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In Re: Wellbutrin Xl

August 11, 2011

IN RE: WELLBUTRIN XL
ANTITRUST LITIGATION



The opinion of the court was delivered by: McLaughlin, J.

MEMORANDUM

The plaintiff Professional Drug Company ("PDC") is a direct purchaser of Wellbutrin XL, a once-a-day antidepressant, who is suing the producers of Wellbutrin XL (Biovail Corp., Biovail Laboratories, Biovail Laboratories International (together, "Biovail")) and its distributors (SmithKline Beecham Corp. and GlaxoSmithKline PLC (together, "GSK")) for illegally conspiring to prevent generic versions of Wellbutrin XL from entering the American market through the use of sham patent litigation. The plaintiff has moved to certify a class of 35 direct purchasers of Wellbutrin XL under federal antitrust law.

The defendants contend that the plaintiff has failed to meet several requirements for class certification under Federal Rule of Civil Procedure 23. The defendants' primary argument against certification is that common issues do not predominate over individual issues for antitrust impact and damages. The defendants argue that class members may have economically benefitted from the alleged exclusionary conduct, and individual evidence will be required to demonstrate which, if any, class members suffered actual harm. The defendants also argue that individual proof will be required for several class members who did not purchase generics or purchased generics indirectly from other wholesalers.

The Court concludes that the plaintiff has demonstrated that common issues will predominate and that the Rule 23 requirements for class certification have been met. The Court, however, will exclude from the class definition direct purchasers of Wellbutrin XL that did not purchase generic extended-release buproprion hydrochloride after it became available. The Court will therefore grant in part and deny in part the plaintiff's motion.

I. Background and Procedural History

PDC seeks to represent a class of 35 plaintiffs (the "direct purchaser plaintiffs") that purchased Wellbutrin XL directly from the defendants during the period of November 14, 2005 through August 31, 2009. PDC has stated a claim for (1) conspiracy to monopolize under § 2 of the Sherman Act against GSK and Biovail, (2) monopolization under § 2 of the Sherman Act against GSK, and (3) agreement in restraint of trade under § 1 of the Sherman Act against GSK and Biovail. See In re Wellbutrin XL Antitrust Litig., No. 08-2431, 2009 WL 678631, at *9 (E.D. Pa. Mar. 13, 2009) (dismissing substantive monopolization claim against Biovail, but otherwise allowing claims to proceed). The plaintiff's proposed class is:

All persons or entities in the United States and its territories who purchased Wellbutrin XL directly from any of the Defendants at any time during the period of November 14, 2005 through August 31, 2009 (the "Class Period"). Excluded from the class are Defendants and their officers, directors, management, employees, parents, subsidiaries, and affiliates, and federal government entities. (Docket No. 306 at 1.)

The plaintiff's complaint alleges that the defendants conducted a four-part scheme to delay the entry of generic equivalents of Wellbutrin XL into the market, primarily by misusing patent litigation. Specifically, the plaintiff alleges that the defendants (1) filed three sham patent litigations, (2) filed a sham listing with the FDA's Approved Drug Products with Therapeutic Equivalence Evaluation (the "Orange Book") (3) filed a baseless FDA citizen petition and suit against the FDA, and (4) formed agreements with potential generic competitors. PDC contends that the effect of these activities was to delay the market entry of cheaper, generic alternatives to Wellbutrin XL.

On July 10, 2080, Meijer, Inc., Meijer Distribution, Inc. (collectively "Meijer), Rochester Drug Co-Operatrive ("RDC"), and American Sales Company, Inc. filed a consolidated class action complaint. On September 4, 2008, American Sales Company, Inc. voluntarily dismissed its claims pursuant to Rule 41(a)(1)(A)(i). On September 10, 2008, Biovail and GSK each filed motions to dismiss. The Court held a hearing on the motions on February 26, 2009. In a Memorandum and Order dated March 16, 2009, the Court granted Biovail's motion to dismiss as to one count that alleged that Biovail engaged in substantive monopolization under section 2 of the Sherman Act, and the Court denied the motions for all other counts. See Wellbutrin XL, No. 08-2431, 2009 WL 678631, at *9 (E.D. Pa. Mar. 13, 2009).

