Comcast Corp. v. Behrend

(Slip Opinion) OCTOBER TERM, 2012 1 Syllabus NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. SUPREME COURT OF THE UNITED STATES Syllabus COMCAST CORP. ET AL. v. BEHREND ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. 11–864. Argued November 5, 2012—Decided March 27, 2013 Petitioners, Comcast Corporation and its subsidiaries, allegedly “clus- ter” their cable television operations within a particular region by swapping their systems outside the region for competitor systems in- side the region. Respondents, named plaintiffs in this class-action antitrust suit, claim that they and other Comcast subscribers in the Philadelphia “cluster” are harmed because Comcast’s strategy lessens competition and leads to supra-competitive prices. They sought class certification under Federal Rule of Civil Procedure 23(b)(3), which requires that “questions of law or fact common to class members pre- dominate over any questions affecting only individual members.” The District Court required them to show (1) that the “antitrust im- pact” of the violation could be proved at trial through evidence com- mon to the class and (2) that the damages were measurable on a classwide basis through a “common methodology.” The court accept- ed only one of respondents’ four proposed theories of antitrust impact: that Comcast’s actions lessened competition from “overbuilders,” i.e., companies that build competing networks in areas where an incum- bent cable company already operates. It then certified the class, find- ing that the damages from overbuilder deterrence could be calculated on a classwide basis, even though respondents’ expert acknowledged that his regression model did not isolate damages resulting from any one of respondents’ theories. In affirming, the Third Circuit refused to consider petitioners’ argument that the model failed to attribute damages to overbuilder deterrence because doing so would require reaching the merits of respondents’ claims at the class certification stage. Held: Respondents’ class action was improperly certified under Rule 23(b)(3). Pp. 5–11. 2 COMCAST CORP. v. BEHREND Syllabus (a) A party seeking to maintain a class action must be prepared to show that Rule 23(a)’s numerosity, commonality, typicality, and ade- quacy-of-representation requirements have been met, Wal-Mart Stores, Inc. v. Dukes, 564 U. S. ___, ___, and must satisfy through ev- identiary proof at least one of Rule 23(b)’s provisions. The same ana- lytical principles govern certification under both Rule 23(a) and Rule 23(b). Courts may have to “ ‘probe behind the pleadings before com- ing to rest on the certification question,’ and [a] certification is proper only if ‘the trial court is satisfied, after a rigorous analysis, that [Rule 23’s] prerequisites . . . have been satisfied.’ ” Ibid. The analysis will frequently “overlap with the merits of the plaintiff ’s underlying claim” because a “ ‘class determination generally involves considera- tions that are enmeshed in the factual and legal issues comprising the plaintiff ’s cause of action.’ ” Ibid. Pp. 5–6. (b) The Third Circuit ran afoul of this Court’s precedents when it refused to entertain arguments against respondents’ damages model that bore on the propriety of class certification simply because they would also be pertinent to the merits determination. If they prevail, respondents would be entitled only to damages resulting from re- duced overbuilder competition. A model that does not attempt to measure only those damages attributable to that theory cannot estab- lish that damages are susceptible of measurement across the entire class for Rule 23(b)(3) purposes. The lower courts’ contrary reasoning flatly contradicts this Court’s cases, which require a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim. Wal-Mart, supra, at ___, and n. 6. Pp. 6–8. (c) Under the proper standard for evaluating certification, respond- ents’ model falls far short of establishing that damages can be meas- ured classwide. The figure respondents’ expert used was calculated assuming the validity of all four theories of antitrust impact initially advanced by respondents. Because the model cannot bridge the dif- ferences between supra-competitive prices in general and supra- competitive prices attributable to overbuilder deterrence, Rule 23(b)(3) cannot authorize treating subscribers in the Philadelphia cluster as members of a single class. Pp. 8–11. 655 F. 3d 182, reversed. SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined. GINSBURG and BREYER, JJ., filed a dissenting opinion, in which SOTOMAYOR and KA- GAN, JJ., joined. Cite as: 569 U. S. ____ (2013) 1 Opinion of the Court NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash­ ington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press. SUPREME COURT OF THE UNITED STATES _________________ No. 11–864 _________________ COMCAST CORPORATION, ET AL., PETITIONERS v. CAROLINE BEHREND ET AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT [March 27, 2013] JUSTICE SCALIA delivered the opinion of the Court. The District Court and the Court of Appeals approved certification of a class of more than 2 million current and former Comcast subscribers who seek damages for al- leged violations of the federal antitrust laws. We consider whether certification was appropriate under Federal Rule of Civil Procedure 23(b)(3). I Comcast Corporation and its subsidiaries, petitioners here, provide cable-television services to residential and commercial customers. From 1998 to 2007, petitioners engaged in a series of transactions that the parties have described as “clustering,” a strategy of concentrating op- erations within a particular region. The region at issue here, which the parties have referred to as the Philadel- phia “cluster” or the Philadelphia “Designated Market Area” (DMA), includes 16 counties located in Pennsylvania, Delaware, and New Jersey.1 Petitioners pursued their —————— 1 A “Designated Market Area” is a term used by Nielsen Media Re­ search to define a broadcast-television market. Strictly speaking, the 2 COMCAST CORP. v. BEHREND Opinion of the Court clustering strategy by acquiring competitor cable provid­ ers in the region and swapping their own systems outside the region for competitor systems located in the region. For instance, in 2001, petitioners obtained Adelphia Com- munications’ cable systems in the Philadelphia DMA, along with its 464,000 subscribers; in exchange, petition­ ers sold to Adelphia their systems in Palm Beach, Florida, and Los Angeles, California. As a result of nine cluster- ing transactions, petitioners’ share of subscribers in the re- gion allegedly increased from 23.9 percent in 1998 to 69.5 percent in 2007. See 264 F. R. D. 150, 156, n. 8, 160 (ED Pa. 2010). The named plaintiffs, respondents here, are subscribers to Comcast’s cable-television services. They filed a class­ action antitrust suit against petitioners, claiming that petitioners entered into unlawful swap agreements, in violation of §1 of the Sherman Act, and monopolized or at- tempted to monopolize services in the cluster, in viola­ tion of §2. Ch. 647, 26 Stat. 209, as amended, 15 U. S. C. §§1, 2. Petitioners’ clustering scheme, respondents con­ tended, harmed subscribe