Comcast Corporation v. Behrend: Another Obstacle to Obtaining Relief for ERISA Participants?
Narrow Undisputed Holding
The undisputed holding of the Supreme Court's decision in Comcast Corporation v. Behrend1 is quite narrow. The Court found that the district court improperly certified an antitrust class action brought on behalf of cable television subscribers where the subscribers' damages model "assumed the validity of [the plaintiffs'] four theories of antitrust impact" but the district court permitted certification of claims asserting only one of those theories. The Court wrote:
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).2
The Court quoted the Federal Judicial Center, Reference Manual on Scientific Evidence 432 (3d ed. 2011) for the proposition that "[t]he 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."3
The Supreme Court's holding did not address the question presented in the petition for certiorari and was not compelled by the facts of the case. Nonetheless, Justice Scalia, writing for the majority, held that "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."4
There is nothing particularly controversial about a requirement that plaintiffs match their theories of damages to the theories asserted in their liability claims. For that reason, the dissent in the Comcast 5-4 decision describes the case as "hardly fit for our consideration."5 The dissent, however, strenuously objects to the imposition at the class phase of the proceedings of a new requirement of showing classwide damages. Specifically, the dissent opines that the majority's "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.'"6 The dissent expressed their concern that the Court not abandon longstanding precedent recognizing "that individual damages calculations . . . not preclude class certification under Rule 23(b)(3)."7
The difference between the majority and the dissent in Comcast has created a significant dispute between plaintiffs and defendants. The two sides strongly disagree regarding whether the Supreme Court held that the availability of classwide damages must be proven at the class certification stage of the proceedings, or whether that was mere dicta in Justice Scalia's decision.
Wide Consequences to Plaintiffs Seeking Class Certification
As of the date of submission of this article, only two courts of appeals have issued class certification opinions citing the Supreme Court's decision in Comcast. On May 28, 2013, the Ninth Circuit reversed the denial of class certification by the district court in a California state wage claims case.8 The Ninth Circuit found that, although "the presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3)," Comcast required that plaintiffs "be able to show that their damages stemmed from the defendant's actions that created the legal liability."9 On May 29, 2013, the Second Circuit vacated and remanded a district court's order certifying a class. The Second Circuit, in reliance on Comcast, instructed the district court to consider all of the relevant evidence presented regarding the primary duties of certain employees of a bank and to determine whether "company wide documents and policies tended to 'show that plaintiffs' jobs were similar . . ."10
District court judges have made inconsistent rulings on the scope of the Supreme Court's holding in Comcast. Chief Judge Holderman in the Northern District of Illinois found that the Supreme Court's assumption "that Rule 23(b)(3) requires that damages must be measurable based on a common methodology applicable to the entire class in antitrust cases . . . was merely dicta and does not bind this court."11 In contrast, Judge Lee, also of the Northern District of Illinois, denied class certification, citing Comcast, and held that "damages must be susceptible to measurement across the entire class."12
Comcast has been used as the basis for denying class certification in many cases. For example, class certification was denied in cases asserting claims under the FLSA,13 state wage and hour claims,14 retention of insurance agents' commissions,15 nationwide breach of warranty,16 and improper arrest and detainer.17
The Comcast decision has also recently been used to justify striking class allegations from the complaint in a disability action in one case.18 However, another district court found that Comcast did not require consideration of a motion to strike class claims; the court held that considering the motion would be premature before the class certification phase of the case.19
At least two courts have found that Comcast does not preclude bifurcation between the class liability phase and the individualized damages phase of the litigation.20
There is widespread agreement that Comcast has made it more difficult for plaintiffs seeking to certify class actions under Fed. R. Civ. P. 23(b)(3) to obtain certification. However, lower courts and litigants are sharply divided about whether Comcast precludes certification of class actions where damages cannot be proven on a class-wide basis.
