* Comcast accused of overcharging cable TV subscribers
* In 5-4 vote, court says class was improperly certified
By Jonathan Stempel
March 27 The U.S. Supreme Court on Wednesday
ruled in favor of Comcast Corp in a case over how much
it charged a group of cable TV subscribers, the latest blow
against consumers hoping to pursue class action lawsuits.
In a 5-4 decision, the court said 2 million subscribers in
the Philadelphia area could not sue Comcast as a group.
These subscribers claimed in an antitrust lawsuit that the
largest U.S. cable TV company overcharged them as part of an
effort to monopolize the market.
But Justice Antonin Scalia wrote for the majority that the
subscribers fell "far short" of establishing that damages could
be accurately measured for the entire group.
He said the proposed class was too diverse in the claims
they raised and in where they lived, causing individual damages
calculations to "overwhelm" issues common to everyone.
Wednesday's decision overturned an August 2011 ruling by the
3rd U.S. Circuit Court of Appeals in Comcast's hometown of
Philadelphia, which had allowed the class action to go forward.
It came nearly two years after the Supreme Court's landmark
ruling in Wal-Mart Stores Inc v. Dukes, which threw out
a giant gender discrimination lawsuit because the employees had
too little in common to sue together.
Wal-Mart came just two months after the court in AT&T
Mobility v. Concepcion upheld contracts that required
customers to arbitrate disputes individually, not as a class.
"The court is building on Dukes by limiting class actions in
the commercial area," said Michael Waterstone, an associate dean
at Loyola Law School in Los Angeles who is not involved in the
Comcast case. "It will make it harder for groups of people with
small claims against large corporate defendants to bring class
claims for damages."
Barry Barnett, a lawyer for the subscribers, said he is
reviewing the decision.
Comcast spokeswoman Jenni Moyer said the company was pleased
with the decision.
Several business and conservative groups, as well as
chipmaker Intel Corp, supported Comcast's appeal.
Comcast shares rose 16 cents to $41.63 in afternoon trading
on the Nasdaq.
In their $875 million lawsuit, Caroline Behrend and other
cable TV subscribers in Pennsylvania, New Jersey and Delaware
said Comcast was able to stifle competition through a successful
strategy of buying rivals or swapping coverage areas.
They said this enabled the company to triple market share,
which peaked at 77.8 percent in 2002.
Comcast countered that the subscribers should not be allowed
to sue together, saying they hailed from 649 franchise areas
facing different competitive conditions.
The trial court accepted only one of the subscribers' four
theories of antitrust liability: that Comcast's activity reduced
competition from "overbuilders" that build networks in areas
where incumbent providers already operate.
But it said damages could be determined classwide on that
theory, relying on a statistician hired by the subscribers who
compared actual cable TV prices with hypothetical prices that he
said would have prevailed absent any anticompetitive activity.
The 3rd Circuit agreed that the trial court could find a
common methodology to justify awarding damages to a class.
But Scalia wrote that by focusing on damages, the 3rd
Circuit ignored precedents requiring that it examine whether
"common questions" among class members predominate.
"There is no question that the model failed to measure
damages resulting from the particular antitrust injury on which
(Comcast's) liability in this action is premised," Scalia wrote.
Cory Andrews, a lawyer at the Washington Legal Foundation
who wrote a brief supporting Comcast, said: "The idea behind a
class action is that it's more efficient to litigate many cases
at once, but the court is saying we're not going to a certify a
class absent evidence it is worthy of certification."
Wednesday's vote breakdown was a familiar one, with Chief
Justice John Roberts and Justices Anthony Kennedy, Clarence
Thomas and Samuel Alito joining Scalia's opinion.
The more liberal justices dissented, with Ruth Bader
Ginsburg and Stephen Breyer penning an unusual joint dissent,
joined by Sonia Sotomayor and Elena Kagan.
Ginsburg and Breyer said they would have dismissed the
appeal, saying the court erred in reformulating the case to
focus on issues that Comcast had not pressed in lower courts and
which the subscribers did not have a fair chance to address.
The dissent also said the court erred in overturning factual
findings made by two lower courts over whether the subscribers'
damages model was legitimate.
Joshua Davis, a University of San Francisco law professor
who worked on a brief supporting the subscribers, said the court
decision would tend to benefit "large corporations with strong
market power," whlie hurting smaller businesses and consumers.
"Class certification is often crucial for private plaintiffs
because it's too expensive to litigate individually," he said.
The Supreme Court has not always ruled for businesses in
recent class action cases.
Last month, the court let shareholders of Amgen Inc
sue the biotechnology company as a group without first having to
show that misinformation had materially and fraudulently
inflated its stock price.
Decisions in other class action cases are also coming up.
In February, the court heard arguments on whether American
Express Co could force merchants into arbitration to
litigate an antitrust claim, rather than allow a class action
lawsuit, as a condition of accepting its charge cards.
And on Monday, the court considered whether doctors may
collectively arbitrate a payments dispute with Oxford Health
Plans LLC, though the governing agreement did not mention class
The case is Comcast Corp et al v. Behrend et al, U.S.
Supreme Court, No. 11-864.