Caroline BEHREND; Stanford Glaberson; Joan Evanchuk-Kind; Eric Brislawn v. COMCAST CORPORATION; Comcast Holdings Corporation; Comcast Cable Communications, Inc.; Comcast Cablecommunications Holdings, Inc.; Comcast Cable Holdings, LLC, Appellants.
No. 10-2865
United States Court of Appeals, Third Circuit
Argued on Jan. 11, 2011. Filed: Aug. 23, 2011.
655 F.3d 182
Darryl J. May, Ballard Spahr LLP, Philadelphia, PA, Michael S. Shuster [Argued], Sheron Korpus, Kasowitz, Benson, Torres & Friedman LLP, New York, NY, for Appellants.
Before: FISHER, JORDAN and * ALDISERT, Circuit Judges.
OPINION OF THE COURT
ALDISERT, Circuit Judge.
In 2008 this Court handed down the seminal case of In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), which outlines the standards a district court should apply in deciding whether to certify a class. This appeal by Comcast requires us to decide if the District Court for the Eastern District of Pennsylvania properly satisfied Hydrogen‘s directions in determining that questions of fact or law common to class members predominate sufficiently to satisfy
I.
A.
“For the rational study of the law the black-letter man may be the man of the present, but the man of the future is the man of statistics and the master of economics.”
Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L. Rev. 457, 469 (1897).
Beginning in 1998, Defendants Comcast Corporation, Comcast Holdings Corporation, Comcast Cable Communications, Inc., Comcast Cable Communications Holdings, Inc., and Comcast Cable Holdings, LLC (collectively “Comcast“) engaged in a series of transactions that increased Comcast‘s share of the multichannel video programming distribution services offered in the Philadelphia Designated Market Area (“Philadelphia DMA“).1 Comcast contracted with competing cable providers to either acquire them or to “swap” cable systems it owned in areas outside the Philadelphia DMA for cable systems within the Philadelphia DMA. These transactions form the “Cable System Transactions,” involving the “Transaction parties.”2 As a
Plaintiffs, six non-basic cable television programming services customers of Comcast, brought a class action antitrust suit against Comcast in 2003. They alleged violations of section 1 of the Sherman Act,
The proposed class included: “All cable television customers who subscribe or subscribed at any time since December 1, 1999, to the present to video programming services (other than solely to basic cable services) from Comcast, or any of its subsidiaries or affiliates in Comcast‘s Philadelphia cluster.” App. 00217; see id. (excluding from the class “governmental entities, Defendants, Defendants’ subsidiaries and
The Complaint alleged that Comcast had perpetrated an anticompetitive “clustering scheme.” To clarify its contentions we pause to define two key terms. “Clustering” refers to a “strategy whereby cable [Multi-System Operators (“MSOs“)] concentrate their operations in regional geographic areas by acquiring cable systems in regions where the MSO already has a significant presence, while giving up other holdings scattered across the country. This strategy is accomplished through purchases and sales of cable systems, or by system ‘swapping’ among MSOs.” Implementation of the Cable Television Consumer Prot. & Competition Act of 1992, 22 F.C.C. Rcd. 17791, 17810 n. 134 (2007) (citation omitted). An “overbuilder” is a company that builds and offers customers a competitive alternative where a telecommunications company already operates. According to the Complaint, Comcast eliminated competition by (1) acquiring competitors in the Philadelphia market and (2) swapping with competitors cable systems and subscribers outside of the Philadelphia market for cable systems and subscribers within the Philadelphia market. The Complaint also alleged that Comcast engaged in conduct intended to exclude competition from overbuilder RCN Telecom Services, Inc. (“RCN“), by denying it access to “Comcast SportsNet,” requiring contractors to enter non-compete agreements, and inducing potential customers to sign up for long contracts with special discounts and penalty provisions in the areas where RCN intended to overbuild. App. 00235-239.
As a result of its clustering, Comcast allegedly harmed the class by eliminating competition, raising entry barriers to potential competition, maintaining increased prices for cable services at supra-competitive levels, and depriving subscribers of the lower prices that would result from effective competition. App. 00241-242. In other words, Comcast subscribers allegedly pay too much for their non-basic video programming cable service.
B.
On May 3, 2007, after extensive motions practice, see App. 00148-172 (listing 194 docket entries prior to certification), the District Court certified the proposed class. App. 00354. It determined that Plaintiffs had met the requirements of
The Court also certified the Chicago class‘s claims, but stayed them pending the outcome of the Philadelphia class. App. 00177, 00179.5
The District Court held an evidentiary hearing on October 13-15 and 26, 2009. During the four-day hearing, the Court heard live testimony from fact and expert witnesses, considered 32 expert reports, and examined deposition excerpts, as well as many other documents. Following the hearing, the Court issued to the parties a series of questions related to antitrust impact and damages methodology, and heard argument on November 16, 2009, to address its specific questions.
On January 7, 2010, the District Court recertified the Philadelphia class, and issued an amended class certification order on January 13, 2010. The Court reaffirmed and incorporated its May 2007 certification as to numerosity, commonality, typicality, and adequacy (
Proof of antitrust impact relative to such claims shall be limited to the theory that Comcast engaged in anticompetitive clustering conduct, the effect of which was to deter the entry of overbuilders in the Philadelphia DMA.
App. 00032.
The Court accompanied its order with an 81-page memorandum opinion containing its analysis of the evidence presented at the evidentiary hearing. Behrend v. Comcast Corp., 264 F.R.D. 150 (E.D.Pa. 2010). The Court summarized its opinion as follows:
Having rigorously analyzed the expert reports, as well as the testimony presented by the parties during a four-day evidentiary hearing, we conclude that the class has met its burden to demonstrate that the element of antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual to its members, and that there is a common methodology available to measure and quantify damages on a class-wide basis.
Comcast filed a
The District Court had jurisdiction pursuant to
“We review a class certification order for abuse of discretion, which occurs if the district court‘s decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an improper application of law to fact.” Hydrogen Peroxide, 552 F.3d at 312 (citation and quotations omitted). We review de novo whether an incorrect legal standard has been used. Id. (citation omitted).
For a district court‘s finding of fact to be clearly erroneous, the standard is high. “Clearly erroneous” has been interpreted to mean that a reviewing court can upset a finding of fact, even if there is some evidence to support the finding, only if the court is “left with the definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948). This means that “[i]t is the responsibility of an appellate court to accept the ultimate factual determination of the fact-finder unless that determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data.” Krasnov v. Dinan, 465 F.2d 1298, 1302 (3d Cir.1972). Especially pertinent to the issue before us, the Supreme Court has explained:
This standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently.... In applying the clearly erroneous standard to the findings of a district court sitting without a jury, appellate courts must constantly have in mind that their function is not to decide factual issues de novo. If the district court‘s account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder‘s choice between them cannot be clearly erroneous.
Anderson v. Bessemer City, 470 U.S. 564, 573-574, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (quotations and citations omitted); accord PA Prison Soc‘y v. Cortes, 622 F.3d 215, 231 (3d Cir.2010).
III.
Comcast raises three principal arguments on appeal, urging us to overturn the District Court‘s certification order on the grounds that: (1) the Court‘s finding that the class can establish class-wide antitrust impact through common evidence was incorrect for various reasons; (2) the District Court exceeded its discretion in accepting Plaintiffs’ proposed methodology for damages calculation; and (3) the Court‘s certification of a per se antitrust claim was clear error. In response, Plaintiffs defend in all respects the District Court‘s certification decision. We first outline the
The district court must conduct a “rigorous analysis” of the evidence and arguments in making the class certification decision. Hydrogen Peroxide, 552 F.3d at 318. The analysis requires “a thorough examination of the factual and legal allegations” and “may include a preliminary inquiry into the merits.” Id. at 317 (quoting Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 166, 168 (3d Cir.2001)). We explained in Hydrogen Peroxide the permissible extent of any inquiry into the merits:
[T]he requirements set out in Rule 23 are not mere pleading rules. The court may delve beyond the pleadings to determine whether the requirements for class certification are satisfied.... An overlap between a class certification requirement and the merits of a claim is no reason to decline to resolve relevant disputes when necessary to determine whether a class certification requirement is met. Some uncertainty ensued when the Supreme Court declared in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), that there is “nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action.” Only a few years later, in addressing whether a party may bring an interlocutory appeal when a district court denies class certification, the Supreme Court pointed out that “the class determination generally involves considerations that are ‘enmeshed in the factual and legal issues comprising the plaintiff‘s cause of action.‘” [Coopers & Lybrand v.] Livesay, 437 U.S. [463,] 469, 98 S.Ct. 2454 [57 L.Ed.2d 351 (1978)] (quoting Mercantile Nat‘l Bank v. Langdeau, 371 U.S. 555, 558, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963)). As we explained in Newton, 259 F.3d at 166-69, Eisen is best understood to preclude only a merits inquiry that is not necessary to determine a Rule 23 requirement. Other courts of appeals have agreed.
552 F.3d at 316-317 (quotations and citations omitted).6 Accordingly, at the class certification stage, we are precluded from addressing any merits inquiry unnecessary to making a Rule 23 determination. Id. Further, any findings for the purpose of class certification “do not bind the fact-finder on the merits.” Id. at 318.
