The United States Supreme Court’s recent ruling in Comcast Corp. v. Behrend, Case No. 11-864 (March 27, 2013) reinforces class certification requirements as spelled out in Wal-Mart v. Dukes. However, the closely divided court (5-4) and a strong dissent underscore that the battle over class certification standards may be far from over. While Comcast involved antitrust claims, the Court’s decision has implications for all Rule 23 cases, including employment class actions.
In Comcast, subscribers accused the cable giant of violating antitrust laws by using “clustering” methods to increase its share of the local cable market. During class certification proceedings, Plaintiffs’ expert presented four damages theories and a damage calculation model to show that classwide damages could be ascertained through “common methodology.” The District Court accepted only one of Plaintiffs’ four damages theories, but still certified the class even though the expert acknowledged that his model did not limit damages to the single theory that the court accepted. On appeal, the Third Circuit held that Comcast’s arguments about Plaintiffs’ damages approach amounted to a merits issue that should not be considered at the class certification stage.
The Supreme Court overturned, striking down the Third Circuit’s refusal to hear arguments about damages when ruling upon class certification. In a key footnote, Justice Scalia wrote that the issue was whether “certification was improper because respondents had failed to establish that damages could be measured on a classwide basis.” Heavily citing Wal-Mart, the Court explained that all Rule 23 requirements must be satisfied and that damages—like liability—must be “capable of measurement on a classwide basis.” Comcast, slip op. at 7. Because Plaintiffs’ damages model was dependent on several theories that were rejected by the trial court, the Supreme Court held that “[q]uestions of individual damage calculations [would] inevitably overwhelm questions common to the class,” defeating predominance and rendering class certification improper. Id. at 7-8.
The strongly worded dissent challenged whether damages issues are sufficient to bar class certification in cases certified under Rule 23(b)(3), stating 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.” Id. at 5. Nevertheless, Comcast stands for the clear proposition that courts should scrutinize not only whether liability can be adjudicated on a classwide basis, but whether plaintiffs have satisfied this requirement for damages issues when they seek certification under Rule 23(b)(3).