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By Christopher T. Micheletti and Patrick B. Clayton
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The U.S. Supreme Court’s March 2013 decision in Comcast was heralded by many as a class certification “game-changer” that raised the bar for plaintiffs seeking class certification in competition and other class cases — particularly on the issue of whether plaintiffs needed to present classwide proof of damages under Rule 23(b)(3) of the Federal Rules of Civil Procedure.

In the two years since that decision, multiple circuit courts of appeals have weighed in on whether and how — if at all — Comcast has changed Rule 23(b)(3) class certification requirements. As discussed below, a review of appeals court decisions interpreting Comcast shows that most courts have cabined its application, and have, in form and substance, consistently reaffirmed both the Comcast majority’s statement that the case “turn[ed] on the straightforward application of class-certification principles,” and the dissent’s view that “the opinion breaks no new ground on the standard of certifying a class action under [Rule 23(b)(3)].” Indeed, the frequent reliance on the other high court class action decision from the same term, Amgen, suggests that post-Comcast, circuit courts’ views on the requirements for Rule 23(b)(3) predominance have changed little.[1]

Comcast and Amgen

In Comcast, a Sherman Act monopolization case, the plaintiffs alleged that Comcast Corporation entered so-called “clustering transactions” that enabled Comcast to monopolize the Philadelphia “Designated Market Area” (DMA) for cable television services. The clustering transactions included acquisition of competitors within the Philadelphia DMA and agreements to swap cable systems outside the DMA with competitors who had systems within the Philadelphia DMA.[2]

The plaintiffs moved to certify a class under Rule 23(b)(3), proposing four separate and alternative theories of antitrust impact. In granting class certification, the district court accepted one theory of antitrust impact as capable of classwide proof and rejected the rest. Notably, however, the plaintiffs’ experts presented a damage model that addressed impact based on all four impact theories. He “did not isolate damages resulting from any one theory of antitrust impact.”[3]

On appeal, the defendants argued that the model’s failure to isolate impact and damages resulting only from the remaining theory of classwide impact precluded certification. The Third Circuit affirmed the grant of certification, but the Supreme Court reversed, reasoning that the expert’s economic model improperly measured damages stemming from alternative liability theories and related antitrust injuries that were no longer in the case.[4]

In Amgen, a case decided one month before Comcast, the Supreme Court affirmed the certification of a securities fraud 10b-5 class action. Proceeding under the “fraud-on-the-market” theory, the plaintiff stock investors alleged that Amgen Inc. made misrepresentations and misleading omissions about two flagship drugs, causing a financial loss. The district court and the Ninth Circuit rejected Amgen’s arguments that the plaintiff-investors’ reliance on the misrepresentations and omissions — an element of proof of the underlying securities claim — must be established as part of the certification proceedings.[5]

In affirming, the Supreme Court rejected the argument that the scope of the class certification decision includes substantive-law requirements not specified under Rule 23. “[T]he office of a Rule 23(b)(3) certification ruling is not to adjudicate the case; rather, it is to select the ‘method’ best suited to adjudication of the controversy ‘fairly and efficiently.’”[6] While acknowledging that “merits” issues may sometimes overlap and need to be considered with the elements of Rule 23, the court cautioned that Rule 23(b)(3) “does not require a plaintiff seeking class certification to prove that each element of her claim is susceptible to classwide proof. What the rule does require is that common questions predominate over any questions affecting only individual class members.”[7]

Circuit Court Treatment of Comcast

Multiple circuit courts have interpreted and applied Comcast in the context of competition, employment, product defect and in other class action cases. While the decisions vary in certain respects, on balance, the majority of courts have limited Comcast to its facts and reaffirmed pre-existing and well-established class action principles. Below are a number of circuit court takeaways regarding Comcast as of its second birthday.

1) Comcast held only that plaintiffs’ damages model must track plaintiffs’ liability theory; it did not hold, and Rule 23(b)(3) does not require, that class plaintiffs must show that individual damages may be estimated on a classwide basis.