Plaintiffs bear the burden of establishing each element of
Rule 23 by a preponderance of the evidence. Id. at 320 (“[T]o certify a class the district court must find that the evidence more likely than not establishes each fact necessary to meet the requirements of Rule 23.“) (citation omitted). The court must also examine critically expert testimony on both sides and may be persuaded by either side as to whether a certification requirement has been met. Id. at 323. Indeed, “[w]eighing conflicting expert testimony at the certification stage is not only permissible; it may be integral to the rigorous analysis Rule 23 demands.” Id.
The parties dispute whether Plaintiffs have met the predominance requirement. Predominance “tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). It “is a test readily met in certain cases alleging consumer or securities fraud or violations of the antitrust laws,” id. at 625, 117 S.Ct. 2231, but a court may not relax its certification analysis as to each element of Rule 23, see Hydrogen Peroxide, 552 F.3d at 322. To assess whether common or individual issues predominate, a district court must examine the nature of the evidence and “formulate some prediction as to how specific issues will play out....” Id. at 311 (quotations and citations omitted).
Reviewing a district court‘s certification of a class, we examine the elements of the class‘s claims “through the prism” of Rule 23. Id. (quoting Newton, 259 F.3d at 181). The elements of the claims before us are (1) a violation of the antitrust laws (here, sections 1 and 2 of the Sherman Act), (2) individual injury resulting from that violation, and (3) measurable damages. See id. Individual injury, also known as antitrust impact, “is critically important for the purpose of evaluating Rule 23(b)(3)‘s predominance requirement because it is an element of the claim that may call for individual, as opposed to common, proof.” Id. At the class certification stage, Plaintiffs’ burden is “to demonstrate that the element of antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual to its members.” Id. at 311-312.
IV.
Comcast devotes much of its energy to contending that the District Court exceeded its discretion in holding that Plaintiffs had established common evidence of antitrust impact. It attacks this issue in two ways: first, that the District Court failed to apply the correct legal standard for determining the relevant geographic market, and, second, that the District Court made clearly erroneous factual findings by relying on Plaintiffs’ expert for proof of class-wide antitrust impact. We address each contention in turn.
A.
Before the District Court, Plaintiffs contended that the relevant geographic market was the Philadelphia Designated Market Area, whereas Comcast countered that it was each individual‘s household. The District Court agreed with Plaintiffs. Behrend, 264 F.R.D. at 160. Plaintiffs’ expert, Dr. Michael Williams, provided seven bases to support the conclusion that the relevant geographic market was the Philadelphia DMA. The District Court set forth each basis, as well as Comcast‘s counterarguments. 264 F.R.D. at 157-160. The Court stated that Comcast‘s focus on the individual household was not supported by the record, and that setting such a small market would be “impractical and inefficient.” 264 F.R.D. at 160. Instead, the Court noted that the alleged conduct centered on Comcast‘s attempt to acquire substantially all of the cable systems in the Philadelphia DMA, and that the Federal Communications Commission aggregates relevant geographic markets in which customers face “similar competitive choices.” 264 F.R.D. at 160. The Court concluded, “[T]he record evidence shows that consumers throughout the DMA can face similar competitive choices and suffer the same alleged antitrust impact resulting from Comcast‘s clustering conduct in the Philadelphia DMA.” 264 F.R.D. at 160.
Comcast contends that the Court failed to articulate or apply the correct legal
Plaintiffs respond at three levels. First, they contend that they need not define the relevant geographic market: per se claims do not require defining the geographic market, and they offered direct evidence of market power, thereby relieving them of the obligation to define the relevant geographic market. Second, Plaintiffs state that the District Court used the commercial realities test to determine the relevant geographic market and did not ignore demand substitutability. Third, according to Plaintiffs, Comcast cannot demonstrate clear error in the Court‘s factual determination that “consumers throughout the [Philadelphia] DMA can face similar competitive choices.” See Behrend, 264 F.R.D. at 160.
B.
We will affirm the District Court‘s conclusion that the Philadelphia DMA is a relevant geographic market “susceptible to proof at trial through available evidence common to the class.” Behrend, 264 F.R.D. at 160.
The relevant geographic market is a component of substantive antitrust law. For antitrust claims analyzed through the rule of reason, plaintiffs must demonstrate that the defendant possessed market power in the relevant geographic market. See Pa. Dental Ass‘n v. Med. Serv. Ass‘n of Pa., 745 F.2d 248, 260 (3d Cir.1984). For per se claims, plaintiffs need not establish a geographic market. See In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 316-317 (3d Cir.2010) (explaining that some prohibited practices can be conclusively presumed to unreasonably restrain competition). Additionally, “direct proof of monopoly power does not require a definition of the relevant market.” See Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307 n. 3 (3d Cir.2007).
Defining the relevant geographic market, however, is an issue of the merits. See, e.g., Borough of Lansdale v. Phila. Elec. Co., 692 F.2d 307 (3d Cir.1982) (addressing on appeal whether jury verdict should be set aside because of allegedly erroneous definition of relevant geographic market). At the class certification stage, a court need only be satisfied that issues—including the definition of a geographic market—will be capable of proof through evidence common to the class. See Hydrogen Peroxide, 552 F.3d at 311; IIA Phillip E. Areeda et al., Antitrust Law ¶ 398b (3d ed.2007) (describing that at the class certification stage the plaintiffs’ expert typically concludes that “any significant economic issues underlying the class representative‘s antitrust claims, including but not limited to issues regarding market definition ... will be analyzed and proven through the use of common data and evidence that would be used to prove the claims of the other members of the proposed Class“) (emphasis added). If the plaintiffs allege per se claims, they may still need to persuade the district court that, in the event defining the relevant geographic market becomes necessary, it is capable of common proof. See Areeda et al., supra, ¶ 398b.
The inquiry before the District Court, therefore, was whether Plaintiffs
C.
First, we perceive no legal error in the District Court‘s reasoning. Procedurally, it conducted the required “rigorous analysis” by examining in depth the expert opinions on both sides and setting forth its conclusions. See Hydrogen Peroxide, 552 F.3d at 317, 320. Substantively, the Court determined that “the record evidence shows that consumers throughout the DMA can face similar competitive choices and suffer the same alleged antitrust impact resulting from Comcast‘s clustering conduct in the Philadelphia DMA.” 264 F.R.D. at 160. Comcast contends that the Court failed to apply the consumer demand substitutability test, which defines the relevant geographic market as “that area in which a potential buyer may rationally look for the goods or services he seeks.” Gordon v. Lewistown Hosp., 423 F.3d 184, 212 (3d Cir.2005) (citing Pa. Dental Ass‘n, 745 F.2d at 260). We determine otherwise: the Court‘s analysis of the relevant geographic market for purposes of class certification comported with our precedent.
“[I]dentification of the relevant geographic market is a matter of analyzing competition.” Borough of Lansdale, 692 F.2d at 311. Defining it “is a question of fact to be determined in the context of each case in acknowledgment of the commercial realities of the industry being considered.” Gordon, 423 F.3d at 212 (quoting Borough of Lansdale, 692 F.2d at 311). In these decisions of our Court, one of which has commanded our attention for almost thirty years, we relied on two Supreme Court cases to develop this standard: United States v. Grinnell Corp., 384 U.S. 563, 576, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966), which held that the relevant geographic market under the Sherman Act was “not the several local areas which the individual stations serve, but the broader national market that reflects the reality of the way in which they built and conduct their business,” and Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320, 327, 332, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961), which defined the relevant geographic area for
§ 3 of the Clayton Act, 15 U.S.C. § 3 , as “the market area in which the seller operates, and to which the purchaser can practicably turn for supplies” or as the area in which suppliers “effectively compete.” In another Clayton Act case, the Supreme Court stated: “The geographic market selected must, therefore, both correspond to the commercial realities of the industry and be economically significant. Thus, although the geographic market in some instances may encompass the entire Nation, under other circumstances it may be as small as a single metropolitan area.” Brown Shoe Co. v. United States, 370 U.S. 294, 336-337, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962) (quotations and citations omitted); see Grinnell, 384 U.S. at 572, 86 S.Ct. 1698(citing Brown Shoe as analogous to determining the relevant market for the Sherman Act).
D.
The District Court‘s determination—that consumers “face similar competitive choices” in the Philadelphia DMA as a result of Comcast‘s alleged clustering conduct—is consistent with the above standards because it considers both where a buyer may rationally look for goods and the commercial reality of the industry. Comcast‘s insistence that the geographic market must be the individual household (as the only place where a consumer can “comparison shop“) ignores that the geographic market must be “economically significant,” Brown Shoe Co., 370 U.S. at 336-337, 82 S.Ct. 1502, and may be premised on “the commercial realities of the industry being considered,” Borough of Lansdale, 692 F.2d at 311, the area where suppliers “effectively compete,” Tampa Electric Co., 365 U.S. at 332, 81 S.Ct. 623, or the broader market reflecting the reality of conducting business, Grinnell, 384 U.S. at 576, 86 S.Ct. 1698.7 We therefore discern no legal error in the District Court‘s analysis.
E.
