The Supreme Court Demonstrates Its Predictable Unpredictability in Comcast v. Behrend
In Comcast Corp. v. Behrend,1 the Supreme Court seemed poised to decide what the majority in Wal-mart v. Dukes previously had suggested in dicta without a "doubt" was already so--namely that "the standards for the admission of expert testimony" under Rule 702, and therefore Daubert, apply to expert testimony in class certification proceedings.2 Despite its own prophecy and despite reformulating the question presented to address this issue, the Supreme Court in Comcast answered another question. What that question was and what the answer was--beyond resolving that the lower courts had improperly certified the specific antitrust case--remain the subject of much debate.
In the aftermath of a typical Supreme Court decision, any analysis usually consists of the question presented, the Supreme Court's answer to that question, a discussion of the Court's rationale and then a prognostication of what the answer and the rationale mean for pending and future cases. But Comcast is hardly typical. As a brief overview, the petitioners (Defendants) sought--on a Rule 23(f) interlocutory appeal--review of "whether a district court may certify a class action without resolving 'merits arguments' that bear on Rule 23's prerequisites for certification, including whether purportedly common issues predominate over individual ones under Rule 23."3 But the Supreme Court apparently believed that Comcast presented a vehicle for the Court to address the 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."4 This seemed to shift the dispute at the Supreme Court to the question of the admissibility of expert testimony at class certification.5 As illustrated by their briefing and as admitted at oral argument, the parties understood the question presented this way; so, too, did at least four members of the Court.6 The problem was that "in neither the District Court nor [on appeal] did Comcast raise [an] issue" with respect to the admissibility of plaintiffs' expert testimony.7 Defendants' failure to object to admissibility of the experts on class certification meant that they failed to preserve the issue below for appeal. At this point, the Court faced at least two options: (1) dismiss the case as improvidently granted or (2) find another question to answer.8 The four dissenting justices would have chosen the former; the majority chose the latter.9 As the Roberts Court is probably the most business-friendly Supreme Court since World War II,10 it's perhaps not surprising that the Court would seek to address some question on class certification.
All of this background may be interesting, but it is not particularly helpful to the practicing lawyer who primarily wants to know: "What is the standard on class certification?" The problem with the Comcast decision is that is hard to discern what new legal principle it announces. In fact, it reads more like a district court decision--or perhaps a court of appeals decision which might be relegated to the "unpublished" category--rather than a Supreme Court decision. The dissent remarked that "the opinion breaks no new ground on the standard for certifying a class action under [Rule] 23(b)(3)."11 Lower courts appear to be adopting this view and rejecting arguments that Comcast "treads any new ground in class action law."12
The majority opinion itself only identified one reason that the "action was improperly certified under Rule 23(b)(3)."13 According to the Supreme Court (although inconsistent with the record), the lower court "refus[ed] 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."14 The majority itself described its decision as being based on "an unremarkable premise" and claimed that the case was decided on "straightforward application of class-certification principles."15 Ultimately, the Supreme Court concluded that the Plaintiffs' expert's damages model failed to measure damages consistent with the only liability theory the district court had allowed to proceed on a class-wide basis.16 The source of the problem with the damages model was that the Plaintiffs' expert's model assumed four different sources of liability, but the district court only permitted one on a class-wide basis and the model did "not attribute damages to any one particular theory."17 The majority opinion acknowledged that the methodology might have been sound and produced commonality of damages if all four of those theories remained in the case (but without giving Plaintiffs the chance to challenge the exclusion of the other three class-wide theories of liability). Thus, the holding from Comcast appears to be simply that a damages theory needs to match the class-wide theory of liability and the assessment of that match is appropriate at the class certification stage.
Contrary to the Supreme Court's description of the source of error, the lower courts did not ignore evidence simply because it related to the merits: After initially certifying a class, the district court agreed to a four-day evidentiary hearing on a motion for reconsideration, during which the court heard live testimony from fact and expert witnesses, considered 32 expert reports, and examined deposition excerpts as well as other documents, and then issued an 81-page opinion.18 Nor did the District Court simply accept the opinions of Plaintiffs' expert: The District Court thoroughly analyzed and weighed each of the competing experts' opinions in its lengthy decision; in fact, the District Court "rejected three of [Plaintiffs' four] theories [of antitrust impact]."19 With respect to damages, the District Court considered Defendants' critique of Plaintiffs' expert and his methodology, but concluded that Plaintiffs' expert opinion was "well supported" and that Defendants' "rebuttal model suffer[ed] significant flaws."20 Most relevant to the Supreme Court's conclusion, the District Court found that rejection of one of Plaintiffs' expert's antitrust impact theories did not undermine the damages model.21 The Third Circuit majority opinion recognized that a district court must "examine critically expert testimony on both sides" and emphasized that "[w]eighing conflicting expert testimony at the certification stage is not only permissible; it may be integral to the rigorous analysis Rule 23 demands."22 The Supreme Court's disagreement with the lower courts turns not on a difference about legal principles, but rather a conclusion about the factual determinations--specifically concerning whether "the model failed to measure damages" on which liability was premised.23 As such determination is usually afforded discretion by the district court, the Supreme Court decision is a narrow one.
