United States District Court, E.D. Pennsylvania
IN RE NIASPAN ANTITRUST LITIGATION THIS DOCUMENT RELATES TO ALL ACTIONS
multidistrict litigation concerns what has come to be known
as a “pay-for-delay, ” or “reverse payment,
” settlement-a practice in which a brand-name drug
manufacturer brings a patent-infringement action against a
generic drug manufacturer and then compensates the generic
drug manufacturer for its agreement to delay entering the
market with a competing generic version of the brand-name
drug. In this case, two putative classes-the Direct-Purchaser
Plaintiffs (“DPPs”) and the End-Payor Plaintiffs
(“EPPs”)-aver that the brand-name manufacturer of
the drug Niaspan, Kos Pharmaceuticals, Inc.
(“Kos”), entered into anticompetitive settlement
agreements in March of 2005 with the generic manufacturer of
that drug, Barr Pharmaceuticals, Inc. (“Barr”),
in order to terminate patent-infringement litigation brought
by Kos against Barr in the District Court for the Southern
District of New York. Kos was later acquired by defendant
AbbVie Inc. (“AbbVie”), and Barr was later
acquired by defendant Teva Pharmaceuticals, Inc.
before the Court is Direct Purchaser Class Plaintiffs'
Motion for Class Certification. For the reasons that follow,
DPPs' Motion is granted.
background of this case is set forth in detail in the
Court's Memorandum and Order of September 5, 2014. See
In re Niaspan Antitrust Litig., 42 F.Supp.3d 735
(E.D. Pa. 2014). This Memorandum recites only the facts and
procedural history relevant to this Motion for Class
Certification. Defendant AbbVie, a drug manufacturer that was
spun off from Abbott Laboratories (“Abbott”) in
January 2013, markets and sells Niaspan, a brand-name
prescription drug, primarily used in the treatment of lipid
disorders. In the early 1990s, Kos, acquired by AbbVie in
December 2006, developed a therapeutically-effective
time-release version of niacin, Niaspan, which does not cause
the side effects previously associated with niacin. Kos
obtained a series of U.S. patents on time-release niacin and
marketed the drug using the trademark Niaspan. Niaspan has
been marketed and sold by AbbVie (and AbbVie's
predecessor corporations) since September of 1997.
October 2001, Barr, acquired by Teva in January 2009, filed
an Abbreviated New Drug Application (“ANDA”) with
the Food and Drug Administration (“FDA”) seeking
authorization to manufacture and sell a generic equivalent of
certain dosages of Niaspan. The ANDA process provides for
streamlined FDA approval of a bioequivalent generic version
of an FDA-approved brand-name drug. As part of the ANDA
process, Barr filed certifications with the FDA stating that
its generic drug did not infringe any of the patents covering
Niaspan and/or that the patents were invalid or
March 2002, Kos initiated the first of a series of
patent-infringement lawsuits against Barr in the Southern
District of New York, alleging infringement of its Niaspan
patents. After three years of litigation, on April 12, 2005,
Kos and Barr entered into several related settlement
agreements terminating the litigation. These agreements
constitute the alleged “pay for delay” or
“reverse payment” settlement that is the subject
of this litigation.
allege that defendants' conduct constituted unlawful
restraint of trade in violation of Sections 1 and 2 of the
Sherman Act, 15 U.S.C. §§ 1-2. They contend that
absent the alleged reverse payments, Barr (or later Teva)
would have launched generic Niaspan earlier than September
2013, the date on which Barr launched its generic, and Kos
(or later Abbott or AbbVie) would have launched an authorized
generic at or about the same time. DPPs proffer
three possible scenarios of earlier market entry: (1) at risk
in June 2005, while the Kos v. Barr patent litigation was
pending, (2) after Barr would have prevailed in the patent
litigation in September 2007, or (3) as a result of reaching
a no-reverse-payment settlement with Kos permitting a
correspondingly earlier date (March 2009) for Barr's
generic to enter the market.
