The Next Big SCOTUS Rule 23 Ruling?
The next “big one” for the U.S. Supreme Court to address under Rule 23 is in Comcast Corp. v. Behrend where the issue is whether a class may be certified without resolving whether plaintiff has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis. While Behrend is not an employment case, the SCOTUS’s answer to that question has enormous strategic significance for employers defending workplace class action lawsuits.
Respondents in Behrend must have felt like they were outnumbered this past week, as four amicus curiae briefs in support of Comcast were filed nearly simultaneously. (You can read the briefs here, here, here, and here.) The amici include important groups that have chimed in on cutting-edge issues in class action law over the years, including the Equal Employment Advisory Council, The Chamber of Commerce of the United States, Business Roundtable, The Securities Industry and Financial Markets Association, and DRI—The Voice of the Defense Bar. To top it off, Intel Corporation also chimed in with its own amicus brief. The fact that all of these briefs were filed demonstrates why employers at risk for class action lawsuits should pay close attention to this case as it hits the Justices’ desks this term. The “battle of the experts” has always been important in defending against employment class actions, and the Supreme Court’s decision in Behrend will no doubt provide important clarity to this area of the law.
The case is important in class action law because it presents a key question that was left open by Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), which we have discussed on this blog several times (here, here, here, here, and here.) The question, as framed by Comcast, is “[w]hether 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.” (You can read Comcast’s brief here.) The issue was not decided in Wal-Mart, but the majority left the door wide open for arguments that the standards for admissibility of expert testimony established in Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 570 (1993), should come in to play at the certification stage of a class action lawsuit. See Wal-Mart v. Dukes, 131 S. Ct. 2541, 2553-54 (“The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so. . . .”) (citation omitted). At bottom, the question is whether the “rigorous analysis” required of a court deciding class certification also requires it to apply Daubert to the parties’ competing expert analyses.
In Behrend, plaintiffs alleged that the cable giant engaged in “anticompetitive clustering,” making deals with competitors in Philadelphia to swap cable assets and allocate regional cable markets among themselves. Behrend v. Comcast Corp., 264 F.R.D. 150 (E.D. Pa. 2010) (reconsidering class certification in light of In Re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2008), and affirming prior decision to certify a class). Plaintiffs claimed this was an exercise of monopoly power that increased the prices for cable services to artificially high levels. They initially advanced four theories of how this caused an “injury” under antitrust law. Id. at 156-57. In granting class certification, the district court relied on only one: a damages model offered by their expert, who compared actual cable prices to hypothetical prices that would have been in place absent Comcast’s alleged wrongdoing. Comcast offered rebuttal expert testimony and also argued that the plaintiff’s expert analysis could not form the basis for a class-wide damages model. The district court nonetheless found that the plaintiffs had shown that “there is a common methodology available to measure and quantify damages on a class-wide basis” and certified a Rule 23(b)(3) class. Id. at 154. The Third Circuit affirmed the decision in a split decision, but the majority did not address Comcast’s challenges to the viability of the methodology of plaintiffs’ expert, holding that “attacks on the merits of the methodology” have “no place in the class certification inquiry.” Behrend v. Comcast Corp., 655 F.3d 182, 207(3d Cir. 2011). Comcast petitioned for Supreme Court review, which was granted.
In employment class actions, particularly those involving large numbers of potential class members, statistical models and arguments about their reliability are crucial parts of the class certification fight. Recall that in Wal-Mart, the majority of the Justices were highly skeptical of the expert evidence offered by the plaintiffs, purporting to show that a corporate culture allegedly imbued with gender stereotyping could explain why discretionary decision-making on pay and promotions caused discrimination in a common way against female employees. Wal-Mart, 131 S. Ct. at 2553. If challenges to the reliability of such evidence are not proper in deciding the certification question, it is much more likely that weak claims will survive the “rigorous analysis” a court must undertake. This makes a decision on class certification even more important. As the EEAC’s amicus brief puts it, “the act of certifying a class significantly increases the pressure on a defendant, wary of the substantial ‘bet the farm’ costs associated with mounting an adequate defense, to settle even questionable class claims[.]” (EEAC Br. at 7.) The Chamber’s brief makes the point even more starkly, noting that if the Third Circuit’s decision stands, it “will make it easier for plaintiffs with meritless claims to pass through the class-certification gateway.” (Chamber’s Br. at 4.)
We will continue to monitor the proceedings in this highly significant case, so stay tuned.