The First Circuit Court of Appeals has upheld the certification of a class of indirect purchasers of Nexium in pay-for-delay litigation over the heartburn drug. The court ruled that the presence of a few uninjured members in the class didn’t prevent certification. In a split decision, a three-judge panel ruled that the district court hadn’t abused its discretion in certifying a class of consumers, insurers and other entities who ultimately paid for the drug even if the class included a de minimis number of members who wouldn’t have been harmed by the alleged plot between AstraZeneca AB and Ranbaxy Pharmaceuticals Inc. to delay generic versions of the drug through a patent settlement.
The majority reasoned that as long as it is possible to come up with a mechanism that could ultimately sort out the uninjured class members and keep them from recovering damages at some point in the proceedings, a case could be certified. “Defendants also assert that any mechanism of exclusion that requires determination of the individual circumstances of class members is improper,” U.S. Circuit Judge Timothy B. Dyk wrote for the majority. “But the Supreme Court in Amgen and the circuits in other cases have made clear that the need for some individualized determinations at the liability and damages stage does not defeat class certification.”
Even though the Plaintiffs hadn’t proposed a mechanism to do so yet, the majority pointed out that there was no reason to think it would be impossible to come up with one. The court pointed out that, on the one hand, Plaintiffs could argue for a presumption that consumers would choose the generic option if it were available, or alternatively, that consumer testimony could be used to show injury. As long as the class is definite and the court limits the total recovery to the size of the injury and makes sure only that only injured class members recover, the fact that the class definition might encompass some uninjured members shouldn’t block certification at that preliminary stage, according to the opinion. Judge Dyk wrote:
“At worst the inclusion of some uninjured class members is inefficient, but this is counterbalanced by the overall efficiency of the class action mechanism. Moreover, excluding all uninjured class members at the certification stage is almost impossible in many cases, given the inappropriateness of certifying what is known as a ‘fail-safe class’ — a class defined in terms of the legal injury.”
The majority also dismissed the Defendants’ appeals to the Supreme Court’s recent class action decisions in Dukes v. Wal-Mart and Behrend v. Comcast, saying that neither case holds that Plaintiffs have to show that every potential class member was injured by the alleged conduct. Judge Dyk wrote: “The Wal-Mart Court nowhere stated that at the class certification stage, every member of the class must establish that he, she or it was in fact injured by the common policy of discrimination.”
The court called the Defendants’ call to Comcast “equally misdirected,” noting that the case only meant that “at class certification, the damages calculation must reflect the liability theory.” U.S. Circuit Judge William J. Kayatta, Jr., dissented from the majority’s decision. While Judge Kayatta agreed that having a mechanism to sort out uninjured class members was key to allowing certification, he said that the court should have vacated and remanded the decision for the district court to take another look at the issue. Judge Kayatta wrote:
The possibility would remain that the Plaintiffs might yet propose and the district court approve some method of culling uninjured consumers from the class in an administratively feasible manner that protects Defendants’ rights. Instead, the majority dons the hats of both Plaintiffs’ counsel and the district court by first proposing, sua sponte, a culling method that no party has proposed — limiting recovery to consumers who file affidavits — and then announcing itself quite satisfied with that method.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.