SUPREME COURT OF THE UNITED STATES
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 Ginsburg and Justice Breyer, with whom Justice Sotomayor and Justice Kagan join, dissenting.
Today the Court reaches out to decide a case hardly fit for our consideration. On both procedural and substantive grounds, we dissent.
This case comes to the Court infected by our misguided reformulation of the question presented. For that reason alone, we would dismiss the writ of certiorari as improvidently granted.
Comcast sought review of the following question: “[W]hether a district court may certify a class action without resolving ‘merits arguments’ that bear on [Federal Rule of Civil Procedure] 23’s prerequisites for certifica-tion, including whether purportedly common issues predominate over individual ones under Rule 23(b)(3).” Pet. for Cert. i. We granted review of a different question: “Whether 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.” 567 U. S. ___ (2012) (emphasis added).
Our rephrasing shifted the focus of the dispute from the District Court’s Rule 23(b)(3) analysis to its attention (or lack thereof) to the admissibility of expert testimony. The parties, responsively, devoted much of their briefing to the question whether the standards for admissibility of expert evidence set out in Federal Rule of Evidence 702 and Daubert
v. Merrell Dow Pharmaceuticals, Inc.
509 U.S. 579
(1993), apply in class certification proceedings. See Brief for Petitioners 35–49; Brief for Respondents 24–37. Indeed, respondents confirmed at oral argument that they understood our rewritten question to center on admissibility, not Rule 23(b)(3). See, e.g.
, Tr. of Oral Arg. 25.
As it turns out, our reformulated question was inapt. To preserve a claim of error in the admission of evidence, a party must timely object to or move to strike the evidence. Fed. Rule Evid. 103(a)(1). In the months preceding the District Court’s class certification order, Comcast did not object to the admission of Dr. McClave’s damages model under Rule 702 or Daubert
. Nor did Comcast move to strike his testimony and expert report. Consequently, Comcast forfeited any objection to the admission of Dr. McClave’s model at the certification stage. At this late date, Comcast may no longer argue that respondents’ damages evidence was inadmissible.
Comcast’s forfeiture of the question on which we granted review is reason enough to dismiss the writ as improvidently granted. See Rogers
v. United States
522 U.S. 252
, 259 (1998) (O’Connor, J., concurring in result) (“[W]e ought not to decide the question if it has not been cleanly presented.”); The Monrosa
v. Carbon Black Export, Inc.
359 U.S. 180
, 183 (1959) (dismissal appropriate in light of “circumstances . . . not fully apprehended at the time certiorari was granted” (internal quotation marks omitted)). The Court, however, elects to evaluate whether re-spondents “failed to show that the case is susceptible to awarding damages on a class-wide basis.” Ante
, at 5, n. 4 (internal quotation marks omitted). To justify this second revision of the question presented, the Court observes that Comcast “argued below, and continue[s] to argue here, that certification was improper because respondents had failed to establish that damages could be measured on a classwide basis.” Ibid.
And so Comcast
did, in addition to endeavoring to address the question on which we granted review. By treating the first part of our reformulated question as though it did not exist, the Court is hardly fair to respondents.
Abandoning the question we instructed the parties to brief does “not reflect well on the processes of the Court.” Redrup
v. New York
386 U.S. 767
, 772 (1967) (Harlan, J., dissenting). Taking their cue from our order, respondents did not train their energies on defending the District Court’s finding of predominance in their briefing or at oral argument. The Court’s newly revised question, focused on predominance, phrased only after briefing was done, left respondents without an unclouded opportunity to air the issue the Court today decides against them. And by resolving a complex and fact-intensive question without the benefit of full briefing, the Court invites the error into which it has fallen. See infra
While the Court’s decision to review the merits of the District Court’s certification order is both unwise and un-fair to respondents, the opinion breaks no new ground on the standard for certifying a class action under Federal Rule of Civil Procedure 23(b)(3). In particular, the decision should not be read to require, as a prerequisite to certification, that damages attributable to a classwide injury be measurable “ ‘on a class-wide basis.’ ” See ante,
at 2–3 (acknowledging Court’s dependence on the absence of contest on the matter in this case); Tr. of Oral Arg. 41.
To gain class-action certification under Rule 23(b)(3), the named plaintiff must demonstrate, and the District Court must find, “that the questions of law or fact common to class members predominate over any questions affecting only individual members.” This predominance requirement is meant to “tes[t] whether proposed classes are sufficiently cohesive to warrant adjudication by representation,” Amchem Products, Inc.
