In re: Nexium Antitrust v.

• Court: Court of Appeals for the First Circuit
• Decided: January 22, 2015
• Docket: 14-1522
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

Nos. 14-1521, 14-1522

IN RE NEXIUM ANTITRUST LITIGATION

ASTRAZENECA AB, et al.,

Defendants-Appellants,

v.

UNITED FOOD AND COMMERCIAL WORKERS UNIONS AND EMPLOYERS MIDWEST HEALTH BENEFITS FUND, et al.,

Plaintiffs-Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Torruella, Dyk,* and Kayatta, Circuit Judges.

Kannon K. Shanmugam, with whom Dane H. Butswinkas, Paul B. Gaffney, John E. Schmidtlein, Williams & Connolly LLP, Laurence A. Schoen, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Jay P. Lefkowitz, Karen N. Walker, Kirkland & Ellis LLP, Kevin D. McDonald, Jonathan Berman, Jones Day, Timothy C. Hester, Covington & Burling LLP, Michael P. Kelly, William A. Zucker, McCarter & English, LLP, Leslie F. Su, Minerva Law, P.C., J. Douglas Baldridge, Lisa Jose Fales, Danielle R. Foley, Sarah Choi, and Venable LLP were on brief, for defendants-appellants. Kenneth A. Wexler, with whom Wexler Wallace LLP, Steve D.

* Of the Federal Circuit, sitting by designation. Shadowen, Hillard & Shadowen LLC, J. Douglas Richards, Cohen Milstein Sellers & Toll, PLLC, Jayne A. Goldstein, Pomerantz Grossman Hufford, Dahlstrom & Gross LLP, Glen DeValerio, and Berman DeValerio were on brief, for plaintiffs-appellees. Kathryn Comerfold Todd, Tyler R. Green, National Chamber Litigation Center, Inc., Jeffrey S. Bucholtz, Ashley C. Parrish, Karen F. Grohman, and King & Spaulding LLP, on brief for Chamber of Commerce of the United States of America, as amicus curiae in support of defendants-appellants. Daniel E. Gustafson, Gustafson Gluek PLLC, Prof. Joshua P. Davis, Albert A. Foer, Richard Brunell, and Randy M. Stutz, on brief for American Antitrust Institute, as amicus curiae in support of plaintiffs-appellees. Ellen Meriwether, Cafferty Clobes Meriwether & Sprengel, LLP, and David A. Balto, on brief for Community Catalyst, Inc., National Legislative Association for Prescription Drug Prices, United States Public Interest Research Group, and American Independent Business Alliance, as amici curiae in support of plaintiffs-appellees. Scott L. Nelson and Julie A. Murray, on brief for Public Citizen Litigation Group, as amicus curiae in support of plaintiffs-appellees.

January 21, 2015

-2- DYK, Circuit Judge.

AstraZeneca1 sells a heartburn drug called Nexium and

owns several patents related to the Nexium compound, a method of

using Nexium, and the process for manufacturing Nexium ("the Nexium

patents"). Nexium is a proton-pump inhibitor, a type of drug that

decreases the symptoms of heartburn by reducing gastric acid

production.

Three generic drug companies, Ranbaxy,2 Teva,3 and DRL4

(collectively, the "generic defendants"), sought to market generic

forms of Nexium. AstraZeneca sued these generic companies for

infringement of some of the Nexium patents. AstraZeneca eventually

settled with each generic manufacturer. Under the settlement

agreements, AstraZeneca paid the generic defendants significant

sums in the form of cash or debt forgiveness (so-called "reverse

payments") in exchange for not challenging the validity of the

Nexium patents and for delaying the launch of their respective

generic products until the two main patents covering the drug

1 AstraZeneca AB, Aktiebolaget Hassle, and AstraZeneca LP. 2 Ranbaxy Pharmaceuticals, Inc., Ranbaxy Inc., and Ranbaxy Laboratories Ltd. 3 Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA Inc. 4 Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc.

-3- product itself expired on May 27, 2014.5 As of the date of this

opinion, no generic substitute has been launched.

The named plaintiffs are union health and welfare funds

that reimburse plan members for prescription drugs including

Nexium. Plaintiffs alleged that the Nexium patents are invalid

because they would have been obvious in light of earlier

AstraZeneca patents and other references. The European Patent

Office and the Canadian courts have held that the European and

Canadian Nexium patents are invalid.

Plaintiffs alleged that the settlement agreements between

AstraZeneca and the generic defendants (collectively, the

"defendants") constituted unlawful agreements not to compete

because of the likely invalidity of the Nexium patents, the size of

AstraZeneca’s payments to the generic defendants, and the fact that

generic defendants provided nothing to AstraZeneca other than an

agreement not to compete. Plaintiffs contend that but for

defendants’ anti-competitive conduct, a generic version of Nexium

would have been available as early as April 2008, thereby lowering

the price through competition. They asserted that AstraZeneca

overcharged for Nexium from April 14, 2008, to at least May 27,

2014 ("the class period"). They claim damages under the antitrust

and consumer protection laws of 24 states and the District of

5 Five of the Nexium patents expired on or before this date.

-4- Columbia.6 The plaintiffs sought class certification for a class

of third-party payors ("TPPs") (i.e., insurance plans), such as the

named plaintiffs, and individual consumers.7

On November 14, 2013, the district court certified a

class consisting of:

All persons or entities in the United States and its territories who purchased or paid for some or all of the purchase price for Nexium or its AB-rated generic equivalents . . . in capsule form, for consumption by themselves, their families, or their members, employees, insureds, participants or beneficiaries, during the period April 14, 2008[,] through and until the anticompetitive effects of Defendants’ unlawful conduct cease.

Add. 40a. The certified class also included certain exceptions

discussed below. The defendants sought to appeal the class

certification. We granted this interlocutory appeal under Federal

Rule of Civil Procedure 23(f) to review the class certification.8

6 The plaintiffs did not assert federal antitrust claims. In Illinois Brick Co. v. Illinois, 431 U.S. 720, 746—48 (1977), the Supreme Court held that indirect purchasers of goods produced by firms engaged in anti-competitive conduct were too remote from that conduct to have suffered an injury under the Clayton Act. As a result, plaintiffs bring their suits under state law in states with "Illinois Brick" repealer laws which have granted indirect purchasers the right to sue for antitrust violations. 7 Plaintiffs filed this suit on August 24, 2012, in the Eastern District of Pennsylvania. The United States Judicial Panel on Multidistrict Litigation transferred the case to the District of Massachusetts in December 2012. 8 The district court has since granted various summary judgment motions that narrow the claims against certain generic defendants. In particular, the district court granted summary judgment to Teva and DRL finding that plaintiffs have not shown the existence of a "large, unjustified reverse payment" to these

-5- We conclude that class certification is permissible even

if the class includes a de minimis number of uninjured parties. We

hold that the district court did not abuse its discretion by

certifying the class here and determining that at the certification

stage, it had not been shown that future proceedings would not be

manageable consistent with defendants’ Seventh Amendment and due

process rights.

I.

A.

Both the Supreme Court in FTC v. Actavis, 133 S.Ct. 2223,

2227–29 (2013), and the district court below, In re Nexium

(Esomeprazole) Antitrust Litigation, 968 F. Supp. 2d 367 (D. Mass.

2013), have discussed extensively the regulatory and patent

framework of this suit. We discuss it briefly here.

The Food, Drug, and Cosmetic Act ("FDCA") requires drug

manufacturers to secure approval from the Food and Drug

Administration ("FDA") to market a new drug. 21 U.S.C.

§ 355(b)(1), (d). To obtain approval, a new drug application

defendants. However, the district court found that there was "sufficient circumstantial evidence" to "infer a conspiracy among the Defendants." J.A. 636 ¶ 3. The district court also concluded that Ranbaxy was not likely to launch "at-risk." However, the defendants make no contention that these various rulings affect the proper composition of the class. In the interim after trial, the jury returned a verdict in favor of defendants. See In re Nexium Antitrust Litig., No. 12-md-02409 (D. Mass. Dec. 8, 2014), ECF No. 1374. This, of course, does not moot the case here given the possibility of further proceedings.

-6- ("NDA") must include scientific data showing that the drug is safe

and effective for its proposed purpose, requiring that the

manufacturer conduct long and costly clinical trials. Caraco

Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S.Ct. 1670, 1676

(2012).

The Hatch-Waxman Amendments9 introduced two mechanisms to

the FDCA to enable early marketing of generic substitutes. First,

to market a generic drug, the manufacturer need only file an

abbreviated new drug application ("ANDA") showing that the generic

product has the same active ingredients as, and is biologically

equivalent to, the brand name drug. Id. Second, Hatch-Waxman

protects the original NDA-filer by barring FDA approval of an ANDA

that is alleged to infringe a patent until the patent cases have

been resolved (or 30 months have elapsed) and provides a means for

early resolution of patent disputes. Eli Lilly & Co. v. Medtronic,

Inc., 496 U.S. 661, 676–78 (1990).

To this end, the NDA-filer must list the number and

expiration date of any patent which claims the drug that is the

subject of the NDA or a method of manufacture or use of that drug

in the FDA’s so-called "Orange Book." 21 C.F.R. § 314.53. Upon

filing, the ANDA applicant must notify the NDA-filer if it is

asserting that some or all of these listed (and unexpired) patents

9 Also known as the Drug Price Competition and Patent Term Restoration Act of 1984. 98 Stat. 1585.

-7- are “invalid or will not be infringed by the manufacture, use or

sale of the [generic] drug" (known as a paragraph IV

certification). 21 U.S.C. § 355(j)(2)(A)(vii)(IV). A paragraph IV

certification is treated as an act of infringement, and the branded

drug manufacturer may immediately sue the generic manufacturer for

infringement based on this certification. 35 U.S.C.