A majority of the circuit courts that have expressed a view on the scope of Comcast have (1) cabined it to a holding that a model for determining classwide damages relied upon to certify a class under Rule 23(b)(3) must measure damages that result from the class’s asserted theory of injury; and (2) confirmed that it did not hold that a class cannot be certified under Rule 23(b)(3) because individual damages cannot be measured on a classwide basis.[8] According to a recent Second Circuit decision, these views are shared by the First, Second, Fifth, Sixth, Seventh and Ninth Circuits.[9]

In Roach, the plaintiff class alleged labor law violations on behalf of certain hourly employees and sought class certification. Relying on Comcast, the district court denied the motion, reasoning that “‘[t]he failure of the proponent of the class to offer a damages model that [is] susceptible of measurement across the entire class for purposes of Rule 23(b)(3) [is] fatal to the certification question.’”[10]

The Second Circuit reversed, noting first that (a) prior to Comcast, “it was well-established in this Circuit that the fact that damages may have to be ascertained on an individual basis is not sufficient to defeat class certification under Rule 23(b)(3),” and (b) that “we do not read Comcast as overruling these decisions.”[11] The court then explained that Comcast “did not hold that a class cannot be certified under Rule 23(b)(3) simply because damages cannot be measured on a classwide basis.” Rather, the court went on, “Comcast’s holding was narrower,” and held only “that a model for determining classwide damages relied upon to certify a class under Rule 23(b)(3) must actually measure damages that result from the class’s asserted theory of injury; ... the Court did not hold that proponents of class certification must rely upon a classwide damages model to demonstrate predominance.”[12]

The Second Circuit noted that “Comcast did not foreclose the possibility of class certification under Rule 23(b)(3) in cases involving individualized damages calculations.”[13] The court of appeals noted that, as in Comcast, its decision turned upon “the straightforward application of class-certification principles,” and that its decision is consistent with “the interpretation of those Circuits that have had the opportunity to apply the decision.”[14]

Several circuit courts addressing this issue in competition cases have reached similar conclusions. For example, the First Circuit in Nexium stated that “Comcast did not require that plaintiffs show that all members of the putative class had suffered injury at the class certification stage — simply that at class certification, the damages calculation must reflect the liability theory.”[15] Similarly, the Sixth Circuit in In re VHS of Michigan Inc., in denying a Rule 23(f) petition, summarized Comcast as follows: “Comcast applies where multiple theories of liability exist, those theories create separable anticompetitive effects, and the combined effects can result in aggregated damages. ... In such cases, the plaintiff’s model must measure damages attributable only to the liability theory (and resulting anticompetitive effects) accepted for class-action treatment.”[16] Multiple district court opinions within these and other circuits have made similar determinations.[17] These rulings are consistent with Amgen’s admonition, noted above, that Rule 23(b)(3) “does not require a plaintiff seeking class certification to prove that each element of her claim is susceptible to classwide proof.”

A potential exception to these narrow readings of Comcast is the D.C. Circuit’s opinion in In re Rail Freight Surcharge Antitrust Litigation. There, the appellate court vacated a ruling by the district court certifying a damage class with respect to claims by shippers that certain railroads fixed rail freight surcharges and remanded for further proceedings.[18] The D.C. Circuit stated that “[b]efore [Comcast], the case law was far more accommodating to class certification under Rule 23(b)(3),” and vacated the certification order on the grounds that plaintiffs’ damage model yielded “false positives,” i.e., positive damage numbers for shippers who entered into freight contracts before the onset of the alleged conspiracy.[19] But the court in Rail Freight focused on common proof of impact; it did not hold that plaintiffs must show a classwide method of estimating damages. At most, Rail Freight stands for the proposition that a damages model that shows damages to nonclass members who cannot have suffered damages will not satisfy Rule 23(b)(3).

2) Comcast does not preclude certification where the plaintiff class may include class members that suffered no injury.

Several circuit courts post-Comcast have addressed whether that decision requires that plaintiffs show that their proposed common proof of impact show injury to all class members. In general, those courts have held that Comcast did not impose such a requirement, and that a class that includes uninjured class members may be certified.[20]

In Nexium, for example, which involved alleged violations of federal antitrust laws in connection with delay of generic heartburn medication, the district court certified a class of individual consumers, third-party payors, union plan sponsors, and insurance companies that purchased or provided reimbursements for the brand name drug Nexium.[21]

On appeal to the First Circuit, defendants relied upon Comcast for their claim that class certification was improper because the class includes members who were not injured by the foreclosure of generic drugs from the market; i.e., individual consumers who would have continued to purchase branded Nexium for the same price after generic entry. The First Circuit rejected this argument: “Comcast did not require that plaintiffs show that all members of the putative class had suffered injury at the class certification stage — simply that at class certification, the damages calculation must reflect the liability theory.”[22] Indeed, the court was of the view that the recent Supreme Court decision in Halliburton Co. v. Erica P. John Fund Inc. [23], “contemplated that a class with uninjured members could be certified if the presence of a de minimis number of uninjured members did not overwhelm the common issues for the class.”

