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In re Comcast Corp. Set-Top Cable Television Box Antitrust Litigation

United States District Court, E.D. Pennsylvania

September 24, 2019

IN RE COMCAST CORP. SET-TOP CABLE TELEVISION BOX ANTITRUST LITIGATION

          MEMORANDUM

          ANITA B. BRODY, J.

         Plaintiffs James E. Deanne, William Gonzales, John Martich, and Carrie D. Cooper (collectively, “Plaintiffs”), on behalf of themselves and the putative class members they seek to represent, have negotiated and agreed to a Fourth Amended Class Action Settlement Agreement (“Settlement Agreement”) with Defendants Comcast Corporation, Comcast Holdings Corporation, Comcast Cable Communications, Inc., and Comcast Cable Communications Holdings, Inc. (collectively, “Comcast”) in this multidistrict litigation (“MDL”). On September 5, 2018, I preliminarily certified the Settlement Class and preliminarily approved the Settlement Agreement. Plaintiffs now move for class certification and final approval of the Settlement. Additionally, Plaintiffs move for attorneys’ fees, reimbursement of expenses, and incentive awards to class representatives.

         Out of an estimated 3.5 million potential Class Members, 20, 262 individuals have filed claims, fifty-nine individuals have opted out of the proposed Settlement, and four individuals have filed three objections to the Settlement.[1] On September 10, 2019, the Court held a final fairness hearing.[2] For the below reasons, I will grant Plaintiffs’ motion for class certification and final approval of the Settlement. I will also grant Plaintiffs’ motion for attorneys’ fees, reimbursement of expenses, and incentive awards to class representatives.

         I. BACKGROUND

         Comcast is the largest provider of cable multi-channel video programming distribution in the United States, servicing over twenty-four million customers in thirty-nine states and the District of Columbia. Comcast provides cable services in exchange for a monthly fee based upon the level of service provided. Comcast provides two cable products, Basic Cable and Premium Cable. Customers who subscribe to Premium Cable pay higher monthly fees than those who subscribe only to Basic Cable. Customers who subscribe to Premium Cable have access to high-definition channels, On Demand, numerous specialty channels, an interactive programming guide, and the ability to purchase pay-per-view programs and additional channels, like HBO. For many years, Premium Cable customers had to rent a cable television set-top box (“Set-Top Box”) from Comcast in order to access Premium Cable.[3] The Set-Top Box enables Premium Cable subscribers to view Premium Cable content and use Premium Cable services.

         In 2008, individuals began filing lawsuits against Comcast, alleging that Comcast unlawfully tied the sale of Premium Cable to the rental of a Set-Top Box from Comcast. On June 17, 2009, the Judicial Panel on Multidistrict Litigation transferred and consolidated these lawsuits before me as a multidistrict litigation, pursuant to 28 U.S.C. § 1407. See MDL Panel Transfer Order, ECF No. 1. In total, twenty-four civil actions were consolidated into this MDL.[4]

         On November 23, 2009, Plaintiffs filed a First Amended Consolidated Class Action Complaint. See First Am. Consolidated Class Action Compl., ECF No. 26. On September 30, 2010, Plaintiffs filed a Second Amended Consolidated Class Action Complaint. See Second Am. Consolidated Class Action Compl., ECF No. 109. On June 10, 2011, Plaintiffs filed a Third Amended Consolidated Class Action Complaint. See Third Am. Consolidated Class Action Compl., ECF No. 122. On October 24, 2017, Plaintiffs filed the currently operative Fourth Amended Consolidated Class Action Complaint (“Complaint”), alleging that Comcast’s unlawful tying arrangement violates Section 1 of the Sherman Act, 15 U.S.C. § 1, the antitrust and consumer protection laws of the State of Washington, the Business & Professions Code of the State of California, and the Consumer Credit and Protection Act of the State of West Virginia. See Compl., ECF No. 253.

         From the outset of the class action, Comcast sought arbitration of certain claims. On January 6, 2010, Comcast moved to compel arbitration. See Mot. Compel, ECF No. 35. On July 22, 2011, after the filing of Plaintiffs’ Third Amended Consolidated Class Action Complaint, Comcast filed a new motion to compel arbitration. See Mot. Compel, ECF No. 127. During 2010 and 2011, the parties engaged in discovery only regarding arbitration.