§ 271(e)(2)(A). If the branded drug manufacturer sues, the FDA may

not approve the ANDA until 30 months pass or an appellate court

finds the patent invalid or not infringed. 21 U.S.C.

§ 355(j)(5)(B)(iii).

On December 3, 1999, AstraZeneca filed an NDA to market

Nexium. The FDA approved AstraZeneca’s NDA in 2001, and

AstraZeneca listed fourteen patents in the Orange Book. Four years

later, generic manufacturer Ranbaxy filed an ANDA and filed a

paragraph IV certification with its ANDA that the listed

AstraZeneca patents were not infringed or were invalid.

AstraZeneca sued Ranbaxy, alleging that Ranbaxy’s product would

infringe six of its patents, including the patents covering the

drug product itself. In the next few years, Teva and DRL also

filed ANDAs and paragraph IV certifications, and were sued in

separate actions by AstraZeneca for infringement of many of the

same Nexium patents, including the drug product patents.

For first-filer Ranbaxy, the 30 month period triggered by

AstraZeneca’s suit expired on April 14, 2008. As a result, Ranbaxy

-8- could have begun marketing its product on April 14, 2008, if it

launched "at-risk" — i.e., before the court ruled on patent

invalidity or infringement. However, on the date that Ranbaxy

could have launched a Nexium substitute, Ranbaxy and AstraZeneca

settled their patent litigation, and the district court entered a

consent judgment. Ranbaxy admitted the validity of AstraZeneca’s

asserted patents, admitted that its generic product infringed those

patents, and agreed to delay the launch of its generic product

until May 27, 2014, the date that the main drug product patents

expired. In exchange, AstraZeneca agreed to pay Ranbaxy over a

billion dollars. Subsequently, AstraZeneca entered into separate

settlement agreements with Teva and DRL. The provisions of these

agreements were similar to AstraZeneca’s agreement with Ranbaxy,

and both Teva and DRL also agreed to delay their respective generic

product launches until May 27, 2014, in exchange for substantial

monetary consideration.10 These agreements raised antitrust

concerns because they were agreements between competitors not to

compete.

The agreements between AstraZeneca and the generic

defendants are known as reverse payment settlements. Unlike

traditional settlements, where "a party with a claim . . . for

10 Both Teva and DRL owed AstraZeneca substantial damages from other patent infringement suits. In exchange for Teva and DRL’s concessions, AstraZeneca agreed not to collect these payments.

-9- damages receives a sum equal to or less than the value of its

claim[,] [i]n reverse payment settlements . . . a party with no

claim for damages . . . walks away with money simply so it will

stay away from the patentee’s market." Actavis, 133 S.Ct. at 2233.

The Supreme Court in Actavis concluded that reverse payment

settlements are properly evaluated under the antitrust laws using

a rule of reason analysis. Id. at 2237. Actavis specified

particular factors indicating that an agreement was an unreasonable

restraint of trade, including whether the reverse payment was

"large and unjustified," measured by "its size, its scale in

relation to the payor’s anticipated future litigation costs, its

independence from other services for which it might represent

payment, and the lack of any other convincing justification." Id.

at 2237.

Plaintiffs here alleged that the Nexium patents were

likely invalid or not infringed by the generic defendants’

products, and the payments were not made in exchange for any

services performed by the generic defendants. As a result,

defendants’ agreements constituted an unlawful horizontal

conspiracy to foreclose generic competition. Plaintiffs claimed

that because drug prices fall significantly with generic entry, the

prices of generic Nexium in the "but-for" market11 would have been

11 "[B]ut for [defendants’] [a]greements, generic versions of Nexium would have been available to [p]laintiffs and members of the Class in the United States as early as April 14, 2008." J.A.

-10- lower than the branded Nexium prices during the class period absent

generic entry. In addition, in the early period, purchasers of

branded Nexium would have paid supracompetitive prices as well. As

a result, the class members were injured by defendants’

overcharges.

The merits of plaintiffs’ antitrust challenge are not

before us.12 The issue is whether the district court properly

certified plaintiffs’ Rule 23(b)(3) damages class.

B.

The district court below concluded that plaintiffs "ha[d]

sufficiently demonstrated a showing of adequacy of representation

and predominance of common questions to the class to meet the

requirements of class certification under Rules 23(a) and

23(b)(3)." Add. 2a.13 Specifically, the district court decided

that plaintiffs had adequately shown that (1) "prices for

esomeprazole [during the class period] continued [to be]

artificially high as a result of the Defendants’ reverse payment

agreements," and (2) "that all class members have been exposed to

127 ¶ 2. 12 In September 2013, the district court concluded that the plaintiffs had plausibly alleged antitrust injury to survive defendants’ 12(b)(6) motion, i.e., that defendants’ exercise of market power generated anti-competitive consequences. In re Nexium, 968 F. Supp. 2d at 393. See also n.8, supra. 13 Plaintiffs here initially included Pharmacy Benefit Managers ("PBMs") in the class definition. PBMs bought Nexium directly from AstraZeneca and sold it to TPPs and consumers.

-11- purchasing or paying for esomeprazole magnesium at a

supracompetitive price." Add. 19a—20a. The district court

determined that some members of the class did not suffer injury,

perhaps "including more than a de minimis number of TPPs and

consumers." Add. 20a. But despite the presence of uninjured class

members, the court determined that "[defendants’ expert] failed

reliably to quantify the prevalence of his alleged problematic

subgroups and thus fail[ed] to establish that they are sufficiently

extensive to undermine [plaintiffs’ expert’s] conclusion[]" that

the vast majority of class members were injured. Add. 22a.

Finally, in keeping with the Supreme Court’s admonition that "class

certification ought not . . . turn into a ‘free-ranging merits

inquir[y]’ through unnecessary demands for exact calculations of

damages," the district court concluded that "[a]t this stage in

class certification . . . the incidence of uninjured consumers and

TPPs are insufficient to overcome a showing of common antitrust

impact to the putative class, but the Court preserves the

Defendants’ right to challenge individual damage claims at trial."

Add. 12a (citing Amgen, Inc. v. Connecticut Ret. Plans & Trust

Funds, 133 S.Ct. 1184, 1194—95 (2013)); Add. 24a.

We review class certification orders for abuse of

discretion. Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 37

(1st Cir. 2003) (citing Califano v. Yamasaki, 442 U.S. 682, 703

(1979)). "An abuse of discretion also occurs if the court adopts

-12- an incorrect legal rule." Waste Mgmt. Holdings, Inc. v. Mowbray,

208 F.3d 288, 295 (1st Cir. 2000). A "class certification appeal

‘can pose pure issues of law reviewed de novo.’" In re New Motor

Vehicles Canadian Export Antitrust Litig., 522 F.3d 6, 17 (citing

Tardiff v. Knox County, 365 F.3d 1, 4 (1st Cir. 2004)). Factual

determinations are reviewed for clear error. Id. (citing In re

PolyMedica Corp. Sec. Litig., 432 F.3d 1, 4 (1st Cir. 2005)).

II.

Defendants contend that the class certification is

improper because the class includes members who were not injured by

generic foreclosure — for example, individual consumers who would

have continued to purchase branded Nexium for the same price after

generic entry. Understanding the defendants’ challenge requires

description of the standards for class certification, only one of

which is at issue on appeal.

To certify a 23(b)(3) class, the district court must

undertake a "rigorous analysis" to determine whether plaintiffs met

the four threshold requirements of Rule 23(a) (numerosity,

commonality, typicality, and adequacy of representation) and Rule

23(b)(3)’s two additional prerequisites. Comcast Corp. v. Behrend,

133 S.Ct. 1426, 1432 (2013); Wal-Mart Stores, Inc. v. Dukes, 131

S.Ct. 2541, 2551 (2011); see also Gen. Tel. Co. of Sw. v. Falcon,

457 U.S. 147, 161 (1982). Defendants do not dispute that the four

-13- Rule 23(a) requirements were met here. In addition, Rule 23(b)(3)

permits certification only if

the court finds 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.14 Fed. R. Civ. P. 23(b)(3).

To meet the predominance requirement, the party seeking

certification must show that "the fact of antitrust impact can[] be

established through common proof" and that "any resulting damages

would likewise be established by sufficiently common proof." New

Motor Vehicles, 522 F.3d at 20 (emphasis added). The party also

bears the burden of "affirmatively demonstrat[ing] his compliance"

with the Rule 23 requirements. Comcast, 133 S.Ct. at 1432. The

district court concluded that plaintiffs had done so here, despite

finding that the certified class included some number of uninjured

class members.

14 The matters pertinent to these findings include:

(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and

(D) the likely difficulties in managing a class action.

-14- On appeal, defendants ask us to reverse the class-certification

decision, relying on two related arguments. First, defendants

contend that the presence of any uninjured class members (even a de

minimis number) defeats the 23(b)(3) predominance requirement

because the existence of uninjured class members precludes the use

of common proof at trial. Second, defendants contend that even if

a de minimis number of potentially uninjured class members would

not defeat class certification, more than a de minimis number of

class members were uninjured here.

III.