Second, we recognize ample evidence in the record supporting the District Court‘s factual findings underpinning its market determination, which precludes us from reversing those findings as clearly erroneous. See, e.g., EBC, Inc. v. Clark Bldg. Sys. Inc., 618 F.3d 253, 273 (3d Cir.2010) (“We will not reverse ‘[i]f the district court‘s account of the evidence is plausible in light of the record viewed in its entirety’ even if we would have weighed that evidence differently.” (quoting Anderson, 470 U.S. at 573-574, 105 S.Ct. 1504)). The Court cited Dr. Williams‘s seven bases for drawing the geographic market as the Philadelphia DMA. Behrend, 264 F.R.D. at 157-160. Although it rejected three of those bases, the remaining four tended to show that Comcast‘s clustering had anti-competitive effects in the Philadelphia DMA by deterring overbuilders from entering the Designated Market Area, and that the industry itself used DMAs to focus its competition. Additional evidence in the record, reviewed in detail below, demonstrated that clustering results in fewer competitors and higher cable prices for the entire market. This evidence belies Comcast‘s claim that there is no change at the individual level when Comcast aggregates surrounding franchises.
Simply put, the District Court determined by a preponderance of the evidence that, when addressed on the merits, the class may be able to prove through common evidence that the relevant geographic
V.
Comcast hinges its next line of arguments on the District Court‘s final certification: “Proof of antitrust impact relative to such claims shall be limited to the theory that Comcast engaged in anticompetitive clustering conduct, the effect of which was to deter the entry of overbuilders in the Philadelphia DMA.” App. 00032. According to Comcast, the District Court made clearly erroneous findings of fact by relying on Plaintiffs’ expert, Dr. Williams, in support of the certified theory of antitrust impact.
The District Court considered in great detail the arguments presented by both sides. It rejected three of Plaintiffs’ four theories of class-wide impact. Behrend, 264 F.R.D. at 166 (rejecting theory of direct broadcast satellite (“DBS“) foreclosure); id. at 177-178 (rejecting benchmark theory); id. at 181 (rejecting bargaining power theory). Nonetheless, it accepted that Plaintiffs could establish class-wide antitrust impact on the theory of clustering and its impact on overbuilder competition. After detailing the evidence put forth by both sides, id. at 166-74, the Court concluded that “the Class has met its burden to demonstrate that the anticompetitive effect of clustering on overbuilder competition is capable of proof at trial through evidence that is common to the class,” id. at 174. The Court found that through the model of Plaintiffs’ expert, Dr. Williams, and the empirical studies conducted by governmental agencies and private researchers, the class had shown that the presence of an overbuilder constrains cable prices, and that Comcast engaged in conduct designed to deter the entry of overbuilders in the Philadelphia DMA. Id. at 174. It found unpersuasive the conclusions of Comcast‘s expert, Dr. David J. Teece, that overbuilding is not a successful business model. Id. at 174-75.
On appeal, Comcast constructs a four-tiered argument to support its objections. First, it contends that Plaintiffs cannot show class-wide antitrust impact based on potential overbuilding by any of the “Transaction parties.”9 According to Comcast, the evidence demonstrated there was no actual competition between the Transaction parties; Plaintiffs therefore must show that the challenged conduct eliminated potential competition. In Comcast‘s view, the record evidence reflects that no Transaction parties had taken any affirmative steps to overbuild and, consequently, there was no potential competition to eliminate. Second, Comcast contends that Plaintiffs identified only RCN Telecom Services, Inc., as attempting to overbuild in the Philadelphia DMA. The evidence establishes, according to Comcast, that RCN was not going to overbuild as a result of its own financial woes, not as a result of any alleged activity on the part of Comcast. Third, as the argument goes, because there was no record evidence demonstrating actual or potential competition, the theoretical opinions indicating otherwise rendered by Plaintiffs’ expert, Dr. Williams, were clearly erroneous. Comcast disputes at many levels Dr. Williams‘s methodology and results in his “market structure” and “market performance” opinions. Summed up, Comcast contends that theoretical expert opinions are no replacement for market facts, the record evidence showed no actual or potential overbuilding (as addressed in the first two contentions), and therefore any reliance on the expert opinions for evidence of anticompetitive behavior was clearly erroneous. Fourth, Comcast adds that any evidence of anticompetitive conduct specific to Delaware County could not serve as evidence of class-wide impact for the Philadelphia cluster.
B.
Plaintiffs respond to each level of Comcast‘s position. First, citing many portions of the record, they assert that there is “overwhelming” record evidence that Comcast‘s clustering of the Philadelphia DMA deterred and reduced overbuilding competition, resulting in antitrust impact (higher cable prices) for all class members. According to the class, the record demonstrates: clustering deters overbuilding, the swaps and acquisitions eliminated competition, Multi-System Operators (“MSOs“) actually do overbuild one another, Comcast and other MSOs look to one another‘s prices to set their own, and the MSOs chose affirmatively not to compete. The class adds that Comcast is raising a merits argument by asking the Court to consider the “potential competition” doctrine. Second, Plaintiffs contend that Comcast raises a merits issue by asking the Court to examine whether Comcast‘s conduct in fact prevented RCN from overbuilding in more areas than it did. In any event, they state that the record evidence demonstrates RCN had the intent and capital to overbuild the Philadelphia market. Third, Plaintiffs state that Dr. Williams‘s theoretical model plainly shows common evidence of class-wide impact; Comcast‘s contention that Dr. Williams‘s opinions do not prove antitrust impact is one for the jury to decide on the merits. Fourth, the evidence related to Delaware County “adds to and illustrates” the common evidence of Comcast‘s anticompetitive clustering conduct.
We begin the analysis of these contentions by focusing on the precise inquiry: Plaintiffs’ burden at the class certification stage is not to prove the element of antitrust impact, although in order to prevail on the merits each class member must do so. Instead, the task for plaintiffs at class certification is to demonstrate that the element of antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual to its members. Hydrogen Peroxide, 552 F.3d at 311-312 (emphasis added). Many of Comcast‘s contentions ask 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.
This dispute therefore is evidentiary. When facts are at issue, the District Court exceeds its discretion in certifying a class only if its findings are clearly erroneous. Id. at 312. Comcast bears a heavy burden in convincing us that the District Court‘s factual findings were clearly erroneous. See Anderson, 470 U.S. at 573-574 (“If the district court‘s account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it....“); Krasnov, 465 F.2d at 1302 (“It is the responsibility of an appellate court to accept the ultimate factual determination of the fact-finder unless that determination either (1) is completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bears no rational relationship to the supportive evidentiary data.“).
Comcast has not carried its burden. Plaintiffs provided evidence at the certification hearing that tended to show that Comcast‘s clustering (through swaps and acquisitions) reduced competition, deterred the entry of overbuilders, and resulted in higher cable prices for the entire class. This evidence displays “some hue of credibility” and bears a rational relationship to the Court‘s finding. See Krasnov, 465 F.2d at 1302.
For example, one of Plaintiffs’ experts, Dr. Williams, concluded after a detailed analysis that, inter alia, Comcast‘s clustering increased its market share and, consequently, its market power, thereby raising barriers to entry for other multichannel video programming distributors and resulting in higher cable rates for all members of the class. App. 03599-3600; see also Behrend, 264 F.R.D. at 166-171 (providing in great detail the analyses, evidentiary support, and conclusions of Dr. Williams). Dr. Williams also cited to Federal Communications Commission reports, Government Accountability Office reports, and academic research, all of which indicated that reducing competition by clustering leads to higher cable rates. App. 03663-3668. Another expert, Dr. Hal Singer, used extensive record evidence to analyze how Comcast‘s clustering denied overbuilders access to the Philadelphia DMA. App. 03501-3529. Dr. Singer concluded that Comcast‘s actions allowed it to foreclose competitors and elevate prices. App. 03450. He also referenced multiple studies—both governmental and private, some of which overlapped with those referenced by Dr. Williams—that concluded that cable prices are lower when overbuilder competition is present. App. 03537-3548. Also in the record are specific instances of Multi-System Operators attempting to overbuild one another around the country. See Appellees’ Br. 27 n. 17 (citing 13 distinct examples in the record of MSOs overbuilding one another).
Comcast protests that the record demonstrates that there was no actual or potential competition among the Transaction parties. In light of the above record evidence, however, Comcast‘s interpretation of the evidence does not render the District Court‘s findings clearly erroneous. Comcast remains free to make these arguments to the jury.
VII.
Comcast‘s other contentions are equally unpersuasive. There is conflicting evidence as to the role Comcast played in RCN Telecom Services, Inc.‘s decision to not overbuild further in the Philadelphia DMA. Plaintiffs highlight record evidence that RCN had the intent and capital necessary to overbuild the Philadelphia market. Appellees’ Br. 34-35. Comcast contends instead that RCN faced financial woes, as a result of which it abandoned its plans to overbuild. Appellants’ Br. 24-28. The District Court credited Plaintiffs’ explanation: “What Dr. Teece considers ‘unlikely,’ Dr. Singer considers to be the common evidence of antitrust impact, namely that RCN was stymied in its efforts by Comcast‘s predatory behavior.” Behrend, 264 F.R.D. at 175. Again, we are satisfied that the District Court‘s finding was not clearly erroneous. “Where there are two permissible views of the evidence, the fact-finder‘s choice between them cannot be clearly erroneous.” Anderson, 470 U.S. at 574. Here there are two permissible views of the evidence and we will not disturb the District Court‘s finding.
