Distribution, Competition, and Antitrust / Intellectual Property (IP) Law

A Supreme Court Antitrust Twofer: What You Need to Know

Washington DC: United States Supreme Court

Washington DC: United States Supreme Court (Photo credit: wallyg)

Within the past two weeks, the U.S. Supreme Court has decided two important cases relevant to antitrust.

First, on March 27, in Comcast Corp. v. Behrend, No. 11-864, the U.S. Supreme Court ruled that a U.S. district court may not certify a class action under Federal Rule of Civil Procedure 23(b)(3) without first determining that damages may properly be awarded on a classwide basis. The Court held that if a damages model fails to attribute supra-competitive prices specifically to the theory of impact, Rule 23(b)(3) cannot authorize class treatment.

Justice Scalia, writing for the majority, cited the Court’s reasoning in Wal-Mart Stores, Inc. v. Dukes as requiring “a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim.” At the class certification stage, “any model supporting a plaintiff’s damages case must be consistent with its liability case.”

In the past, lower courts saw no need for class plaintiffs to tie each theory of antitrust im­pact to a calculation of damages. That, they said, would involve consideration of the merits having no place in the class certification inquiry.  This approach is no longer the law after Comcast.

Time will tell whether Comcast reduces the overall number of class claims presented, or merely leads to more robust expert reports and expert discovery.

Second, on March 19, the Supreme Court held in Standard Fire Ins. Co. v. Knowles, No. 11-1450, that class representatives cannot circumvent the Class Action Fairness Act (CAFA) by stipulating to limit their class damages claim to less than $5 million to keep their case out of federal court. The decision should make it more difficult for plaintiffs to keep their antitrust and other class claims out of federal court by, e.g., so stipulating, and bringing multiple cases/claims, each purportedly under $5 million.

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