Federal courts continue to be split on whether the Supreme Court’s 2013 ruling in Comcast Corp. v. Behrend requires plaintiffs seeking class certification to present viable, common methodologies to prove class-wide injury and damages. Two recent federal decisions highlight these competing views of Comcast. Uncertainty over the standards for the use of expert damages testimony to establish predominance of common issues is likely to remain until the Supreme Court further clarifies Comcast and what it means for class actions.
Denial of Class Certification in In re Optical Disk Drive
On Oct. 3, 2014, Northern District of California Judge Richard Seeborg denied certification of a class of purchasers of optical disk drives (or products containing them, like computers and video game consoles) who allege that manufacturers conspired to fix disk drive prices.
Judge Seeborg said Comcast requires plaintiffs to offer “a viable methodology for establishing class-wide antitrust injury and damages” to establish the predominance of common issues. The court held that at the class certification stage it must evaluate the “integrity” of a plaintiff’s damages model to determine if it is a “viable” method to prove injury and damages across-the-board, for the entire class.
Plaintiff’s damages model, supposedly establishing a “but for” price to be subtracted from an allegedy inflated price consumers paid, missed the mark based on two critical flaws: (1) mere correlation between wholesale and retail prices did not establish common classwide impact (such correlation already existed in the market and not as a result of any wrongdoing); and (2) the damages model assumed, without any proof, that conspiratorial overcharges were the same across the entire class. Judge Seeborg accordingly denied certification.
Class Certification Affirmed in In re Urethane
The Tenth Circuit Court of Appeals recently reached the opposite conclusion on September 29, 2014, affirming a class action judgment against Dow Chemical for fixing the price of polyurethane, a component used in consumer products such as mattresses, shoes and insulation. The Tenth Circuit said Comcast did not require that plaintiffs seeking class certification present a reliable “method to prove class-wide damages through a common methodology,” reasoning that the Supreme Court did not decide the issue (based on plaintiff’s concession in that case).
The court further held that if Comcast required a class-wide damages model, attacks on the expert’s methodology go to the weight of the testimony, not its admissibility.
The differing results in these two cases are emblematic of the competing views of plaintiffs’ class certification burden under Comcast. Had Judge Seeborg considered Dow’s attack on the expert’s model, he could easily have deemed it sufficient to defeat certification under his “viable” methodology test.
The Supreme Court needs to clarify whether Comcast requires a plaintiff seeking class certification to demonstrate a reliable methodology for proving impact/damages on a common, class-wide, basis. Such large discrepancies in interpretations between different judges and courts only incentivizes improper forum shopping.
In the meantime, defendants should continue to argue that Comcast requires a “viable” methodology, and focus on exposing economic, statistical or methodological flaws in plaintiffs’ damages models. After certification, defendants should renew these objections at trial in the hopes that further (and favorable) clarification is on the horizon.