521 U.S. 591
, 623 (1997), but it scarcely demands commonality as to all questions. See 7AA C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure
§1778, p. 121 (3d ed. 2005) (hereinafter Wright, Miller, & Kane). In particular, when adjudication of questions of liability common to the class will achieve economies of time and expense, the predominance standard is generally satisfied even if damages are not provable in the aggregate. See Advisory Committee’s 1966 Notes on Fed. Rule Civ. Proc. 23, 28 U. S. C. App., p. 141 (“[A] fraud perpetrated on numerous persons by the use of similar misrepresentations may be an appealing situation for a class action, and it may remain so despite the need, if liability is found, for separate determination of the damages suffered by individuals within the class.”); 7AA Wright, Miller, & Kane
§1781, at 235–237.[1
Recognition that individual damages calculations do not preclude class certification under Rule 23(b)(3) is well nigh universal. See 2 W. Rubenstein, Newberg on Class Actions §4:54, p. 205 (5th ed. 2012) (ordinarily, “individual damage[s] calculations should not scuttle class certification under Rule 23(b)(3)”). Legions of appellate decisions across a range of substantive claims are illustrative. See, e.g.
v. Knox County
, 365 F.3d 1
, 6 (CA1 2004) (
Fourth Amendment); Chiang
, 385 F.3d 256
, 273 (CA3 2004) (Equal Credit Opportunity Act); Bertulli
v. Independent Assn. of Continental Pilots
, 242 F.3d 290
, 298 (CA5 2001) (Labor-Management Reporting and Disclosure Act and Railway Labor Act); Beattie
v. CenturyTel, Inc.
, 511 F.3d 554, 564–566 (CA6 2007) (Federal Communications Act); Arreola
, 546 F.3d 788, 801 (CA7 2008) (
Eighth Amendment). Antitrust cases, which typically involve common allegations of
antitrust violation, antitrust impact, and the fact of damages, are classic examples. See In re Visa Check/MasterMoney Antitrust Litigation
, 280 F.3d 124
, 139–140 (CA2 2001). See also 2A P. Areeda, H. Hovenkamp, R. Blair, & C. Durrance, Antitrust Law ¶331, p. 56
(3d ed. 2007) (hereinafter Areeda & Hovenkamp); 6 A. Conte & H. Newberg, Newberg on Class Actions §18:27, p. 91 (4th ed. 2002). As this Court has rightly observed, “[p]redominance is a test readily met” in actions alleging “violations of the antitrust laws.” Amchem
, 521 U. S., at 625.
The oddity of this case, in which the need to prove damages on a classwide basis through a common methodology was never challenged by respondents, see Brief for Plaintiffs-Appellees in No. 10–2865 (CA3), pp. 39–40, is a further reason to dismiss the writ as improvidently granted. The Court’s ruling is good for this day and case only. In the mine run of cases, it remains the “black letter rule” that a class may obtain certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members. 2 Rubenstein, supra
, §4:54, at 208.
Incautiously entering the fray at this interlocutory stage, the Court sets forth a profoundly mistaken view of antitrust law. And in doing so, it relies on its own version of the facts, a version inconsistent with factual findings made by the District Court and affirmed by the Court of Appeals.
To understand the antitrust problem, some (simplified) background discussion is necessary. Plaintiffs below, re-spondents here, alleged that Comcast violated §§1 and 2 of the Sherman Act. See 15 U. S. C. §§1, 2. For present purposes, the §2 claim provides the better illustration. A firm is guilty of monopolization under §2 if the plaintiff proves (1) “the possession of monopoly power in the relevant market” and (2) “the willful acquisition or maintenance of that power[,] as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States
v. Grinnell Corp.
384 U.S. 563
, 570–571 (1966). A private plaintiff seeking damages must also show that (3) the monopolization caused “injur[y].”
15 U. S. C. §15. We have said that antitrust injuries must be “of the type the antitrust laws were intended to prevent and that flo[w] from that which makes defendants’ acts unlawful.” Atlantic Richfield Co.
v. USA Petroleum Co.
495 U.S. 328
, 334 (1990) (quoting Brunswick Corp.
v. Pueblo Bowl-O-Mat, Inc.