Similarly, Comcast contends that Dr. Williams‘s analysis and methodology was flawed for various reasons, including the allegation that it was unsupported by any actual evidence. We disagree. As detailed above, there was ample evidence that clustering conduct can deter entry of overbuilders and result in higher cable prices. Dr. Williams and Dr. Singer examined evidence specific to Comcast‘s activities in the Philadelphia market, as well as numerous independent studies on the effects of cable clustering, to reach their conclusions. Comcast cites various cases for the proposition that “expert theory is not a substitute for market facts.” See, e.g., Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 242, 113 S.Ct. 2578, 125 L.Ed.2d 168 (1993) (expert opinion rendered unreasonable by indisputable record facts); In re New Motor Vehicles Canadian Export Antitrust Litig., 522 F.3d 6, 27 (1st Cir.2008) (expert analysis unfinished and “purely conclusory“); In re Baby Food Antitrust Litig., 166 F.3d 112, 135 (3d Cir.1999) (“An expert opinion based on ... meager superficial information ... is highly speculative, unreliable, and of dubious admissibility.“). Although expressing a correct legal precept, those cases addressed situations in which the experts largely failed to tie their theories to any evidence; the precept therefore does not apply to this case in
Comcast also asserts that every individual had one or two options from which to choose cable and that consequently only the name of the provider changed, not the number of options. This assertion completely overlooks the nature of the claims of the class: by clustering, Comcast was able to deter the entry of overbuilders, which resulted in higher prices for all non-basic Comcast subscribers. And Plaintiffs provided evidence that clustering can have this effect. In short, the District Court‘s task was to weigh expert testimony and make a determination, Hydrogen Peroxide, 552 F.3d at 323, and we discern no error in the Court‘s determination that Dr. Williams‘s analysis demonstrated that class-wide antitrust impact was susceptible to common proof.
As to Comcast‘s remaining contention that the District Court erred by crediting as evidence of class-wide impact the alleged conduct targeted at RCN Telecom Services, Inc., in Delaware County, we agree with the class that the alleged conduct is relevant to establishing class-wide impact. We have explained that “courts must look to the monopolist‘s conduct taken as a whole rather than considering each aspect in isolation.” LePage‘s Inc. v. 3M, 324 F.3d 141, 162 (3d Cir.2003) (en banc) (citing Cont‘l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 699, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962)). Alleged specific conduct aimed at preventing the entry of an overbuilder anywhere in the Philadelphia DMA supports Plaintiffs’ allegations of Comcast‘s ability to maintain supra-competitive prices for the entire market.
VIII.
At bottom, Comcast misconstrues our role at this stage of the litigation. Comcast would have us decide on the merits whether there was actual or potential competition among the Transaction parties, the reason RCN Telecom Services, Inc., abandoned the Philadelphia market, and whether Plaintiffs’ experts proved antitrust impact. We are not the jury. Although in Hydrogen Peroxide we heightened the inquiry a district court must perform on the issue of class certification, nothing in that opinion indicated that class certification hearings were to become actual trials in which factual disputes are to be resolved. Indeed, as we explained in Hydrogen Peroxide, a district court may inquire into the merits only insofar as it is “necessary” to determine whether a class certification requirement is met. 552 F.3d at 316. Eisen still precludes any further inquiry. See Eisen, 417 U.S. at 178 (“[T]he question is not whether the plaintiff or plaintiffs ... will prevail on the merits, but rather whether the requirements of Rule 23 are met.” (quoting Judge Wisdom‘s holding in Miller v. Mackey Int‘l, Inc., 452 F.2d 424, 427 (5th Cir.1971))); Hydrogen Peroxide, 552 F.3d at 317 (”Eisen is best understood to preclude only a merits inquiry that is not necessary to determine a Rule 23 requirement.“). We allow preliminary merits inquiries when necessary for
In sum, we hold that the District Court‘s determination—that Plaintiffs have demonstrated by a preponderance of the evidence that they can establish class-wide antitrust impact through common evidence—did not exceed its discretion.
IX.
To satisfy another portion of the predominance requirement, Plaintiffs must establish that the alleged damages are capable of measurement on a class-wide basis using common proof. See Hydrogen Peroxide, 552 F.3d at 311, 325-326; cf. Newton, 259 F.3d at 187 (stating that the “Herculean task” of calculating individual damages from hundreds of millions of different transactions “counsels against finding predominance“). The District Court concluded that Plaintiffs, through their expert Dr. McClave, provided a damages model based on a common methodology available to measure and quantify damages on a class-wide basis. Behrend, 264 F.R.D. at 191. Comcast assails that determination as an abuse of discretion.
A.
The District Court examined the methodology, conclusions, and criticisms of the experts on both sides, before providing its conclusions. 264 F.R.D. at 181-191. (Comcast does not contest that the Court performed the “rigorous analysis” required by Hydrogen Peroxide.) Because on appeal Comcast renews the arguments it made to the District Court, we set forth each side‘s position in the District Court and the Court‘s response.
Plaintiffs’ damages expert, Dr. McClave, concluded that the prices in the Philadelphia market were consistently and substantially higher than the prices in areas of effective competition. 264 F.R.D. at 181. His econometric analysis demonstrated that the alleged antitrust impact was class-wide, because the prices were elevated above competitive levels across all class members and for the entire time period. Id. For his methods, Dr. McClave constructed “but-for” prices against which to compare the prices Comcast charged in the Philadelphia DMA. “But-for” prices are those that would have existed absent the alleged anticompetitive conduct. To construct the “but-for” prices, he first selected comparable “benchmark” counties around the country by applying two “screens” to determine whether the coun-
Comcast‘s experts, Dr. Teece and Dr. Tasneem Chipty, contested several parts of Dr. McClave‘s methodology, and questioned his results. 264 F.R.D. at 183. First, they challenged both benchmark screens used by Dr. McClave. Regarding the “DBS screen,” Dr. Teece asserted that Dr. McClave erroneously chose the higher national Direct Broadcast Satellite penetration rate, instead of the lower regional rate predicted by Plaintiffs’ experts Dr. Singer and Dr. Williams. The District Court rejected the critique, stating that Dr. McClave “used his national average DBS penetration screen as a descriptor of typical competitive market conditions,” and was not attempting to predict the Direct Broadcast Satellite penetration rate of the Philadelphia DMA. Id. at 184. Regarding the “market share screen,” Dr. Chipty contended that because Comcast was present in only a few counties in 1999, its actual market share was much higher in the counties where it was and 0% where it was not; as a result, the less-than-40% penetration rate provided an inappropriate screen. App. 03833. The District Court rejected the criticism as unsupported by the record, stating that Dr. Chipty should have presented evidentiary data to show that 40% was an incorrect midpoint estimate or average rate. 264 F.R.D. at 184. The Court also noted that the 40% screen was supported by the evidence as Comcast‘s approximate share of the Philadelphia DMA at the midpoint of the class period. Id. at 184 n. 43.
Second, Dr. Chipty faulted Dr. McClave‘s model for failing to consider properly demographic variables among the
counties: specifically, for omitting the variables of population density and the number and type of households. The District Court credited as well-supported Dr. McClave‘s response as to why he omitted population density: it is correlated with medium household income (which he included) and using it as well as household income would create confounding and unreliable results. 264 F.R.D. at 185-186. Additionally, according to Dr. McClave, adding it would mask the effects of anticompetitive influences because higher population density results in lower costs per subscriber. Id. at 185. The Court noted that Dr. Chipty‘s use of population density as a variable resulted in it being positive and statistically significant in one model but negative and statistically significant in another. Id. at 186. Moreover, the Court added that Federal Communications Commission and Government Accountability Office studies included population density but found it was not a statistically significant variable. Id.Third, Dr. Chipty criticized Dr. McClave‘s model for comparing list prices for expanded basic cable in the Philadelphia DMA against the benchmark counties. She opined that Dr. McClave‘s model did not take into account the significant number of promotions and discounts offered to Comcast customers. Id. at 187. Dr. Chipty offered several rebuttal models that included population density and discounted prices, which resulted in significantly lower or even negative damages. The Court rejected Dr. Chipty‘s models as “suffer[ing] significant flaws.” Id. at 188, 189. It stated that Dr. McClave‘s model accounted for discount prices in the formula (not model) when he multiplied anticompetitive overcharge by Comcast‘s relevant revenues (because Comcast receives revenue only for prices charged, the revenue side of the formula by definition includes discount prices). Accordingly, by adding discount prices to the model as well, Dr. Chipty‘s model doubly counted the discount. The Court also noted that, as Dr. McClave explained, more than 80% of Comcast‘s customers pay list price for expanded basic cable, and discounts from list prices are temporary (after which they return to list price). As to another of Dr. Chipty‘s models, which calculated damages through direct calculations instead of multiple regression, the Court rejected it in the words of Dr. McClave as a “novel and non-standard formula for calculating damages.” Id. at 189.
Fourth, the District Court rejected Dr. Chipty‘s attempt to impeach Dr. McClave‘s model by using it to calculate damages for basic cable prices, instead of expanded basic cable. Id. at 190. The Court explained that Dr. McClave‘s model aimed to analyze only expanded basic cable, because Comcast alters its prices at the expanded level, so “any application of the McClave model to [basic cable prices] explains nothing.” Id. Comcast does not contest that ruling.