The direct purchaser plaintiffs filed a motion for class certification on December 14, 2009. The parties then engaged in extensive discovery. For a partial overview of the parties' discovery disputes, see In re Wellbutrin XL Antitrust Litig., 268 F.R.D. 539, 541--43 (E.D. Pa. 2010). On March 17, 2010, the Court granted Meijer's oral motion for voluntary dismissal under Rule 41(a). On May 14, 2010, RDC moved for voluntary dismissal and the direct purchaser plaintiffs moved to substitute Professional Drug Company, Inc. ("PDC") as class representative. On July 21, 2010, the Court granted RDC's motion for voluntary dismissal provided that it comply with its pending discovery obligations and the Court substituted PDC as class representative. In re Wellbutrin XL Antitrust Litig., 268 F.R.D. at 547. Because the three original direct purchaser plaintiffs have voluntarily dismissed their claims, PDC is now the sole remaining named plaintiff seeking to represent direct purchasers of Wellbutrin XL.

The Court held a day-long evidentiary hearing on the plaintiff's motion for class certification on April 5, 2011. PDC presented the expert testimony of Dr. Jeffery Leitzinger and the defendants presented the expert testimony of Dr. Andrew Joskow.*fn1

On July 11, 2011, the defendants' submitted a supplemental memorandum of law in opposition to the plaintiff's motion for class certification. On July 19, 2011, the plaintiff submitted a rebuttal memorandum.

II. Analysis

To certify a class under Federal Rule of Civil

Procedure Rule 23, a court must find that the action satisfies all four requirements of Rule 23(a) - numerosity, commonality, typicality, and adequacy of representation - and at least one provision of Rule 23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). PDC seeks certification under Rule 23(b)(3). Rule 23(b)(3) requires the court to find that 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.

A proper analysis under Rule 23 requires "rigorous" consideration of all the evidence and arguments offered by the parties. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320 (3d Cir. 2008). A court must "consider carefully all relevant evidence and make a definitive determination that the requirements of Rule 23 have been met before certifying a class." Id. at 320. Factual determinations necessary for Rule 23 findings must be made by a preponderance of the evidence. Id. The court must resolve factual or legal disputes relevant to class certification, even if they overlap with the merits. Id. at 307. Furthermore, "[w]eighing conflicting expert testimony at the certification stage is not only permissible; it may be integral to the rigorous analysis Rule 23 demands." Id. at 323. A determination that an expert's opinion is persuasive on a Rule 23 requirement does not preclude a different view at the merits stage of the case. Id. at 324.

The defendants contend that the plaintiff has failed to satisfy the numerosity, predominance, and superiority requirements. The defendants argue that: (1) the proposed class is insufficiently numerous such that joinder is impracticable, (2) common issues do not predominate over individual issues for antitrust impact and damages, and (3) the superiority requirement has not been met. The Court will address each of the Rule 23(a) and (b) requirements in turn.

A. Rule 23(a) 1. Numerosity

Rule 23(a)(1) requires a finding that the class is so numerous that joinder of all class members is impracticable. Although there is no precise number for establishing numerosity, classes that exceed forty or more class members generally satisfy this prerequisite. See Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001) ("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.").

In Stewart, the Court of Appeals for the Third Circuit cited favorably to the Rule 23 numerosity discussion in Moore's Federal Practice. See Stewart, 275 F.3d at 227 (citing 5 James Wm. Moore, et al., Moore's Federal Practice § 23.22[3][a]). Moore explains that classes with between 21 and 40 members are considered mid-sized classes. These mid-sized classes may or may not meet the numerosity requirement depending on the circumstances of each particular case. See 5 James Wm. Moore, et al., Moore's Federal Practice § 23.22[3][a].

In addition to the number of class members, other factors that are relevant to determining the impracticability of joining all members include (1) judicial economy, (2) geographic dispersion, (3) financial resources of class members, (4) the claimants' ability to institute individual suits, and (5) requests for injunctive relief that could affect future class members. Id.

