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Supreme Court rules for Comcast in class action

The news ticker outside the Today Show announces GE's sale of NBC to Comcast, in New York, December 3, 2009. REUTERS/Chip East
The news ticker outside the Today Show announces GE's sale of NBC to Comcast, in New York, December 3, 2009. REUTERS/Chip East

By Jonathan Stempel

(Reuters) - The Supreme Court on Wednesday ruled in favor of Comcast Corp in an antitrust case over how much it charged cable TV subscribers, further curtailing the ability of people to pursue class action lawsuits.

In a 5-4 decision, the court said a group of cable TV subscribers in the Philadelphia area who accused Comcast of overcharging them as part of an effort to monopolize the market could not sue as a group.

"The permutations involving four theories of liability and 2 million subscribers located in 16 counties are nearly endless," Justice Antonin Scalia wrote for the majority.

Comcast's subscribers fell "far short of establishing that damages are capable of measurement on a classwide basis," he continued. "There is no question that the model failed to measure damages resulting from the particular antitrust injury on which (Comcast's) liability in this action is premised."

Wednesday's decision came in one of several class action cases being addressed this term by a court whose recent decision-making is often considered friendly to businesses and unfriendly to consumers.

They follow a landmark 2011 decision in Wal-Mart Stores Inc v. Dukes where the court threw out a giant employment discrimination lawsuit because the female plaintiffs did not have enough in common to sue together.

Wednesday's vote breakdown was a familiar one, with Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito joining Scalia's opinion.

The more liberal justices dissented, with Ruth Bader Ginsburg and Stephen Breyer penning an unusual joint dissent, joined by Sonia Sotomayor and Elena Kagan.

Comcast did not immediately comment, saying its lawyers were reviewing the decision. Barry Barnett, a lawyer for the subscribers, did not immediately respond to requests for comment.

PRECEDENTS IGNORED

While not as sweeping as the Wal-Mart ruling, the Comcast decision addressed a key issue in class action litigation: what kind of evidence must be presented in the early stages of a case before a judge can allow a class action to go forward.

Led by Caroline Behrend, subscribers in Pennsylvania, New Jersey and Delaware in an $875 million lawsuit dating from 2003 accused the largest cable TV company of overcharges through its effort to monopolize the Philadelphia area market.

The subscribers said that by buying rivals or swapping coverage areas, Philadelphia-based Comcast was able to triple its market share, which peaked at 77.8 percent in 2002.

Comcast said the case was too big, covering subscribers in 649 franchise areas facing different competitive conditions.

In August 2011, the 3rd U.S. Circuit Court of Appeals in Philadelphia said a trial judge could decide the subscribers had a common methodology to justify awarding damages to a class.

But in reversing that ruling, Scalia said that in focusing on damages, the 3rd Circuit failed to do what Supreme Court precedents require: examine whether "common questions" among class members predominate over individual questions.

"By refusing to entertain arguments against (subscribers') damages model that bore on the propriety of class certification, simply because those arguments would also be pertinent to the merits determination, the Court of Appeals ran afoul of our precedents requiring precisely that inquiry," Scalia wrote.

Ginsburg and Breyer said they would have dismissed the appeal, saying the court erred in reformulating the case to focus on issues that Comcast had not pressed in lower courts and which the subscribers did not have a fair chance to address.

The dissent also said the court erred in overturning factual findings made by two lower courts over whether the subscribers' damages model was legitimate.

In late morning trading, Comcast shares rose 0.1 percent to $41.50 on Nasdaq.

The case is Comcast Corp et al v. Behrend et al, U.S. Supreme Court, No. 11-864.

(Reporting by Jonathan Stempel in New York and Lawrence Hurley in Washington; Editing by Lisa Von Ahn)

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