Fifth and finally, the Court asked the parties after the hearing how to interpret Dr. McClave‘s damages model if it credited at least one, but not all, of Dr. Williams‘s four theories of antitrust impact. Id. It determined that Dr. McClave‘s damages model was still viable, even if it rejected some theories of antitrust impact, explaining that Dr. McClave selected benchmarks to isolate the effect of anticompetitive conduct, and that his use of the DBS screen was “entirely unrelated” to Dr. Williams‘s DBS foreclosure theory. Id. The Court concluded that Dr. Williams‘s theories of antitrust impact were not relevant to Dr. McClave‘s methods of choosing benchmarks because “[a]ny anticompetitive conduct is reflected in the Philadelphia DMA price, not in the selection of the comparison counties.” Id. at 191.
Comcast contends that the District Court exceeded its discretion in accepting Plaintiffs’ proposed damages calculation methodology. Its arguments are recast versions of those rejected by the District Court. First, Comcast contends that Dr. McClave‘s damages theory was based on all of Plaintiffs’ alleged anticompetitive effects, but the District Court rejected three of Plaintiffs’ four theories. Because Dr. McClave stated that his model was based on the cumulative effect and could not isolate damages for individual theories of harm, according to Comcast the District Court erred in accepting the damages model. Second, Comcast asserts that the economic assumptions underlying the damages model lack foundation in the record evidence. According to Comcast, both screens employed by Dr. McClave are factually unsupported and economically unsound: the “DBS penetration screen” because the Court rejected Dr. Williams‘s Direct Broadcast Satellite foreclosure theory, and the “market share screen” because it bears no relation to the conditions that would have existed in the Philadelphia region but for the complained-of conduct. Third, Comcast contends that the damages model is flawed because it fails to include population density as a variable, and because it calculates damages based on list prices, which fails to consider the discounted prices that some subscribers actually pay.12
Plaintiffs remind us that the District Court already thoroughly considered and rebutted each of the points that Comcast now raises. As to the specific contentions, first, the class asserts that the District Court explicitly held that Dr. McClave‘s model was suitable for calculation of damages on all or individual theories of liability. Second, the class emphasizes that the damages model provides a methodology that can establish damages on a class-wide basis using common proof, and that Comcast ignores the proper inquiry at class certification and instead prematurely attacks the merits of the model. As a result, Comcast‘s arguments concerning the benchmarks miss the point. Third, the class asserts that Dr. McClave had ample justification to omit population density as a variable, and that the damages model incorporates discount prices.
Χ.
We pause to identify the forest for the trees. If allowed to proceed to trial, the class must establish that the injury it suffered from the violation of the antitrust laws is measurable. See Hydrogen Peroxide, 552 F.3d at 311; see also Newton, 259 F.3d at 188 (“Proof of injury (whether or not an injury occurred at all) must be distinguished from calculation of damages (which determines the actual value of the injury).“). The usual measure in an overcharge case “is the difference between the illegal price that was actually charged and the price that would have been charged ‘but for’ the violation multiplied by the number of units purchased.”
The inquiry for a district court at the class certification stage is whether the plaintiffs have demonstrated by a preponderance of the evidence that they will be able to measure damages on a class-wide basis using common proof. See Hydrogen Peroxide, 552 F.3d at 325. Some variation of damages among class members does not defeat certification. See
It is true that the validity of plaintiffs’ theory is a common disputed issue. It will be for the fact finder to decide whether this theory is persuasive. At the class certification stage, however, the district court must still ensure that the plaintiffs’ presentation of their case will be through means amenable to the class action mechanism. We are looking here not for hard factual proof, but for a more thorough explanation of how the pivotal evidence behind plaintiff‘s theory can be established. If there is no realistic means of proof, many resources will be wasted setting up a trial that plaintiffs cannot win.
In re New Motor Vehicles Canadian Export Antitrust Litig., 522 F.3d 6, 29 (1st Cir.2008) (citation omitted); see also
On appeal, the inquiry narrows. Because the District Court held that Plaintiffs had established they could measure damages through common proof, we examine whether that determination was beyond the Court‘s discretion. Having identified the forest of law, we proceed to scrutinize the timber that Comcast faults as rotted.
A.
Comcast contends that Dr. McClave‘s model cannot isolate damages for individual theories of harm, and that it therefore cannot distinguish between lawful and unlawful competition. Comcast cites Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1353 (3d Cir.1975), and Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1057 (8th Cir.2000). In both cases, following adverse jury verdicts, the courts held that the experts’ theories of damages were “speculation“—not “just and reasonable inferences“—because the models did not distinguish between the effects of lawful and unlawful competition. In Coleman, we quoted the guidepost of Story Parchment: “The rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount.” Coleman, 525 F.2d at 1353 (quoting Story Parchment, 282 U.S. at 562, 51 S.Ct. 248).
We are not persuaded by Comcast‘s argument. To measure damages, Dr. McClave used screens to select and average benchmark counties against which to compare the actual Philadelphia market. The screens themselves were not intended to calculate damages, but instead to construct an estimated competitive “but-for” Philadelphia market (a market absent the alleged anticompetitive conduct). For example, although the screens incorporated Direct Broadcast Satellite penetration rates, those rates were included to estimate typical competitive market conditions, not to calculate liability for the foreclosure of DBS competitors.14 The model then calculates damages by comparing actual prices to the constructed “but-for” market. Differences between actual prices and “but-for” prices reflect anticompetitive impact. In other words, the model calculates supra-competitive prices regardless of the type of anticompetitive conduct. Further, the model uses standard econometric methodology to calculate damages. See generally
As a result, if the class proves at trial that Comcast engaged in anticompetitive
Additionally, the cases that Comcast offers are distinguishable on multiple grounds. Most to the point, those cases considered the merits of experts’ theories following adverse jury verdicts; here, we address only whether Plaintiffs have provided a method to measure and quantify damages on a class-wide basis. We have not reached the stage of determining on the merits whether the methodology is a just and reasonable inference or speculative. And, to the extent Comcast worries about distinguishing between lawful and unlawful conduct, Dr. McClave‘s damages methodology does not suffer from the defects present in those cases because it constructs a competitive “but-for” world that includes lawful competition, not a hypothetical one bereft of both lawful and unlawful competition. See Concord, 207 F.3d at 1056-1057 (model was “mere speculation” because it ignored inconvenient evidence, failed to account for external market events, and did not incorporate economic reality of market); Coleman, 525 F.2d at 1352-1353 (model premised on hypothetical world without even lawful competition).16
B.
Comcast‘s remaining arguments contest specific parts of Dr. McClave‘s damages methodology. These contentions are a renewal of those it made to the District Court, each of which the Court rejected. For those determinations to be beyond the Court‘s discretion, Comcast must convince us that the Court‘s acceptance of the pieces of Dr. McClave‘s methodology was clearly erroneous.
At the outset, we agree with the class that the heart of Comcast‘s arguments are
Plaintiffs have provided a common methodology to measure and quantify damages on a class-wide basis. The District Court acted within its discretion in so finding.18
XI.
The District Court certified the class for resolution of four claims. Comcast contends that the District Court erred by certifying the following claim:
Whether Defendants conspired with competitors, and whether Defendants entered into and implemented agreements with competitors, to allocate markets, territories, and customers for cable television services; and whether such conduct is a per se violation, or whether it constitutes a restraint of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
App. 00031 (emphasis added). According to Comcast, the District Court lacked any legal authority to certify a per se claim based on the class‘s allegations.
This is a merits issue beyond the scope of our Rule 23(f) jurisdiction. Comcast misconstrues the District Court‘s certification order. The 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. See McKowan Lowe & Co. v. Jasmine, Ltd., 295 F.3d 380, 390 (3d Cir.2002) (describing the “scrupulous” limits of Rule 23(f) jurisdiction). Comcast appeals from the District Court‘s determination that questions of law or fact common to class members predominate, which was the only issue before the District Court. See App. 00029 (District Ct. Certification Order) (“The only class certification element that remained in dispute was the requirement of Fed.R.Civ.P. 23(b)(2) that common issues of law and fact predominate.“). Comcast itself stipulated as much. See App. 00436 (Comcast Letter to the District Ct., Mar. 25, 2009) (“With respect to the issues to be addressed in a new class certification motion, Comcast is prepared to stipulate that the only issues to be resolved are those of antitrust impact and methodology of damages....“). Comcast‘s request to have us declare on the merits that Plaintiffs cannot establish a per se antitrust violation is beyond the scope of the certification decision from which Comcast appeals pursuant to Rule 23(f). Accordingly, we do not reach this contention.
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We have considered carefully all the contentions presented by the parties. Plaintiffs have demonstrated that this case can proceed as a class action. Comcast has not carried its burden to convince us otherwise. Accordingly, we will AFFIRM in all respects the District Court‘s Order certifying the class.
JORDAN, Circuit Judge, concurring in the judgment part and dissenting in part.
