Court Approves Settlement of Narrowed Class Following Supreme Court’s Denial of Class Certification in Comcast v. Behrend

On Dec. 12, 2014, a District Court judge granted preliminary approval of the settlement submitted by the plaintiff class in Glaberson. v. Comcast Corp., No. 2:03-cv-06604 (E.D. Pa.). Judge John R. Padova issued the order in the case, a decade-old class action in which the U.S. Supreme Court had reversed a 3rd U.S. Circuit Court of Appeals order affirming class certification in the closely followed case captioned Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). The proposed settlement fund is $50 million, consisting of $16.7 million in cash and services valued at $33.3 million. For background on the case and the Supreme Court’s decision, click here.

From 1998 to 2007, Comcast allegedly engaged in a series of transactions described as “clustering” operations, in which the company unlawfully swapped its own cable systems outside of a targeted region for competitors’ systems located within the region. Plaintiffs alleged that Comcast obtained a monopoly, or attempted to obtain a monopoly, on cable services in violation of Sections 1 and 2 of the Sherman Act. They filed a motion to certify a class under Rule 23(b)(3), the relevant portion of which permits certification only if “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members.”

Plaintiffs proposed four theories of class-wide injury. The district court rejected three of the theories but accepted a fourth—that clustering increased Comcast’s bargaining power relative to content providers (the “overbuilder-deterrence” theory). The district court further found that the damages resulting from overbuilder-deterrence could be calculated on a class wide basis. Plaintiffs relied on a regression model that compared actual cable prices with hypothetical prices but for Comcast’s allegedly anticompetitive activities. Critically, the expert who created the model acknowledged that it did not—and could not—isolate damages resulting only from overbuilder-deterrence, but rather provided an estimate of aggregate damages based on all four of plaintiffs’ theories of antitrust impact. Nonetheless, the district court certified the class and the 3rd Circuit affirmed.

The Supreme Court held that the plaintiffs’ expert’s damages model was unable to measure class-wide damages attributable to the only theory of antitrust impact found viable by the district court. Because of this flaw in the damages model, individual damages calculations would overwhelm questions common to the class, and the class therefore could not be certified under Rule 23(b)(3).

On remand, plaintiffs filed a new motion for class certification, slicing several years off the class period and limiting the geographic market to only five of the 18 counties in the Philadelphia area for which they originally sought certification. The defendants opposed the motion and filed a new motion to exclude the opinions of plaintiffs’ expert. The court then granted plaintiffs’ unopposed request to stay the case while the parties conducted settlement discussions. Plaintiffs then filed an amended complaint limited to the five Philadelphia-area markets. In his order preliminarily approving the settlement, Judge Padova found that plaintiffs’ additional expert reports, which were offered to support their theory that Comcast’s swaps and acquisitions constituted unlawful horizontal market allocations, provided common proof of antitrust injury in fact and tied damages directly to liability and plaintiffs’ theory of antitrust impact.

The Supreme Court’s decision in Comcast v. Behrend resulted in the Philadelphia-area settlement class being substantially cut back by eliminating 13 of the 18 Philadelphia-area counties, which is undoubtedly is reflected in the settlement of $16.7 million in cash and $33.3 million in services.

A copy of Judge Padova’s ruling granting preliminary approval of the settlement is available here.