         From January 2012 through September 2012, the parties engaged in five formal mediation sessions before Thomas Rutter, Esquire, of ADR Options in Philadelphia. Thereafter, the parties continued to engage in settlement negotiations.

         During the pendency of this class action, the Supreme Court of the United States twice addressed key questions about arbitration in the cases AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) and American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013). While the parties awaited the Supreme Court’s decisions in Concepcion and Italian Colors, significant delay occurred in the litigation and the settlement negotiations. See, e.g., Stipulation and Order, ECF No. 114 (staying the case until the Supreme Court rendered its decision in Concepcion).

         In Concepcion, the Supreme Court held that the Federal Arbitration Act (“FAA”) prohibits a State from conditioning the enforceability of an arbitration agreement on the availability of classwide arbitration procedures. Concepcion, 563 U.S. at 344. In Italian Colors, the Supreme Court further held that the FAA prohibits courts from invalidating a contractual waiver of class arbitration on the basis that the cost of individually arbitrating a federal statutory claim exceeds the potential recovery. Italian Colors, 570 U.S. at 233-39.

         On November 12, 2014, in response to the recent Supreme Court jurisprudence of Concepcion and Italian Colors, Comcast filed a renewed motion to compel arbitration, seeking, for the first time, to compel arbitration of the Washington state law claims. See Mot. Compel, ECF No. 209. On October 27, 2015, Comcast filed a supplemental motion to compel arbitration, seeking, for the first time, to compel arbitration of the California state law claims. See Supp. Mot. Compel, ECF No. 231. Although Comcast previously sought only to compel individual arbitration of the Sherman Act claim, Comcast asserted that Italian Colors was an intervening change in the law that justified its delayed decision to also seek arbitration of the Washington and California state law claims.

         On February 22, 2018, nearly nine years after the inception of this MDL and several failed settlement attempts, the parties reached a Fourth Amended Class Action Settlement Agreement. Preliminary Approval Mot., ECF No. 266. At Plaintiffs’ insistence, the Settlement Agreement permitted Plaintiffs to take confirmatory discovery of a corporate representative, pursuant to Federal Rule of Procedure 30(b)(6), to enable Plaintiffs to ascertain whether they had accurately assessed the strengths and weaknesses of their case when deciding to settle. See Fourth Am. Class Action Settlement Agreement § 8, ECF No. 266 Ex. 1. ¶ 8 [hereinafter Agreement]. Plaintiffs also were permitted to terminate the Settlement Agreement within ten days after confirmatory discovery if they determined “based upon the answers given, that this Settlement Agreement is not in the best interest of the class as a whole.” Id.

         On September 5, 2018, the Court preliminarily certified the Settlement Class and preliminarily approved the Settlement Agreement. Preliminary Approval Mem., ECF No. 268; Preliminary Approval Order, ECF No. 269. The Court, however, denied approval of the proposed Notice and the proposed Claim Form and ordered Plaintiffs to submit revised notice materials that satisfied the requirements of Federal Rule of Civil Procedure 23 and due process. Id. On January 10, 2019, the Court approved Plaintiffs’ revised notice materials because they satisfied the requirements of Rule 23(c)(2)(B) and due process. Order Approving Revised Notice Materials, ECF No. 276.

         On June 5, 2019, pursuant to the confirmatory discovery provision of the Settlement Agreement, Plaintiffs took the deposition of Comcast’s corporate designee, Jack Birnbaum. Plaintiffs deposed Mr. Birnbaum on the following relevant topics: changes to the Set-Top Boxes since the filing of this action; the market for selling Set-Top Boxes; and the compatibility of different Set-Top Boxes with the cable television plans offered by Comcast. Jack Birnbaum Dep., ECF No. 277-2. “That sworn deposition confirmed what Plaintiffs had already concluded, that many of the risks they face could end this litigation for Plaintiffs and the putative class altogether, resulting in no recovery at all.” Final Cert. and Final Approval Mem. 8, ECF No. 277-1. As a result, on June 7, 2019, Plaintiffs moved forward with the Settlement and filed their motion for class certification and final approval of the Settlement.