Relevant to the question of whether a class can include

uninjured members, three principles are established. First, a

class action is improper unless the theory of liability is limited

to the injury caused by the defendants. In other words, the

defendants cannot be held liable for damages beyond the injury they

caused. The Supreme Court emphasized this principle in Comcast.

The plaintiffs in that case had initially relied on four theories

of liability and had calculated aggregate damages based on all four

theories. 133 S.Ct. at 1434. But the district court certified the

class based on only one theory, and plaintiffs did not provide a

damages calculation for that one theory standing alone. Id.

Because the plaintiffs relied on "a methodology that identifies

damages that are not the result of the wrong[,]" they did not

-15- establish that "damages are capable of measurement on a classwide

basis," failing to meet the Rule 23(b)(3) requirement. Id. at

1434, 1433.15 Here, in contrast, the plaintiffs’ theory of

liability is appropriately limited. As defendants concede, the

plaintiffs’ theory and model for damages would only require that

the defendants pay aggregate damages equivalent to the injury that

they caused.

Second, the definition of the class must be "definite,"

that is, the standards must allow the class members to be

ascertainable. See William B. Rubenstein, Newberg on Class Actions

§§ 3:1, 3:3 (5th ed. 2013) (explaining that an "implied"

requirement for certification is that "a putative class [is]

ascertainable with reference to objective criteria"); Matamoros v.

Starbucks Corp., 699 F.3d 129, 139 (1st Cir. 2012) (holding that a

class was not "unascertainable and overbroad" where it was defined

15 Other circuits have also adopted this understanding of Comcast. See In re Urethane Antitrust Litig., 768 F.3d 1245, 1258–59 (10th Cir. 2014) (explaining the expert’s benchmarks in Comcast became "useless" upon a ruling that three of the liability theories could not be used); In re Deepwater Horizon, 739 F.3d 790, 815 (5th Cir. 2014) (explaining that Comcast stands for the proposition that formulas for classwide measurement of damages should not be "incompatible" with liability theories); Butler v. Sears, 727 F.3d 796, 799 (7th Cir. 2013) (A damages model must "measure only those damages attributable to [the liability] theory. If the model does not even attempt to do that, it cannot" meet the requirements of Rule 23(b)(3). (citing Comcast, 133 S.Ct. at 1433)), cert. denied, 134 S. Ct. 1277 (2014); Leyva v. Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir. 2013) ("[P]laintiffs must be able to show that their damages stemmed from the defendant’s actions that created the legal liability." (citing Comcast, 133 S.Ct. at 1435)).

-16- in terms of an "objective criterion"); Carrera v. Bayer Corp., 727

F.3d 300, 306 (3d Cir. 2013) (As an "essential prerequisite of a

class action," plaintiffs "must show, by a preponderance of the

evidence, that the class is currently and readily ascertainable

based on objective criteria." (citing Marcus v. BMW of North

America, LLC, 687 F.3d 583, 592—93 (3d Cir. 2012) (internal

quotation marks omitted)). The class definition here satisfies

these standards by being defined in terms of purchasers of Nexium

during the class period (with some exceptions that also satisfy

objective standards).

Third, where an individual claims process is conducted at

the liability and damages stage of the litigation, the payout of

the amount for which the defendants were held liable must be

limited to injured parties.16 At the class certification stage, the

16 We do not address here problems that arise where the distribution of the recovery is not based on an individual claims process: for example, where the amount of recovery for each individual class member is so small that it is not practical to engage in an individual claims process. In such circumstances some courts have resorted to awarding the recovery from the defendants to charities whose missions are consistent with the litigation, under the "cy pres" doctrine, or to a group of individuals that closely approximates the class, under the "fluid recovery" process. See, e.g., Comment: Manageability of Notice and Damage Calculation in Consumer Class Actions, 70 Mich. L. Rev. 338, 366 n.185 (1971) (describing the settlement of the case Daar v. Yellow Cab, 67 Cal. 2d 695 (1967), in which a taxi company reduced fares to offset gains it had made with higher rates). There is no suggestion here that an individual claims process is not feasible. Nor do we deal here with the problem that arises where the amounts awarded to individual claimants are less than the aggregate award. See Newberg, supra, § 12:28 (outlining common ways of distributing "unclaimed" funds).

-17- court must be satisfied that, prior to judgment, it will be

possible to establish a mechanism for distinguishing the injured

from the uninjured class members. The court may proceed with

certification so long as this mechanism will be "administratively

feasible," see Carrera, 727 F.3d at 307, and protective of

defendants’ Seventh Amendment and due process rights, see American

Law Institute, Principles of the Law: Aggregate Litigation,

§§ 2.02(a)(3), 2.07(d) cmt. j (2009) (indicating that the court

should exercise discretion to authorize aggregate treatment only if

it would "not compromise the fairness of procedures for resolving

any remaining issues presented by such claims" and that "due

process in aggregation . . . extend[s] to persons opposing the

aggregate group litigating related claims on an aggregate basis").

The defendants here dispute the plaintiffs’ compliance

with the third set of requirements primarily because the class

includes some number of brand-loyal consumers who would continue to

purchase branded Nexium even when a generic becomes available.

Defendants argue that "the [brand-loyalist issue] presents problems

that plaintiffs cannot overcome, for plaintiffs have no methodology

to identify [at a later stage of litigation] those consumers who

would have switched to a generic version." Appellant’s Br. 22.

Defendants assert that the plaintiffs’ expert admitted that her

damages model did not limit recovery to injured parties.

-18- While it is true that a proper mechanism for exclusion of

brand-loyalist consumers has not yet been proposed, plaintiffs’

expert made no concession that such a mechanism could not be

developed, nor did defendants’ expert say that it could not be

developed.

In order to address whether an appropriate mechanism can

be developed, it is useful to consider how injury would be

established outside of the class action context — that is, in an

individual consumer suit for antitrust damages. In that situation,

as here, by definition there are no records concerning generic

purchases during the class period since no generic was on the

market. Under these circumstances there appear to be at least two

ways that the consumer could establish injury. The first would be

to argue for a presumption that consumers would purchase the

generic if it were available, i.e., a presumption that economically

rational consumers faced with two identical products would purchase

the less expensive alternative. This presumption would be similar

to the presumption of reliance in securities class actions and

would be subject to rebuttal by the defendant. See Halliburton Co.

v. Erica P. John Fund, Inc., 573 U.S. ___, 134 S.Ct. 2398, 2408,

2412 (2013) (presumption of reliance in Basic, Inc. v. Levinson,

485 U.S. 224 (1988), applies to class action, but is subject to

rebuttal by defendants). We do not decide whether applying such a

presumption would be appropriate.

-19- But even if a presumption were determined not to be

appropriate, another approach exists. This other approach would be

to establish injury through testimony by the consumer that, given

the choice, he or she would have purchased the generic. Such

testimony, if unrebutted, would be sufficient to establish injury

in an individual action. And if such consumer testimony would be

sufficient to establish injury in an individual suit, it follows

that similar testimony in the form of an affidavit or declaration

would be sufficient in a class action. There cannot be a more

stringent burden of proof in class actions than in individual

actions. "Rigorous analysis," Falcon, 457 U.S. at 161, of Rule 23

requirements does not require raising the bar for plaintiffs higher

than they would have to meet in individual suits.17

Thus, we have confidence that a mechanism would exist for

establishing injury at the liability stage of this case, compliant

with the requirements of the Seventh Amendment and due process.

See Madison v. Chalmette Refining, LLC, 637 F.3d 551, 556 (5th Cir.

2011) (approving, in the context of class certification,

consideration of possible “case management tools, including

narrowing the claims and potential plaintiffs through summary

17 The cases relied on by the dissent rejecting the use of affidavits involved affidavits concerning the past purchase of the product in question (necessary for class membership), not affidavits concerning likely future purchases of the consumers, as to which documents are not available. See Marcus, 687 F.3d at 593; Carrera, 727 F.3d at 304.

-20- judgment [or] facilitating the disposition of the remaining

plaintiffs’ claims through issuance of a Lone Pine order [requiring

affidavits from plaintiffs]”).

Defendants have merely speculated that a mechanism for

exclusion cannot be developed later. This is not enough to

overcome plaintiffs’ case for having met the requirements of Rule

23. See Smilow, 323 F.3d at 40 (decertification unnecessary where

existence of individualized issues is "a matter of conjecture");

Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 430 (4th Cir.

2003) (defeating adequacy requirement of Rule 23 requires a

conflict that is "more than merely speculative or hypothetical").

Defendants also assert that any mechanism of exclusion

that requires determination of the individual circumstances of

class members is improper. 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. Rule 23(b)(3) "does not

require a plaintiff seeking class certification to prove that each

element of her claim is susceptible to classwide proof." Amgen,

133 S. Ct. at 1196 (alterations and citations omitted). Rather,

the question is whether there is "reason to think that

[individualized] questions will overwhelm common ones and render

class certification inappropriate . . . ." Halliburton, 134 S.Ct.

at 2412 (2014) (emphasis added). For example, damages will not be

-21- uniform across the class. But it is well-established that "[t]he

individuation of damages in consumer class actions is rarely

determinative under Rule 23(b)(3). Where . . . common questions

predominate regarding liability, then courts generally find the

predominance requirement to be satisfied even if individual damages

issues remain." Smilow, 323 F.3d at 40; Newberg, supra, § 4:54 (It

is a "black letter rule . . . that individual damage calculations

generally do not defeat a finding that common issues predominate

. . . .").

