In re Relafen Antitrust Litigation

225 F.R.D. 14, 2004 U.S. Dist. LEXIS 22003, 2004 WL 2441256
District Court, D. Massachusetts·Decided September 2, 2004·No. Master File No. 01-12239-WGY·Published·Cited by 10 cases

Opinion

MEMORANDUM

YOUNG, Chief Judge.

I. INTRODUCTION

By Order dated November 21, 2003, this Court allowed the end payor plaintiffs’ motion for class certification with respect to persons and entities who purchased nabumetone in five “exemplar” states. Order of 11/21/03 [Doc. No. 168 in Master File No. 01-12222-WGY] at 3, 5; see also In re Relafen Antitrust Litig., 221 F.R.D. 260 (D.Mass. 2004). The end payor plaintiffs, having since reached an agreement of settlement with SmithKline, now seek to extend certification to a nationwide settlement class. [Doe. No. 306]. To assist the parties in their ongoing negotiations, the Court offers the following analysis.

II. BACKGROUND

Because the present analysis is, in the Court’s view, primarily a continuation of a previous memorandum, see Relafen, 221 F.R.D. 260, the Court relates the factual and procedural background only briefly. In this consolidated action against SmithKline Beeeham Corporation and GlaxoSmithKline PLC (collectively “SmithKline”), the plaintiffs1 alleged that SmithKline fraudulently procured and maliciously prosecuted its patent for nabumetone, a nonsteroidal anti-inflammatory drug sold under the brand name “Relafen.” Id. at 263. Essentially, the plaintiffs claimed that but for SmithKline’s unlawful conduct, they could have begun purchasing nabumetone in a competitive market — comprising both Relafen and its generic alternatives — as early as September 1998, nearly four years before generic nabumetone products actually became available. Id. at 264.

The end payor plaintiffs — parties who purchased nabumetone from sources other than SmithKline for purposes other than resale— assert claims under federal and state antitrust laws, state unfair competition statutes, and state consumer protection statutes. Id. at 264. On September 16, 2003, the end payor plaintiffs moved for certification of a nationwide class under Federal Rule of Civil Procedure 23(b)(2) and (3). Id. After hearing oral argument and conducting a “rigorous analysis” of the end payor plaintiffs’ proposed order, the Court denied the motion for certification under Rule 23(b)(2) and allowed it under Rule 23(b)(3) for the following exemplar classes:

With respect to their state antitrust and consumer protection claims—
All persons or entities who purchased Relafen or its generic alternatives in the states of Arizona, California, Massachusetts, or Vermont during the period of September 1, 1998 through June 30, 2003 for consumption by themselves, their families, members, employees, insureds, participants, or beneficiaries,
and with respect to their unjust enrichment claims—
All persons or entities in the United States who purchased Relafen in the states of Arizona, California, Massachusetts, Tennessee, or Vermont during the period September 1, 1998 through June 30, 2003 for consumption by themselves, their families, members, employees, insureds, participants, or beneficiaries.

Id. at 288. Excluded from both classes were governmental entities; SmithKline and its officers, directors, management, employees, [20]*20subsidiaries, and affiliates; persons or entities who purchased Relafen for purposes of resale; persons or entities who purchased Relafen directly from SmithKline or its affiliates; and persons or entities who suffered no economic harm as a result of SmithKline’s alleged conduct. Id.

On November 25, 2003, SmithKline moved for summary judgment. [Doc. Nos. 169, 187, 193, 197, 202], With respect to the end payor plaintiffs, SmithKline emphasized that states had varied in their responses to Illinois Brick v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), in which the Supreme Court determined that under federal antitrust law, indirect purchasers (parties who, like the end payor plaintiffs, “are not the immediate buyers from the alleged antitrust violators,” Kansas v. UtiliCorp United, Inc., 497 U.S. 199, 207, 110 S.Ct. 2807, 111 L.Ed.2d 169 (1990)) generally lack standing to seek antitrust damages. See Defs.’ Unjust Enrichment Mem. [Doc. No. 203] at 5-9. SmithKline maintained that in those states that construe their antitrust statutes consistently with Illinois Brick, permitting the end payor plaintiffs to seek restitution for unjust enrichment woúld allow an “end run” around state antitrust policies. See id. at 5-7. In addition, SmithKline continued, in those states that construe their antitrust statutes inconsistently with Illinois Brick — that is, those states that allow indirect purchasers to seek antitrust damages under either statutory enactments (commonly termed “Illinois Brick repealers”) or judicial decisions — permitting the end payor plaintiffs to seek restitution for unjust enrichment would lead to unlawful “double recovery.” See id. at 8-9. The Court agreed, in part. It allowed Smith-Kline’s motion “with respect to unjust enrichment claims asserted under the laws of states in which such claims would constitute an end[]run around the state’s adherence to Illinois Brick.” Order of 12/19/03 [Doc. No. 229] at 2-3. The Court otherwise denied the motion, mindful that the Federal Rules permit plaintiffs to plead alternative and inconsistent claims. See Fed.R.Civ.P. 8(e)(2).

The end payor plaintiffs now seek certification of a nationwide settlement class. [Doc. No. 306]. Members of the proposed class— defined as “persons or entities in the United States who purchased Relafen and/or its generic alternatives ... during the period of September 1, 1998 through June 30, 2003”— would share in a settlement fund of $75 million. Am. Stip. & Agreement [Doc. No. 305] ¶ 1. Recovery would vary, according to the end payor’s status (as a settling health plan, third-party payor, or consumer), and, more importantly for present purposes, according to the end payor’s place of purchase (in a “Group I” or “Group II” state). Id. 1[ 17. Not surprisingly, Group I and Group II correspond to the responses to Illinois Brick described above: Group I states have rejected Illinois Brick; Group II states have not. Id. 112(m)-(n). To account for their varying “strengths and weaknesses,” claims asserted under the laws of Group I states would be “favor[ed]” over those asserted under the laws of Group II states should the settlement fund prove insufficient. Pis.’ Supp. Mem. [Doc. No. 334] at 10. Otherwise, all claims would be compensated equally, with consumers,2 for example, receiving the greater of 100 to 150 percent of their claims or a minimum payment of $50. Am. Stip. & Agreement H17. This allocation according to place of purchase, unlike the allocation according to status, was not the result of “independent negotiations” between counsel designated to represent the distinct interests of Group I or Group II claimants. Compare Pis.’ Mem. at 7-8.

Also before the Court are motions by the attorneys general of six Group II states: Arkansas, Idaho, Illinois, Maryland, Oregon, and Washington.

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In re Relafen Antitrust Litigation, 225 F.R.D. 14, 2004 U.S. Dist. LEXIS 22003, 2004 WL 2441256 (D. Mass. 2004).

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