In re Zetia Ezetimibe Antitrust Litig.

In re ZETIA EZETIMIBE ANTITRUST LITIGATION

MDL No. 2:18md2836

United States District Court, E.D. Virginia, Norfolk Division

August 20, 2021

MEMORANDUM ORDER

REBECCA BEACH SMITH, SENIOR UNITED STATES DISTRICT JUDGE

This matter comes before the court on the End-Payor Plaintiffs' ("EPPs'") Motion for Class Certification and Appointment of Class Representatives and Class Counsel, ECF No. 729, and EPPs' Motion for Leave to Modify and Limit Their Class Definition, ECF No. 809.

I. Background

EPPs^[1] filed the Motion for Class Certification on November 18, 2019, and the Motion to Modify the Class Definition on January 15, 2020. ECF Nos. 729, 809. On January 20, 2020, the Glenmark and Merck Defendants^[2] filed an Opposition to the Motion for Class Certification, ECF Nos. 829, 833, and EPPs filed a reply on February 20, 2020, ECF Nos. 885, 886. On February 4 2020, the Glenmark and Merck Defendants filed an Opposition to the Motion to Modify the Class Definition, ECF Nos. 854, 857, and EPPs filed a reply on February 20, 2020, ECF Nos. 884, 887.

On February 25, 2020, the Motion for Class Certification was referred to United States Magistrate Judge Douglas E. Miller pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72 (b), to conduct necessary hearings and to submit to the undersigned district judge proposed findings of fact, if applicable, and recommendations for the disposition of the motion. ECF No. 888. The Motion to Modify the Class Definition was separately referred on February 21, 2020. The Magistrate Judge held hearings on the motions on May 1, 2020, and July 7, 2020. ECF Nos. 931, 1014. EPPs filed a Supplemental Brief in Support of their Motion for Class Certification and Motion to Modify the Class Definition on May 15, 2020, ECF Nos. 945, 949, and Defendants filed a Supplemental Brief in Opposition on May 22, 2020, ECF Nos. 954, 956.

On August 14, 2020, the Magistrate Judge submitted a Report and Recommendation ("R&R"). ECF No. 1094. The R&R recommends that the court grant EPPs' Motion for Class Certification, ECF No. 729, and grant EPPs' Motion for Leave to Modify Their Class Definition, ECF No. 809. R&R at 83-84.

The R&R advised Defendants of their right to file written objections to the findings and recommendations made by the Magistrate Judge within fourteen (14) days from the date of service of the R&R on the objecting party. Id. at 84. Defendants filed Objections to the R&R on August 28, 2020, arguing that EPPs cannot satisfy the predominance and ascertainability requirements of Federal Rule of Civil Procedure 23 even with EPPs' modified class definition. ECF No. 1103. EPPs filed a response on September 11, 2020. ECF No. 1129. On April 23, 2021, the court allowed Defendants to file a supplemental brief in further support of their Objections to the R&R. See ECF Nos. 1258-1261, 1271-1272.

These matters are now ripe for review. Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure, the court, having reviewed the record in its entirety, hereby makes a de novo determination of those portions of the R&R to which Defendants have specifically objected. See Fed.R.Civ.P. 72(b). The court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to him with instructions. 28 U.S.C. § 636(b) (1) .

II. Analysis

Defendants make two overarching objections to the R&R.^[3]First, they argue that the class should not be certified because EPPs have not shown by a preponderance of the evidence that issues that are common to the class will predominate over individual ones. Second, they argue that EPPs have not provided a reliable and administratively feasible method for ascertaining class membership. For the reasons below, the court rejects the Defendants' objections and affirms the R&R.

A. Predominance

For the proposed class to be certified, EPPs must prove by a preponderance of the evidence that questions "of law or fact common to class members predominate over any questions affecting only individual members." Fed.R.Civ.P. 23(b)(3). To satisfy this requirement, EPPs must specifically demonstrate that they can prove violation of antitrust laws, injury, and measurable damages through common proof on a classwide basis. See In re Restasis Antitrust Litig., 335 F.R.D. 1, 14 (E.D.N.Y. 2020). However, "individual questions need not be absent in order to certify a class," In re Namenda Direct Purchaser Antitrust Litig., 331 F.Supp.3d 152, 204 (S.D.N.Y. 2018), as long as "common questions "predominate over any questions affecting only individual [class] members," Amqen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 469 (2013) (alteration in original).

