Comcast May Raise Bar on Employment Class Certification

With its decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), the United States Supreme Court muddled the degree to which a district court may scrutinize the merits of a class action at the certification stage. In Comcast, the class plaintiffs sought to address one of the considerations for certification – the capacity for damages to be measured on a class-wide basis – by offering an expert damage model projecting damages under plaintiffs’ four, combined antitrust theories. While rejecting three of those theories, the district court certified the class on the basis of the fourth theory, coupled with the damage model. Comcast appealed, noting the damage model (1) had not separated damages by each of plaintiffs’ four theories, (2) thus, potentially included damages under antitrust theories the district court had rejected, and (3) in turn, could draw into the class persons not damaged under the one, permitted antitrust theory. The U.S. Court of Appeals for the Third Circuit rejected Comcast’s argument, finding such examination of the damage model’s methodology would amount to an improper consideration of the merits of the case at the certification stage. In a 5-4 decision, the Supreme Court reversed, held the class was improperly certified, and suggested class counsel attempting to prove they can quantify damages on a class-wide basis must:

  • tie each theory of class impact to a discrete calculation of damages, and
  • demonstrate the calculations are just and reasonable inferences, rather than speculation.

Whether Comcast will prompt closer scrutiny by district courts of merits other than damages during class certification remains to be seen.

SOX Covers Employee Complaints of More Than Shareholder Fraud

An employee who complains of matters not specifically related to fraud against shareholders may still claim retaliation under the Sarbanes-Oxley Act of 2002 (“SOX”). Lockheed Martin v. Department of Labor, No. 11-9524 (10th Cir. June 4, 2013), In Lockheed Martin, the employee internally reported what she believed was mail or wire fraud. When later constructively discharged, she sued for retaliation under SOX. Despite finding the employee failed to prove a “loss of shareholder value” as a result of the alleged fraud, the Tenth Circuit allowed her to maintain her claim under SOX. The Court noted the anti-retaliation provision of SOX applies to any employee complaint regarding violations of 18 U.S.C. §§ 1341, 1343, 1344, or 1348, or any rule or regulation of the Securities and Exchange Commission, regardless whether such violations relate to fraud against shareholders.

Undocumented Worker Recovers Work-Comp Benefits

The Supreme Court of New Mexico has held, an employer who did not demand documentation of a prospective employee’s lawful status at the time of hire could not later use the worker’s undocumented status as a defense to paying benefits under the New Mexico Workers’ Compensation Act. Gonzales v. Performance Painting, Inc., No. 32,844 (N.M. May 30, 2013),,844.pdf.