out Dr. Williams--
Justice Antonin Scalia: That was the basis for the claims.
Barry Barnett: --It was not, Your Honor.
Justice Antonin Scalia: It was not the basis?
His was based only on the one that the court accepted?
Where in the record is -- is that?
Barry Barnett: His -- his model was agnostic about what the anticompetitive conduct was.
Justice Antonin Scalia: You can't be agnostic about what the anticompetitive conduct is, if you are going to do -- if you're going to do an analysis of what are the consequences of the -- of the anticompetitive conduct, you have to know the anticompetitive conduct you are talking about.
Barry Barnett: Again, I want to make sure I am being precise about this, Justice Scalia.
There is no question that the conduct that caused the harm is the clustering behavior that Comcast engaged in over a decade's time.
What is not clear, was not clear but is now, because Judge Padova has told us which of the mechanisms that Dr. Williams formulated as possible causes of the -- the possible engines that resulted in the prices going way up.
Justice Stephen G. Breyer: I guess in a monopolization case it is not the case that you have to trace the damages to the exclusionary conduct.
Barry Barnett: Exactly.
Justice Stephen G. Breyer: In the classical class of -- section 2 case, the damages are caused by the monopolization, which lacks skill, foresight and industry justification.
So the fact that he omitted three but kept one has nothing to do with damages in the classical section 2 case, is that right?
Barry Barnett: Exactly right, Justice Breyer.
And maybe if you think of it as the possibility of -- I think of in terms of engines.
There is an engine that is causing something.
Maybe it's--
Justice Stephen G. Breyer: But here is the difficulty that I am having.
A little technical, but -- but it -- this is a regulated industry.
Barry Barnett: --Yes, Your Honor.
Justice Stephen G. Breyer: And because it's a regulated industry, the regulator in your view is doing one of the worst jobs in history.
They are willing to come in and overbuild and everything, so he must be letting prices -- all right.
Suppose the judge or lawyer were to find: That's okay, doesn't matter, all we're interested in is what Justice Scalia says.
Then if that were true, from looking at the footnote on this, I guess you'd take this model and you would simply subtract or add to the base, which is supposed to be the competitively priced districts.
Barry Barnett: Yes, Your Honor.
Justice Stephen G. Breyer: The districts that also have satellite.
Barry Barnett: Indeed.
Justice Stephen G. Breyer: And that shouldn't be tough to do but I don't know if it's tough to do and I don't see how we're ever going to find out.
Barry Barnett: The record says it can be done.
Justice Stephen G. Breyer: I don't know.
How would you answer such a question?
Barry Barnett: --I would -- would cite you to -- let's see if I can find it.
It's in -- actually in the Court of Appeals record AO 01533 through 34.
It is stated there that you can take off of the DBS -- if you don't like the DBS penetration screen, then you can turn it off and damages are still, as we have established since -- when Comcast complied -- when they finally did file a Daubert motion, would be something like $550 million on a class-wide basis.
So that is in the record as well as there is ample evidence; Exhibit 82, which shows 23 different iterations of the damages models including damages models that Dr. Chipty on the Comcast side put together slicing and dicing all of this data to show that no matter how you slice it and dice it almost, if you did it in any kind of a fair way that the Federal Judicial Center recognizes as a reliable type of methodology you are going to have significant damages across the class for each class member throughout the time period.
The other thing I would like--
Justice Elena Kagan: Mr. Barnett -- I'm sorry.
Barry Barnett: --No, Your Honor, I was about to change that subject.
I am still in search of a legal question that anybody disagrees about here.
You know, I read before the district court statement of the standard, now all points of the circuit court statement of the standard, where the circuit court says,
"The inquiry for a district court at the class certification stage is whether the plaintiffs have demonstrated. "
--burden is on you --
"by a preponderance of the evidence that they will be able to measure damages on a class-wide basis using common proof. "
The parties both agree with that statement of the standard.