Ultimately, the court concluded that “Plaintiffs’ evidence has shown that the vast majority of class members were probably injured;” and that “‘[r]igorous analysis’ of the evidence does not show that the number of uninjured class members is more than de minimis.”[24] Other circuit courts have reached similar conclusions post-Comcast.[25]

3) Comcast does not preclude certification for liability purposes only under Rules 23(b)(3) and 23(c)(4).

Finally, a number of circuit courts have held post-Comcast that certification of a class for liability purposes only — reserving damages for individual considerations — is appropriate.[26]

For example, the Sixth Circuit addressed both Comcast and Amgen in In re Whirlpool Corp. Front-Loading Washer Products Liability Litig., which involved a class action brought by consumers of Whirlpool washing machines that developed mold problems. A district court order granting certification was affirmed by the Sixth Circuit prior to Comcast. The Supreme Court vacated that ruling for reconsideration in light of Comcast.

On reconsideration, the Sixth Circuit first found that, under Amgen, “[a] plaintiff class need not prove that each element of a claim can be established by classwide proof: ‘What the rule does require is that common questions ‘predominate over any questions affecting only individual [class] members.’”[27] Following Amgen, the court upheld the district court’s determination that the “liability questions [of] ... whether the alleged design defects ... proximately caused mold to grow in the machines and whether Whirlpool adequately warned consumers about the propensity for mold growth — predominate over any individual questions.” The court then distinguished Comcast on the ground that the trial court had only certified a liability class and reserved damages for individual determinations.[28]

Defendants in antitrust and other actions have attempted to seize upon Comcast to raise the bar on the extent of common proof needed to show damages, to preclude certification where the class may include uninjured class members, and to preclude certification of liability-only classes. In light of the discussion above, however, it is clear that most circuit courts, to date, view Comcast as (1) holding only that plaintiff’s damages model must track plaintiff’s liability theory; (2) leaving undisturbed, the bedrock rule that the existence of individualized damages calculations does not defeat class certification; and (3) not precluding certification of classes with uninjured class members or liability-only classes where individualized damages issues prevent 23(b)(3) certification for the case as a whole.

— By Christopher T. Micheletti and Patrick B. Clayton

Christopher Micheletti is a partner and Patrick Clayton was a senior associate in Zelle Hofmann's San Francisco office.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013); Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, 133 S. Ct. 1184 (2013).

[2] Comcast, 133 S. Ct. at 1430.

[3] Id. at 1431.

[4] Id. at 1435.

[5] Amgen, 133 S. Ct. 1190 – 1191.

[6] Id. at 1191 (quoting Fed. R. Civ. P. 23(b)(3)).

[7] Id. at 1196.

[8] See, e.g., Roach v. T.L. Cannon Corp., --- F.3d ---, No. 13-3070-cv, (2nd Cir. Feb. 10, 2015) (citing multiple circuit court opinions); In re Nexium Antitrust Litig., --- F.3d ---, No. 14–1521, (1st Cir. Jan. 21, 2015) (citing multiple circuit court opinions).