I agree with the Majority‘s conclusion, though not its reasoning, with respect to the question of antitrust impact, and I therefore join in holding that the District
But because I conclude that damages cannot be proven using evidence common to that entire class, I would vacate the certification order to the extent it provides for a single class as to proof of damages, and I would remand the case to the District Court to consider whether the class can be divided into subclasses for the purpose of proving damages.2
As the Majority explains, Plaintiffs’ claims have three elements, (1) an antitrust violation, (2) antitrust impact, and (3) damages (see Op. at 190 (citing In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311 (3d Cir.2008))).3 In pursuing its motion to decertify the initial class, however, Comcast effectively conceded that there was predominance with respect to the element of an antitrust violation, stipulating that it was contesting only “the Rule 23(b) issues of predominance of the common issues of (1) antitrust impact and (2) methodology of damages.” (App. at 438.) When the District Court granted Comcast‘s motion,4 it accepted that stipulation and instructed the parties that, moving forward, they “need only address these discrete issues.” (Id.) On appeal, after the District Court once more certified a class, Comcast has again limited its arguments to addressing predominance as to impact and damages. We are therefore faced with two related questions: First, whether the District Court abused its discretion by holding that, as required by
I. Whether Antitrust Impact Can Be Proven Using Evidence Common To The Class
In seeking class certification, Plaintiffs initially presented four theories of antitrust impact.6 The District Court rejected three of them,7 leaving Plaintiffs with only a single theory of antitrust impact: that Comcast‘s clustering reduced overbuilding8 and, therefore, increased prices.
Much confusion has been caused in this case by the conflation of two distinct concepts: the antitrust concept of “relevant geographic market,” which has traditionally been defined as the smallest area within which a monopolist can exercise market power,10 and the class action concept of a “class definition,” which gives the parameters of a set of plaintiffs as to whom the elements of a claim can be proven using common evidence.11 Because, in this case, the class definition includes a geographic component, the term “relevant geographic market” has been used equivocally by the parties, the District Court, and the Majority to describe both the area affected by antitrust impact and the area within which potential class members reside—the latter area being what I will call, for lack of a better term, the “class region.”12 The problem with that equivocal usage is that
While the relevant geographic market and the class region are conceptually distinct,13 the Majority, like the District Court, initially attempts to identify the class region in terms of the relevant geographic market. Unlike the District Court, however, the Majority decides that because “[d]efining the relevant geographic market... is an issue of the merits,” the question of the relevant geographic market is “not properly before us.” (Op. at 191-93.)
The Majority is correct that defining the relevant geographic market is not a task we need to undertake at this stage, but that is not because the task takes us into the merits. It is rather because, regardless of whether there are one or many relevant geographic markets associated with the Philadelphia DMA, the question before us at this juncture is whether there is some class, in this case defined geographically, that can be shown, through common evidence, to have experienced elevated prices as a result of reduced overbuilding because of Comcast‘s clustering. Should that region include only those franchise areas involved in the Cable System Transactions?14 Should it include only those franchise areas in which RCN was licensed to overbuild, but did not? Should it encompass the Philadelphia DMA or some lesser or greater area? The Majority does not ask those questions, but, instead, after determining that Plaintiffs can attempt to prove that the relevant geographic market is the Philadelphia DMA, the Majority assumes that that also means that the class is properly defined to cover the Philadelphia DMA and, therefore, that Plaintiffs can prove by common evidence that clustering reduced overbuilding and increased prices throughout the DMA. (See, e.g., Op. at 206 n. 16 (dismissing Comcast‘s argument that overbuilding should be analyzed at the franchise level because “Plaintiffs have established that the relevant geographic market can be the Philadelphia DMA“).) Fortunately, what the Majority assumes, namely that the Philadelphia DMA is the appropriate class region for proving antitrust impact, is supportable.
A compelling argument could be made that the class should consist only of those people living in franchise areas where RCN was licensed to overbuild, because
The Majority also asserts that there is no question about the class region because Comcast does not dispute the class region but disputes only the relevant geographic market. (Op. at 195 n. 8.) That is not correct. While Comcast does not use the term “class region,” Comcast and its experts plainly argue that the scope of the class is too broad, and they dispute the District Court‘s conclusion that antitrust impact can be proven by common evidence across the Philadelphia DMA. (See, e.g., App. at 3923 (Teece Reply Dec.)) (“[E]ven if RCN would have overbuilt all five counties entirely in the but-for world, this would not be sufficient to conclude that the impact of the challenged conduct would have affected all Comcast customers in the Philadelphia DMA.“); id. at 3922 (“I have seen no evidence that RCN ever intended to build out the entire Philadelphia DMA.“); Appellants Br. at 33 (arguing that Dr. Williams‘s models do not show that clustering “deterred overbuilding... in a manner affecting all class members“); id. at 24-25 (noting that RCN was licensed in only five counties and arguing that Plaintiffs cannot prove that RCN would have entered the Philadelphia DMA). While I do not agree with Comcast‘s effort to define the class region by reference to the relevant geographic market (any more than I agree with the Majority‘s conflating of those concepts), to say that Comcast does not dispute the contours of the class region is not accurate, as the foregoing citations indicate.
However, even if Comcast had not disputed the class region, it would still be appropriate for us to address it. The Majority faults me for, in its view, addressing problems not raised by Comcast, which the Majority asserts are, therefore, waived. (See, e.g., Op. at 202-03 n. 12) (“[T]he Concurrence-Dissent raises multiple arguments... not addressed by Comcast‘s expert.... We must limit our review to the issues presented by Appellants and Appellees.“). But “there can be no waiver... of the Judge‘s duty to apply the correct legal standard.... This is particularly true in the class action context, where ‘the district court acts as a fiduciary who must serve as a guardian of the rights of absent class members.‘” In re Cmty. Bank of N. Virginia, 622 F.3d 275, 302 n. 20 (3d Cir.2010) (quoting United States v. Ali, 508 F.3d 136, 144 n. 9 (3d Cir.2007) and In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 785 (3d Cir.1995)). Thus, where Comcast has raised the issues of whether there is predominance with respect to antitrust impact and damages, we are required to “apply the correct legal standard,“—which is to determine whether those elements can, in fact, be proven using evidence common to the class—even if that requires us “‘to conduct [our] own thorough [R]ule 23[b] inquiry.‘” Id. (quoting Stirman v. Exxon Corp., 280 F.3d 554, 563 n. 7 (5th Cir.2002)). By disregarding the problems I have endeavored to identify, the result is an overly broad class definition and, to the extent any legitimate claims are proven, a likely dilution of recovery. Our fiduciary responsibility to absent class members requires that we ensure compliance with the provisions of Rule 23, especially those “‘designed to protect absentees by blocking unwarranted or overbroad class definitions.‘” Id. at 291 (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997)); cf. Tri-M Group, LLC v. Sharp, 638 F.3d 406, 416 (3d Cir.2011) (“[T]he waiver principle is only a rule of practice and may be relaxed whenever the public interest or justice so warrants.“).
Moreover, we must be cognizant of “the pivotal status of class certification in large-scale litigation,” which is “often the defining moment in class actions (for it may sound the ‘death knell’ of the litigation on the part of plaintiffs, or create unwarranted pressure to settle nonmeritorious claims on the part of defendants).” Hydrogen Peroxide, 552 F.3d at 310 (internal quotation marks omitted). Pointing out analytical problems central to the certification question is no frolic and detour. It is our obligation.
II. Whether Damages Can Be Proven Using Evidence Common To The Class
I part ways with the Majority entirely, however, when it comes to class-wide proof of damages. The only evidence supporting Plaintiffs’ claim that damages can be proven using evidence common to the class is the expert opinion of Dr. McClave. But, as detailed hereafter, Dr. McClave‘s testimony is incapable of identifying any damages caused by reduced overbuilding in the Philadelphia DMA. Consequently, his testimony is irrelevant and should be inadmissible at trial, pursuant to
Even without the guidance of Dukes and Hydrogen Peroxide, simple logic indicates that a court may consider the admissibility of expert testimony at least when considering predominance. A court should be hard pressed to conclude that the elements of a claim are capable of proof through evidence common to a class if the only evidence proffered would not be admissible as proof of anything.
I recognize, of course, that in neither the District Court nor before us did Comcast describe its challenge to certification as a challenge to the admissibility of Dr. McClave‘s testimony. Nonetheless, while it did not use the language of Daubert, the substance of Comcast‘s challenge was that Dr. McClave‘s damages testimony was irrelevant and, therefore, did not fit the case. (See, e.g., Appellants’ Br. at 37) (“Dr. McClave admitted that his damages model takes all of the anticompetitive effects of all of the complained-of conduct as a whole, and therefore cannot isolate damages attributable to specific conduct or effects.“); id. at 42 (“Dr. McClave‘s DBS penetration screen is substantively invalid because it bears no relation to the competitive conditions that would have prevailed in the Philadelphia region.“); id. at 43 (“Dr. McClave‘s ‘market share’ screen is likewise invalid because it bears no relation to the competitive conditions that would have pre-vailed in the Philadelphia region.“). The Majority protests my invocation of Daubert, but, regardless of whether we frame the issue as a question of fit under Daubert or simply ask whether the District Court abused its discretion by relying on irrelevant evidence, we are effectively asking the same question. I have chosen the terminology of Daubert because it is particularly apt for describing the difficulty created by the change in Plaintiffs’ theory of impact and the consequent disconnect between that altered theory and Dr. McClave‘s expert report. The short of it is, Dr. McClave‘s model no longer fits the case. This observation is not, as the Majority fears, either an invitation or a demand for mini-trials in conjunction with class certification motions.