Minimal Effects on Most Plan Participants
No reported decision has yet to be issued discussing the effect of the Supreme Court's ruling in Comcast on the certification of claims brought under ERISA. ERISA claims, by their nature, do not share many of the characteristics of the claims which other courts have struggled to certify. ERISA provides for a uniform federal system of enforcement of obligations under employee benefits plans. ERISA plans are required to be established and maintained under written plan documents.21 ERISA §404(a)(1)(D) requires that ERISA plans be administered "in accordance with the documents and instruments governing the plan" as long as the plan does not conflict with ERISA's substantive provisions.22 ERISA sets one uniform prudent man standard of care for plan fiduciaries in ERISA §404(a).23 The United States Department of Labor has also promulgated claims regulations which require that ERISA plans contain reasonable claims procedures. The Department's procedures include "administrative processes and safeguards designed to ensure and to verify that benefit claim determinations are made in accordance with governing plan documents and that, where appropriate, the plan provisions have been applied consistently with respect to similarly situated claimants."24
Except for promissory estoppel type claims, which require proof of individualized reliance,25 virtually all other ERISA claims require similar treatment of those similarly situated under the plan documents, ERISA's substantive provisions and the fiduciary standard of care. Because of ERISA's unique statutory scheme, most courts have had no difficulty certifying ERISA benefits and fiduciary claims for class treatment.26 Two courts have certified ERISA class actions since the date that Comcast was decided without discussing the decision.27 Nothing about the Comcast decision suggests that ERISA class action cases will be significantly more difficult to certify going forward.
Ellen M. Doyle, Feinstein, Doyle, Payne & Kravec, LLC
1133 S.Ct. 1426, at 1432-1434. (Mar. 27, 2013).
2Id. at 1433.
3Id. at 1435.
4Id. at 1433.
5Id. at 1435.
6Id. at 1436.
7Id. at 1447.
8Leyva v. Medline Industries, Inc., ___ F.3d___, 2013 WL 2306567 (9th Cir. May 28, 2013).
9Id. at *3.
10Cuevas v. Citizens Financial Group, Inc., 2013 WL 2321426 at *2-3 (2nd Cir., May 29, 2013).
11Harris v. comScore, Inc., ___ F.R.D.___, 2013 WL 1339262 at *11 (N.D. Ill., April 2, 2013). See also Martins v. 3PD, Inc., 2013 WL 1320454 at *8 (D. Mass., Mar. 28, 2013) where the district court interpreted Comcast "not to foreclose the possibility of class certification where some individual issues of the calculation of damages might remain, as in the current case, but those determinations will neither be particularly complicated not overwhelmingly numerous."
12Smith v. Family Video Movie Club, Inc., 2013 WL 1628176 at *10 (N.D. Ill., April 15, 2013).
13Roach v. T.L. Cannon Corp., 2013 WL 1316452 at *10 (N.D.N.Y., March 29, 2013).
14Hernandez v. Ashley Furniture Industries, Inc., 2013 WL 2245894 at *6 (E.D. Pa., May 22, 2013); Wang v. Hearst Corporation, ___ F. Supp. __, 2013 WL 1903787, at *8-9 (S.D.N.Y., May 8, 2013).
15Cowden v. Parker & Associates, Inc., 2013 WL 2285163 at *6-7 (E.D. Ky., May 22, 2013).
16Cochran v. Volvo Group North America, LLC, 2013 WL 1729103 (M.D.N.C., April 22, 2013).
17Wright v. St. Louis Board of Police Commissioners, 2013 WL 1318577 at *4 (E.D. Mo., March 29, 2013).
18Semenko v. Wendy's International, Inc., 2013 WL 1568407 at *11 (W.D. Pa., April 12, 2013).
19Blagman v. Apple, Inc., 2013 WL 2181709 at *8 (S.D.N.Y., May 20, 2013).
20Miri v. Dillon, ___ F.R.D.___, 2013 WL 2034310 at *11 (E.D. Mich., May 14, 2013); Wallace v. Powell, 2013 WL 2042369 at *16-19 (M.D. Pa., May 14, 2013)
2129 U.S.C. § 1102(a)(1).
2229 U.S.C. § 1104(a)(1)(D).
2329 U.S.C. § 1104(a).
2429 C.F.R. § 2560-503-1(b)(5).
25See Heffner v. Blue Cross Blue Shield of Alabama, Inc., 443 F.3d 1330, 1340-1345 (11th Cir. 2006).
26See, e.g., Johnson v. Meritzer Health Services Employee Retirement Plan, 702 F.3d 364 (7th Cir. 2012); In re Beacon Associates Litigation, 2012 WL 1569827 (S.D.N.Y., May 3, 2012).
27Schumacher v. AK Steel Corporation Retirement Accumulation Pension Plan, 711 F.3d 675, 683-684 (6th Cir., Mar. 28, 2013); Bauer-Ramazani v. TIAA-CREF, 2013 WL 1920793 at *2-9 (D.Vt., May 9, 2013).