December 19, 2018, DPPs filed a Motion for Class
Certification. In their Motion, DPPs seek certification of
the following class:
All persons or entities in the United States and its
territories who purchased brand name Niaspan directly from
any defendant, and generic Niaspan (extended-release niacin)
at any time during the period April 5, 2009 through June 26,
2014; or who purchased generic Niaspan (extended-release
niacin) directly from any defendant during that time period;
or who purchased brand name Niaspan directly from any
defendant at any time after April 5, 2009 but ceased
operations before generic Niaspan entered in September 2013.
Excluded from the class are the defendants, their officers,
directors, management, employees, subsidiaries, and
affiliates, and all federal governmental entities.
Purchaser Class Plaintiffs' Motion for Class
Certification (“DPPs' Mot.”) 2.
proposed class consists of forty-eight class members, six of
which have since been acquired by other class
members. Direct Purchaser Class Pls.' Mem. L.
Supp. Mot. for Class Cert. (“DPPs' Mem.”) 17;
Mem. L. Opp'n to Direct Purchaser Plaintiffs' Motion
for Class Certification (“Defs.' Opp'n”)
38. Twenty-one class members purchased brand and generic
Niaspan from defendants. Direct Purchaser Pls.' Mem. L.
Supp. Mot. for Class Certification (“DPPs'
Reply”) 6. Two class members, King Drug Co. of
Florence, Inc. and Professional Drug Company Inc., purchased
brand Niaspan but ceased business operations before generic
Niaspan became available in 2013. Defs.' Opp'n 27;
DPPs' Reply 6. Twenty-five class members purchased only
generic Niaspan directly from defendants. DPPs' Mem.
also move the Court to appoint plaintiffs Rochester Drug
Co-Operative, Value Drug, and Professional Drug Co. as class
representatives and to appoint Berger Montague PC, Garwin
Gerstein & Fisher LLP, and Hagens Berman Sobol Shapiro
LLP as Co-Lead Counsel for the Class pursuant to Fed.R.Civ.P.
23(c)(1)(B) and 23(g). Defendants responded to the Motion on
February 25, 2019; DPPs filed a Reply on March 25, 2019. The
Court held Hearings on DPPs' Class Certification Motion
on May 14 and July 23, 2019. The Motion is ripe for decision.
class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.” In re Modafinil Antitrust
Litig., 837 F.3d 238, 248 (3d Cir. 2016). Subsection (a)
of Federal Rule of Civil Procedure 23 sets out four
prerequisites for a class action-numerosity, commonality,
typicality, and adequacy. Subsection (b) provides additional
requirements for each type of class action. To obtain
certification under Rule 23(b)(3), as plaintiffs seek to do
in this case, the moving party must show “that the
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.” These requirements are referred to,
respectively, as predominance and superiority. Rule 23(b)(3)
also contains an implied, judicially-created requirement that
the identities of class members are ascertainable. See In
re Domestic Drywall Antitrust Litig., 322 F.R.D. 188,
200 (E.D. Pa. 2017) (citing Carrera v. Bayer Corp.,
727 F.3d 300, 305 (3d Cir. 2013)).
party seeking certification bears the burden of establishing
each element of Rule 23.” In re Modafinil Antitrust
Litig., 837 F.3d at 248. “[T]rial courts
‘must engage in a rigorous analysis and find each of
Rule 23[ ]'s requirements met by a preponderance of the
evidence before granting certification.' They must do so
even if it involves judging credibility, weighing evidence,
or deciding issues that overlap with the merits of a
plaintiff's claims.” Harnish v. Widener Univ.
Sch. of Law, 833 F.3d 298, 304 (3d Cir. 2016) (citing
In re Hydrogen Peroxide Antitrust Litig., 552 F.3d
305, 316-25 (3d Cir. 2008)). This Rule 23 analysis also
requires courts to “determine the nature of the
evidence, and how plaintiffs would present this evidence at
trial.” In re Domestic Drywall Antitrust
Litig., 322 F.R.D. at 221. However, “a court
should not address merits-related issues ‘beyond what
is necessary to determine preliminarily whether certain
elements will necessitate individual or common
proof.'” Harnish, 833 F.3d at 305.