The Court must determine whether a class of 33 geographically dispersed, direct purchasers is so numerous that joinder of all class members is impracticable.*fn2 The defendants argue that joinder is practicable in this case because the direct purchasers of Wellbutrin XL are large, sophisticated entities with sufficient financial resources to pursue their own claims and that each member could seek significant damages, if the claims are proven on the merits. Although the defendants are correct about the nature of the class members, judicial economy and geographic dispersion of the parties more heavily favor the use of a class action.

The proposed class includes more than 30 entities that are located across the country. Putative class members are located in California, Illinois, Louisiana, Michigan, Mississippi, Missouri, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Puerto Rico, South Carolina, Vermont, and West Virginia. The class members' geographic dispersion would cause substantial difficulty for the parties to conduct discovery efficiently and to coordinate the litigation. Furthermore, this complex case has involved numerous discovery disputes and repeated joint requests for extensions of the case schedule. The Court finds that such delays and other complications would be greatly increased if all direct purchasers were joined in this suit. Judicial economy and geographic dispersion therefore weigh in favor of the numerosity requirement. Because of the complexity and sheer volume of discovery in this case and because the 33 direct purchasers are located across the country, the Court finds that the numerosity requirement is satisfied.

This result is consistent with other courts that have addressed the numerosity requirement for direct purchaser antitrust class actions that allege unlawful delay of generic competition. See Am. Sales Co. v. SmithKline Beecham Corp., No. 08-3149, 2010 WL 4644426, at *4 (E.D. Pa. Nov. 12, 2010) (class certification uncontested) (33 class members sufficient); In re K-Dur Antitrust Litig., No. 1419, 2008 WL 2699390, at *3 (D.N.J. Apr. 14, 2008) (45 class members sufficient); Meijer, Inc. v. Warner Chilcott Holdings Co. III, Ltd., 246 F.R.D. 293, 306 (D.D.C. 2007) (29 class members sufficient).

2. Commonality

Rule 23(a)(2) requires that there must be questions of law or fact common to the class. To satisfy the commonality requirement, the class's claims must depend upon a common contention. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550--51 (2011). The common contention must be capable of class-wide resolution. Id. at 2551. A contention is capable of class-wide resolution if determination of its truth or falsity will resolve an issue that is central to the validity the claims "in one stroke." Id. A single common question is sufficient. Id. at 2556--57.

The Court finds that the commonality requirement is met here. PDC alleges that the defendants engaged in a scheme to delay the entry of less expensive generic versions of Wellbutrin XL into the market. The plaintiff contends that this scheme caused 300 mg extended-release bupropion hydrochloride to enter the market in December, 2006 instead of in November, 2005 and that the scheme prevented entry of 150 mg extended-release bupropion hydrochloride until May, 2008. Each class member's claims depend on whether or not the defendants unlawfully engaged in anticompetitive behavior to limit the entry of generic competitors in violation of federal antitrust law.

3. Typicality

Rule 23(a)(3) requires that the claims or defenses of the representative parties be typical of the claims or defenses of the class. The typicality requirement ensures that the class representatives' interests are aligned with those of the absent class members, so that the representatives work to benefit the class as a whole. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 311 (3d Cir. 1998). "The concepts of commonality and typicality are broadly defined and tend to merge." Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994) (citing 7A Charles A. Wright, et al., Federal Practice and Procedure § 1764).

If the representative's claims and those of the absent class members arise from the same course of conduct and are based on the same legal theories, the class satisfies typicality, regardless of factual differences underlying the individual claims. Baby Neal v. Casey, 43 F.3d at 57-58. The Court finds that the typicality requirement is met because the claims of PDC arise from the same course of conduct and are based on the same legal theories as those of the absent class members.

4. Adequacy of Representation

Rule 23(a)(4) requires that the proposed class representative will fairly and adequately protect the interests of the class. The United States Court of Appeals for the Third Circuit has held that adequacy of representation depends on two factors: (a) the plaintiff's attorney must be qualified, experienced, and generally able to conduct the proposed litigation, and (b) the plaintiff must not have interests antagonistic ...


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