Third Circuit Rules Hydrogen Peroxide Can’t Wipe Out Comcast Class

The U.S. Court of Appeals for the Third Circuit has upheld the certification of a consumer class alleging antitrust violations against cable distributor Comcast.

The appellate court ruled in Behrend v. Comcast Corp. that certification was wholly consistent with its instructions to district courts in the seminal case of In re Hydrogen Peroxide, 552 F.3d 305 (3d Cir. 2008), which outlines the standards a district court should apply in determining whether to certify a class.

Plaintiffs sued Comcast in federal court in the Eastern District of Pennsylvania in 2003, claiming that it eliminated competition by (1) acquiring competitors in the Philadelphia market, (2) swapping with competitors outside the Philadelphia market for cable systems and customers within the Philadelphia market, and (3) engaging in conduct to exclude an “overbuilder,” or company that builds and offers customers a competitive alternative to an incumbent cable company.  Plaintiffs’ proposed class included virtually all Comcast subscribers throughout several counties in Pennsylvania, New Jersey and Delaware since December 1999.

The district court originally certified in May 2007.  After the Third Circuit’s decision in Hydrogen Peroxide, the district court reconsidered, and in January 2010 it recertified.  Comcast appealed, which led to the instant decision.   

Comcast challenged three main findings of the district court: that (1) plaintiffs could establish antitrust impact through common evidence; (2) plaintiffs’ damages methodology was acceptable; and (3) plaintiffs’ per se claim was certifiable.  The court of appeals rejected each of these, reprimanding Comcast along the way for urging it to exceed its authority under Hydrogen Peroxide.

On antitrust impact, the Third Circuit noted that Comcast “asks us to reach into the record and determine whether Plaintiffs actually have proven antitrust impact.  This we will not do.  Instead, we inquire whether the District Court exceeded its discretion by finding that plaintiffs had demonstrated by a preponderance of the evidence that they could prove antitrust impact through common evidence at trial.”  (Emphasis in original.)  When the appellate court conducted that inquiry, it found no abuse of discretion.  

On damages, the court likewise found “that the heart of Comcast’s arguments are attacks on the merits of the methodology that have no place in the class certification inquiry.”  It determined that those arguments did “not impeach the District Court’s ultimate holding that damages are capable of common proof on a class-wide basis,” and affirmed that holding as well.   

The court declined even to reach Comcast’s third argument, that “the District Court lacked any legal authority to certify a [Section 1] per se claim based on the class’s allegations.”  Again, it explained: “This is a merits issue beyond the scope of our Rule 23(f) jurisdiction.  . . . The [District] Court certified the class and stated that one of the questions to be litigated is whether there has been a per se violation.  It did not declare that a per se violation had occurred.  Appeals taken pursuant to Rule 23(f) do not furnish the proper vehicle to address the merits of Plaintiffs’ antitrust claims.”    

Plaintiffs are not out of the woods yet.  Comcast has also moved for summary judgment, and that motion has been fully briefed since June 2010.  Whatever its outcome, the parties may well appear before the Third Circuit again soon.