Third Circuit has “repeatedly emphasize[d] that
[a]ctual, not presumed conformance with Rule 23 requirements
is essential.” Gonzalez v. Corning, 885 F.3d 186, 192
(3d Cir. 2018) (internal quotations omitted). “When
courts harbor doubt as to whether a plaintiff has carried her
burden under Rule 23, the class should not be
certified.” Mielo v. Steak 'n Shake Operations,
Inc., 897 F.3d 467, 483 (3d Cir. 2018).
argue that they have satisfied their burden of establishing
each Rule 23 requirement by a preponderance of the evidence.
The Court considers each requirement in turn.
must initially satisfy the four prerequisites detailed in
Rule 23(a): numerosity, commonality, typicality, and
adequacy. The Court concludes that each requirement is
23(a)(1) requires that the class be “so numerous that
joinder of all members is impracticable.” The
numerosity determination “calls for an inherently
fact-based analysis that requires a district court judge to
‘take into account the context of the particular
case,' thereby providing district courts considerable
discretion in making numerosity determinations.” In
re Modafinil Antitrust Litig., 837 F.3d 238, 249 (3d
Cir. 2016) (quoting Pa. Pub. Sch. Emps. Ret. Sys. v.
Morgan Stanley & Co., 772 F.3d 111, 120 (2d Cir.
2014)). The non-exhaustive list of relevant factors that are
appropriate for district court judges to consider when
determining whether joinder would be impracticable includes
“judicial economy, the claimants' ability and
motivation to litigate as joined plaintiffs, the financial
resources of class members, the geographic dispersion of
class members, the ability to identify future claimants, and
whether the claims are for injunctive relief or for
damages.” In re Modafinil Antitrust Litig. at
252-53. “[J]udicial economy and the ability to litigate
as joined parties are of primary importance.”
Id. at 253. “While ‘[n]o minimum No. of
plaintiffs is required to maintain a suit as a class
action,' [the Third Circuit] has said that
‘generally if the named plaintiff demonstrates that the
potential No. of plaintiffs exceeds 40, the first prong of
Rule 23(a) has been met.'” Id. at 249-50.
contend that the putative class contains forty-eight members,
creating a presumption that joinder is impracticable.
DPPs' Mem. 17-18. They further argue that the class has
widespread geographic dispersion, that many class members do
not have large enough claims to make an individual suit
practicable, and that some class members may not sue for fear
of retaliation by defendants. Id. at 18-20.
Defendants respond that the putative class contains only
forty-two members and that joinder is practicable because
“[a]ll, or virtually all, of the members of the
proposed class have the resources and financial incentives to
litigate through joinder.” Defs.' Opp'n 40.
reasons below, the Court concludes that the numerosity
requirement is satisfied.
Number of Class Members
contend that DPPs' calculation of forty-eight class
members wrongly includes “six entities that have been
acquired by other members of the proposed class.”
Defs.' Opp'n 38. They argue that “[a]s a
practical matter, Parents and subsidiaries will not make
different litigating decisions because they have a
‘unity of interests.'” Id. at 39.
correctly note that courts have consistently rejected this
argument. See, e.g., In re Loestrin 24 Fe Antitrust
Litig., No. 13-2472, 2019 WL 3214257, at *10 (D.R.I.
July 2, 2019); In re Namenda Direct Purchaser Antitrust
Litig., 331 F.Supp.3d 152, 207 (S.D.N.Y. 2018) (“I
join with other courts that have considered this issue and
have ruled that where there is distinct and separate injury,
a corporate relationship with another class member does not
defeat individual member status.”); In re Solodyn
(Minocycline Hydrochloride) Antitrust Litig., No.
14-02503, 2017 WL 4621777, at *4 (D. Mass. Oct. 16, 2017)
(holding class members with common corporate parents are
considered distinct entities for class certification
purposes); Am. Sales Co., LLC v. Pfizer, Inc., No.
14-361, 2017 WL 3669604, at *8 (E.D. Va. July 28, 2017)
(allowing subsidiaries to vindicate their own antitrust
Court agrees with DPPs that the six class members
subsequently acquired by other class members should be
treated as separate entities in the numerosity analysis.