[9] See Roach; Nexium (Comcast “simply” requires that a damages calculation reflect the associated theory of liability, and discussing the “well-established” principle that individualized damages do not automatically defeat Rule 23(b)(3) certification); In re Urethane Antitrust Litig., 768 F.3d 1245, 1257–58 (10th Cir. 2014) (“Comcast did not rest on the ability to measure damages on a class-wide basis”); In re Deepwater Horizon, 739 F.3d, 790, 817 (5th Cir. 2014) (rejecting, post-Comcast, the argument “that certification under Rule 23(b)(3) requires a reliable, common methodology for measuring classwide damages” (internal quotation marks omitted)); Butler v. Sears, Roebuck & Co., 727 F.3d 796, 801 (7th Cir. 2013) (holding, upon remand in light of Comcast, that “the fact that damages are not identical across all class members should not preclude class certification”); In re Whirlpool Corp. Front–Loading Washer Prods. Liab. Litig., 722 F.3d 838, 860–61 (6th Cir. 2013), cert. denied, 134 S.Ct. 1277 (2014) (noting that Comcast was “premised on existing class-action jurisprudence” and that “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”); Leyva v. Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir. 2013) (reiterating Ninth Circuit precedent, post-Comcast, that “damage calculations alone cannot defeat certification”)).

[10] Roach (quoting Roach v. T.L. Cannon Corp., No. 3:10–CV–0591 (TJM/DEP), (N.D.N.Y. Mar. 29, 2013)).

[11] Id. 

[12] Id. 

[13] Id.

[14] Id; see also footnote 10, above.

[15] Nexium.

[16] (6th Cir. Feb. 3, 2015).

[17] Martins v. 3PD, Inc., No. 11–11313–DPW, (D. Mass. Mar. 28, 2013) (“[this court] interpret[s] [Comcast] not to foreclose the possibility of class certification where some individual issues of the calculation of damages might remain”); Harris v. comScore Inc., No. 11 C 5807, (E.D. Ill. Apr. 2, 2013) (Comcast court’s “assumption” that “Rule 23(b)(3) requires that damages must be measurable based on a common methodology applicable to the entire class ... is merely dicta and does not bind this court”); In re Motor Fuel Temperature Sales Practices Litig., MDL No. 1840, (D. Kan. Apr. 5, 2013) (noting that “the possibility that individual issues may predominate the issue of damages ... does not defeat class certification” and citing Ginsburg and Breyer dissent from Comcast); In re High-Tech Employee Antitrust Litig., No. 11-CV-02509-LHK, (N.D. Cal. Apr. 5, 2013) (holding that Comcast did not alter the “universal” rule that “individual damages calculations do not preclude class certification under Rule 23(b)(3)”); In re Cathode Ray Tube (CRT) Antitrust Litig., No. C-07-5944-SC, (N.D. Cal. Sept. 19, 2013) (holding that “Comcast did not preclude Dr. Netz’s damages methodology, because the [Indirect Purchaser Plaintiffs] assert, and Dr. Netz analyzed, just one theory of antitrust liability. Further, neither Comcast nor any other precedent requires the [Indirect Purchaser Plaintiffs] to provide exact calculations of their damages at the class certification stage.”).

[18] 725 F.3d 244 (D.C. Cir. 2013).

[19] Id. at 255.

[20] See, e.g., Nexium (citing other cases, including several post-Comcast decisions).

[21] Id. 

[22] Id. 

[23] 134 S.Ct. 2398 (2014).

[24] Nexium.

[25] See, e.g., In re Urethane, 768 F.3d at 1254 (affirming class certification notwithstanding that “some of the plaintiffs may have successfully avoided damages”); Suchanek v. Sturm Foods Inc., 764 F.3d 750, 757 (7th Cir. 2014) (“As we have cautioned before, ‘[i]n circumstances such as these, involving minor overbreadth problems that do not call into question the validity of the class as a whole, the better course is not to deny class certification entirely but to amend the class definition as needed to correct for the overbreadth.’” (quoting Messner v. Northshore Univ. Health Sys., 669 F.3d 802, 826 n. 15 (7th Cir.2012)); but see Rail Freight, 725 F.3d at 252 (while plaintiffs need not show at class certification the precise amount of damages incurred by each class member, “we do expect the common evidence to show all class members suffered some injury”).

[26] Whirlpool, 722 F.3d at 858-60; Jacob v. Duane Reade Inc., --- Fed.Appx. ---; No. 13-3873-cv, (2nd Cir. Feb. 10, 2015) (rejecting defendant’s argument that “Comcast requires that the district court analyze whether common questions predominate over individual questions in the case as a whole before certifying the class with respect to any particular issue,” and concluding that the district court did not abuse its discretion in “determining that common questions predominate with respect to liability”).

[27] Id (quoting Amgen, 133 S.Ct. at 1196).

[28] Id.