         II. PROPOSED CLASS ACTION SETTLEMENT A. Proposed Settlement Class

         The parties define the Settlement Class as follows:

         All persons who:

(i) resided in and subscribed to Premium Cable in California, Washington, or West Virginia during the Class Period, or
(ii) subscribed to Premium Cable in any state in the United States during the Class Period and elected to opt out of Comcast’s arbitration clause as reflected in Comcast’s records;

         and paid Comcast a rental fee for a Set-Top Box at any time during the Class Period.

Excluded from the Settlement Class are: (i) those persons who opt out of this Agreement as identified in paragraph 6; (ii) all commercial account customers; (iii) Comcast officers, directors, or employees, any entity in which Comcast has a controlling interest, and the affiliates, legal representatives, attorneys, heirs, or assigns of Comcast; (iv) Class Counsel and Class Counsel’s employees; and (v) Judge Anita B. Brody and members of her judicial staff of the United States District Court for the Eastern District of Pennsylvania, as well as any federal, state, or local governmental agency, and any judge, justice, or judicial officer presiding over this matter and members of their immediate families and judicial staffs.

         Agreement § 3.1.

         B. Proposed Settlement

         The Class Period covers all Class Members who rented a Set-Top Box anytime starting on or after January 1, 2005 and ending on September 5, 2018, the date of this Court’s Order granting preliminary approval of the Settlement Agreement. Id. § 2.8. The Settlement is a claims-made settlement.[5] Id. § 9.1. Comcast will pay all claims made in the aggregate that do not exceed $15.5 million in value. Id. § 9.1.6. If Class Members submit more than $15.5 million worth of claims, then benefits will be distributed on a pro rata basis. Id. If Class Members submit less than $15.5 million worth of claims, then Comcast will retain the balance. Id.

         All Class Members will be entitled to a cash payment and Current Subscribers[6] will have the choice of either a cash payment or in-kind relief. Id. § 9.1. Class Members will be entitled to a cash payment in accordance with the length of time they rented a Set-Top Box from Comcast, regardless of the number of Set-Top Boxes they rented, as follows:

9.1.1.1 If the Claimant rented at least one Set-Top Box from 1 to 35 months (0 to 3 years), the Claimant is entitled to ten U.S. dollars and no cents ($10.00) payable by check.
9.1.1.2 If the Claimant rented at least one Set-Top Box from 36 to 59 months (3 to 5 years), the Claimant is entitled to twelve U.S. dollars and fifty cents ($12.50) payable by check.
9.1.1.3 If the Claimant rented at least one Set-Top Box for 60 or more months (more than 5 years), the Claimant is entitled to fifteen U.S. dollars and no cents ($15.00) payable by check.

Id. § 9.1.1. Current Subscribers will be entitled to elect to receive in-kind relief in lieu of a cash payment. Current Subscribers will be entitled to in-kind relief in accordance with the length of time they rented a Set-Top Box from Comcast, and will receive additional in-kind relief if they rented more than one Set-Top Box, as follows:

9.1.2.1 If the Claimant rented at least one Set-Top Box from 1 to 35 months (0 to 3 years), the Claimant is entitled to select one of the following options:
(a) three (3) free months of Showtime (up to a maximum $30.00 value); or
(b) five (5) movie or television show rentals or purchases (up to a maximum $29.95 value).
Plus, if the Claimant rented more than one Set-Top Box, one (1) additional movie or television show rental or purchase (up to a maximum $5.99 value).
9.1.2.2 If the Claimant rented at least one Set-Top Box from 36 to 59 months (3 to 5 years), the Claimant is entitled to select one of the following options:
(a) three (3) free months of Showtime (up to a maximum $30.00 value) and one (1) movie or television show rental or purchase (up to a maximum $5.99 value) (a combined up to maximum $35.99 value); or
(b) six (6) movie or television show rentals or purchases (up to a maximum $35.94 value).
Plus, if the Claimant rented more than one Set-Top Box, two (2) additional movie or television show rentals or purchases (up to a maximum $11.98 value).
9.1.2.3 If the Claimant rented at least one Set-Top Box for 60 or more months (more than 5 years), the Claimant is entitled to select one of the following options:
(a) three (3) free months of Showtime (up to a maximum $30.00 value) and two (2) movie or television show rentals or purchases
(up to a maximum $11.98 value) (a combined up to maximum $41.98 value); or
(b) seven (7) movie or television show rentals or purchases (up to a maximum $37.97 value).
Plus, if the Claimant rented more than one Set-Top Box, three
(3) additional movie or television show rentals or purchases (up to a maximum $17.97 value).