It seems to me that the parties also both agree, and this goes back to Justice Sotomayor's question, that if the Daubert question had not been waived, that if -- if Comcast had objected to the admissibility of this expert report, that indeed, the court would -- should have held a hearing on the admissibility of the expert report.
So this is a case where it seems to me that except for the question of how good the expert report is, none of the parties have any adversarial difference as to the appropriate legal standard.
And, you know, usually we decide cases based on disagreements about law, and here I can't find one.
Do you disagree with Mr. Estrada on any statement of the legal standard?
Barry Barnett: I -- I do not, Your Honor, and I think Justice -- Judge Padova got it exactly right.
You read the standard that he applied.
In fact, if anything, it's a tougher standard than should be the test, but we embrace that test and we are happy about it, and we don't disagree with Mr. Estrada.
And this is what I was about to change subject to a little bit, the two misconceptions that fundamentally affect Comcast's view of the world--
Justice Samuel Alito: Before you do that, let me ask a question related to what Justice Kagan just asked.
If we were to answer the question presented as reformulated, I take it your answer would be that a district court under those circumstances may not certify a class action; is that right?
Barry Barnett: --If there is a proper objection, properly and timely presented, it's preserved up through the appellate courts and all the things that you need to do in order to be fair to the judge as well as make sure you get it -- give it as good a chance to be right as possible, the answer would be yes.
But that's a lot of caveats before you get--
Justice Samuel Alito: Well, then the only remaining question is whether the issue was in the case as a factual -- as a matter of the record here; isn't that right?
Barry Barnett: --Well, if the issue of admissibility is in the case, I don't think it is.
If evidence comes in -- again, this is -- this was not a bunch of expert reports that were just piled up on the -- in chambers and Judge Padova went through them.
He actually, at their request, had a four-day hearing, and then a fifth day where he posed a series -- I think it was a four-page letter where the judge says,
"I'm concerned about this, I'm concerned about that. "
"Y'all come back and tell me why it's okay. "
Justice Samuel Alito: Well, could this report be probative if it did not satisfy Daubert?
Barry Barnett: The answer, Your Honor, and my source is Section 274 of Trial and Corpus Juris Secundum, well recognized in this Court, no doubt.
It says that if it's in the record, if it comes in unobjected to, it has whatever probative value the court -- the trier-of-fact chooses to place on it.
Justice Anthony Kennedy: That the court as the trier-of-fact chooses to.
That the -- not reserved to cases where there's a jury?
Barry Barnett: No, Your Honor.
Justice Anthony Kennedy: --It seems to me that, as I indicated before, that the whole question of weight and admissibility is somewhat less important when the trial judge is not the gatekeeper.
The trial judge at the end of the day can hear the testimony, say: You know, I admitted this testimony, but it doesn't make any sense.
Barry Barnett: What's happening, Your Honor, is you have got to satisfy -- Rule 23(b)(3) says the judge has to make findings.
That's the one of the few parts of Rule 23 that talks about findings.
Justice Anthony Kennedy: Well, he does what I said, but then he has 100 pages of findings.
But he's acting as a gatekeeper, and what he's doing or she's doing is projecting: What's this trial going to look like based on the evidence in front of me.
Justice Anthony Kennedy: No, I think that's where we disagree.
The judge has to make a determination that in his view the class can be certified.
Barry Barnett: Absolutely.
Justice Anthony Kennedy: And that includes some factual inquiries as to the damages alleged and the cause of the injury and whether or not there is a common -- whether or not there's a commonality.
Barry Barnett: Justice Kennedy, the district judge asks: Prove to me -- to the plaintiff, that you can prove it at trial.
Prove to me now that at trial you will be able to submit a damages model that passes muster, under Daubert or whatever test there is, depending on what the objections are.
So the judge is acting in a gatekeeper role right then, kind of projecting into the future about what am I going to do when the jury's in the box--
Justice Anthony Kennedy: Well, that's not -- I'll think about it, but that's not my understanding.