Even in cases where "the issue of injury-in-fact [not

just damages calculation] presents individual questions, . . . it

does not necessarily follow that they predominate over common ones

and that class action treatment is therefore unwarranted." Cordes

& Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91,

108 (2d Cir. 2007) (emphasis added). We do not think the need for

individual determinations or inquiry for a de minimis number of

uninjured members at later stages of the litigation defeats class

certification. As contemplated by Halliburton, the district court

also explicitly recognized the need to "preserv[e] the Defendants’

right to challenge individual damage claims at trial." Add. 24a.

In light of these three requirements — ensuring the class

is definite, limiting aggregate recovery to the amount of the

injury, and ensuring recovery by only injured parties — it is

-22- difficult to understand why the presence of uninjured class members

at the preliminary stage should defeat class certification.

Ultimately, the defendants will not pay, and the class members will

not recover, amounts attributable to uninjured class members, and

judgment will not be entered in favor of such members. Some number

of uninjured members will receive a class notice, but the district

court can easily assure that defendants will not pay for notice to

uninjured members.18 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.19

18 "District courts may order a class action defendant to pay the cost of class notification after they determine that the defendant is liable on the merits." Hunt v. Imperial Merch. Servs., Inc., 560 F.3d 1137, 1144 (9th Cir. 2009). However, fee shifting is discretionary, and the Supreme Court has cautioned that "courts must not stray too far from the principle" that plaintiff "should bear all costs relating to the sending of notice because it is he who seeks to maintain the suit as a class action." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 350 (1978). 19 As the district court noted, a fail-safe class is one in which "it is virtually impossible for the Defendants to ever ‘win’ the case, with the intended class preclusive effects." Add. 26a n.5; see Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 537 (6th Cir. 2012) (A fail-safe class "is prohibited because it would allow putative class members to seek a remedy but not be bound by an adverse judgment—either those class members win or, by virtue of losing, they are not in the class and are not bound." (citations, internal quotation marks omitted)).

-23- In certifying a (b)(3) class there is an almost

inevitable tension between excluding all non-injured parties from

the defined class and including all injured parties in the defined

class. Ideally, that tension should be resolved by adopting a

class definition that includes no uninjured parties and excludes no

injured parties. See Messner v. Northshore Univ. Healthsystem, 669

F.3d 802, 825 (7th Cir. 2012) ("Defining a class so as to avoid, on

one hand, being over-inclusive and, on the other hand, the fail-

safe problem is more of an art than a science."). We doubt that

this will be feasible in many cases. Without the benefit of

further proceedings, it is simply not possible to entirely separate

the injured from the uninjured at the class certification stage.

And as the Supreme Court noted in Amgen, "Rule 23 grants courts no

license to engage in free-ranging merits inquiries at the

certification stage." 133 S.Ct. at 1194–95.

Finally, Defendants' objections to certifying a class

including uninjured members run counter to fundamental class action

policies. As the Supreme Court has repeatedly recognized, while

"[t]he class action device was designed as an exception to the

usual rule that litigation is conducted by and on behalf of the

individual named parties only," it is nonetheless "peculiarly

appropriate when the issues involved are common to the class as a

whole." Falcon, 457 U.S. at 155 (citing Califano, 442 U.S. at 701

(internal quotation marks omitted)). In particular, when amending

-24- Rule 23 to include section (b)(3), "the Advisory Committee sought

to cover cases in which a class action would achieve economies of

time, effort, and expense, and promote . . . uniformity of decision

as to persons similarly situated." Amchem Prods., Inc. v. Windsor,

521 U.S. 591, 615 (1997) (citing Adv. Comm. Notes, 28 U.S.C. App.,

p. 697) (internal quotation marks omitted). In Amchem, the Supreme

Court recognized what types of cases were best adjudicated under

this amended section — "[w]hile the text of Rule 23(b)(3) does not

exclude from certification cases in which individual damages run

high, the Advisory Committee had dominantly in mind vindication of

the rights of groups of people who individually would be without

effective strength to bring their opponents to court at all." Id.

at 617 (internal quotation marks omitted).

The plaintiff class members in this case appear to be the

very group that Rule 23(b)(3) was intended to protect. As we

discuss later in this opinion, the actual overcharge to each class

member was generally a small amount per prescription and too small

to warrant individual litigation. See Carnegie v. Household Int’l,

Inc., 376 F.3d 656, 661 (7th Cir. 2004) ("The realistic alternative

to a class action is not 17 million individual suits, but zero

individual suits, as only a lunatic or a fanatic sues for $30.").

As this court noted in New Motor Vehicles, 522 F.3d at 8, "an

erroneous failure to certify a class where individual claims are

-25- small may deprive plaintiffs of the only realistic mechanism to

vindicate meritorious claims."

C.

Despite the obvious utility of allowing the inclusion of

some uninjured class members in the certified class and the lack of

harm in doing so, the defendants rely on authority from the Supreme

Court and from this court for the proposition that plaintiffs must

nonetheless prove that every putative class member suffered injury

to prevail on class certification. But the authority cited by the

defendants do not impose any such requirement.

The defendants cite Wal-Mart, where the Supreme Court

reversed the class certification because plaintiffs could not show

Wal-Mart had a common policy of discriminating against women. 131

S.Ct. at 2553. As a result, plaintiffs did not meet the Rule 23(a)

commonality requirement. Id. But 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. Id. at 2550—55.

Defendants’ reliance on Comcast is equally misdirected.

As we explained above, Comcast did not require that plaintiffs show

that all members of the putative class had suffered injury at the

class certification stage — simply that at class certification, the

damages calculation must reflect the liability theory. 133 S.Ct.

at 1434.

-26- The Supreme Court also addressed the treatment of

potentially uninjured class members last term in Halliburton. In

securities cases like Halliburton, investors can recover damages

only if they can prove that they relied on the defendant’s

misrepresentation in deciding to buy or sell a company’s stock.

134 S.Ct. at 2405. Under Basic, Inc. v. Levinson, 485 U.S. 224

(1988), a plaintiff securities class can satisfy the reliance

requirement at class certification by invoking a presumption of

reliance, rather than proving direct reliance on defendant’s

misrepresentation for each individual class member. Halliburton,

134 S.Ct. at 2408, 2412. Basic permits defendants to rebut this

presumption using individualized evidence "showing that [the class

member] did not rely on the integrity of the market price in

trading stock." Id. at 2412. The Halliburton Court concluded that

"[w]hile [the rebuttal] has the effect of leaving individualized

questions of reliance in the case, there is no reason to think that

these questions will overwhelm common ones and render class

certification inappropriate under Rule 23(b)(3)." Id. (internal

quotation marks omitted). Even if "the defendant might attempt to

pick off the occasional class member here or there through

individualized rebuttal . . . individual questions [did not]

predominate" over common questions. Id. Thus, the Halliburton

Court contemplated that a class with uninjured members could be

-27- certified if the presence of a de minimis number of uninjured

members did not overwhelm the common issues for the class.

The law in this circuit is not to the contrary.

Defendants argue that this court in New Motor Vehicles held that to

obtain class certification, plaintiffs must establish at class

certification that "each class member was harmed by the defendants’

practice." 522 F.3d at 28 (internal quotation marks and

alterations omitted). To the extent that New Motor Vehicles is

read to impose such a requirement, it has been overruled by the

Supreme Court’s Halliburton decision. But, in fact, New Motor

Vehicles imposes no such requirement. In that case, plaintiffs

alleged that defendant automobile manufacturers illegally colluded

to restrict the flow of Canadian cars into the United States to

maintain higher prices in the United States. Id. at 10. This

court was concerned that even if plaintiffs showed that defendants’

anti-competitive conduct increased the vehicle list price in the

United States, plaintiffs did not have evidence showing that the

list price was actually paid by the class members. Id. at 27—28.

New Motor Vehicles recognized that plaintiffs’ theory "must include

some means of determining that each member of the class was in fact

injured," and that at the liability stage, there must be a showing

"that class members were injured at the consumer level." Id. at

28. There was no basis for concluding that the plaintiffs there

-28- could separate the injured from the uninjured at the liability

stage.

But New Motor Vehicles did not impose a requirement that

the injury determination must be completed by the class-

certification stage — only that "the district court [have] enough

information to evaluate preliminarily whether the proposed model

will be able to establish . . . which consumers were impacted by

the alleged antitrust violation and which were not." Id. (emphasis

added). Uninjured members of the putative class would be

identified in the liability proceedings later in the case, as

Halliburton contemplates.20

20 New Motor Vehicles does not suggest separation of the injured from the uninjured must be possible "without need for individual determination" — only that separating the injured from the uninjured must be possible using a common test rather than an individual ad hoc approach. 522 F.3d at 28. The other circuit cases defendants rely on do not suggest otherwise. For instance, in In re Hydrogen Peroxide Antitrust Litigation, the Third Circuit, which cited many of the cases the defendants cite, suggested that if "fact of [antitrust] damage cannot be established for every class member through proof common to the class, the need to establish antitrust liability for individual class members defeats . . . predominance." 552 F.3d 305, 311 (3d Cir. 2008) (emphasis added) (citing Bell Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir. 2003)). However, the court explicitly noted that the "[p]laintiffs’ burden at the class certification stage is not to prove the element of antitrust impact" even if "to prevail on the merits each class member must do so." Id. Rather, at class certification, plaintiffs must only show that "antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual members." Id. (emphasis added). Similarly, the D.C. Circuit has stated that at the class certification stage, plaintiffs must "show that they can prove" — not that they have proved — "through common evidence, that all class members were in fact injured . . . ." In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244, 252 (D.C. Cir.