Undoubtedly disappointed by the narrowness of the Supreme Court's decision, defendants have attempted to divine a host of interpretations of Comcast,largely without success. For example, district courts have rejected arguments that Comcast "foreclose[s] a district court from certifying a liability only class under Rule 23(c)(4)," under the predominance requirement of Rule 23(b)(3).24 Perhaps most importantly, in the first appeals court decision to address Comcast, the Ninth Circuit reaffirmed that "the presence of individualized damages cannot, by itself, defeat class certification under Rule 23(b)(3)."25 District courts outside the Ninth Circuit have reached similar conclusions.26 The Chief Judge of the Northern District of Illinois concluded that Comcast's statement that "damages must be measurable based on a common methodology applicable to the entire class" was merely "dicta."27
Yet, the Supreme Court appears to believe that Comcast decided some question of greater applicability. The Supreme Court vacated and remanded three cases, one to the Sixth Circuit and two to the Seventh Circuit, "for further consideration in light of " Comcast.28 While "the significance of a grant, vacate, and remand order" by the Supreme Court usually is debatable, as one court observed, "one must pause at least for a moment when one sees that the Supreme Court, 'in light of Comcast,' has issued an order vacating and remanding" a decision affirming class certification.29 In each of these cases, defendants sought to present to the Supreme Court some variation of the argument that a class had been improperly certified under Rule 23(b)(3) because of variations among the members of the class (of course, some variation of that argument is a common one).30 Given the lack of clarity in Comcast, whether and how the Comcast decision has changed the standards on class certification will likely be determined by the various Courts of Appeals.
So are there any lessons from Comcast for plaintiff's counsel who wants to certify a class action? Even though ERISA cases are probably more frequently certified under Rule 23(b)(1) or (b)(2) than (b)(3), and ERISA does not permit damages per se, there are nonetheless some instructive principles from Comcast. First and foremost, make sure that any model supporting plaintiff's "damages"31 are consistent with liability (presumably, that is not a revelation to an experienced attorney). Second, as a corollary, if there are multiple theories of liability supporting the "damages" model, make sure that the "damages" expert considers and separately sets forth how each liability theory results in damages, both alone and in combination with others. Third, remember that--particularly as class certification in Comcast was reconsidered by the district court and reviewed on appeal after discovery was closed below--that the initial class certification decision can be reviewed at any time. Fourth, be prepared to explain how and why a damages calculation can be calculated on a class-wide basis. Finally, as the Supreme Court will likely address whether experts need to meet Rule 702 and the standards in Daubert on class certification in the future, it is probably safest to ensure that experts on class certification meet those standards. Perhaps the only safe prediction is that the question of whether expert opinion on class certification is subject to a Daubert analysis is an issue on the Supreme Court's radar and is likely to be decided in the near future.
R. Joseph Barton, Cohen Milstein Sellers & Toll PLLC
1133 S. Ct. 1426 (2013)
2131 S. Ct. 2541, 2553 (2011).
3Petition for Writ of Certiorari¸2012 WL 105558 at *i (Jan. 2012) (emphasis added).
4Comcast Corp. v Behrend,133 S. Ct. 24 (2012).
5Comcast, 133 S. Ct. at 1435 (2013) (Ginsburg, J., dissenting).
7Behrend v. Comcast Corp., 655 F.3d 182, 204 n.13 (3d Cir. 2011).
8As an alternative to the second option, the Court, had it actually been interested in fairness, could have given Plaintiffs the opportunity to actually address the question actually resolved including the precise issues related to the model.
9Compare Comcast, 133 S. Ct. at 1432 (majority opinion) ("Respondents' class action was improperly certified under Rule 23(b)(3)") with Comcast, 133 S. Ct. at 1435 (dissenting opinion) ("[W]e would dismiss the writ of certiorari as improvidently granted.").
