Georgia District Court Denies Class Certification To Plaintiffs Alleging Conspiracy To Delay Release of Generic Versions Of Testosterone Replacement Drug
On July 16, 2018, in the latest development in the litigation over the “reverse payment” settlements relating to the pharmaceutical testosterone replacement AndroGel that the Supreme Court addressed in FTC v. Actavis, Inc., 570 U.S. 136 (2013), Judge Thomas W. Thrash, Jr. of the United States District Court for the Northern District of Georgia denied class certification to a proposed class of direct purchaser plaintiffs. In re AndroGel Antitrust Litigation (No. II), No. 2084, 2018 WL 3424612 (N.D. Ga. July 15, 2018).
Plaintiff drug wholesalers alleged that the defendant patent holder agreed to drop its patent infringement claims and to share its AndroGel profits with two potential generic entrants through inflated payments in simultaneous development and promotion side deals in return for the generic firms’ agreement to delay their introduction of generic versions of AndroGel for nine years, and that these arrangements violated the Sherman Act. Plaintiffs alleged they paid substantially more for both the brand name and generic versions of the drug as a result of the coordinated delay, and sought to certify a class of direct purchasers of branded AndroGel and its generic substitutes.
Judge Thrash denied class certification because plaintiffs failed to prove numerosity – that is, that the proposed class consists of so many members that joinder of all members is impracticable. While there is no rule fixing the minimum number of members necessary to satisfy the numerosity requirement, the Eleventh Circuit has held that 21 class members is too few, but 40 members is sufficient. In this case, the proposed class consisted of 33 purchasers—falling “squarely in the middle of the Eleventh Circuit’s gray area.” In re AndroGel Antitrust Litigation (No. II), 2018 WL 3424612, at *2.
Thus, Judge Thrash considered three additional factors—ease of identification, feasibility of service, and geographic dispersions of the class—to determine whether joinder would be impractical. He noted that “the only factor potentially weighing in favor of certification is the geographic dispersion of the class” as plaintiffs are distributed throughout the United States. Id. However, Judge Thrash concluded that this factor was insufficient to warrant class certification as the proposed class consisted of large, sophisticated drug wholesalers with sizeable claims that have litigated similar actions before. In contrast to “the typical class action, in which there are a number of individual plaintiffs with relatively small claims” and where the costs of litigating each individual claim would dwarf any potential damages, Judge Thrash found little concern here that plaintiffs lack “the means or motivation” to join the action. Judge Thrash denied class certification on numerosity grounds alone. He did not address any of the other elements to certify a Rule 23(b) damages class—including commonality, typicality, adequacy, or predominance.
This decision highlights the current trend to examine the numerosity element closely when the proposed class consists of relatively few large, sophisticated companies with the apparent wherewithal and motivation to pursue the litigation on their own.