FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Denise J. Casper, U.S. District Judge]
Mark Gidley, with whom Peter J. Carney, Dana Foster, Matthew
S. Leddicotte, Jaclyn Phillips, Maxwell J. Hyman, Robert A.
Milne, Jack E. Pace III, Bryan D. Gant, Kelly Newman, and
White & Case LLP were on brief, for appellants.
Richard A. Samp and Marc B. Robertson on brief for Washington
Legal Foundation, amicus curiae.
N. Boley, with whom Kenneth A. Wexler, Tyler J. Story, Wexler
Wallace LLP, Tyler W. Hudson, Eric D. Barton, David Barclay,
Wagstaff & Cartmell, LLP, Nathaniel L. Orenstein, Todd A.
Seaver, Berman Tabacco, Daniel E. Gustafson, Karla M. Gluek,
Michelle J. Looby, Joshua J. Rissman, Gustafson Gluek PLLC,
Jeffrey L. Kodroff, William G. Caldes, John A. Macoretta,
Spector Roseman Kodroff & Willis, P.C., Peter J. Mougey,
Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor,
P.A., Jonathan D. Karmel, and Karmel Law Firm were on brief,
Lynch, Kayatta, and Barron, Circuit Judges.
KAYATTA, CIRCUIT JUDGE
manufacturer Warner Chilcott Limited pulled one of its
products -- Asacol -- from the market just months before the
drug's patent protection expired. Warner simultaneously
introduced a similar but not exactly identical substitute
drug called Delzicol, the patent protection for which ran
years longer. This coordinated withdrawal and entry of the
two drugs allegedly precluded generic manufacturers from
introducing a generic version of Asacol, which would have
provided a lower-cost alternative to Warner's drugs
Delzicol and Asacol HD, a version of Asacol that was also
still under patent protection. Crying foul, the named
plaintiffs in this case filed a class action alleging a
violation of the consumer protection and antitrust laws of
twenty-five states and the District of Columbia. On
plaintiffs' motion, the district court certified a class
of all Asacol purchasers who subsequently purchased Delzicol
or Asacol HD in one of those twenty-six jurisdictions. In so
doing, the court found that approximately ten percent of the
class had not suffered any injury attributable to
defendants' allegedly anticompetitive behavior.
Nevertheless, the district court determined that those
uninjured class members could be removed in a proceeding
conducted by a claims administrator. We find this approach to
certifying a class at odds with both Supreme Court precedent
and the law of our circuit. We therefore reverse.
is a pharmaceutical drug that treats mild to moderate
ulcerative colitis, a chronic inflammatory bowel disorder.
Developed and first manufactured by Procter and Gamble
Pharmaceuticals, Asacol debuted on the market in 1992 and
received the protection of two patents. Those patents expired
on July 30, 2013. In 2008, Procter and Gamble brought a new
variation of Asacol to market, dubbed Asacol HD, which
treated moderate, but not mild, ulcerative colitis. This new
drug differed from Asacol in two key ways: it included twice
the dosage, and it replaced Asacol's single-layer coating
with a dual-layer coating. Asacol HD's patent protection
extended years beyond that of Asacol. In 2009, Warner
Chilcott purchased Procter and Gamble's pharmaceutical
portfolio, which included both Asacol and Asacol HD.
March 18, 2013, only a few months shy of the end of
Asacol's patent protection, Warner stopped selling and
marketing Asacol. On the same day, Warner introduced a new
drug: Delzicol. Delzicol, like Asacol, treats ulcerative
colitis. The two drugs contain the same active ingredient and
dosage, and sold for the same price. Unlike Asacol, Delzicol
comes in a capsule that does not contain dibutyl phthalate
("DBP"). DBP is a plasticizer, the safety of which
appears to have been the subject of a dialogue between the
FDA and Asacol's manufacturers.
