Policy

Comcast Won’t Be Held to Antitrust Suit Settlement

High Court to Hear Oral Argument on Nov. 5 10/08/2012 7:13 PM Eastern

WASHINGTON — Comcast won’t have to hold to a tentative settlement of a 2003 class-action lawsuit — alleging the cable operator violated federal antitrust laws and overcharged subscribers — after a U.S. district court judge ruled that the deal was not an enforceable contract.

The decision comes in the advance of a Nov. 5 oral argument before the Supreme Court in one key aspect of the case, Behrend v. Comcast Corp.

The suit, which seeks damages of more than $875 million, was filed on behalf of six non-basic Comcast subscribers who claim that, starting in 1998, Comcast through system swaps with other operators had “abused its dominance to stifl e competition from those cable providers.”

It is not uncommon for cable operators to swap systems in deals where the exchanges would make sense geographically for both parties, eff ectively un-gerrymandering often peripatetic growth patterns that developed through acquisitions and mergers. The lawsuit cited swaps Comcast made over the years in the Philadelphia, Chicago and Boston markets.

In 2011, Comcast had appealed a decision from the 3rd U.S. Circuit Court of Appeals, which had ruled 2-1 that sufficient grounds had been established to create a “class” in the class-action suit. Meanwhile, through a third-party mediator, Comcast came to a tentative settlement.

The Supreme Court in June said it would hear Comcast’s appeal of the decision. The MSO then said it was no longer interested in a settlement.

The plaintiffs petitioned a U.S. District Court in Philadelphia to hold Comcast to the deal, saying the agreement in principle — both sides had signed off on a terms sheet subject to the mediator’s approval — was an enforceable contract. The plaintiff s said the court should enforce the settlement, which included cash and provision of services.

But Judge John Padova has ruled that the term sheet could not be summarily enforced as a binding agreement, in part because it contained provisions — never agreed to by Comcast — that the MSO had to abide by the settlement regardless of how the Supreme Court may rule in the class determination.

Comcast does not comment on pending litigation, and didn’t make an exception in this case.

The Supreme Court is limiting its consideration to the following: “Whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the case is susceptible to awarding damages on a class-wide basis.” Comcast says it can’t; the 3rd Circuit says it can. Now, the Supreme Court will get the final say.

Miguel Estrada, Comcast’s Supreme Court counsel and himself a former nominee to the High Court, will argue the case, according to a Comcast source.

TAKEAWAY

Comcast won’t have to abide by a 2003 settlement deal as a more than $875 million classaction lawsuit heads to the Supreme Court.

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