I note here as well my disagreement with the Majority‘s claim that, at the class certification stage, we need only “evaluate expert models to determine whether the theory of proof is plausible.” (Op. at 204 n. 13.) The Majority supports that position by quoting Hydrogen Peroxide‘s statement that “‘if such impact is plausible in theory, it is also susceptible to proof at trial through available evidence common to the class.‘” (Id. (quoting Hydrogen Peroxide, 552 F.3d at 325).) That quotation is better understood, however, if one includes the first half of the quoted sentence, which states that “the question at class certification is whether, if such impact is plausible in theory, it is also susceptible to proof at trial through available evidence common to the class.” 552 F.3d at 325 (emphasis added). Thus, Hydrogen Peroxide does not suggest that we need only “evaluate expert models to determine whether the theory of proof is plausible,” as the Majority claims. To the contrary, Hydrogen Peroxide instructs that, even where a theory is plausible, “the question at class certification is whether” that plausible theory is susceptible to common proof. Id. If the only common proof offered is inadmissible expert testimony, then Plaintiffs have not met their burden of showing that the theory—plausible or not—is capable of common proof.
As explained by the Majority, Dr. McClave arrived at his damages calculation by comparing actual cable prices in the Philadelphia DMA to prices in benchmark counties outside the Philadelphia DMA. By making those comparisons, Dr. McClave sought to identify the “but for” price of cable—that is the price that would have prevailed in the Philadelphia DMA but for the alleged anticompetitive conduct of Comcast. (App. at 3407 (McClave Dec.).) For that comparison to be relevant, however, Dr. McClave‘s benchmark counties must reflect the conditions that would have prevailed in the Philadelphia DMA in the absence of any impact from
Dr. McClave‘s benchmark counties fail in that regard because he formulated his model at a time when Plaintiffs had four separate theories of antitrust impact, and so he did not select his benchmark counties to isolate the impact of reduced overbuilding. He chose them, as one would expect, to reflect the impact of other conditions in addition to reduced overbuilding. Consequently, as described in greater detail below, once the District Court rejected Plaintiffs’ other theories of antitrust impact—leaving only the reduced-overbuilding theory—Dr. McClave‘s model no longer fits Plaintiffs’ sole theory of antitrust impact and, instead, produces damages calculations that “are not the certain result of the wrong.” Story Parchment, 282 U.S. at 562, 51 S.Ct. 248.20
A. Dr. McClave‘s Benchmark Counties Do Not Reflect “But For” Conditions in the Philadelphia DMA
To identify his benchmark counties, Dr. McClave used three “screens.” First, he screened for counties where Comcast‘s market share was “less than 40%,” because that figure identified “markets where Comcast is likely to have less market power than it has acquired in the Philadelphia market.” (App. at 3410 (McClave Dec.).) Second, he screened for counties where DBS penetration21 was “at or above the national average” because “DBS... penetration was allegedly constrained by the anticompetitive behavior of Comcast.” (Id.) Third, having identified counties in which Comcast‘s share was less than 40 percent and DBS penetration was above the national average, Dr. McClave screened for overbuilding, identifying “each of the benchmark counties... as either overbuilt or not overbuilt.” (App. at 3411-12 (McClave Dec.).)22 While those screens might, if properly employed, have helped identify relevant benchmark counties in a case involving antitrust impacts beyond limited overbuilding, they fail to identify the “but for” conditions that are relevant to what is now the only impact of Comcast‘s allegedly anticompetitive conduct, namely the deterrence of overbuilding. They, therefore, cannot help identify damages caused by that impact. I examine the screens in reverse order.
While there are several problems in Dr. McClave‘s opinion that reflect the lack of fit, nothing demonstrates it with more certainty than this: For thirteen of the eighteen counties in the Philadelphia DMA, Dr. McClave‘s opinion does not even attempt to show that there were elevated prices resulting from reduced overbuilding. In fact, he assumes that there was no such effect.
As noted above, after identifying his benchmark counties using the market share and DBS penetration screens, Dr. McClave used a third screen to divide those counties into two groups, identifying “each of the benchmark counties... as either overbuilt or not overbuilt.” (App. at 3411-12 (McClave Dec.).) Having done so, Dr. McClave estimated “but for” competitive prices, by comparing, on a county by county basis, prices in the eighteen actual Philadelphia DMA counties to prices in either the “overbuilt” or “not overbuilt” benchmark counties, and crucially—he did so “assum[ing] that only the five counties that RCN indicated it planned to enter as an overbuilder would have been overbuilt.” (App. at 3412 (McClave Dec.).) At the outset, therefore, it is clear that Dr. McClave assumed that elevated prices resulting from reduced overbuilding would be present in only five of the eighteen Philadelphia counties. Dr. McClave then explained that, after making his calculations, “the overbuilt factor indicate[d] lower prices [in his model] in counties where the overbuilding factor [was] present.” (App. at 3422 (McClave Dec.) (emphasis added).) Thus, Dr. McClave‘s model assumes that elevated prices from reduced overbuilding could be present only in the five counties “that RCN indicated it planned to enter,” and the model did, in fact, identify elevated prices from reduced overbuilding only in those counties. (App. at 3412, 22 (McClave Dec.).) For the remaining counties, while there may be some uncertainty as to what exactly caused any elevated prices, this much is certain: the elevated prices identified by Dr. McClave in those thirteen counties were, according to Dr. McClave himself, the result of something other than reduced overbuilding. Consequently, any “damages” identified by Dr. McClave with respect to those thirteen counties are “uncertain damages... [that] are not the certain result of [reduced overbuilding],” and “may be substantially attributable to lawful competition.” Coleman Motor, 525 F.2d at 1353 (quoting Story Parchment, 282 U.S. at 562, 51 S.Ct. 248).
Because Plaintiffs have been limited by the District Court to an overbuilding theory of antitrust impact, any price elevation resulting from a source other than reduced overbuilding is simply irrelevant. Thus, not only have Plaintiffs failed to show that damages can be proven using evidence common to the class, they have failed to show, for thirteen counties in the Philadelphia DMA, that damages can be proven using any evidence whatsoever—common or otherwise. Perhaps, in those other counties, there is a way to show damages resulting from reduced overbuilding, but, if so, Plaintiffs have not identified it. As the burden lies with Plaintiffs to establish predominance, that alone should compel us to vacate the District Court‘s certification order with respect to class-wide proof of damages.23
Dr. McClave screened for counties where DBS penetration was at or above the national average because “DBS... penetration was allegedly constrained by the anticompetitive behavior of Comcast.” (App. at 3410 (McClave Dec.).) Using that screen would have been appropriate if, as Plaintiffs originally argued and as Dr. McClave was originally informed, DBS penetration had been constrained by Comcast‘s anticompetitive conduct. But, as the District Court explicitly held, Plaintiffs failed to tie “Comcast‘s clustering activity in the Philadelphia DMA to reduced DBS penetration.” Behrend, 264 F.R.D. at 165. Consequently, there is no evidence in the record suggesting that DBS penetration in the Philadelphia DMA was in any way affected by Comcast‘s allegedly anticompetitive conduct. Rather, the District Court found that, while DBS penetration in Philadelphia was well below the national average, the cause of that reduced penetration—Comcast‘s refusal to distribute Comcast SportsNet through DBS providers—“occurred prior to the class period,” is “unrelated to clustering,” is “based upon valid business considerations” and is “specifically permitted” by the FCC. Id.
Therefore, while DBS penetration in the Philadelphia DMA is below the national average, the cause of that reduced rate predated and is unrelated to Comcast‘s clustering and, thus, even in the absence of Comcast‘s allegedly anticompetitive conduct, DBS penetration in the Philadelphia DMA would be no different than the below average rate that has actually prevailed. As a result, any benchmark county used to identify “but for” conditions should use the
The Majority responds to this flaw only by stating that the DBS penetration screen was “included to estimate typical competitive market conditions, not to calculate liability for the foreclosure of DBS competitors.” (Op. at 205.) That explanation misses the mark. In identifying benchmark counties for use in a damages analysis, the goal is not to identify “typical competitive market conditions.” The goal is, and must be, to identify the conditions that would have existed “but for” Comcast‘s alleged anticompetitive conduct. In this case, even in the “but for” hypotheti-
3. The Market Share Screen
Dr. McClave screened for counties where Comcast‘s market share was “less than 40%,” because that figure represented the midpoint between Comcast‘s 20 percent share before the class period and its 60 percent share during the class period and so identified “markets where Comcast is likely to have less market power than it has acquired in the Philadelphia market.” (App. at 3410 (McClave Dec.).) Under Plaintiffs’ last viable theory of antitrust impact, however, while Comcast‘s market share is relevant to the question of whether there has been any reduction in overbuilding, it is not relevant—at least not in isolation—to determining the damages caused by that reduction. Instead, the relevant market share is the share that would have been held by any incumbent in the “but for” hypothetical world.
As an illustration of that point, consider a hypothetical county with two equally sized franchise areas. Assume that, prior to the class period, Comcast had a 100 percent share of one franchise area and that AT & T had a 100 percent share of the other, so that each had a 50 percent share of the county as a whole. Assume further that, as part of its clustering efforts, Comcast acquired AT & T‘s franchise area so that, today, Comcast has a 100 percent share of the entire county. To test the theory that clustering reduces overbuilding, a comparison between Comcast‘s current 100 percent share of the county and the 50 percent share that Comcast would have had but for its clustering would surely be relevant in determining whether clustering effected any reduction in overbuilding.