10Lee Epstein, William M. Landes, & Richard A. Posner, How Business Fares in the Supreme Court, 97 Minn L. Rev. 1431 (2013). After conducting a thorough review of decisions, this study concluded:
We find that five of the ten Justices who, over the span of our study (the 1946 through 2011 Terms), have been the most favorable to business are currently serving, with two of them [Roberts and Alito] ranking at the very top among the thirty-six Justices in our study.
Id. at 1472.
11Comcast, 133 S. Ct. at 1436.
12Manno v. Healthcare Revenue Recovery Grp., LLC, No. 11-61357 SCOLA, 2013 WL 1283881, at *18 (S.D. Fla. Mar. 26, 2013) (denying motion for reconsideration based on Comcast); see Munoz v. PHH Corp., 1:08-CV-0759-AWI-BAM, 2013 WL 2146925 (E.D. Cal. May 15, 2013).
13Comcast, 133 S.Ct. at 1432.
14Id. at 1432-33.
15Id. at 1433.
17Id. at 1434.
18R. Joseph Barton, Will the Supreme Court Fulfill Its Own Prophecy in Dukes and End the Class Certification World as We Know It in 2012? ABA Employee Benefits Committee Newsletter (Fall 2012).
19Id. at *5.
20Behrend v. Comcast Corp., 264 F.R.D. 150, at 182-187, 188 (E.D. Pa. 2010).
21Id. at 190 ("Having reviewed [plaintiffs' damages expert's] methodology more closely, we are convinced that our decision not to credit [plaintiffs' antitrust impact expert's] DBS foreclosure theory of antitrust impact does not impeach [plaintiffs' damages expert's] damages model.").
22Behrend, 655 F.3d at 190.
23Comcast, 133 S. Ct. at 1433.
24E.g., Wallace v. Powell, No. 3:09-CV-286, 2013 WL 2042369, at *19 (M.D. Pa. May 14, 2013) (rejecting that argument); In re Motor Fuel Temperature Sales Practices Litig., MDL No. 1840, 2013 WL 1397125 (D. Kan. Apr. 5, 2013) (rejecting a similar argument); Miri v. Dillon, No. 11-15248, 2013 WL 2034310 (E.D. Mich. May 14, 2013) (certifying class for liability only).
25Leyva v. Medline Indus. Inc., __ F.3d __, 2013 WL 2306567, at *3 (9th Cir. May 28, 2013) (reversing denial of class certification).
26Martins v. 3PD, Inc., CIV.A. 11-11313-DPW, 2013 WL 1320454, *8 n.3 (D. Mass. Mar. 28, 2013) (interpreting 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 nor overwhelmingly numerous"); Miri, 2013 WL 2034310 (same).
27Harris v. comScore, Inc., 11 C 5807, 2013 WL 1339262, at *10 n.9 (N.D. Ill. Apr. 2, 2013).
28Whirlpool Corp. v. Glazer, 133 S. Ct. 1722 (2013); RBS Citizens, N.A. v. Ross, 133 S. Ct. 1722 (2013); Sears, Roebuck & Co. v. Butler, et al., 12-1067, 2013 WL 775366 (U.S. June 3, 2013).
29Xuedan Wang v. Hearst Corp., 12 CV 793 HB, 2013 WL 1903787, at *9 (S.D.N.Y. May 8, 2013).
30Petitions for Writs of Certiorari in Whirlpool Corp. v. Glazer, 2012 WL 4083727, *i (Sept. 2012) ("Whether a class may be certified under Rule 23(b)(3) even though most class members have not been harmed and could not sue on their own behalf."); RBS Citizens, N.A. v. Ross, 2012 WL 3142664, *i (Aug. 2012) ("Whether a district court can conclude that the Rule 23(a)(2) commonality requirement is satisfied when a class claims the denial of overtime pay, without resolving whether dissimilarities in the class would preclude it from establishing liability on a class-wide basis."); Sears, Roebuck and Co. v. Butler, 2013 WL 768586, *i (Feb. 2013) ("Whether a class may be certified on breach of warranty claims where it is undisputed that most members did not experience the alleged product defect and where fact of injury would have to be litigated on a member-by-member basis.").
31ERISA does not permit monetary damages at law, but does permit monetary and other relief through declarations, benefits, penalties, losses, profits, remedial or equitable relief. Here, I use the term "damages" in quotes as an imprecise shorthand to refer to the forms of remedies and relief recoverable under ERISA.