Is a class action permitted if each class member’s damages would have to be proven separately rather than measured on a class-wide basis?
The Supreme Court’s 5 – 4 majority opinion today in Comcast Corp. v. Behrend raises this fundamental question. The implications for wage and hour class and collective actions are monumental.
As we have reported previously (read more here), the issue in Comcast was whether the claims of 2 million cable subscribers that Comcast illegally inflated prices were appropriate to litigate together in a class action. The district court judge and the Third Circuit ruled that class certification was appropriate because common issues of law and fact predominated over issues affecting only individual subscribers. In particular, the lower courts concluded that the plaintiffs’ expert’s report — even if flawed — showed that the amounts subscribers overpaid could be calculated on a class-wide basis.
The Supreme Court reversed the lower courts. In doing so, the Court ruled that the district and appellate courts should have paid attention to the flaws in the expert’s report because those flaws made it useless as a methodology for calculating class-wide how much the subscribers were allegedly overcharged. As discussed further in Seyfarth’s Workplace Class Action Litigation blog post on Comcast, the Supreme Court reached this conclusion even though it required an examination of the merits of the case, as allowed by Wal-Mart v. Dukes.
The plaintiffs’ inability to show that damages could be measured on a class-wide basis, the Supreme Court ruled, meant that the case was not a proper class action because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.” Even if the expert report had not been flawed, the Court wrote, “it still would not have established the requisite commonality of damages unless it showed that the extent of the [alleged antitrust violations by Comcast] was the same in all counties or . . . irrelevant to [Comcast’s] ability to charge supra-competitive prices.” These statements imply that a case cannot satisfy the predominance of common issues requirement of Dukes if each plaintiff’s damages must be proven separately.
Justices Breyer and Ginsburg, in a dissenting opinion joined by Justices Sotomayor and Kagan, argued that the Court’s opinion should not be so interpreted. “Recognition that individual damages calculations do not preclude class certification under Rule 23(b)(3),” they argued, “ is well-nigh universal.” The dissenters did not cite any Supreme Court cases approving a Rule 23(b)(3) class action requiring individualized proof of damages. That they felt the need to try to minimize the scope of the Court’s ruling only reinforces that it is indeed significant.
In the almost two years since Wal-Mart v. Dukes, Plaintiff-side lawyers have sought to limit Dukes’ reasoning to the specific type of class action (a Rule 23(b)(2) class) and type of legal claims (discrimination claims) presented in that case, and some courts have agreed. In Comcast, the Supreme Court made clear that the principles of Dukes are intended to apply to class actions generally, applying them to a Rule 23(b)(3) class action in a very different substantive area.
For employers defending state wage and hour law class actions, which are generally brought under Rule 23(b)(3), Comcast is especially important.
Wage and hour damages usually depend on individualized proof. For example, in off-the-clock work cases, each potential class member’s damages typically depend on her specific work schedule, routine, activities and other individualized factors. Likewise, in exempt classification cases, employees often claim to have worked different amounts of overtime in different weeks, and the employer’s evidence of hours worked may vary from employee to employee. By stating that common issues can predominate only in cases in which damages can be calculated on a class-wide rather than an individualized basis, Comcast gives employers a potent weapon for defeating class certification in Rule 23 wage and hour cases.