The wait is over. The United States Supreme Court decided Comcast v. Behrend on March 27, issuing a 5-4 opinion (same alignment as in Dukes) that contained surprises for both sides of the Rule 23 bar. Class action practitioners anticipated a ruling addressing the propriety of Daubert admissibility standards at the class certification stage. What they got, however, was a predominance analysis that the dissent characterized as “good for this day and case only.” Ultimately, the Court reversed the Third Circuit’s affirmation of class certification because the multiple regression model submitted by the plaintiffs’ expert to establish common impact failed to tie the damage analysis to the particular theory of antitrust harm that plaintiffs’ alleged: “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.” While commentators are split on the impact that the Court’s opinion will have on future Rule 23 cases (pun fully intended), the Court swiftly vacated and remanded two other class certification cases raising predominance issues that were pending before it.
So what happened to Daubert? A procedural glitch. The question that the Court was supposed to address was “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.” It wasn’t exactly the question Comcast sought to certify, and it wasn’t the question the Court ended up answering because Comcast did not challenge the admissibility of the expert opinion below. Accordingly, there was no Daubert challenge for the Court to review. Hence, the predominance analysis.
The holding: Plaintiffs brought the case under both sections 1 and 2 of the Sherman Act, alleging that Comcast entered into customer “swaps” with competitors in violation of section 1 and monopolized services in customer “clusters” in violation of section 2. They proposed four theories of impact, all of which the District Court rejected except for one: Comcast’s activities reduced competition from “overbuilders,” companies that were essentially local area competitors. Plaintiffs’ damage model, however, did not attribute particular damage to any particular conduct or theory and instead gave a general damage analysis equally applicable to all four proffered theories. The Court rejected the analysis on the ground that it failed to satisfy the predominance requirement of Rule 23(b)(3) because the analysis failed to attribute damage to the sole remaining “overbuilder” theory of harm and thus failed to show that impact could be proven on a class-wide basis.
The impact: Some commentators suggest that the decision changes the long-standing rule that a class may be certified even if individual damage calculations are necessary. This is likely wishful thinking. The opinion does, however, embrace Dukes and makes it clear that the Dukes commonality analysis applies, perhaps with more force, to the predominance requirement of Rule 23(b)(3), i.e., merits inquiries, including resolving factual disputes, are required at the certification stage if necessary to resolve Rule 23 issues. But, what about experts? The decision confirms that an expert theory must be viable, not merely plausible. Thus, the old Visa Check/Master Money standard is likely gone. Comcast did not address the applicability of Daubert at the class certification stage, which leaves us with the statement in Dukes implying but not holding that an admissibility challenge is proper at the certification stage. But, the Court’s predominance analysis and result can certainly be interpreted as simply as requiring resolution of expert disputes at the certification stage whether through an admissibility challenge or otherwise, if properly presented—based on the Court’s analysis, it seems the plaintiffs’ expert would have been excluded if Comcast had taken the procedural step of challenging admissibility.
The dissent criticized the majority’s result as not only being procedurally improper, but as being “good for this day and this case only.” Whether this is true remains to be seen. In the few days since the Court’s decision, the Court has vacated certification orders and remanded two cases for reconsideration in light of its decision in Comcast: Whirlpool v. Glazer, a products liability case out of the 6th Circuit and Ross v. RBS Citizens, NA, a wage and hour case out of the 7th Circuit. Obviously, there will be more to come.