Next, assume that, after making that comparison, Plaintiffs could show that, had no clustering taken place, RCN would have overbuilt 20 percent of each of the two franchise areas, so that, in the “but for” world, RCN would have a 20 percent share in each franchise area, and Comcast and AT & T would each have an 80 percent share in their respective franchise area. Pursuant to Plaintiffs’ only theory—that increased overbuilding decreases prices—any damages in that scenario arise solely from the difference between RCN‘s 20 percent share in the “but for” franchise areas and RCN‘s zero percent shares in the current franchise areas. The damages resulting from that foregone overbuilding are the same whether, in the “but for” world, the remaining 80 percent of the franchise in question would have been controlled by Comcast or by AT & T. It follows, therefore, that once the antitrust impact of Comcast‘s clustering—i.e., the reduction in overbuilding—has been identified and accounted for as part of an overbuilding screen, any market share screen applied to isolate the “but for” conditions that would have prevailed in the Philadelphia DMA should screen not just for Comcast‘s share, but for the share of whatever incumbent would have been present but for the clustering.26
Because none of Dr. McClave‘s screens reflect the conditions that would have prevailed in the Philadelphia DMA “but for” any reduction in overbuilding, the damages Dr. McClave calculated are “not the certain result of the wrong.” Story Parchment, 282 U.S. at 562, 51 S.Ct. 248. Accordingly, Dr. McClave‘s opinion cannot help a jury determine damages, and so would be inadmissible at trial for lacking fit. Because Dr. McClave‘s opinion is the only evidence Plaintiffs have offered to meet their burden of showing that damages can be proven using evidence common to the class, I would vacate the District Court‘s class certification with respect to class-wide proof of damages.28
B. Damages Are Not Capable of Being Proven By Evidence Common to the Entire Class
While my thoughts thus far have focused on why Plaintiffs have not met their burden of showing that damages can be proven using evidence common to the class, none of the problems I have noted are necessarily irreparable. That is, Dr. McClave could conceivably redesign his model to address overbuilding throughout the Philadelphia DMA, to use actual DBS penetration rates, and to screen for the market share of all incumbents, not just Comcast. Nevertheless, there remains an intractable problem with any model purporting to calculate damages for all class members collectively.
Central to Dr. McClave‘s damages model is the conclusion that the price of cable television service in any given franchise area is affected by the relative market shares of at least three entities: overbuilders, DBS providers, and incumbent cable providers. All else being equal, for example, areas that are overbuilt will have lower prices than areas that are not overbuilt, and areas with high DBS penetration will have lower prices than areas with low DBS penetration. For that reason, Dr. McClave‘s model identifies benchmark counties by screening for the relative market shares of those three entities.29 While I do not accept the manner in which Dr. McClave has measured the relative shares of those entities in the “but for” Philadelphia DMA, I accept the premise that the relative shares have significant influence on the price of cable television service.
If price does vary with the changes in relative share within a franchise area, however, it is hard to see how those 650 franchise areas30 can simply be treated as average for purposes of proving damages. The record indicates that, on the contrary, the “but for” market shares of overbuilders, DBS providers, and incumbent providers would vary, sometimes significantly, from franchise area to franchise area.
Addressing overbuilding first, RCN—the only party licensed to overbuild any part of the Philadelphia DMA—was licensed to overbuild in only five counties. (App. at 3640 (Williams Dec.); App. at 4284-85 (Singer Reply Dec.).) While Plaintiffs’ experts have opined that, had RCN successfully overbuilt those five counties, it would have continued overbuilding elsewhere, (App. at 4284-85 (Singer Reply Dec.)), any overbuilding into the other parts of the Philadelphia DMA would, it seems clear, have come later than the overbuilding of the five licensed counties. Thus, while some franchise areas might have been overbuilt early in the class period, other franchise areas would
Consider next DBS penetration. Dr. McClave testified that the DBS penetration rate he used for the Philadelphia DMA was an average for the DMA, but he also said that it was his understanding that “DBS penetration varies across the cluster here” and that it was “possible that some of the counties in the Philadelphia DMA in fact have penetration that‘s above the national median.” (App. at 729-30 (McClave Cross).) Thus, according to Dr. McClave, not only does DBS penetration vary across the Philadelphia DMA, but the variation is pronounced enough that some parts of the Philadelphia DMA have above national average DBS penetration despite the fact that the Philadelphia DMA, as a whole, has DBS penetration at only half the national average. Because DBS penetration was unaffected by Comcast‘s alleged anticompetitive conduct, see supra Part II(A)(2), DBS penetration in the “but for” Philadelphia DMA would likewise vary significantly from one franchise area to another.
Finally, with respect to the incumbents’ market share, the record gives little information regarding what the share of any non-Comcast incumbent would be in the “but for” world. We do know, though, that Comcast‘s share prior to clustering varied markedly from franchise area to franchise area. (See, e.g., App. at 3833 (Chipty Dec.) (stating that Comcast “had a zero percent share of housing units in the majority of counties” and, therefore, that “Comcast‘s share in the counties in which it was present was substantially higher than [its average market share]“); App. at 733 (McClave Cross) (testifying that, at the beginning of the class period, Comcast was present in “maybe half, maybe less of the counties” and that its share “in the counties where [it was] present” was probably higher than its average share)). And, where the other two components of market share—DBS penetration and overbuilding31—vary from one franchise area to another, it becomes a near mathematical certainty that the remaining portion of the franchise held by incumbent cable providers must likewise vary.32
The wide variation in the relative market shares evidenced by the record makes it hard to imagine a means of calculating class-wide damages. Even if Dr. McClave‘s benchmarks were not problematic, to say that Comcast‘s “but for” share of the market throughout the Philadelphia DMA would be, on average, 40% is about as meaningful as saying that “with one foot on fire and the other on ice, I am, on average, comfortable.”33 Given that the three major factors identified as influ-
This primary flaw in Dr. McClave‘s methodology—using a single set of assumptions for the entire Philadelphia DMA—cannot be fixed merely by altering his model. It seems to me that no model can calculate class-wide damages because any damages—such as they may be—are not distributed on anything like a similar basis throughout the DMA.35 Rather, where some class members might reside in a franchise area that would have been 50 percent overbuilt for the entire class period and other class members might reside in a franchise area that would have been only 5 percent overbuilt and only for a single year, or not overbuilt at all, it strains credulity to believe that the damages suffered by those individuals would all be the same as a result of reduced overbuilding. Yet Dr. McClave‘s model treats them as though they are the same.36
III. Conclusion
For the foregoing reasons, I would vacate the District Court‘s certification order to the extent it provides for a single class as to proof of damages and remand the case for the District Court to address whether Dr. McClave‘s model could, in fairness, be revised to accurately reflect the conditions that would have existed in the Philadelphia DMA in the absence of any reduction in overbuilding caused by clustering. I would further ask the District Court to consider whether the class certified for proving antitrust impact can be divided into appropriate subclasses for purposes of proving damages.
Keith LITMAN; Robert Wachtel, Individually and on behalf of all others similarly situated, Appellants,
v.
CELLCO PARTNERSHIP d/b/a Verizon Wireless.
No. 08-4103.
United States Court of Appeals, Third Circuit.
Argued Nov. 5, 2009.
Submitted Under Third Circuit
Filed: Aug. 24, 2011.
Notes
- The April 1998 acquisition of Marcus Cable and its 27,000 cable subscribers located in Harrington, Delaware, which is part of the Philadelphia DMA.
- The June 1999 acquisition of Greater Philadelphia Cablevision, Inc., a subsidiary of Greater Media, Inc., and its 79,000 cable subscribers located in Philadelphia.
- The January 2000 acquisition of Lenfest Communications, Inc. and more than 1.1 million cable subscribers located in Berks, Bucks, Chester, Delaware, and Montgomery counties in Pennsylvania, and New Castle County in Delaware.
- The January 2000 acquisition of Lenfest‘s ownership interests in Garden State Cablevision L.P. and its 212,000 customers located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Mercer, and Salem counties in New Jersey, which is part of the Philadelphia DMA.
- The December 2000 swap agreement with AT & T, wherein Comcast obtained cable systems and approximately 770,000 subscribers, including subscribers located in Eastern Pennsylvania (Berks and Bucks counties) and New Jersey. In exchange, AT & T obtained cable systems and approximately 700,000 Comcast subscribers located in Chicago and elsewhere around the country.
- The January 2001 swap agreement with Adelphia Communications Corp., wherein Comcast obtained cable systems and approximately 464,000 subscribers located primarily in the Philadelphia area and adjacent New Jersey areas. In exchange, Adelphia received Comcast‘s cable systems and subscribers located in Palm Beach, Florida and Los Angeles, California.
- The April 2001 swap agreement with AT & T, wherein Comcast obtained cable systems and approximately 595,000 subscribers, including subscribers located in Pennsylvania and New Jersey.
- The August 2006 swap agreement with Time Warner in connection with the Adelphia bankruptcy, wherein Comcast obtained cable systems and approximately 41,000 subscribers in the Philadelphia DMA.
- The August 2007 acquisition of Patriot Media and its 81,000 cable subscribers located in New Jersey, within the Philadelphia DMA.