Daubert and Class Actions - All Just Magic Words?
Is a Daubert hearing a mere magical incantation, unnecessary to invoke as long as the trick is still performed?
Several Supreme Court justices seemed to suggest as much, as the court heard oral arguments Nov. 5 in Comcast Corp. v. Behrend, an antitrust case that presents the question of the extent to which a trial court must vet an expert witness under the Daubert standard prior to certification of a class action.
If the issue in the case sounds familiar, it is not because of déjà vu. Just over a year ago, the Supreme Court decided Wal-Mart Stores, Inc. v. Dukes, a case in which the court had been expected to decide the very same question.
But rather than decide the Daubert issue in Wal-Mart, the court stepped around it, dropping a tantalizing nugget of dictum along the way that suggested how it might rule the next time around. "The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings," Justice Antonin Scalia wrote. "We doubt that is so."
Comcast could be that next time. The case arose out of a lawsuit alleging that Comcast had created a cable TV monopoly in greater Philadelphia, in violation of the Sherman Act. The plaintiffs sought certification of a class action on behalf of Comcast customers.
The District Court ruled that class certification was appropriate, finding that issues common to members of the class predominated over issues unique to individual class members. In reaching this conclusion, the court relied on a damages model presented by the plaintiffs' expert, without ever conducting a Daubert hearing on the testimony and even though the model incorporated theories of liability rejected by the court. On appeal, the 3rd U.S. Circuit Court of Appeals affirmed.
Foreshadowing the Outcome
So did the oral arguments present any clues as to how the court is likely to rule on the issue this time around? That is hard to say, given that the justices sometimes seemed impatient, even exasperated, with the arguments of counsel on both sides of the case.
In fact, the closest any justice expressly came to foreshadowing the outcome was when Chief Justice John G. Roberts suggested the possibility that the court should decide only a subsidiary issue and then send the case back to the District Court for further consideration.
Barry Barnett, counsel for the respondents (the plaintiffs in the trial court), argued both in his brief and during oral argument that Comcast had waived the Daubert issue by choosing not to object to the admission of the expert's testimony.
After several justices questioned both counsel about this issue, Chief Justice Roberts interjected. "We are having an elaborate discussion, and you did in the briefs, about whether or not this was a claim that was waived below. No court has addressed that yet."
"We’re a court of review, not first view," he continued. "So it seems to me that one option for the court, since we did reformulate the question, is to answer the question and then send it back for the court to determine whether or not the parties adequately preserved that option or not -- that objection or not."
Could Damages be Bifurcated?
Earlier in the oral argument, prior to Chief Justice Roberts' comment, several justices questioned Miguel Estrada, Comcast’s counsel, about whether the damages evidence was even necessary for the class certification. Justice Ruth Bader Ginsburg first raised this issue.
"Generally -- at least it’s my impression-- that in class certifications, if the liability question can be adjudicated on a class basis, then the damages question may be adjudicated individually," Justice Ginsburg said. She drew an analogy to a Title VII class action, pointing out that, if plaintiffs can show a pattern or practice of discrimination and establish liability, damages can be assessed on an individual basis. "So why isn’t bifurcation possible here?"
Even as Estrada continued to argue that bifurcation was not possible in this case because of the nature of the damages, Justice Stephen G. Breyer indicated such an approach is "hornbook law."
"Three pipe manufacturers get together and in January fix their prices, all right?" Justice Breyer postulated. "Fourteen wholesalers want to show that and each has different damages because they bought different amounts of pipe. Hornbook law: Certify the class and leave the damages issues for later."
Estrada persisted. "The damage model just does not fit the legal theory that stays in the case," he argued.
Mere Magic Words
But it was soon after Barnett took the podium and began to argue that Comcast had waived its Daubert objection that the justices' questions turned to whether the need to invoke Daubert by name was a matter of "magic words," putting form over substance.
"I don’t see why the judge has to say: All right, now first I'm going to do Daubert, and next I'm going to do whether this is reliable," Justice Anthony M. Kennedy prodded. "This is just a magic words approach, it seems to me."
Picking up on that, Justice Sonia Sotomayor asked, “Why do you disagree with the simple proposition that a district court, by whatever magic words it uses, has to come to the conclusion that the expert's testimony is persuasive? And isn't that at bottom line a judgment that it’s reliable and probative?"
Barnett countered that the issue is not merely a matter of magic words. "Once you say Daubert, once you say [Rule] 702, or once you say, 'I object, it’s not reliable,' at the time, contemporaneously, the district judge has an opportunity to fix whatever the problem is. And the other side has a chance to fix whatever the problem is, too."
Looking for a Legal Issue
A turning point in the argument seemed to come when Barnett conceded that, had the trial judge properly excluded the expert under Daubert, class certification would not have been appropriate. That led Justice Elena Kagan to state, "I am still in search of a legal question that anybody disagrees about here." Justice Samuel Alito followed her, saying, "Well, then the only remaining question is whether the issue was in the case as a factual -- as a matter of the record here; isn’t that right?"
Once again, the argument returned to magic words. "The problem everyone’s having is -- I think -- that why do you need Daubert to point out that something is not probative or unreliable?" Justice Sotomayor said. "Whether it’s an expert or a lay witness testifying, wouldn’t you apply the same standard to anybody's testimony?"
"It doesn’t make a dime's worth of difference whether the judge excludes it under Daubert or proceeds to find it simply unreliable," Justice Antonin Scalia followed. "Suppose we held that. What difference would it make in the world?"
Justice Scalia’s question had the ring of sounding rhetorical. But several justices appeared to embrace the idea that Daubert may be just an unnecessary magic word. If the judge in substance decides what Daubert requires, then does it matter whether the judge calls it a Daubert ruling?
For the answer to that question, we will have to wait and see what the court pulls out of its deliberative magic hat.
Editor’s Note: Do you agree with Justice Sotomayor’s supposition -- that the same standard should apply to anybody's testimony, whether it's an expert or a lay witness? Is Daubert just a "magic word" that places form over substance?
This article was originally published in BullsEye, an expert witness and litigation news blog published by IMS ExpertServices. IMS ExpertServices is a full service expert witness and litigation consultant search firm, focused exclusively on providing best-of-class experts to attorneys. We are proud to be the choice of nearly all of the AmLaw Top 100.