I thought the judge has to make a determination that, in the next case we are going to hear this morning, that the representation is material, or it affects the market.
The judge has to make that conclusion, make that finding.
Barry Barnett: --And the finding that the judge makes based on preponderance of the evidence, plaintiffs have shown to me that more likely than not, at trial, plaintiffs will be able to show on a class-wide basis, some evidence, enough to get a verdict that could be upheld, enough that satisfies to some evidence or whatever the test is at trial, that shows damages on a class-wide basis.
So the judge isn't saying: This is it, you can't fix it, you can't change it, you can't modify it, you can't enhance it between now and trial.
He says that you can do it.
You have shown to me, to my satisfaction, that more likely than not that the evidence that you will present to the jury at trial is going to be admissible and it's going to be sufficiently persuasive if the jury chooses to accept it.
And this is where -- I really want to get to this about the merits.
I think there is a great deal of confusion about what Judge Aldisert meant in the Third Circuit when he talked about the merits.
Comcast, each time construes, when he uses the word “ merits ”, talk about incantation of magic words, that that means whether it's good or bad, that that is what Judge Aldisert was talking about.
That is not what he was talking about at all.
He was talking about trial on the merits.
He was saying that right now we don't have to decide whether this model is perfect.
The test -- this issue isn't before us because it's been waived, Daubert and all that, but if you want to know what our observation would be if this were presented in a proper case, then observation is it doesn't have to be perfect, and it can be enhanced between now -- which is supposed to happen at an early, practicable time -- and trial, so that the jury can see it.
Justice Sonia Sotomayor: Counsel, tell me -- you articulate for me what you think -- what the district court found when it accepted your expert's theory as adequate.
Barry Barnett: What Judge--
Justice Sonia Sotomayor: What do you think that means legally?
Barry Barnett: --What Judge Padova found was that the McClave damages model is persuasive to him, sufficiently persuasive to him that it could be used at trial to prove damages on a class-wide basis.
Justice Sonia Sotomayor: And so what does sufficiently persuasive mean?
Barry Barnett: That more likely than not--
Justice Sonia Sotomayor: It sounds nice, but more likely than not--
Barry Barnett: --More likely than not that it will be admissible at trial, and it will meet the standard that's required to get to a verdict.
Not that it's I'm convinced that you're right.
And that's what Judge Aldisert was talking about.
He said: It's not time for us to say Comcast wins or plaintiffs win based on all this evidence; the only thing that's really before the court is whether more likely than not the plaintiffs have presented a model -- we're talking about a model in this case; it could be a different issue in a different case.
In than the Amgen case that's coming up it could be a different issue.
Justice Ruth Bader Ginsburg: Mr. Barnett, this is on a different issue, but you had originally suggested that you had -- that the motion -- that the settlement that's looming was a reason that this Court ought not to decide this case.
But do you now agree that, given the district court's denial of your motion to enforce the settlement, that the proposed settlement has no bearing on this Court's consideration of the case?
Barry Barnett: At this time, Your Honor, I think -- I think it has no bearing on what this Court does or does not do in this case.
It is something that we would have the right to appeal at an appropriate time, but we're not doing that now.
Chief Justice John G. Roberts: Counsel, it -- it seems to me that your answer to Justice Sotomayor, which is whether it's more likely than not that this will be something that can be used at trial, one way to capture that is whether or not this evidence is usable, right?
Barry Barnett: I would not say that.
And partly--
Chief Justice John G. Roberts: More likely than not whether it can be used at trial, that sounds like is it usable.
Barry Barnett: --Well, the reason I'm hesitating is because--
Chief Justice John G. Roberts: Well, I know the reason you're hesitating.
Barry Barnett: --Well -- and also, it's because it's something you don't know.
When that word was used, “ unusable ”, in court, they were talking about common impact.
That's what that was about.
That was -- that discussion was about, it wasn't about this model.