22, 2015, several plaintiffs (collectively
"plaintiffs," "named plaintiffs," or
"class representatives") filed suit on their own
behalf and on behalf of a putative class. These plaintiffs
are all union-sponsored benefit plans that paid for the
purchases of Asacol HD and Delzicol. In their operative
complaint, plaintiffs allege that Warner harbored an
anticompetitive motivation for its conduct. According to the
complaint, Warner's aim in pulling Asacol from the market
and introducing Delzicol was to preclude the possibility of
market entry of generic drugs, which would have cut into
Warner's profits. State law provides the mechanism for
this preclusion. Under most state substitution laws,
pharmacists can fill a prescription by substituting a generic
drug for the prescribed brand drug, but only if the brand
drug is listed as a "reference" drug for the
generic. This automatic substitution, plaintiffs say,
provides the "only viable cost-efficient means" for
new generics to "compet[e] with brand drugs." But
even a small alteration to the brand drug, such as
substituting a tablet form for a capsule form, can prevent a
generic equivalent from using the discontinued form as a
reference drug. Thus, by pulling Asacol, Warner effectively
prevented generic drugs that would have used Asacol as a
reference drug from entering the market after the expiration
of Asacol's patents. And the introduction of a similar, but
not wholly equivalent, drug -- Delzicol -- with the potential
for longer-lasting patent protection, allowed Warner to
substantially retain its market share. Thus, plaintiffs
contend, Warner forced consumers into a "hard
switch" and maintained its monopoly power unencumbered
by competition from generic entry. Plaintiffs' theory of
liability rests on a Second Circuit decision that condemns
similar such conduct. See New York ex rel. Schneiderman
v. Actavis PLC, 787 F.3d 638 (2d Cir. 2015).
named plaintiffs and the putative class members purchased
Warner's products not from Warner directly, but from
third party intermediaries. That means that they cannot sue
Warner for damages under the federal antitrust law.
Illinois Brick Co. v. Illinois, 431 U.S. 720, 736
(1977). Plaintiffs therefore seek recovery under the laws of
twenty-five states and the District of Columbia that allow
indirect purchasers to challenge anticompetitive conduct by
manufacturers whose products consumers acquire through
intermediaries. All twenty-six jurisdictions, according to
plaintiffs, generally interpret state law restraints on
anticompetitive activity consistently with federal
courts' interpretation of federal antitrust law, but have
"Illinois Brick repealer" laws allowing
antitrust damage actions by indirect purchasers against
moved for class certification on behalf of a class of all
similarly situated indirect purchasers, including any
individual consumers who purchased the relevant Warner
products from drug retailers in the twenty-six jurisdictions.
Plaintiffs designed the class to include only those persons
or entities that both purchased Asacol prior to July 31, 2013
-- the approximate date on which Asacol's patent
protection expired -- and also purchased either Asacol HD or
Delzicol after July 31, 2013. Both sides introduced expert
evidence regarding the propriety of class certification.
district court granted plaintiffs' motion for class
certification. Rejecting Warner's argument to the
contrary, the district court concluded that the named
plaintiffs had standing to prosecute claims on behalf of
class members under various state laws even if the named
plaintiffs themselves had not made purchases in all those
states. Any difference between the claims of the named
plaintiffs and those of unnamed class members was a matter
for consideration under Rule 23, and not a matter of Article
III standing, the court ruled.
to the Rule 23 analysis, the district court first found that
plaintiffs' proposed class satisfied the four elements of
Rule 23(a): numerosity, commonality, typicality, and
adequacy. See Fed.R.Civ.P. 23(a). The district court
also concluded that the proposed class passed muster under
Rule 23(b)(3) because common questions predominated over
individual questions and a class action presented a superior
method for resolving plaintiffs' claims.
