Supreme Court deals two blows to class action plaintiffs

Posted
by Jim Orr

In Comcast Corp. v. Behrend, No. 11–864 (U.S. March 27, 2013), the U.S. Supreme Court reversed an order certifying a class of cable TV customers asserting antitrust violations against Comcast. The Supreme Court held that the court of appeals erred in refusing to decide whether the plaintiff class’s proposed damage model could show damages on a class-wide basis. The court held that, under proper standards, the damages model was inadequate and the class should not have been certified.

The plaintiffs were subscribers to Comcast’s cable-television services. The plaintiffs alleged that Comcast company obtained an illegal monopoly via transactions with competitors for allocation of regional cable markets and engaged in conduct excluding and preventing competition.

The district court only certified a class as to one theory of antitrust liability, that Comcast’s alleged monopolization of the Philadelphia area through clustering deterred competitors, or “overbuilders” from competing. However, the only damages model presented by the Plaintiffs in support of certification was not similar limited to the “overbuilder” theory. Rather, the damages model also took into consideration three additional alleged antitrust behaviors that were not certified. At the evidentiary hearing, the expert who prepared the damage model admitted that the model calculated damages resulting from “the alleged anticompetitive conduct as a whole” and did not attribute damages to any one particular theory of anticompetitive impact.

Thus, according to the Supreme Court, there was nothing in the record to suggest that damages for the one theory still in the case could be determined on a class-wide basis. The court held that “[w]ithout presenting another methodology, respondents cannot show Rule 23(b)(3) predominance: Questions of individual damage calculations will inevitably overwhelm questions common to the class.”

In another case, Standard Fire Ins. Co. v. Knowles, No. 11–1450 (U.S. March 19, 2013), the U.S. Supreme Court reversed an order remanding a class action back to state court. The Supreme Court held that a stipulation by a class-action plaintiff that he and the class that he purported to represent would seek damages that are less than the threshold for jurisdiction under the Class Action Fairness Act of 2005 did not defeat federal jurisdiction under the Act.

In that case, Plaintiff Knowles filed a proposed class action in an Arkansas state court against Standard Fire Insurance Company. Knowles claimed that when the company made certain homeowner’s insurance loss payments, it had unlawfully failed to include a general contractor fee.

Standard Fire removed the case to federal court, arguing that federal jurisdictional existed under the Class Action Fairness Act of 2005. The Act provides that the federal “district courts shall have original jurisdiction” over a civil “class action” if, among other things, the “matter in controversy exceeds the sum or value of $5,000,000.”

The district court granted Knowles’ motion to remand the case to state court because Knowles had attached an affidavit to his state court complaint stating that he “will not at any time during this case … seek damages for the class … in excess of $5,000,000 in the aggregate.”

The Supreme Court reversed. The Court held that “[t]he stipulation Knowles proffered … does not speak for those he purports to represent.” Because his “precertification stipulation does not bind anyone but himself,” the Court ruled that Knowles had not actually reduced the value of the putative class members’ claims to less than $5,000,000. Because the remand to state court was reversed, the case was sent back to the federal district court.

At Heygood, Orr & Pearson, we have represented numerous class action plaintiffs in various consumer class actions. Heygood, Orr & Pearson is AV-rated, the highest legal and ethical rating available from the leading law firm rating service. Our partners Michael Heygood, Jim Orr, and Eric Pearson are all Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization. Mr. Heygood and Mr. Orr are additionally Board Certified in Civil Trial Advocacy Law by the National Board of Trial Advocacy. Our partners been voted by their peers as “Super Lawyers” in the state of Texas for several years in a row.*

If you believe you may have a proposed class action complaint, contact us for a free consultation by calling toll-free at 1-877-446-9001 or by filling out the free consultation form on this page to find out more about your legal options.

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Michael Heygood, James Craig Orr, Jr. and Eric Pearson were selected to the Super Lawyers List, a Thomson Reuters publication, for the years 2003 through 2013.