Justice Anthony Kennedy: Well, of course there matters for the trier of fact to determine at the merits stage, but under Daubert and under Rule 702 the judge has to say that the evidence is relevant to the task at hand, and it has a reliable foundation.
I can see a judge saying,
"Well, now, this theory that you're using, this theory works. "
"I think it's accepted in academia. "
Then he hears all the testimony and he says, “ It just doesn't work here ”.
Barry Barnett: And Judge Padova could have done that, but he didn't do that.
I think he was persuaded by the evidence that Dr. McClave put on and he rejected, because we know from his 81-page opinion that he rejected an awful lot of what Comcast's experts said.
So he -- he could have made that determination.
And this is why it's an -- if we're talking -- if we're not dealing just with an admissibility issue that's been forfeited away, we're dealing with abuse of discretion and clearly erroneous.
And this is--
Justice Anthony Kennedy: I'm -- I'm not sure what I just described is not Daubert.
Barry Barnett: --Your Honor, if you're in a trial court and somebody says Daubert or somebody says Rule 702 or somebody says I object to this expert's testimony, that has profound significance.
And again, I think it's -- it's almost disrespectful to the district court to say,
"It's okay, although this -- this question wasn't on the test that you had when you were trying to decide the case, we're going to add the question to the test, and by the way, you flunked it. "
Justice Sonia Sotomayor: --Counsel, the bottom line is, can a district court ever say that it's persuaded by unreliable or not probative evidence.
That's really the bottom line question.
Barry Barnett: I--
Justice Sonia Sotomayor: Does it commit legal error when it finds something that's unreliable and unpersuasive or unprobative?
Barry Barnett: --Well, Your Honor, I agree, and of course that's not the issue in the case, because Judge Padova was convinced it was reliable.
And there's plenty of proof that there was.
Justice Sonia Sotomayor: I -- I think that's a fair reading of what he said--
Barry Barnett: Right.
Justice Sonia Sotomayor: --but if we're answering a legal question.
Barry Barnett: We're talking about the -- the edges and all the -- where everything is done properly below.
If it doesn't pass muster under Daubert, whatever the test is, let's not reformulate it here, I suppose, yes, then it's not admissible.
Justice Sonia Sotomayor: The problem everyone's having is -- I think -- that why do you need Daubert to point out that something is not probative or unreliable?
Whether it's an expert or a lay witness testifying, wouldn't you apply that same standard to anybody's testimony?
Barry Barnett: Justice Sotomayor, let me just give you an example.
There were a bunch of issues that the dissenting judge raised, including the overbuilding screen, a particular kind of market screen, mathematical averages.
If in the DBS penetration screen, if he had raised any of those, if there had been a whisper of a hint of a suggestion, of a thought of the those things in the district court, we'd have been all over that, and we would have proved that it was false, that those -- that those statements are untrue.
And we know that's accurate because, as I just read to you from the -- the court of appeals record, the DBS screen can in fact be taken off, eliminated from the sample, and you still have $550 million worth of damages on a class-wide basis.
Justice Antonin Scalia: Mr.--
Barry Barnett: And the reason we got to that is because they finally did, on the eve of trial, file an actual Daubert motion, and that was our response, and they cited footnote 323 of their brief.
Justice Antonin Scalia: --Mr. Barnett, suppose -- suppose we held that where -- where there's a bench trial, it doesn't make any difference what -- what -- whether the judge excludes the evidence under Daubert.
I never know how to say it.
Is it Daubert or Daubert?
Barry Barnett: It depends on the time of day, Your Honor.
Justice Antonin Scalia: Yes, I think you're right.
It doesn't make a dime's worth of difference whether the judge excludes it under -- under Daubert or proceeds to find it simply unreliable -- unreliable.
Suppose -- suppose we held that.
What difference would it make in the world?
Barry Barnett: I would--
Justice Antonin Scalia: So the trial judge could say,
"Yes, I have a Daubert motion, but -- but I'm going to defer that. "
"I'm just going to -- going to proceed to see whether this evidence is reliable. "
Barry Barnett: --Justice Scalia, I would say what you're doing is what I suggest the Court ought to do.