Id. § 9.1.2.

         III. DISCUSSION

         A. Class Certification

         Plaintiffs move for certification of the Settlement Class pursuant to Rule 23(b)(3). For a class action to have preclusive effect and bind absent class members, a class must first be certified. Federal Rule of Civil Procedure 23(a) contains four threshold requirements for certification:

(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). Rule 23(b)(3) imposes two additional requirements: “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”[7] Fed.R.Civ.P. 23(b)(3). The Rule 23(b)(3) requirements are commonly referred to as predominance and superiority. Sullivan v. DB Investments, Inc., 667 F.3d 273, 296 (3d Cir. 2011) (en banc).

         “[T]he party proposing class-action certification bears the burden of affirmatively demonstrating by a preponderance of the evidence her compliance with the requirements of Rule 23.” Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015), as amended (Apr. 28, 2015). Class certification “demand[s] undiluted, even heightened, attention in the settlement context.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997). However, the existence of a settlement means that “certain Rule 23 considerations . . . are not applicable.” Rodriguez v. Nat’l City Bank, 726 F.3d 372, 378 (3d Cir. 2013). For example, because a settlement obviates the need for trial, concerns regarding the manageability of a Rule 23(b)(3) class disappear. See Amchem, 521 U.S. at 619-20; see also Sullivan, 667 F.3d at 297 (noting that “concerns regarding variations in state law largely dissipate when a court is considering the certification of a settlement class”); In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 529 (3d Cir. 2004) (“[C]oncerns with regards to case manageability that arise with litigation classes are not present with settlement classes, and thus those variations are irrelevant to certification of a settlement class” (citing Amchem, 521 U.S. at 620)).

         The proposed Class meets the Rule 23(a) and 23(b)(3) requirements and warrants certification.

         1. Rule 23(a) Requirements

         a. Numerosity

         Rule 23(a)(1) requires that a class be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “No minimum number of plaintiffs is required to maintain a suit as a class action, but generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met.” Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001). The parties represent that there are approximately 3.5 million proposed Class Members. Accordingly, Plaintiffs satisfy the numerosity requirement of Rule 23(a).

         b. Commonality

          Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). To satisfy commonality, class members’ claims “must depend upon a common contention . . . of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Commonality may be shown by “demonstrat[ing] that the class members ‘have suffered the same injury.’” Id. (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). A single common question or fact is sufficient to satisfy the commonality requirement of Rule 23(a)(2). Wal-Mart, 564 U.S. at 359; Baby Neal for & by Kanter v. Casey, 43 F.3d 48, 56 (3d Cir. 1994).

         Here, common questions of law and fact include:

a. Whether Comcast is liable to Plaintiffs and the Class for violations of federal antitrust laws;
b. Whether Comcast established an unlawful tying arrangement for the rental of set-top boxes, in violation of federal laws;
c. Whether Comcast established an unlawful tying arrangement for the rental of set-top boxes, in violation of applicable state laws;
d. Whether Comcast’s actions have caused damages to Plaintiffs and the Class; e. Whether Comcast should be enjoined from further violations of federal and state laws; and f. Whether Comcast is liable to Plaintiffs and the Class for treble damages as a result of its violations of federal antitrust laws.

Compl. ¶ 121. Moreover, Plaintiffs allege the same harm from the same illegal conduct: the payment of supracompetitive prices as a result of Comcast’s unlawful tying of its Premium Cable to the rental of a Set-Top Box. Whether Comcast engaged in such conduct and Plaintiffs suffered harm as a result are common questions of law and fact. Thus, commonality exists.

         c. ...


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