* Comcast accused of overcharging cable TV subscribers
* Amgen shareholders allege drugs' safety exaggerated
By Jonathan Stempel
WASHINGTON, Nov 5 The U.S. Supreme Court
considered appeals by Comcast Corp and Amgen Inc
that could help determine what kind of evidence must be
presented before companies may be the subject of class-action
Monday's complex arguments gave the court a new opportunity
to further limit class actions, which can let large groups of
plaintiffs seek larger recoveries at lower cost.
Most recently, in June 2011 the court decertified a class of
as many as 1.5 million Wal-Mart Stores Inc female
workers who accused the world's largest retailer of bias in pay
and promotions, saying they raised too many different claims.
In the Comcast case, subscribers led by Caroline Behrend had
accused the largest U.S. cable TV company, which is also
majority owner of NBC Universal, of overcharges that resulted
from Comcast's effort to monopolize the market in the
The $875 million lawsuit was brought on behalf of a potential
2 million customers in Pennsylvania, New Jersey and Delaware.
Comcast said the subscribers were too different to sue as a
class, but in August 2011 the 3rd U.S. Circuit Court of Appeals
in Philadelphia said a trial judge could decide whether they had
a common methodology to justify awarding damages to a class.
Miguel Estrada, a lawyer arguing for Comcast, called the
subscribers' model for determining damages "bunk," adding that
the certified class covered subscribers in 649 franchise areas
facing different competitive conditions.
"If you drop a stone in the water, you're going to have
ripples all the way out," he said. "That doesn't mean all the
ripples are the same."
Justice Anthony Kennedy appeared sympathetic to Comcast.
"The judge has to make a determination that in his view the
class can be certified," he said. "And that includes some
factual inquiries as to the damages alleged."
But the main issue, as framed by the justices ahead of oral
arguments, had been whether the trial judge could rely on
testimony from an expert witness for the subscribers before
certifying a class.
The subscribers' lawyer Barry Barnett and some justices on
Monday suggested that Philadelphia-based Comcast could not press
that issue because it had not done so in the lower courts, and
that perhaps the Supreme Court should not rule on the company's
"Usually we decide cases based on disagreements about law,
and here I can't find one," Justice Elena Kagan said.
Chief Justice John Roberts suggested differently. "One
option for the court, since we did reformulate the question, is
to answer the question," and then ask a lower court to decide
whether Comcast had waived its right to address it.
In the Amgen case, shareholders accused the Thousand Oaks
California-based biotechnology company of fraudulently inflating
its stock price between April 2004 and May 2007 by exaggerating
the safety of its anti-anemia drugs Aranesp and Epogen.
Shareholders led by the Connecticut Retirement Plans and
Trust Funds sought class certification based on the "fraud on
the market" theory endorsed by the Supreme Court in a 1988 case.
This assumes that the price of a stock in an efficient
market reflects all public information, and that a purchaser is
presumed to have relied on the truthfulness of that information.
Amgen said the shareholders should have been forced at the
class certification stage, rather than at trial, to prove that
alleged misstatements materially inflated the company's stock
price. But last November, the 9th U.S. Circuit Court of Appeals
in Pasadena, California, let the class action proceed.
Seth Waxman, a former U.S. solicitor general arguing for
Amgen, told the court the shareholders cannot raise the fraud on
the market theory without showing material misstatements.
"Absent materiality, the market price cannot be presumed to
reflect the statement in question," he said.
But Justice Antonin Scalia told the shareholders' lawyer
David Frederick there is "good reason" to decide the question of
materiality before a class is certified.
"The reason is the enormous pressure to settle once the
class is certified," he said. "In most cases, that's the end of
But Frederick noted that when Congress adopted a 1995 law to
limit class-action lawsuits, it decided not to address the
"It's not really for this court's province to be imposing
policy judgments about what additional requirements ought to be
put on," he said. "Congress made that judgment."
Comcast and Amgen were supported in their appeals by various
business groups, including the U.S. Chamber of Commerce, as well
as former commissioners and officials at the U.S. Securities and
Decisions are expected by the end of June 2013.
The cases are Comcast Corp et al v. Behrend et al, U.S.
Supreme Court, No. 11-864; and Amgen Inc et al v. Connecticut
Retirement Plans and Trust Funds, U.S. Supreme Court, No.
(Reporting By Jonathan Stempel in Washington, D.C.; editing by