Lessons from an Epic Case — Part 1

Originally published by Barry Barnett.

On December 8, 2003, the antitrust class action that lawyers know as Comcast Corp. v. Behrend started a 12-year odyssey through the federal courts. On December 15, 2015, the settlement that will end Behrend became final.

Today begins a five-part series on lessons that Behrend taught. This post will focus on the plaintiffs’ need for speed.

Fundamentals

Let’s start with these basic facts about lawsuits:

• Plaintiffs win by changing the status quo, defendants by maintaining it.

• Whereas generally plaintiffs have sustained a loss that they want to recoup, defendants have typically scored a gain that they want to keep.

• People put a lower value on receiving future benefits than on avoiding current loss, and they will therefore spend more to keep what they have than to add to it.

• The longer a case takes to resolve, the more it costs.

These fundamentals suggest that plaintiffs need to change the status quo by getting a money judgment or settlement as rapidly as possible to keep the cost commensurate with the value of the probable gain.

The risk of change in law

When a plaintiffs’ firm takes a case on a contingent-fee basis, the lawyers research the current state of relevant law, both substantive and procedural.

The lawyers can usually make a good assessment of the law as it stands. But projecting how it will evolve in the future involves a lot more uncertainty. And the longer a case goes, the likelihood of a material change in the lawsuit’s legal risk profile grows ever bigger.

Behrend provides a good example. When my firm decided to take Behrend in 2003, courts of appeals had scant history with a 1998 addition to class action procedure — the interlocutory appeal, under new Rule 23(f). The track record gave little basis for assessing the odds of having to defend a class certification order in a pre-trial appeal. We knew that it did increase the risk of slowing the process, increasing expense, and changing the relevant law but could not forecast the degree of additional risk.

It proved large indeed. Few issues in law have changed so much over the last 12 years as the rules governing class actions.

The big alterations came on the procedural side. They included these Supreme Court rulings:

• Twombly, in which the Court used an antitrust conspiracy case to raise the bar for pleading claims in all kinds of cases.
• Dukes, where the Court toughened the test for certifying cases seeking damages as class actions.
• Italian Colors, which said that courts must enforce contractual bans on class actions even if that makes pursuing claims cost prohibitive.
• In Behrend itself, the Court sought (but largely failed) to raise a new hurdle to class certification, this one on the damages side.

Substantive law proved more stable but neither static nor favorable for plaintiffs. Although in American Needle the Court upheld potential liability under section one of the Sherman Act for a conspiracy among the teams of the National Football League, in Weyerhaeuser the Court extended its tough predatory pricing test to monopsonies, and in Leegin it abolished a per se liability category (minimum resale price maintenance) after almost a century.

The procedural-risk chickens came home to roost when the Third Circuit toughened the standards for class certification in In re Hydrogen Peroxide, when that court later granted Comcast’s petition for discretionary review of the district court’s post-Hydrogen Peroxide class certification order, and again when the Supreme Court chose to review the Third Circuit’s 2-1 decision upholding certification.

Putting it together

In the dozen years since we filed Behrend, the risk profile for class actions has materially worsened for plaintiffs, mainly for procedural reasons.

In the short term, the riskiness of class litigation will likely grow worse still. Although new appointments to the courts of appeals appear to have slowed the deterioration in that quarter, the Supreme Court majority that dislikes class actions remains firmly in charge and anxious to wreak more havoc.

Plaintiffs’ lawyers often say that cases do not get better after they file them. They generally have the facts in mind when they say that, knowing that witnesses and documents may prove less compelling than how the complaint painted them.

But the risk of negative changes in the governing law has over the last couple of decades made the old saying doubly true. I learned that the hard way in Behrend.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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