429 U.S. 477
, 489 (1977)). See 2A Areeda & Ho-venkamp ¶391a, at 320 (To prove antitrust injury, “[a] private plaintiff must identify the economic rationale for a business practice’s illegality under the antitrust laws and show that its harm flows from whatever it is that makes the practice unlawful.”).
As plaintiffs below, respondents attempted to meet these requirements by showing that (1) Comcast obtained a 60% or greater share of the Philadelphia market, and that its share provides it with monopoly power; (2) Comcast acquired its share through exclusionary conduct consisting of a series of mergers with competitors and “swaps” of customers and locations; and (3) Comcast consequently injured respondents by charging them supra-competitive prices.
If, as respondents contend, Philadelphia is a separate well-defined market, and the alleged exclusionary conduct permitted Comcast to obtain a market share of at least 60%, then proving the §2 violation may not be arduous. As a point of comparison, the government considers a market shared by four firms, each of which has 25% market share, to be “highly concentrated.” Dept. of Justice & Federal Trade Commission, Horizontal Merger Guidelines §5.3, p. 19 (2010). A market, such as the one alleged by respondents, where one
firm controls 60% is far worse. See id.,
§5.3, at 18–19, and n. 9 (using a concentration index that determines a market’s concentration level by summing the squares of each firm’s market share, one firm with 100% yielding 10,000, five firms with 20% each yielding 2000, while a market where one firm accounts for 60% yields an index number of at least
3,600). The Guidelines, and any standard antitrust treatise, explain why firms in highly concentrated markets normally have the power to raise prices significantly above competitive levels. See, e.g.,
2B Areeda & Hovenkamp ¶503, at 115.
So far there is agreement. But consider the last matter respondents must prove: Can they show that Comcast injured them by charging higher prices? After all, a firm with monopoly power will not necessarily exercise that power by charging higher prices. It could instead act less competitively in other ways, such as by leading the quiet life. See J. Hicks, Annual Survey of Economic Theory: The Theory of Monopoly, 3 Econometrica 1, 8 (1935) (“The best of all monopoly profits is a quiet life.”).
It is at this point that Dr. McClave’s model enters the scene. His model first selects a group of comparable outside
-Philadelphia “benchmark” counties, where Comcast enjoyed a lower market share (and where satellite broadcasting accounted for more of the local business). Using multiple regression analysis, McClave’s model measures the effect of the anticompetitive conduct by comparing the class counties to the benchmark counties. The model concludes that the prices Philadelphia area consumers would have paid had the Philadelphia counties shared the properties of the benchmark counties (including a diminished Comcast market share), would have been 13.1% lower than those they actually paid. Thus, the model provides evidence that Comcast’s anticompetitive conduct, which led to a 60% market share, caused the class to suffer injuriously higher prices.
The special antitrust-related difficulty present here stems from the manner in which respondents attempted to prove their antitrust injuries. They proffered four “non-exclusive mechanisms” that allegedly “cause[d] the high prices” in the Philadelphia area. App. 403a. Those four theories posit that (1) due to Comcast’s acquisitions of competitors, customers found it more difficult to compare prices; (2) one set of potential competitors, namely Direct Broadcast Satellite companies, found it more difficult to obtain access to local sports broadcasts and consequently decided not to enter the Philadelphia market; (3) Comcast’s ability to obtain programming material at lower prices permitted it to raise prices; and (4) a number of potential competitors (called “overbuilders”), whose presence in the market would have limited Comcast’s power to raise prices, were ready to enter some parts of the market but decided not to do so in light of Comcast’s anticompetitive conduct. 264 F.R.D. 150, 161–162 (ED Pa. 2010).
For reasons not here relevant, the District Court found the first three theories inapplicable and limited the liability-phase proof to the “overbuilder” theory. See App. to Pet. for Cert. 192a–193a. It then asked the parties to brief whether doing so had any impact on the viability of McClave’s model as a measure of classwide damages. See 264 F. R. D., at 190. After considering the parties’ arguments, the District Court found that striking the three theories “does not impeach Dr. McClave’s damages model” because “[a]ny anticompetitive conduct is reflected in the [higher Philadelphia] price [which Dr. McClave’s model determines], not in the [the model’s] selection of the comparison counties, [i.e.
, the lower-price ‘benchmark counties’ with which the Philadelphia area prices were compared].” Id.
, at 190–191. The court explained that “whether or not we accepted all [four] . . . theories . . . is inapposite to Dr. McClave’s methods of choosing benchmarks.” Ibid.