making those determinations, the district court grappled with
a problem that has been the source of much debate among the
circuits: the presence of uninjured class members. The
district court presumed that approximately ten percent of
class members had not been injured by Warner's allegedly
anticompetitive conduct because, even had a lower-priced
generic alternative been available, these consumers would not
have switched to it. The court based this conclusion on the
reports of both sides' experts. Those experts used the
experiences of similar pharmaceutical products as benchmarks
from which to infer likely market dynamics had a lower-priced
generic form of Asacol been introduced. Defendants'
expert, Dr. Bruce Strombom, pointed to a benchmark product in
which the prevalence of consumers who stuck with the
higher-priced brand decreased to 10.6% within approximately
three years after generic entry. Dr. Rena Conti,
plaintiffs' expert, looked to different benchmark
products, from which she concluded that the market share of
generic Asacol would have grown to approximately 88.8% within
a year of generic entry, and would then have risen to about
91.4% thirty-one months after generic entry. From these two
reports, the district court presumed that "by the end of
the relevant period, somewhere around 10% of the class
members would have opted for Asacol HD or Delzicol even in
the presence of generic Asacol." In re Asacol
Antitrust Litig., 323 F.R.D. 451, 482 (D. Mass. 2017).
district court nevertheless concluded that the number of
these uninjured class members was "de minimis." The
district court also accepted plaintiffs' contention that
they could remove these uninjured persons from the class with
the assistance of a so-called claims administrator. Our
opinion in Nexium, plaintiffs argue, permitted such
a process. See In re Nexium Antitrust Litig., 777
F.3d 9 (1st Cir. 2015).
district court's order certifying the class raises issues
on which circuits are split and that are likely to arise in
other cases in this circuit before an appeal from a final
judgment would -- if ever -- ripen in this case. A panel of
this court therefore found "special circumstances"
justifying the grant of leave to pursue an interlocutory
appeal under Rule 23(f). See Fed.R.Civ.P. 23(f);
Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288,
293-94 (1st Cir. 2000). In accord with this grant, Warner
presents two primary challenges. First, it argues that,
because the named plaintiffs only made purchases in four
states, they lack Article III standing to assert claims under
the laws of states in which they did not make purchases.
Second, Warner takes issue with the district court's
decision to certify a class containing uninjured class
review de novo the existence of Article III standing required
to invoke the jurisdiction of a federal court. See
Anderson ex rel. Dowd v. City of Boston, 375 F.3d 71, 92
(1st Cir. 2004). The named plaintiffs in this case
indisputably have standing to litigate their own claims
against Warner. They plausibly allege an injury in the form
of lost money fairly traceable to an allegedly unlawful
supra-competitive price, and seek classic redress in the form
of a damage award. See generally Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560-61 (1992). Nor does the
standing requirement of Article III erect any impediment to
the named plaintiffs' ability to litigate as class
representatives materially identical claims by other persons
under the same laws under which the named plaintiffs'
claims arise. Gratz v. Bollinger, 539 U.S. 244, 267
challenges, instead, the named plaintiffs' standing to
bring claims on behalf of class members whose claims arise
under the laws of the twenty-two states within which no named
plaintiff has either resided or purchased the relevant Warner
products during the class period. These states, apparently,
apply their relevant law only to claims that arise out of
purchases made within the state or by state residents.
Therefore, says Warner, because no named plaintiff can
successfully bring a claim under the laws of any of those
twenty-two states, they necessarily lack standing to bring
such claims as representatives of persons who might sue
successfully in those states.
might think that we could reject this argument merely by
observing that whether a plaintiff may represent persons who
themselves have standing to bring the claims alleged is a
question to be addressed under Rule 23, rather than a
question of standing. After all, that is how one would
presumably proceed in seemingly analogous situations outside
of Rule 23. For example, in deciding whether a fiduciary, a
parent, a personal representative, or a partner may prosecute
a claim on behalf of another person, courts generally focus
not on whether the putative representative independently
satisfies Article III standing, but rather on whether that
party qualifies under the applicable law as a representative
of the one who does have standing. See, e.g.,
Sam M. ex rel. Elliot v. Carcieri, 608 F.3d 77, 83
n.5 (1st Cir. 2010); Goodwin v. C.N.J., Inc., 436
F.3d 44, 49 (1st Cir. 2006); Pérez v. Clinica Dr.
Perea, 915 F.2d 1556, 1990 WL 151307, at *3 (1st Cir.
July 9, 1990) (unpublished); Levin v. Berley, 728
F.2d 551, 555-56 (1st Cir. 1984). And sometimes the authority
for such a person to bring a suit as a representative of
another resides in the Federal Rules of Civil Procedure.
