Third Circuit Affirms Class Certification in In re Suboxone Antirust Litigation
On July 28, 2020, the Third Circuit in In re Suboxone (Buprenorphine Hydrochloride & Nalaxone) Antitrust Litigation, affirmed certification of a direct purchaser class, concluding that common evidence existed to prove the plaintiffs’ antitrust theory and resulting injury and that the proposed class representative, Burlington Drug Company, Inc., was an adequate class representative.
The direct-purchaser plaintiffs alleged that the defendant drug manufacturer of the opioid-treatment drug, Suboxone, engaged in anticompetitive conduct that impeded the entry of generic versions of the drug into the market. Specifically, plaintiffs asserted that defendant “shifted the market” from Suboxone tablets to Suboxone film by the time generic tablets entered the market, thereby maintaining a monopoly and suppressing competition. According to plaintiffs, the defendant’s transition from tablets to film was coupled with six tactics to “eliminate demand for Suboxone tablets and to coerce prescribers to prefer film,” including making false statements about the safety of the tablets and withdrawing brand-name Suboxone tablets from the market. The plaintiffs argued that due to defendant’s anticompetitive conduct, they paid more for brand Suboxone products than they would have for generic tablets. The district court certified the class, and the Third Circuit granted the defendant’s petition for leave to appeal under Rule 23(f).
First, the Third Circuit addressed defendant’s argument that plaintiffs did not provide common evidence of injury or damages that matched a viable theory of liability, as required by Comcast Corp. v. Behrend, 569 U.S. 27, 37-38 (2013) (class certification inappropriate where damages model reflected injury from four antitrust injuries, but only one viable theory of antitrust liability and injury remained in the case). The defendant did not dispute that plaintiffs provided common evidence that they paid more for brand Suboxone products, but rather, defendant argued that it could lawfully raise the prices of Suboxone tablets and change its rebate program and so there was no antitrust injury. The Third Circuit rejected defendant’s argument, reasoning that plaintiffs’ theory of the case was not simply that defendant’s “pricing of brand tablets individually caused harm.” The court explained, “[t]his case is not one involving a pricing scheme alone. Rather, this case includes a scheme to suppress generic competition through a series of actions that will be proven by common evidence.”
The court explained that defendant’s request that the court “examine each of these acts individually,” was “incorrect[]” because all of the acts must be taken together to determine whether there is a monopoly. In this regard, the court noted, “[t]he common evidence here would be used to prove that these actions occurred and together suppressed generic competition, and thereby caused the Purchasers to buy the higher-priced brand Suboxone products because [defendant’s] actions made it difficult for the less expensive generics to compete.”
Moreover, the court distinguished Comcast because in In re Suboxone, there was “only one theory of antitrust injury, and that theory corresponds to a theory of liability.” As the court explained, “[r]aising prices … was just one aspect of [defendant’s] alleged monopolistic conduct, which is better described as a multifaceted yet single scheme to move the market to Suboxone film to stifle competition from generic tablets.” While defendant argued that each of the six allegedly anticompetitive actions represented a different theory of liability, the court concluded that “there is one theory of liability proven by a variety of acts resulting in one antirust injury.”
Next, the Third Circuit rejected defendant’s argument that the plaintiffs did not satisfy the predominance requirement because their damages model calculated aggregate damages, and “the eventual need for individualized damages inquiries defeats predominance.” The Circuit Court explained that “[a]ntitrust plaintiffs may satisfy the predominance requirement by using a model that estimates the damages attributable to the antitrust injury, even if more individualized determinations are needed later to allocate damages among class members.” And individual damages determinations were “of no consequence in determining whether there are common questions concerning liability.” Thus, the court held that the eventual need for individual inquiries to allocate damages among class members did not preclude class certification.
Lastly, the Third Circuit rejected defendant’s arguments that Burlington was not an adequate class representative, pursuant to Rule 23(a)(4). The court found that possible conflicts with class counsel alleged by defendant were “speculative or without basis … [and s]uch hypothetical conflicts cannot defeat adequacy.” Moreover, the court concluded that defendant’s argument that Burlington had “ceded control” of the litigation to class counsel did not render Burlington an inadequate representative. The Circuit Court noted that defendant cited “no precedent from this Court for its argument that a class representative must ‘control’ the litigation.” And, the court further observed that Burlington was not a “disengaged representative.”
The Third Circuit’s decision makes clear that in determining whether a plaintiff’s antitrust allegations are sufficient to support class certification, a court must consider the totality of a defendant’s alleged acts, and whether those acts, taken together, could be proven through common evidence. The decision is also a reaffirmation that predominance may be satisfied, even if individual inquiries regarding the allocation of damages must be decided later in the litigation. Additionally, the Circuit Court’s decision confirms its prior observations that a named plaintiff need not “control” the litigation to be an adequate class representative; rather, class counsel may manage and direct a class action.