On appeal, the Third Circuit held that this finding was not an abuse of discretion. 655 F.3d 182, 207 (2011).
The Court, however, concludes that “the model failed to measure damages resulting from the particular antitrust injury on which petitioners’ liability in this action is premised.” Ante,
at 8. To reach this conclusion the Court must consider fact-based matters, namely what this econometric multiple-regression model is about, what it proves, and how it does so. And it must overturn two lower courts’ related factual findings to the contrary.
We are normally “reluctant to disturb findings of fact in which two courts below have concurred.” United States
465 U.S. 605
, 614 (1984). See also United States
518 U.S. 515
, 589, n. 5 (1996) (Scalia, J., dissenting) (noting “our well-settled rule that we will not ‘undertake to review concurrent findings of fact by two courts below in the absence of a very obvious and exceptional showing of error’ ” (quoting Graver Tank & Mfg. Co.
v. Linde Air Products Co.
336 U.S. 271
, 275 (1949))). Here, the District Court found McClave’s econometric model capable of measuring damages on a classwide basis, even after striking three of the injury theories. 264 F. R. D., at 190–191. Contrary to the Court’s characterization, see ante
, at 8–9, n. 5, this was not a legal conclusion about what the model proved; it was a factual finding about how
the model worked. Under our typical practice, we should leave that finding alone.
In any event, as far as we can tell, the lower courts were right. On the basis of the record as we understand it, the District Court did not abuse its discretion in finding that McClave’s model could measure damages suffered by the class—even if the damages were limited to those caused by deterred overbuilding. That is because respondents alleged that Comcast’s anticompetitive conduct increased Comcast’s market share (and market power) by deterring potential entrants, in particular, overbuilders, from entering the Philadelphia area market. See App. 43a–66a. By showing that this was so, respondents’ proof tends to show the same in respect to other entrants. The overbuilders’ failure to enter deprives the market of the price discipline that their entry would have provided in other parts via threat of the overbuilders’ expansion or that of others potentially led on by their example. Indeed, in the District Court, Comcast argued that the three other theories, i.e.
, the three rejected theories, had no impact on prices. See 264 F. R. D., at 166, 176, 180–181. If Comcast was right, then the damages McClave’s model found must have stemmed exclusively from conduct that deterred new entry, say from “overbuilders.” Not surprisingly, the Court offers no support at all for its contrary conclusion, namely, that the District Court’s finding was “ ‘obvious[ly] and exceptional[ly]’ erroneous.” Ante,
at 8–9, n. 5 (quoting Virginia
, 518 U. S., at 589, n. 5 (Scalia, J., dissenting)).
We are particularly concerned about the matter because the Court, in reaching its contrary conclusion, makes broad statements about antitrust law that it could not mean to apply in other cases. The Court begins with what it calls an “unremarkable premise” that respondents could be “entitled only to damages resulting from reduced overbuilder competition.” Ante
, at 7.
In most §2 cases, how-ever, the Court’s starting place would seem remarkable,
Suppose in a different case a plaintiff were to prove that Widget, Inc. has obtained, through anticompetitive means, a 90% share of the California widget market. Suppose the plaintiff also proves that the two small remaining firms—one in Ukiah, the other in San Diego—lack the capacity to expand their widget output to the point where that pos-sibility could deter Widget, Inc. from raising its prices. Suppose further that the plaintiff introduces a model that shows California widget prices are now twice those in every other State, which, the model concludes is (after accounting for other possible reasons) the result of lack of competition in the California widget market. Why would a court hearing that case restrict damages solely to customers in the vicinity of Ukiah and San Diego?
Like the model in this example, Dr. McClave’s model does not purport to show precisely how
Comcast’s conduct led to higher prices in the Philadelphia area. It simply shows that
Comcast’s conduct brought about higher prices. And it measures the amount of subsequent harm.
* * *
Because the parties did not fully argue the question the Court now answers, all Members of the Court may lack a complete understanding of the model or the meaning of related statements in the record. The need for focused argument is particularly strong here where, as we have said, the underlying considerations are detailed, technical, and fact-based. The Court departs from our ordinary practice, risks inaccurate judicial decisionmaking, and is unfair to respondents and the courts below. For these rea-sons, we would not disturb the Court of Appeals’ judgment and, instead, would dismiss the writ as improvidently granted.