-29- "Numerous courts have certified plaintiff classes even

though the plaintiffs have not been able to use common evidence to

show harm to all class members." Davis et al., The Puzzle of Class

Actions with Uninjured Members, 82 G.W.L.Rev. 858, 859 (May 2014).

In addition to Halliburton, cases from our sister circuits21 and

this circuit22 hold that the presence of a de minimis number of

2013). In a case where plaintiffs’ methodology "detects injury where none could exist[,]" and there is "no reliable means of proving classwide injury[,]" class certification must be denied. Id. at 252—53 (emphasis added). But from this it does not follow that the existence of a de minimis number of uninjured class members bars certification if those members can be weeded out at a later stage. 21 See, e.g., Messner, 669 F.3d at 819, 824—25 (vacating denial of class certification despite presence of potentially uninjured class members); Cordes & Co. Fin. Servs., 502 F.3d at 107—08 (same); In re Urethane, 768 F.3d at 1254 (affirming class certification despite the fact that "some [of the plaintiffs] avoid[ed] injury altogether"); Pella Corp. v. Saltzman, 606 F.3d 391, 394 (7th Cir. 2010) (affirming class certification despite possibility that class included uninjured members); Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir. 2009) (same); DG ex rel. Stricklin v. Devaughn, 594 F.3d 1188, 1198, (10th Cir. 2010) ("[C]ertification requirements neither require all class members to suffer harm . . . nor Named Plaintiffs to prove class members have suffered such harm."); Mims v. Stewart Title Guar. Co., 590 F.3d 298, 308 (5th Cir. 2009) ("Class certification is not precluded simply because a class may include persons who have not been injured by defendant’s conduct." (citation omitted)). 22 See Gintis v. Bouchard Transp. Co., 596 F.3d 64, 67 (1st Cir. 2010) (Souter, J.) (vacating and remanding district court’s denial of class certification and stating that "on remand, the focus will be on the plaintiffs’ claim that common evidence will suffice to prove injury, causation and compensatory damages for at least a very substantial portion of the claims that can be brought by the putative class members" (emphasis added)); Tardiff, 365 F.3d at 6 ("[U]ndue complications as to liability [were] limited. . . . If there was in fact a rule, custom or policy of strip searching every arrestee or a substantially overlarge category, then it is a

-30- uninjured class members is permissible at class certification. In

fact, as one court has recognized at certification, "a class will

often include persons who have not been injured by the defendant’s

conduct; indeed, this is almost inevitable because at the outset of

the case many of the members of the class may be unknown, or if

they are known still the facts bearing on their claims may be

unknown." Kohen, 571 F.3d at 677. "Such a possibility or indeed

inevitability does not preclude class certification." Id. (citing

1 Alba Conte & Herbert Newberg, Newberg on Class Actions § 2:4,

pp. 73—75 (4th ed. 2002)).

We think that a certified class may include a de minimis

number of potentially uninjured parties. We need not decide

whether it is ever permissible to define a proper class including

more than a de minimis number of uninjured parties since we

conclude that it has not been shown that the class here includes

more than a de minimis number of uninjured parties.

IV.

Defendants’ alternative argument is that more than a de

minimis number of class members were uninjured here, barring class

fair guess that most arrestees so classed were strip searched on this basis. (emphasis added)); Mowbray, 208 F.3d at 296 (noting that "most class members’ claims were unaffected" by "idiosyncratic" statute of limitations issues, affirming certification because "the mere fact that such concerns may arise and may affect different class members differently does not compel a finding that individual issues predominate over common ones" (emphasis added)).

-31- certification. In addressing this argument, we conduct a detailed

inquiry into the parties’ and experts’ economic analyses, keeping

in mind that this is an indirect purchaser action. The Supreme

Court in Illinois Brick, in holding that indirect purchasers may

not bring suit for damages under the Clayton Act, noted the

"uncertainties and difficulties in analyzing price and output

decisions ‘in the real economic world rather than an economist’s

hypothetical model’" and reasoned that actions by indirect

purchasers would often result in "long and complicated" proceedings

when such purchasers attempted to prove that a price increase was

passed on to them. 431 U.S. at 732.

Twenty-four states eventually disagreed, creating private

causes of action for indirect purchasers under state antitrust

laws. That such actions are thus allowed under those laws does not

eliminate the real economic and litigation complexities identified

by the Supreme Court. It should therefore not be surprising that

determining whether and when certification of indirect purchaser

class actions may bear the added complexity entails considerable

thought and effort.

Here, a class member suffered antitrust injury if that

individual or entity was overcharged for Nexium during the class

period. There is no serious dispute that the majority of class

members were injured. It is undisputed that the price that would

have been paid by class members for generic Nexium but-for

-32- defendants’ conduct ("but-for price") is lower than the actual

price paid by class members during the class period for branded

Nexium ("class period price"). For those class members who were

reimbursed for their purchases by an insurance plan and paid only

a copayment, it is similarly undisputed that the generic copayment

is almost always lower than the brand-name copayment. The dispute

here focuses on various purchasers who were atypical and allegedly

uninjured.

In proving injury, plaintiffs relied on the expert

testimony of Professor Meredith Rosenthal, Professor of Health

Economics and Policy at the Harvard School of Public Health and an

Academic Affiliate of Greylock McKinnon Associates, a consulting

and litigation support firm. Rosenthal assumed that plaintiffs had

proven defendants’ anti-competitive conduct and offered an opinion

on the antitrust impact of the alleged generic foreclosure. To

calculate the class period price — the actual prices paid by class

members for branded Nexium during the class period, Rosenthal used

data from the IMS National Prescription Audit. However, because no

generic forms of Nexium were on the market, there was no data to

show firsthand the prices of branded and generic Nexium after

generic entry. To calculate the but-for prices, Rosenthal relied

on the "yardstick" approach which approximates the but-for market

by using data from similar markets.

-33- Because Nexium is a proton-pump inhibitor, Rosenthal

examined other drugs in that therapeutic class for their

suitability as a yardstick. She selected Prevacid (lansoprazole)

because it was launched closest in time to Nexium (November 2009),

and had a similar profile of generic entrants as Nexium in terms of

number and size. Rosenthal corroborated her calculations of the

but-for prices using defendants’ documents, which contained

estimates of Nexium prices after generic entry. Rosenthal’s

calculations showed that nearly all class members suffered an

antitrust injury as a result of defendants’ conduct.

Defendants argued that even though injured class members

comprise a majority of the putative class, more than a de minimis

number of class members were not injured, identifying five groups

of class members that likely suffered no injury. Defendants’

arguments were based on the expert testimony of Professor James W.

Hughes, Thomas Sowell Professor of Economics at Bates College.

Plaintiffs bear the burden of an initial showing that a

proposed class satisfies the Rule 23 requirements. Smilow, 323

F.3d at 38; accord Messner, 669 F.3d at 811; In re Hydrogen

Peroxide, 552 F.3d at 311—12. But "[plaintiffs] need not make that

showing to a degree of absolute certainty. It is sufficient if

each disputed requirement has been proven by a preponderance of

evidence." Messner, 669 F.3d at 811 (citing Teamsters Local 445

Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2d

-34- Cir. 2008)); accord Alaska Elec. Pension Fund v. Flowserve Corp.,

572 F.3d 221, 228 (5th Cir. 2009). Once plaintiffs have made their

initial showing, defendants have the burden of producing sufficient

evidence to rebut the plaintiff’s showing.

Here, it is difficult to determine exactly what findings

the district court made with respect to each of the five allegedly

uninjured groups presented by the defendants. However, the

district court generally credited Rosenthal’s calculations. It

pointed out that Rosenthal’s figures showed "approximately 5.8

percent of all class prescriptions were attributable to brand . . .

transactions with no overcharge." Add. 24a (emphasis added)

(internal quotation marks omitted). Neither the parties nor the

district court presented a precise estimate of the number or

percentage of uninjured class members, but on balance, the district

court found defendants’ challenges did not suffice to overcome

predominance.

We consider here defendants’ contentions with respect to

the five allegedly uninjured groups and the record materials. We

conclude that defendants’ argument that no class can be certified

stems in large part from four errors in their analysis of the

"uninjured" groups.

First, defendants incorrectly assume that class members

are shielded from injury by plan arrangements that the district

court found did not exist.

-35- Second, defendants incorrectly assume that a class member

who is injured for only a part of the class period did not suffer

injury, even though they have now conceded that an injury for part

of the class period is sufficient to establish injury. "Paying an

overcharge caused by the alleged anticompetitive conduct on a

single purchase suffices to show — as a legal and factual matter —

impact or fact of damage." Davis & Cramer, Antitrust, Class

Certification, and the Politics of Procedure, 17 Geo. Mason L. Rev.

969, 984—85 (2010) (internal quotation marks omitted) (citing Paper

Sys., Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 633 (7th Cir.

2002)).

Third, defendants incorrectly assume that if a class

member offsets an overcharge through later savings attributable to

the same or related transaction, there is no injury. But antitrust

injury occurs the moment the purchaser incurs an overcharge,

whether or not that injury is later offset. See Adams v. Mills,

286 U.S. 397, 407 (1932) (“In contemplation of law the claim for

damages arose at the time the extra charge was paid. Neither the

fact of subsequent reimbursement by the plaintiffs from funds of

the shippers nor the disposition which may hereafter be made of the

damages recovered is of any concern to the wrongdoers.” (citations

omitted)); see also Hawaii v. Standard Oil Co. of Cal., 405 U.S.