Everybody knows that district judges have broad discretion in a lot of different things that they do.
You just made it this much bigger as a result of saying,
"We're not even going to bother with the Daubert thing, we're going to trust that the district judge is not going to be persuaded by phony evidence, and we're going to trust, if he gets it nearly close, right, that he got it right. "
Mr. Estrada, you have five minutes remaining.
REBUTTAL ARGUMENT OF MIGUEL ESTRADA ON BEHALF OF THE PETITIONERS
Miguel Estrada: Thank you, Mr. Chief Justice.
Let me -- let me start with the proposition which I continue to find startling, that a damages model can stand up to examination on the theory that it is not linked to any theory of anticompetitive conduct.
Now, the theory seems to be that whether the McClave model is intended to do is to isolate competitive markets elsewhere that are competitive in some sense, come to the conclusion that the Philadelphia DMA is somehow less competitive, and charge whatever the expert says is the difference to Comcast.
But that has a fundamental failure as a matter of substantive antitrust law, because we know from cases from this Court and the court of appeals going back to story parchment, that the one requirement is that causation link of the damages, you know, it has to be certainly linked to illegal conduct.
Justice Stephen G. Breyer: Is that right?
Is that what learned hand said?
Is -- is that what Alcoa holds, is that United Fruit holds when they bomb their competitor's ship and achieve monopolization that the only people who can get damages are the people who run the ship and were bombed--
Miguel Estrada: No, I think--
Justice Stephen G. Breyer: --who bought those bananas?
But besides, if you're right, which I tend to doubt, but I'll look it up, if you're right--
Miguel Estrada: --Story parchment.
Justice Stephen G. Breyer: --Yes, all right.
If you're right and as they pointed out, it's still one of the easiest things in the world to simply change the base for this model.
Instead of the base being those businesses or homeowners who received their service at competitive prices, we say -- we modify it by including those who received services where DBS was involved, and that'll be a higher price and we subtract that price from the price they paid where there was overbuilding threatened.
Now, that'll be a new number.
They say it was a new number.
And I think anybody running a model could do that, but I promise you I don't know.
And to know whether you're right on that or they're right, I will have to get into the model-building business where I am not an expert.
Miguel Estrada: Well, no.
I think all you have to do is whether the proponent -- is to ask whether the proponent of class certification has discharged his duty under this Court's cases to come forward with evidence that is persuasive under the point whether the case as a whole can be tried as a class.
You don't have to become an econometrician; you have to know enough to assess whether the record that has been proffered is probative on the question before the Court.
Here, it isn't.
And one of the reasons it isn't is because they came to the hearing in class certification in the fall of 2009 after full merits discovery.
The papers -- we said to them,
"We have full merits discovery; this model does not work. "
We had variants of not usable.
Every word -- I can read it all, Justice Kagan, if it's worth taking the time.
You know, the flaws preclude its use, it's not to be accepted, it's not usable, does not result in a valid methodology that can be used.
And so having said all of that, we said,
"This model is bunk. "
"You have full class merits discovery. "
"You have plenty of opportunity to come up with a better model. "
We go to the Court of Appeals.
It is affirmed.
Then it goes back to the -- to the district court for further trial proceedings.
The district court, having read the court of appeals' opinion, invites them to submit the evolutionary model that the court of appeals had in mind.
We are still sticking with our story: McClave's the guy.
And so they have had every conceivable opportunity to develop a model.
Why haven't they done that, Justice Breyer?
Maybe because there is a problem in the record.
You can take all of the maps in the record, which are part of the field supplemental appendix, and you can see the different areas of penetration for DBS, you know, has different rates of penetration all over the class area.
Same thing for RCN and FiOS.
And you can look at what -- what the market penetration is in each franchise area.
Consider that each of them is a different licensing authority, that the overbuilding would have to go to franchise by franchise and radiate out in the fullness of time.