See, e.g., Fed.R.Civ.P. 17(c)(2) (allowing a
"next friend" to sue on behalf of a minor with no
requirement that the next friend possess standing to bring
such a claim on behalf of herself or himself).
though, forecloses such a simple and quick answer. See
Warth v. Seldin, 422 U.S. 490, 502 (1975); Blum v.
Yaretsky, 457 U.S. 991, 1000-01 (1982); see
also 1 William B. Rubenstein, Newberg on Class
Actions § 2:5 (5th ed. 2012) ("In a class
action suit with multiple claims, at least one named class
representative must have standing with respect to each
claim."). In Blum, the Supreme Court confronted
an effort by two plaintiffs to represent a class of Medicaid
patients challenging the decisions of a state committee to
transfer them to different levels of nursing home care,
allegedly without sufficient procedural safeguards. The two
named plaintiffs, who had been threatened with transfers to
lower levels of nursing care, also sought to press the claims
of persons who might object to being transferred to
facilities providing higher levels of care. 457 U.S. at
1000-02. The named plaintiffs had not been transferred or
threatened with transfers to facilities providing higher
levels of care. Furthermore, the conditions under which
transfers to such facilities occurred were sufficiently
different from transfers to facilities providing lesser care
"that any judicial assessment of their procedural
adequacy would be wholly gratuitous and advisory."
Id. at 1001. For that reason, the plaintiffs lacked
"the necessary stake in litigating conduct . . . to
which [the plaintiffs] ha[d] not been subject."
Id. at 999.
keeping with this precedent, we have trained our Article III
focus in class actions on "the incentives of the named
plaintiffs to adequately litigate issues of importance to
them." Plumbers' Union Local No. 12 Pension Fund
v. Nomura Asset Acceptance Corp., 632 F.3d 762, 770 (1st
Cir. 2011). This focus is in many respects simply an
application to aggregate litigation of the basic Article III
requirement that a plaintiff possess "such a personal
stake in the outcome of the controversy as to assure . . .
concrete adverseness." Baker v. Carr, 369 U.S.
186, 204 (1962).
in this precedent, though, suggests that the claims of the
named plaintiffs must in all respects be identical to the
claims of each class member. See Gratz, 539 U.S. at
262-68. Requiring that the claims of the class representative
be in all respects identical to those of each class member in
order to establish standing would "confuse the
requirements of Article III and Rule 23." Fallick v.
Nationwide Mut. Ins. Co., 162 F.3d 410, 421 (6th Cir.
1998). Indeed, such an approach would render superfluous the
Rule 23 commonality and predominance requirements because any
case that survived such a strict Article III analysis would
by definition present only common issues. So the question of
standing is not: Are there differences between the claims of
the class members and those of the class representative?
Rather, the pertinent question is: Are the differences that
do exist the type that leave the class representative with an
insufficient personal stake in the adjudication of the class
members' claims? Here, with one exception, we think not.
the claims of the named plaintiffs parallel those of the
putative class members in the sense that, assuming a proper
class is certified, success on the claim under one
state's law will more or less dictate success under
another state's law. Even while arguing that there may be
a few subtle differences in the attitudes of some state
courts toward such claims, Warner concedes that the
"parties do agree that Plaintiffs' liability
theories as to monopolization are limited to a construction
of state antitrust laws that parallel the federal Sherman
Act." Under those parallel laws, all plaintiffs who were
forced to pay a higher price in the absence of generic
competition have a substantial and shared interest in proving
that the higher price was the result of unlawful monopolizing
conduct that is redressable by an award of damages. And the
fact that judgments for some class members will nevertheless
enter under the laws of states other than the states under
which any of the class representatives' judgments will
enter, where those laws are materially the same, has no
relevant bearing on the personal stake of the named
plaintiffs in litigating the case to secure such judgments.
See Morrison v. YTB Int'l, Inc., 649 F.3d 533,
536 (7th Cir. 2011) (holding that a state law's limit to
in-state events is an "application of choice-of-law
principles [that] has nothing to do with
standing" (emphasis in original)). Indeed, the
fact that the judgments will enter under different statutes