251, 262 n.14 (1972) ("[C]ourts will not go beyond the fact of this

injury to determine whether the victim of the overcharge has

-36- partially recouped . . . ."). Here, if a class member is

overcharged, there is an injury, even if that class member suffers

no damages.

Fourth, defendants incorrectly treat individual

prescriptions of Nexium as a proxy for individual consumers. For

example, defendants mistakenly cite the district court’s findings

that "only approximately 5.8 percent of all class

prescriptions . . . [had] no overcharge" and that "Nexium co-pay

coupons were only used in 2-4 percent of prescriptions," Add. 24a

(emphases added), to support the conclusion that "at least 7.8 to

9.8% of the consumers — more than 100,000 consumers in all —

suffered no injury." Appellant’s Br. 20 (emphasis added).

However, there is no necessary relationship between the percentage

of prescriptions and the percentage of consumers since a class

member may fill one prescription with an overcharge and another

with no overcharge.

In light of the correct standards, we discuss each of the

five allegedly uninjured groups in turn — Groups 1 to 5. The

question in each instance is whether the but-for price absent

generic foreclosure would have been lower than the actual class

period price of Nexium.

Group 1. This group consists of TPPs that would have

allegedly paid a higher but-for price for generic Nexium than they

actually paid for branded Nexium during the class period.

-37- Defendants contend that they were not injured because they

benefitted from rebates that reduced the actual class period price

for branded Nexium.23 Defendants argue that Group 1 members were

not injured because with the rebates, the actual class period

Nexium price was lower than the but-for generic price. However,

defendants have not shown that this is the case. Using Hughes’

calculations, after accounting for the rebates, the average actual

class period branded Nexium price was $121, while the but-for

generic price would have been $113.24 Therefore, Group 1 TPPs who

23 These rebates were negotiated between PBMs and AstraZeneca. Both Rosenthal and Hughes agree that AstraZeneca paid approximately $12.9 billion in rebates to PBMs from 2008 to 2012. Because PBMs are not part of the class, the rebates only affect the class to the extent that they are "passed-through" from PBMs to TPPs. There is some disagreement as to whether the rebates are passed-through as a discounted price when the PBMs bill the TPPs or whether TPPs are charged the list price and then refunded a portion based on the rebate amount. If the latter, then all Group 1 TPPs were injured because the rebates are only a damages setoff and do not affect the fact of injury. Rosenthal calculated that approximately $10.3 billion in rebates was passed through to TPPs (an average discount of 39%), although Hughes alleges that the entire $12.9 billion was passed through (an average discount of 49%). For the purposes of these calculations, we assume that Hughes is correct — that all of the rebates were passed through. 24 Defendants also argue that Rosenthal improperly relied on averages to determine the fact of injury, with the result that some class members at the extreme would not suffer injury even though the average consumer did. We think that the defendants cannot simply speculate that a more than de minimis number of class members departed from the average. They have failed to submit evidence that this is the case. Nor is it the case that plaintiffs’ average but-for price is so close to the average class period price that any deviation with either figure would eliminate the overcharge.

-38- would have purchased generic Nexium during the class period were

injured.

Group 2. TPPs usually pay for the prescription drug

directly and then charge plan members a copayment (a flat payment)

or a coinsurance (a percentage of the drug price). Sometimes TPPs

incentivize generic drug purchases by plan members by charging a

lower copayment for a generic drug than for its brand-name

counterpart. Defendants allege that under such plan arrangements,

"the decrease in the co-payment is more than the total net price

drop," Add. 21a (citing Def.’ Mem. Opp. Class Certification) —

i.e., the difference between the actual branded Nexium price paid

for by the TPP during the class period (absent generic entry) and

the but-for generic price is less than the difference between the

branded Nexium copayment (absent generic entry) and the but-for

generic copayment. As a result, defendants argue that Group 2

members — TPPs that offered such plan arrangements — suffered no

injury because the decreased revenue from copayments offset the

increased savings from the lower generic price. But as discussed

above, that erroneous inference assumes that the decrease in

copayment revenue should offset the increased actual savings in

determining injury when it should not.

In any event, defendants have presented no evidence to

support this prediction. Rosenthal’s projections show that the

price difference between the branded Nexium price absent generic

-39- entry and the but-for generic price would have been $47 at the

beginning of the class period and $196 at the end. Plaintiffs’

deposition testimony and other evidence established that a typical

plan offered by TPPs has only a $10 or $20 spread between the

generic and brand-name copayments. The defendants provided no

evidence of any plans with a greater spread. The record shows that

there are likely no Group 2 members who were uninjured by

defendants’ conduct.

Group 3. Some TPPs, according to Hughes, had fixed price

agreements to pay PBMs the same amount for every drug in a given

therapeutic class, regardless of the actual drug price.25 As a

result, defendants claim that Group 3 TPPs suffered no injury

because they would have paid the same for generic Nexium in the

but-for world as they actually paid for branded Nexium during the

class period. But the defendants did not provide any evidence that

such agreements existed. Rosenthal stated that she has never

encountered such an agreement in her research. The district court

found that "[Hughes] does not establish the actual existence of

[such] uninjured TPP groups." Add. 23a. The district court did

not err in finding insufficient evidence that Group 3 actually

exists.

25 These hypothetical agreements are presumably with PBMs whereby the TPPs reimburse pharmacies the same amount for every drug in a particular therapeutic class.

-40- Group 4. This group comprises consumers who used coupons

that reduced the copayment that they paid for branded Nexium during

the class period. The assumption is that the coupons would not

have been available in the but-for world and that the consumers

would have switched to generic Nexium. These coupons were offered

by AstraZeneca starting in August 2011. Eligible patients could

use a "Nexium Savings Card" to pay only an $18 copayment for their

prescription (with a maximum discount of $50). Defendants assert

that Group 4 members were not injured because with coupons, the

actual branded Nexium copayment during the class period was lower

than the but-for generic copayment would have been. But the

average branded Nexium copayment with the coupon was $18 (before

generic entry), while the average but-for generic copayment would

have been only $10-11. Thus these consumers were likely injured as

well.

Group 5. This group comprises consumers who would

continue to purchase only brand-name Nexium even after generic

entry, known as brand-loyalists. There are Group 5 members who

paid the actual cost of the drug (i.e., uninsured consumers) or a

percentage thereof (i.e., consumers with a coinsurance plan).

Defendants argue that these class members would have suffered no

injury because, after generic entry, the price of branded Nexium

would have increased over the class period. Defendants also

contend that some plans charged a higher copayment for branded

-41- drugs than for their generic substitutes with the result that

brand-loyalist members of such plans would suffer no injury from

the foreclosure of generic entry.26 In other plans, the copayment

for the branded drug increased with generic entry. As a result,

defendants contend that Group 5 consumers are not injured because

they would pay more with generic entry.

We agree that some Group 5 consumers were likely not

injured by defendants’ conduct. The question is whether that is

more than a de minimis number. The district court found, based on

Rosenthal’s projections, that 5.8% of all prescriptions during the

entire six-year class period would have been for branded Nexium.

Defendants argue that this shows that 5.8% "of the consumers" were

uninjured. Appellant’s Br. 20. This does not follow for at least

the following reasons:

First, the number of prescriptions is not a necessary

surrogate for the number of consumers.

26 Consumers who are members of plans with flat copayment structures (i.e., that charge the same copayment for both brand- name drugs and generic substitutes) were also uninjured whether they would have switched to the generic or were brand-loyalists. But these consumers are already excluded by the class definition — "‘flat co-pay’ ‘Cadillac Plan’ consumers who made purchases only via fixed dollar co-payments that do not vary between Nexium and its AB-rated generic equivalent." Add. 41a(f). One minor change to the class definition is required to exclude members of plans where the generic copayment after generic entry would be the same as the branded copayment before generic entry.

-42- Second, consumers who purchased Nexium using cash or a

coinsurance at the beginning of the class period were injured (even

if they made later purchases that did not reflect injury) because

in the early period the but-for branded Nexium price would have

been lower than the actual branded Nexium price in the early

period.

Third, a consumer was injured if he or she would have

purchased generic Nexium even once during the class period. Because

Nexium is a maintenance drug, there is a high likelihood that a

generic purchase would occur. Indeed, only 2% of prescriptions

three years after generic entry would have been for branded Nexium.

Significantly, state laws allow pharmacists to substitute generic

products (some mandate substitution unless a physician prevents

substitution).

As Rosenthal explained, defendants are relying on the

mere hope that there is a "likelihood of there being a substantial

number of consumers whose only purchases during the entire Class

Period were brand purchases . . . ." J.A. 203. While on this

record it is impossible to precisely quantify the uninjured members

in Group 5, we conclude that plaintiffs have provided more than

enough evidence to meet their Rule 23 burden.

What counts as a "de minimis" deviation "from a

prescribed standard must, of course, be determined with reference

to the purpose of the standard." Wisconsin Dept. of Revenue v.