And I don't know if there is any kind of attrition that can combine all of that into a single class or subclasses.
They haven't identified one.
And the key point for the resolution of the case in front of you, Justice Kagan, is that the question that comes here is whether a class that is more expansive than the one that you -- that you certified in Walmart can possibly be certified where there is no evidence that is tied to the record in the case that is reliably probative that a class would exist.
Transcript: Justice Ruth Bader Ginsburg: As you have just heard, Justice Breyer and I joined by Justices Sotomayor and Kagan think this case is not fit for the Court's review.
We would dismiss the writ as in providently granted.
We dissent on grounds both procedural and substantive.
I will note the procedural slips, Justice Breyer, the substantive fault.
First, the Court wrote its own question presented.
Comcast question concerned Rule 23's prerequisites for cross-action certification.
The revised question instead of focusing on Rule 23 as whether the plaintiff's class had introduced admissible evidence including expert testimony showing the damages could be proved on a class-wide basis.
In fact, Comcast raised no objection to the admission of the damages model designed by plaintiff's expert, so no question of admissibility was preserved.
Realizing that the question it framed was in inept, the Court addressed a different question.
“Did plaintiff fail to show the damages could be awarded on a class-wide basis?”
The Court settled on that question, however, after briefing an argument ended.
Understandably, plaintiffs followed the Court's instruction and trained their written and oral arguments on admissibility, not Rule 23 requirements.
Thus, the plaintiffs had no unclouded opportunity to be brief and argue with precision the issue the Court decides against them today and that's not rigid.
Second, the Court's ruling is good for this day in case only for it depends on an oddity, the plaintiff's failure to oppose the need to prove damages on a class-wide basis through a common methodology.
In the mine run of cases, class-certification under Rule 23 (b)(3) is proper when liability questions come into the class predominate even if damages are not provable in the aggregate.
That is black letter law and nothing in the Court's opinion today disturbs the legions of federal court decisions that have treated liability on the class basis, damages in smaller units or individually.
Transcript: Justice Stephen G. Breyer: In this dissent, the others agree with Justice Ginsburg and I will try in a minute to explain why I think when we ignore our usual procedure of practice is we risk going quite seriously wrong of a substantive subject here as monopolization.
So, to explain and imagine a roughly analogous case, suppose a plaintiff were to claim that the defendant company through exclusionary practices had obtained 90% of the market for the product in California.
And the defendant says, “Well, California buyers because of that are paying 13% more for the products in buyers in other places.”
Then the plaintiff introduces an expert and he produces a model.
And the model shows that California buyers pay 13% more for the product than others do and that the explanation after he goes through all the possibilities are that the defendant does exercise unlawful monopoly power in California.
That's why they're paying more.
Now, that model, everybody I think would say, is at least evidence that the California buyers were hurt and they constitute an appropriate class of plaintiffs.
However, many there are who wants to buy the product.
Now, the case before us, in our view, in the dissent does not differ meaningfully from that example and the Court doesn't agree with that.
That's because they think the model works differently.
The Court points out that the plaintiffs did give four reasons or theories why other firms found it difficult to enter the market here in Philadelphia.
And the District Court did strike three of those reasons or theories as being invalid.
Now, the Court says, “That back means they have to reconsider the model,” but the District Court found explicitly that removal from of the three theories or reasons or whatever they were from the case didn't have anything to with the model.
Its creation was not premised on their viability.
In the District Courts words, “Whether or not we accepted all four theories is inapposite to Dr. McClave's methods and the Court of Appeals affirmed that.”
How Dr. McClave's model actually works is a matter of fact.
We don't normally disturb findings of fact in which two courts below have concurred and having looked to that model is like -- he had to do.
I believe those lower courts were actually right when they held here as a matter of how the model work, but like Justice Ginsburg, I think at a minimum and that's the more general point, at a minimum, we should not hold to the contrary without having the benefit of the parties argued the point specifically.