However, even assuming arguendo that there were only
forty-two class members, the result would not change.
size of forty-eight members, or forty-two members, raises a
presumption that joinder is impracticable. See In re
Modafinil Antitrust Litig., 837 F.3d 238, 250-251 (3d
Practicality of Joinder
Court next turns to the other relevant numerosity
factors-judicial economy, the claimants' ability and
motivation to litigate as joined plaintiffs, the financial
resources of class members, and the geographic dispersion of
class members. A review of those factors does not rebut the
presumption that joinder is impracticable.
economy will be served by allowing this case to proceed as a
class action. If this case proceeds through joinder, the
Court faces the prospect of individual plaintiffs represented
by dozens of different attorneys with the potential for a
multitude of summary judgment briefs espousing an array of
arguments and additional complications at trial. See July 23,
2019, Hr'g Tr. 40:21-41:11.
Court finds that the claimants' ability and motivation to
litigate as joined plaintiffs is a neutral factor in
determining whether joinder would be impracticable. DPPs
assert that non-recoverable expert costs in complex antitrust
cases “can easily exceed $3 million.” DPPs'
Mem. 18-19. Even assuming that DPPs recover the full amount
of trebled prospective claims based on their damages
expert's highest aggregate overcharge estimate, they
argue that twenty-seven class members would have claims below
$3 million. Id. However, defendants correctly note
that DPPs err in their claims valuation because “the
numerosity rule does not envision the alternative of
individual suits; it considers only the alternative of
joinder.” In re Modafinil Antitrust Litig.,
837 F.3d at 258. DPPs offer no assessment as to how expert
costs could be economically shared through joinder. DPPs'
argue that contrary to DPPs' representation,
“[a]ll, or virtually all, of the members of the
proposed class have the resources and financial incentives to
litigate through joinder.” Defs.' Mem. 40. They
rely upon their expert, Dr. Daniel Rubinfeld, who determined
that “if the putative class members split those costs
evenly, 41 of the 42 ‘would have trebled claims in
excess of their share of expected litigation
costs.'” Id. at 41. The Court is not
persuaded by defendants' argument. To assess whether
bringing a claim is economical, a claimant must consider not
only the trebled value of the maximum possible recovery, but
also the possibility that a lawsuit will result in a less
favorable outcome-either through partial recovery or no
recovery at all. Dr. Rubinfeld's calculation is
fundamentally flawed due to his failure to take the
likelihood of litigation success into account. Thus, the
Court concludes that neither party has provided a persuasive
analysis of DPPs' financial motivation to litigate
also assert that some class members might not be motivated to
litigate through joinder out of fear of retaliation by
defendants. They highlight dicta from the Supreme Court in
which the Court “recognize[d] that direct purchasers
sometimes may refrain from bringing a treble-damages suit for
fear of disrupting relations with their suppliers.”
Illinois Brick Co. v. Illinois, 431 U.S. 720, 746
(1977). DPPs allege that this fear of retaliation explains
why in a similar reverse payment case, several plaintiffs
chose not to pursue their claims through joinder after the
court denied their motion for class certification. DPPs'
Mem. 18 n.84 (citing King Drug Co. of Florence, Inc. v.
Cephalon, Inc., No. 06-1797 (E.D. Pa.)). However, DPPs
do not provide any evidence that the putative class members
in this case fear retaliation or that participation through
joinder sparks greater fear of retaliation than does
participation through a class action. See King Drug Co.
of Florence, Inc. v. Cephalon, Inc., No. 06-1797, 2017
WL 3705715, at *10 (E.D. Pa. Aug. 28, 2017) (“Direct
Purchasers have again failed to offer any concrete evidence
to support their concern about the hypothetical risk of
Court also finds relevant, though less significant, DPPs'
widespread geographic diversity as a factor favoring finding
joinder impracticable. In re Solodyn (Minocycline
Hydrochloride) Antitrust Litig., No. 14-02503, 2017 WL
4621777, at *5 (D. Mass. Oct. 16, 2017) (“[G]eographic
dispersion suggests joinder is impracticable, even when
putative class members are corporate entities.”). In
this case, DPPs are scattered across ...