-43- William Wrigley, Jr., Co., 505 U.S. 214, 232 (1992). We thus

define "de minimis" in functional terms. Here, if common issues

"truly predominate over individualized issues in a lawsuit, then

the addition or subtraction of any of the plaintiffs to or from the

class [should not] have a substantial effect on the substance or

quantity of evidence offered." Vega v. T-Mobile USA, Inc., 564

F.3d 1256, 1270 (11th Cir. 2009) (alteration in original, citation

omitted). Upon examination of the record, we see no basis for

overturning the district court’s ultimate conclusion that the

number of uninjured members here is not so large as to render the

class impractical or improper, or to cause non-common issues to

predominate. Nor do we see a basis for concluding the number of

uninjured class members here is so large as to violate defendants’

7th Amendment or due process rights, in light of the fact that

uninjured members can be excluded and the district court expressly

"preserve[d] the Defendants’ rights to challenge individual damage

claims at trial." Add. 24a.

Plaintiffs’ evidence has shown that the vast majority of

class members were probably injured. "Rigorous analysis" of the

evidence does not show that the number of uninjured class members

is more than de minimis. The district court was well within its

discretion to have found that the plaintiffs’ "rebuttal to

[defendants’] challenges [was] persuasive" and sufficient for a

"showing of common antitrust impact to the putative class." Add.

-44- 24a. The defendants’ speculation cannot defeat the plaintiffs’

showing. See In re Urethane, 768 F.3d at 1254 (no abuse of

discretion in not decertifying where plaintiffs had evidence of

artificially inflated baseline for price negotiations, and

defendants alleged plaintiffs "could have avoided the announced

price increases, such as [by] negotiating for a lower price or

switching to a substitute" (emphasis added)); Messner, 669 F.3d at

825 (once plaintiffs had shown broad antitrust impact,

certification could not be denied just because defendants pointed

to a class of uninjured members but "[gave] no indication how many

such individuals actually exist"); Kohen, 571 F.3d at 676—79 (where

evidence did not show "great many" uninjured persons, defendants’

pointing to "possibility" that unidentified number of class members

were uninjured is insufficient to defeat certification, especially

since defendants could depose a "random sample of class members to

determine how many were [uninjured] and . . . could urge the

district court to revisit its decision to certify"); see also In re

Whirlpool Corp. Front-Loading Washer Products Liability Litig., 722

F.3d 838, 854—55 (6th Cir. 2013) (commonality not defeated simply

because, though plaintiffs’ evidence showed washer models were

nearly identical, defendants merely contended the class included

owners who are "pleased with the performance of their" machines and

are thus dissimilar to consumers who complained of a mold problem),

cert. denied Whirlpool Corp. v. Glazer, 134 S.Ct. 1277 (2014).

-45- In the context of the plaintiffs’ having shown that the

class does not "consist[] largely . . . of members who are

ultimately shown to have suffered no harm," Messner, 669 F.3d at

824, the number of uninjured members here seems comparable to the

"2.4 percent decrease in the size of the class [due to removal of

uninjured members]" that the Seventh Circuit concluded was

"certainly not significant enough to justify denial of

certification." Id. at 826 (emphasis added).

Defendants also raise the separate but related argument

that because each putative class member has not suffered injury,

the class does not have standing.

Article III standing is an "indispensable part" of any

case that must be present at every stage of the case. See Lujan v.

Defenders of Wildlife, 504 U.S. 555, 561 (1992) (noting that

standing must be "supported . . . at the successive stages of

litigation"). Injury is a prerequisite to standing, and named

plaintiffs need to satisfy this standing requirement throughout the

stages of the litigation. See Stearns v. Ticketmaster Corp., 655

F.3d 1013, 1021 (9th Cir. 2011) ("At least one named plaintiff must

satisfy the actual injury component of standing in order to seek

relief on behalf of himself or the class."), cert. denied, 132

S.Ct. 1970 (2012); Kohen, 571 F.3d at 676 ("[A]s long as one member

of a certified class has a plausible claim to have suffered

-46- damages, the requirement of standing is satisfied."); see also DG

ex rel. Stricklin, 594 F.3d at 1197—98; In re Prudential Ins. Co.

Am. Sales Practices Litig. Agent Actions, 148 F.3d 283, 306—7 (3d

Cir. 1998). It is undisputed that the named plaintiffs have shown

that they were overcharged for at least one Nexium transaction

during the class period, establishing standing. See Baker v. Carr,

369 U.S. 186, 204—06 (1962). The named plaintiffs thus have

standing to sue for their injuries and to request, under Rule

23(b)(3), that the court allow them to represent and secure a

judgment on behalf of a class.

To the extent that it is necessary that each and every

member of the class who secures a recovery also has standing,27 the

requirement will be satisfied — only injured class members will

recover.28

27 Some circuits have suggested that this is a requirement. See Denney v. Deutsche Bank AG, 443 F.3d 253, 263—64 (2d Cir. 2006) ("[While] [w]e do not require that each member of a class submit evidence of personal standing [at the class certification stage,] . . . [t]he class must . . . be defined in such a way that anyone within it would have standing."); Halvorson v. Auto-Owners Ins. Co., 718 F.3d 773, 778 (8th Cir. 2013). 28 Defendants' Rules Enabling Act argument is similarly inapposite. While the Act would preclude recovery for uninjured class members, it imposes no requirement at the class certification stage beyond ensuring that a methodology can be developed that is capable of excluding uninjured members.

-47- VI.

In summary, we conclude that plaintiffs have met their

burden in showing that the 23(b)(3) requirements are met with

respect to the TPPs in the certified class because all TPPs would

have suffered injury. We also conclude that defendants have not

established that more than a de minimis number of uninjured

consumers are included in the certified class.

In large part, the remaining difference between

plaintiffs and defendants is that the defendants would require a

determination at the class certification stage as to which parties

were injured and which not, whereas the plaintiffs would leave to

later stages of litigation such sorting of injured and uninjured

parties. We conclude that so long as it is established that such

a mechanism can be identified, the presence of a de minimis number

of uninjured members at the class certification stage does not

defeat a class action. We conclude that such a mechanism can be

identified here. The district court did not abuse its discretion

in certifying the class.

Costs to appellees.

AFFIRMED

-Dissenting Opinion Follows-

-48- KAYATTA, Circuit Judge, dissenting.

The chief difficulty we confront in this case arises from

the fact that some of the members of the class have not suffered

the antitrust injury upon which this entire case is predicated.

This percentage, while small, could constitute as many as 24,000

consumers29 who would have no valid claim against the defendants

under the state antitrust laws even if the named plaintiffs win on

the merits.

The majority correctly recognizes that certification of

a class that includes uninjured consumers hinges on there being a

method of identifying and removing those consumers prior to entry

of judgment, and that any such method must be both administratively

feasible and protective of the defendants' Seventh Amendment and

due process rights. Slip Op. at 17-18. The majority also

correctly recognizes that the district court has not identified--

much less rigorously analyzed--any method for identifying and

excluding these thousands of consumers prior to entry of judgment.

Slip Op. at 18-19. Rather, the district court certified the class

29 Neither side has precisely defined the size of the class, but the defendants, without challenge, suggest that it includes over a million consumers. Appellants' Br. at 20 (noting that 7.8% to 9.8% of the consumers in the class would constitute a group of over 100,000, meaning that the class would number more than a million). The majority's careful analysis suggests, in turn, that the percentage of uninjured consumers may be comparable to the 2.4% in Messner v. Northshore University Healthsystem, 669 F.3d 802, 826 (7th Cir. 2012). In a putative class including over a million consumers, that's at least 24,000 people.

-49- because it considered the Rule 23 predominance inquiry satisfied by

the fact that the vast majority of consumers in the class had been

injured. As for the uninjured, the court simply kicked the can

down the road by noting that the court "preserve[d] the Defendants'

right to challenge individual damage claims at trial." In re

Nexium (Esomeprazole) Antitrust Litig., 297 F.R.D. 168, 179 (2013).

The path thus marked for our court is clear. We should

vacate the order certifying a class that includes uninjured

consumers, and remand to the district court to proceed in

accordance with the principles set forth in the majority's opinion.

To the extent that certification remains relevant, given the

posture of the case, 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. Slip Op. at 20. I therefore respectfully dissent. By

upholding the district court on the basis of a culling method that

it itself has fashioned, the majority errs both on the merits and

as a matter of appellate procedure.

-50- First, on the merits of the majority's proposed culling

method, at least one sister circuit has twice noted the limitations

of using affidavits in the manner proposed by the majority. See

Carrera v. Bayer Corp., 727 F.3d 300, 304, 307 (3d Cir. 2013)

(remanding an order certifying a class of all purchasers of a

weight-loss supplement in Florida where documentary proof of

purchase was "unlikely" and noting that the method of ascertaining

whether someone is in the class must be "administratively feasible"

and that affidavits of purchase are not sufficient); Marcus v. BMW

of N. Am., LLC, 687 F.3d 583, 594 (3d Cir. 2012) (remanding a class

certification order on the grounds that a class of original

purchasers of BMWs with run-flat tires during the class period was

not readily ascertainable via a "reliable, administratively

feasible" method, and cautioning against including class members

based on mere affidavits that their tires had gone flat).

The majority's response to the persuasive force of this

precedent is fashioned out of a vacuum. The majority cites Madison

v. Chalmette Refining, LLC, 637 F.3d 551, 556 (5th Cir. 2011), a

case that both makes no mention of affidavits and actually reverses

a class certification order because the district court failed to

analyze in detail how individual issues would be resolved at trial,

and instead took a "figure-it-out-as-we-go-along approach."30 637

30 The majority gleans a potential blessing of affidavits from Chalmette by noting that among the criticisms of the district court by the Fifth Circuit was the failure to consider use of a so-called

-51- F.3d at 557 (quoting Robinson v. Texas Auto. Dealers Ass'n, 387

F.3d 416, 426 (5th Cir. 2004)).

