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February 25, 2020 Articles

What Is Comcast’s Lasting Impact in Antitrust Class Actions?

The presence of uninjured class members matters most.

By Daniel J. Boland and Kaitlin L. O’Donnell

In its 2013 decision Comcast v. Behrend, the U.S. Supreme Court appeared to drastically change Rule 23(b)(3)’s predominance requirement when it held in an antitrust case that the class plaintiffs’ damages model fell “far short of establishing that damages are capable of measurement on a classwide basis,” thus preventing class certification. 569 U.S. 27, 34 (2013). Before Comcast, courts factored the need for individualized damages inquiries into their predominance analyses, but that alone did not automatically preclude class certification. See id. at 42 (Ginsburg, J., dissenting) (“Recognition that individual damages calculations do not preclude class certification under Rule 23(b)(3) is well-nigh universal.”); see also Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 253 (2d Cir. 2011) (“Common issues may predominate when liability can be determined on a class-wide basis, even when there are some individualized damage issues.” (quoting In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 139 (2d Cir. 2001))). Many pundits predicted that Comcast’s holding would significantly increase class plaintiffs’ predominance burden, making it much more difficult to certify a class.

Although defense counsel urge courts to read and apply Comcast broadly, few have. Instead, some courts perceived the holding as particularly narrow, requiring only that the plaintiffs’ proffered damages methodology match their liability theory. See, e.g., Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 374 (3d Cir. 2015); Roach v. T.L. Cannon Corp., 778 F.3d 401, 408 (2d Cir. 2015). Other courts sidestepped Comcast and individualized damages issues entirely by certifying only liability questions under Rule 23(c)(4), which permits class certification for particular issues. See, e.g., Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013); In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838 (6th Cir. 2013).

Given these opinions, it is clear that Comcast did not have nearly the impact that many initially predicted. That said, Comcast may still be relevant to a question currently being debated among courts: How, if at all, does the presence of uninjured class members affect class certification and class plaintiffs’ ability to satisfy Rule 23(b)(3)’s predominance requirement?

Faced with oppositions to class certification often premised in part on Comcast, multiple courts have held that the presence of a small or “de minimis” number of uninjured class members will not prevent class certification, provided there is an “administratively feasible” mechanism for distinguishing between injured and uninjured class members prior to judgment and awarding damages, thus protecting a defendant’s Seventh Amendment and due process rights. See In re Nexium Antitrust Litig., 777 F.3d 9, 19–20 (1st Cir. 2015); see also Cordoba v. DIRECTTV, LLC, 942 F.3d 1259, 1274 (11th Cir. 2019); Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 826 (7th Cir. 2012); Marrero-Rolon v. P.R. Elec. Power Auth., 2018 U.S. Dist. LEXIS 170679, at *24–26 (D.P.R. Sept. 30, 2018); In re Thalomid & Revlimid Antitrust Litig., 2018 U.S. Dist. LEXIS 186457, at *40–43 (D.N.J. Oct. 30, 2018); In re Lidoderm Antitrust Litig., 2017 U.S. Dist. LEXIS 24097, at *64–65 (N.D. Cal. Feb. 21, 2017). These decisions, at least in part, focus on the total number of uninjured class members. See, e.g., Messner, 669 F.3d at 826 (finding the presence of about 2.4 percent uninjured class members “not significant enough to justify denial of certification”); In re Nexium, 777 F.3d at 31 (same). Courts, however, have yet to precisely define what “de minimis” means, and the numeric threshold is likely to differ depending on the specific facts of each case. See In re Nexium, 777 F.3d at 30 (applying a fact-dependent, “functional” definition of “de minimis”).

As courts continue to grapple with the question of how many is too many uninjured class members, this debate has special consequence for antitrust class action litigation. In the antitrust context, the presence of uninjured class members is not simply an issue of how many or of individualized damages. Rather, uninjured class members may also indicate serious problems with class plaintiffs’ common proof of antitrust injury—a concept unique to antitrust actions.

To satisfy Rule 23(b)(3)’s predominance requirement, class action plaintiffs must show that “questions of law or fact common to the class members predominate over any questions affecting only individual members.” See Comcast, 569 U.S. at 33 (quoting Fed. R. Civ. P. 23(b)(3)). In an antitrust class action, an essential element of liability is “antitrust injury” or “antitrust impact”—i.e., that the plaintiffs’ injuries resulted from a harm that the antitrust laws were intended to prevent. See Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477, 489 (1977). In other words, a plaintiff must show that its injury results directly from the defendant’s alleged anticompetitive conduct and that injures the market as a whole. Courts have generally found that antitrust class plaintiffs’ failure to show common proof of antitrust injury renders them unable to satisfy Rule 23(b)(3)’s predominance requirement and precludes class certification. See, e.g., In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311 (3d Cir. 2008) (“[I]ndividual injury (also known as antitrust impact) is an element of the cause of action; to prevail on the merits, every class member must prove at least some antitrust impact resulting from the alleged violation.”); In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 20 (5th Cir. 2008) (“In antitrust class actions, common issues do not predominate if the fact of antitrust violation and the fact of antitrust impact cannot be established through common proof.”).

For this reason, the presence of uninjured class members in an antitrust class action may very well impugn the class plaintiffs’ liability theory and frustrate their efforts to show class-wide proof of antitrust injury. For example, antitrust class plaintiffs often proffer expert models purporting to show damages to the class resulting from the alleged anticompetitive conduct. Accordingly, class plaintiffs’ damages model is inextricably intertwined with the question of antitrust injury. If the damages model shows uninjured class members—persons who should have been injured by the alleged anticompetitive conduct but were not—it creates substantial doubt regarding the plaintiffs’ ability to show common proof of antitrust injury. Is the economic model incapable of reliably identifying injury from the alleged anticompetitive conduct? Or is class plaintiffs’ liability theory that the alleged conduct caused anticompetitive injury to the market as a whole simply wrong? In either event, class plaintiffs’ ability to show common proof of antitrust injury for the proposed class as a whole is significantly hampered where uninjured class members exist. Moreover, a mechanism for identifying and removing uninjured class members before judgment does nothing to solve that failure of common proof on an essential element of liability.

Accordingly, defendants in antitrust class actions may make great use of Comcast where the class plaintiffs’ damages model shows uninjured class members, inconsistent with their liability theory. Uninjured class members may very well signal class plaintiffs’ inability to show class-wide proof of antitrust injury and liability, resulting in a failure to meet their burden to show predominance. Reading Comcast’s holding as applying specifically to antitrust class actions, therefore, provides an explanation for the majority’s concern over the plaintiffs’ failure to show class-wide proof of damages. Although characterized as a damages issue, class plaintiffs’ inability to tie their damages calculation to their liability theory was tantamount to a failure to show class-wide proof of antitrust injury, preventing class certification. Ultimately, while the rest of the legal world seems to have moved on, counsel for both class action plaintiffs and defendants in antitrust cases should be wary of Comcast’s potential impact.

Daniel J. Boland and Kaitlin L. O’Donnell are with Pepper Hamilton LLP in Philadelphia, Pennsylvania.

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