Transcript: Chief Justice John G. Roberts: Justice Scalia has our opinion this morning in case 11-864, Comcast Corporation versus Behrend.
Justice Antonin Scalia: This case is here on writ of certiorari to the United States Court of Appeals for the Third Circuit.
Comcast Corporation and its subsidiaries provide cable television services.
From 1998 to 2007, they allegedly engaged in the series of transactions that the parties have described as “clustering.”
A strategy of concentrating up their operations in a particular region that included 16 counties located in Pennsylvania, Delaware, and New Jersey.
What they would do is buy out other companies in that area or trade-off a company in that area for one of their own elsewhere.
Respondents are subscribers to Comcast's cable services.
They filed the class-action, alleging violations of federal antitrust laws, mainly that the clustering scheme harms the subscribers in the region by eliminating competition and holding prices for cable services above competitive levels.
Respondent sought to certify a class of more than two million people pursuant to Federal Rule of Civil Procedure 23 (b)(3).
That rule 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 -- it was uncontested in this case that to meet the predominance requirement, respondents had to show, one, that the individual injury resulting from the alleged antitrust violation, referred to as a “antitrust impact,” was capable of proof at trial through evidence that was common to the class, rather than different for the individual members.
And two, that the damages resulting from that injury were measurable on a classwide basis through the use a common methodology.
Respondents proposed four theories of antitrust impact.
One, Comcast's clustering resulted in decreased market penetration by direct broadcast satellite providers.
Number two, Comcast reduced the level of competition from overbuilders that is companies that build cable networks in areas where an incumbent cable company already exists.
Three, Comcast reduced the level of benchmark competition on which cable customers rely to compare prices.
And four, Comcast's clustering increased its bargaining power relative to content providers.
Each of these forms of impact, respondents alleged, increased cable subscription rates throughout the region.
The District Court accepted only one of those four theories on antitrust impact.
As capable of classwide proof, namely, the theory that Comcast activities reduced the level of competition from overbuilders.
Proceeding then to the second question, the question of damages, the District Court found that damages could also be calculated on a classwide basis.
And so concluding, however, the District Court relied on an expert model that did not isolate damages resulting form any one theory of antitrust impact.
That is to say it calculated the damages attributable to all four of the alleged antitrust impacts described earlier.
The District Court certified the class and the Court of Appeals affirmed.
The Court of Appeals saw no need for respondents to tie each theory of antitrust impact to a calculation of damages attributable to that impact because, the Court said, that would involve consideration of the merits of the antitrust claim which has no place, it said, in the class-certification inquiry.
We granted certiorari and today reverse.
The class-action was improperly certified under Rule 23 (b)(3) by refusing to entertain arguments against respondent's damages model that bore on the propriety of class-certification simply because those arguments would also be pertinent to the merits determination.
The Court of Appeals ran a file of our clear precedence 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.
That is because as I have described, the model did not even attempt to calculate the damages resulting from reduced overbuilder competition.
The only theory of antitrust impact accepted for class-action treatment by the District Court.
Respondents contend at the District Court's conclusion that the model was adequate, was a finding of fact that we must accept.
We think at no more a finding of fact than is a District Court's determination of what -- one of our our opinions holds.
And even if it were a finding of fact, it would be so obviously and exceptionally erroneous that we need not accept it.
Justice Ginsburg and Justice Breyer have filed a dissenting opinion in which Justice Sotomayor and Justice Kagan joined.
COMCAST v. BEHREND. The Oyez Project at IIT Chicago-Kent College of Law. 31 August 2015. <http://www.oyez.org/cases/2010-2019/2012/2012_11_864>.COMCAST v. BEHREND, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/2010-2019/2012/2012_11_864 (last visited August 31, 2015)."COMCAST v. BEHREND," The Oyez Project at IIT Chicago-Kent College of Law, accessed August 31, 2015, http://www.oyez.org/cases/2010-2019/2012/2012_11_864. Footer Links About