Supreme Court Comcast case ruling helps employers in class action suits

The U.S. Supreme Court's ruling in an antitrust case has given employers a potent argument in fighting class actions in general.

Although not employment-related, observers say the high court's March 27 ruling in Comcast Corp. et al. v. Caroline Behrend et al. in conjunction with its 2011 ruling in Wal-Mart Stores Inc. v. Betty Dukes et al. means that plaintiffs must provide more proof of damages before they can win class certification (see related story).

“The ruling is going to have a big impact on employers because it puts an extra burden on plaintiffs in class actions to introduce admissible evidence at the class certification stage,” said Raul E. Zermeno, an associate with law firm Fisher & Phillips L.L.P. in Los Angeles.

“Before, plaintiffs only had to show some type of theory of damages” at the class certification stage “and could get past class certification without having to introduce admissible evidence. The court's ruling in Comcast will “affect not only how many class actions are filed, but also impact on whether class sections will be certified,” said Mr. Zermeno.

Michael A.S. Newman, a partner with Barger & Wolen L.L.P. in Los Angeles, said the ruling is particularly significant for large employers because “those will be the ones most likely to be the subject of class action lawsuits.”

Frederick D. Braid, a partner with Holland & Knight L.L.P. in New York, said the rulings in Comcast and Wal-Mart “are two pretty significant hurdles for class action plaintiffs now to get over in order to become certified as a class, so I would say it should reduce the number of class action cases and reduce the exposure of employers to significant judgments based on very large classes.”

Charles C. Warner, a partner with Porter Wright Morris & Arthur L.L.P. in Columbus, Ohio, said Comcast provides “a very clear and precise analysis of what it takes to have a viable class action from the point of view of proof of damages.”

“What we saw in 2012 was the disinclination of most judges to apply parts of Wal-Mart to wage-and-hour class actions,” said Gerald L. Maatman, a partner with Seyfarth Shaw L.L.P. in Chicago. Comcast “is going to allow employers to say, "That's wrong,'” he said.

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The class action principles due to Comcast “are going to be applied in all sorts of workplace litigation running the gamut from employment discrimination to wage-and-hour litigation,” Mr. Maatman said.

However, William F. Allen, a shareholder with Littler Mendelson P.C. in Washington, said, “It's likely to take some time for the courts to digest Comcast and determine how it applies to the wage-and-hour setting.”

The ruling has already had some impact.

In its late March ruling in Matthew Roach et al. v. T.L. Cannon Corp., dba Applebee's et al., for instance, a New York federal judge denied class certification for a suit challenging meal periods and how far employees' hours are spread out.

In upholding a magistrate judge's decision, U.S. District Court Judge Thomas J. McAvoy cited Comcast in ruling “that precedents require a demanding and rigorous analysis of the evidentiary proof to determine whether the prerequisites” under the federal rules of civil procedure are met.

Noting the Supreme Court's 1993 ruling in William Daubert et al. v. Merrell Dow Pharmaceuticals Inc. on admitting expert scientific testimony, Mr. Braid said an unanswered question is whether the ruling in Comcast means there will have to be “Daubert” hearings in class certification cases.

Daubert hearings would be “basically meant to make sure that expert testimony is reliable, and will help the finder of facts understand the facts of the case and facilitate making a decision,” he said.