Defendants argue that the proposed class does not satisfy the predominance requirement as to classwide proof of injury because the class includes "thousands of uninjured class members'' for which EPPs "offer no mechanism of identifying . . . without . . . individual inquiries." Defs.' Objs. at 7. They argue that the R&R mistakenly arrived at the opposite conclusion by (1) applying the wrong legal standard to assess injury and (2) erroneously using anecdotes and averages to mask large numbers of uninjured members.

1. Nexium Standard

Defendants first argue that in determining whether class members suffered injury, the R&R "wrongly relied on the Nexium single overcharge standard." Defs.' Objs. at 7. Under that standard, "antitrust injury occurs the moment the purchaser incurs an overcharge, whether or not that injury is later offset." In re Nexium, 777 F.3d 9, 27 (1st Cir. 2015). Defendants argue that the court should instead assess injury on a net basis. See Defs.' Objs. at 11.

After reviewing the record and case law, the court concludes that the Magistrate Judge properly rejected the Defendant's argument. See R&R at 47 (noting that "[t]he overwhelming weight of authority rejects Defendants' position"). Defendants mistakenly assert that "if an EPP was no worse off because of the alleged conduct (or in fact benefitted from it, on net) then it has not been injured by that conduct." Defs.' Objs. at 8. However, in the antitrust context, injury occurs at the moment a single overcharge occurs due to the alleged anticompetitive conduct. Nexium, 777 F.3d at 27; see also Mayor of Baltimore v. Actelion Pharms. Ltd., 995 F.3d 123, 131 (4th Cir. 2021) (asserting that "each time [pharmaceutical company] sold [branded drug] at a supracompetitive price . . ., it illegally exercised monopoly power . . . thus committing an overt act that caused injury and violated the antitrust laws"); R&R at 47-48 (collecting cases). When assessing injury, "no attempt is made to ask whether the injury is outweighed by benefits." Alig v. Quicken Loans Inc., 990 F.3d 782, 792 (4th Cir. 2021) (affirming class certification and holding that an instance of financial harm, even if subsequently offset, constituted injury). Offsets are relevant to the issue of damages, ^[4]not injury. Id.

The court is not convinced otherwise by Defendants' reliance on vague statements in Windham v. American Brands, Inc., 565 F.2d 59, 66-67 (4th Cir. 1977), a case that was based on patently different facts than this case, and involved an "unmanageable" variety of antitrust claims "arising out of . . . several violations," and focused primarily on the unfeasible and individualized calculation of damages. See Defs.' Objs. at 10. Relatedly, the court rejects Defendants assertion that the Nexium standard is irrelevant to "many of the transactions" in this case because "[u]ndisputed evidence showed that some rebates are paid *at the time of purchase,' and not as a later offset." Defs.' Objs. at 10 (quoting Hughes Decl., ECF No. 836, SI 50). However, Dr. Hughes failed to persuasively support that assertion, which is in fact disputed, with evidence related to Zetia during the applicable class period. Cf. Dietz Decl., ECF No. 835, SI 27, ; May Hr'g Tr., ECF No. 931, at 99:15-100:23, 114:6-10.

2. Uninjured Class Members

Next, Defendants argue that the R&R underestimated the number of uninjured class members because the use of "averages and anecdotes offered by EPPs' expert" to support classwide injury "mask a large number of uninjured TPPs in the putative class." Defs.' Objs. at 12. Therefore, according to Defendants, the individualized inquiry necessary to identify uninjured members will predominate over common questions. Defendants rely on the case In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d 184 (3d Cir. 2020), and argue that the use of averages is only "acceptable where they do not mask individualized injury." Defs.' Objs. at 12 (quoting Lamictal, 957 F.3d at 194). However, Lamictal involved evidence of "nuance[s]" in that particular market that were ignored by the district judge and may have defeated a predominance finding. 957 F.3d at 194. Here, Defendants do not attempt to analogize the salient facts at issue in Lamictal, and therefore fail to provide persuasive evidence that the use of averages is inappropriate here. See In re Zetia (Ezetimibe) Antitrust Litig., No. 20-2184, 2021 WL 3379035, at *6 (4th Cir. Aug. 4, 2021) ("But we find no issue with the practice of proving injury by classwide averages, which the district court correctly characterized as 'common.'")

Additionally the Magistrate Judge completed an extensive and rigorous analysis to find that EPPs presented sufficient evidence to show that the amended class does not include so many uninjured class members as to bar class certification. See R&R at 40-66. By limiting the class definition, EPPs have excluded certain government-subsidized plans and plans with high manufacturer rebates on branded Zetia, which likely included members with no injury or damages. See ...