But regardless of whether or not affidavits may have a

role to play in this or any class action, the larger issue is that

a court of appeals should not assume that Rule 23 has been

satisfied on the basis of a culling method that it itself has

proposed. Many circuit court judges have little to no substantial

experience with the nuts and bolts of class litigation, so

fashioning litigation management devices is not in our

institutional wheelhouse. Many of the facts relevant to assessing

whether a certain management procedure will achieve a certain

objective will not be discernible by a court until one party

proposes it, and the other has a chance to critique it. At that

"Lone Pine" order, a device used in mass accident litigation to streamline a case. Lore v. Lone Pine Corp., No. L-33606-85, 1986 WL 637507 (N.J. Super. Ct. Law Div. Nov. 18, 1986). A Lone Pine order, in turn, can include a requirement that those willing to sue first produce "some evidence to support a credible claim," which may include affidavits from a physician or real estate appraiser as evidence of injury. See Steering Comm. v. Exxon Mobil Corp., 461 F.3d 598, 604 n.2 (5th Cir. 2006). Lone Pine orders are for mass accident cases, which the drafters of Rule 23(b)(3) recognized are generally not certifiable. Fed. R. Civ. P. 23 advisory committee's note to subdiv. (b)(3) (1966) ("A 'mass accident' resulting in injuries to numerous persons is ordinarily not appropriate for a class action because of the likelihood that significant questions, not only of damages but of liability and defenses to liability, would be present, affecting the individuals in different ways."). So while a court might consider how a trial might be held in a mass accident case with use of a Lone Pine order, and by potentially requiring affidavits, nothing in Chalmette remotely suggests that affidavits would suffice as an administratively feasible tool for establishing injury in a manner protective of defendant's jury trial rights.

-52- point, the district court would usually weigh the pros and cons of

the procedure and make a decision, employing the fair amount of

discretion assigned to it. We, in turn, come along at or near the

end of the process. And we are pretty good at explaining the

principles that cabin the district court's exercise of discretion,

and at analyzing what by that point have usually become stationary

targets presented in competing briefs.

The majority's opinion, in contrast, skips all that. It

simply assumes that the question of how uninjured consumers can be

identified and excluded can be answered with affidavits.31

Untested by the adversary system, unexamined by any trial judge,

and fashioned without awareness of its fit to the parties' needs

and goals, the majority's method raises more questions than it

answers. Will it require two forms of notice to class members--one

to TPPs and one to consumers? What happens to those consumers who

do not return an affidavit (of whom there may be many, given the

low dollar amount of any potential recovery)? Will they be deemed

to have opted out of the class? Or will they be deemed to have

31 The majority also toys with the idea that courts could create a presumption that a consumer would buy a generic if it was available. Even assuming we could do so in a federal question case, but see 28 U.S.C. § 2072(b) (prohibiting the use of any procedural device to "abridge, enlarge, or modify any substantive right"), given that indirect purchasers cannot sustain an antitrust claim under federal law, see Illinois Brick Co. v. Illinois, 431 U.S. 720, 746-48 (1977), the only time such a presumption could be employed is in a state-law diversity suit where a federal court is without authority to create such a presumption. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).

-53- remained in, but lost their claims due to lack of injury? Even

more daunting, what happens if tens or hundreds of thousands of

Nexium purchasers file affidavits? How exactly will defendants

exercise their acknowledged right to "challenge individual damage

claims at trial"? Will the defendants seek to depose everyone who

has returned an affidavit, effectively challenging plaintiffs'

counsel to a discovery game of chicken? The majority simply hedges

on these questions by assuming--without any basis at all, and

likely unreasonably--that the affidavits will be "unrefuted."

Throwing up an idea to see if it might stick is just not

what courts of appeals do best. Rather, it is only after the

adversaries have gone to the mat and the dust has settled that we

can fairly review a district court's assessment of whether a

proposed method would be feasible. For this reason, if the

district court does not identify a culling method to ensure that

the class, by judgment, includes only members who were actually

injured, this court has no business simply hoping that one will

work. See Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160

(1982) (noting that "actual, not presumed, conformance" with the

rule is "indispensable"); In re New Motor Vehicles Can. Exp.

Antitrust Litig., 522 F.3d 6, 28 (1st Cir. 2008) (requiring the

district court to evaluate a proposed model for proving fact of

injury prior to certification). In this important respect, any

attempt to reconcile the majority's holding with the approach taken

-54- by our circuit in New Motor Vehicles will result in hopeless

confusion unless one concludes that the dissent in New Motor

Vehicles has become the law without en banc review.

On a related note, I must also part company with the

majority's dalliance with a percentage-based rule inspired by the

Seventh Circuit's decision in Messner v. Northshore University

Healthsystem, 669 F.3d 802, 826 (7th Cir. 2012). The majority

quite rightly says that the test for determining whether the

inclusion of uninjured class members should defeat class

certification is "functional." Slip Op. at 44. But then it

backslides: it notes that a 2.4% decrease in the size of the class

due to the removal of uninjured members was not so large as to

defeat certification in Messner, 669 F.3d at 824, and concludes

that the number of uninjured members here "seems comparable" to the

number in Messner. Slip Op. at 46.

If 2.4% is okay, why not 5.7%? Or any number under 50%?

The percentage tells one almost nothing about the functional

sufficiency of the method. The relevant inquiry for a court

considering certifying a class that includes uninjured members is

whether the court will be able to feasibly cull out those members

before entry of judgment. It may be relatively easy to cull 5% out

of a class of 30. Culling out 5% of 1 million is almost certainly

not. Here, "just 2.4%" is likely to be at least 24,000 people.

Moreover, nobody knows who the 24,000 are. So the culling process

-55- may need to review individually all the affidavits of class members

who return them. How this is feasible, the majority does not

explain.32

I also take issue with the majority's suggestion that

when a proposed class includes some uninjured members who will have

to be removed post-certification, it is the defendants who bear the

burden of demonstrating that it cannot be done. The Supreme Court

has been clear that the party seeking certification bears the

burden of demonstrating that the requirements of Rule 23 are

satisfied. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551

(2011). So, too, has this circuit. Smilow v. Sw. Bell Mobile

Systems, Inc., 323 F.3d 32, 38 (1st Cir. 2003).

The majority acknowledges this, Slip Op. at 14, 34, and

yet goes on to suggest the opposite: "Defendants have merely

speculated that a mechanism for exclusion cannot be developed

later. This is not enough to overcome plaintiffs' case for having

met the requirements of Rule 23." Slip Op. at 21. But plaintiffs

have not met their burden because, as the majority acknowledges,

the proposed class includes some number of uninjured members, Slip

Op. at 42, and the plaintiffs have not explained how they will be

32 Oddly, the majority avoids any discussion of how affidavits will, as a practical matter, affect trial, even while citing Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1270 (11th Cir. 2009) for the proposition that there is no predominance when the addition or subtraction of class members has a substantial effect on the quantity of the evidence offered. See Slip Op. at 44.

-56- removed before judgment, Slip Op. at 18-19. (It is also notable

that the majority felt compelled to propose a culling method sua

sponte--if the plaintiffs had indeed met their burden, this step

would not be necessary.) When the plaintiffs have only shown that

the number of uninjured members is relatively small, the class

still cannot satisfy Rule 23 unless there exists a method for

excluding those uninjured members prior to judgment. In such a

context, it is no more the defendants' burden to prove that this

cannot be done than it is this court's job to come up with a way

that it can. Cf. Wallace B. Roderick Revocable Living Trust v. XTO

Energy, Inc., 725 F.3d 1213, 1218 (10th Cir. 2013) (vacating a

certification order in part because the district court appeared to

shift the burden to the defendant to prove lack of commonality).

Finally, it bears noting that in the time that this

interlocutory appeal was pending, the district court tried most of

the liability issues in this case, leaving the end payors' fact-of-

injury for a future proceeding. That trial concluded with a

defense verdict just as these opinions were about to issue. The

district court solicited no affidavits from consumers, nor does it

appear that there was a plan to do so. So even if the majority's

proposed culling method were tenable, we know that the district

court did not employ it. In short, the majority affirms a

certification order based entirely on a fiction that we know to be

false. And unless one-way intervention is allowed, but see Am.

-57- Pipe & Constr. Co. v. Utah, 414 U.S. 538, 546-49 (1974) (discussing

the history and application of the one-way intervention rule), it

is likely too late to let class members self-identify after taking

a peek at the verdict.

These changing facts on the ground warrant caution before

affirming a class certification order based on a possibility that

the district court might do something that it did not do, and which

it is likely that it could not do. Will there be an appeal from

the verdict that will succeed? Is there any plan to send notice?33

Is the basis for interlocutory review now eliminated? Although I

agree entirely with the key principle that serves as the predicate

for the majority's opinion--that certification of a class that

includes uninjured members is possible if the district court

identifies a feasible method for culling those members prior to

entry of judgment in a way that protects defendants' rights--I do

not believe that the majority has properly applied that principle

in this case. I respectfully dissent.

33 This is a Rule 23(b)(3) action in which notice to class members is mandatory. Fed. R. Civ. P. 23(c)(2)(B).

-58-