In Re Modafinil Antitrust Litigation

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-3475
_____________
IN RE: MODAFINIL ANTITRUST LITIGATION
Mylan Laboratories, Inc.; Mylan Pharmaceuticals Inc.;
Ranbaxy Laboratories, Ltd; Ranbaxy Pharmaceuticals, Inc.,
Appellants
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
District Court No. 2-06-cv-01797
District Judge: The Honorable Mitchell S. Goldberg
Argued July 12, 2016
Before: SMITH, JORDAN, and RENDELL,
Circuit Judges
(Filed: September 13, 2016)
Daniel Berger
Daniel C. Simons
David F. Sorensen
Berger & Montague
1622 Locust Street
Philadelphia, PA 19103
Erin C. Burns
Dianne M. Nast
NastLaw
1101 Market Street
Suite 2801
Philadelphia, PA 19107
Russell A. Chorush
Connelly Baker Wotring
600 Travis Street
JPMorgan Chase Tower, Suite 700
Houston, TX 77002
Neill Wilson Clark
Peter Kohn, Esq.
Faruqi & Faruqi
101 Greenwood Avenue
Suite 600
Jenkintown, PA 19046
Stuart E. Des Roches
Andrew W. Kelly
Chris Letter
Odom & Des Roches
650 Poydras Street
Suite 2020, Poydras Center
New Orleans, LA 70130
2
Bruce E. Gerstein [ARGUED]
Dan Litvin
Joseph Opper
Garwin Gerstein & Fisher
Wall Street Plaza
88 Pine Street, 10th Floor
New York, NY 10036
Miranda Y. Jones
Heim Payne & Chorush
600 Travis Street
Suite 6710
Houston, TX 77002
Linda P. Nussbaum
Nussbaum Law Group
570 Lexington Avenue
19th Floor
New York, NY 10022
Counsel for Appellees
Evan R. Chesler
David R. Marriott
Rowan D. Wilson [ARGUED]
Cravath Swaine & Moore
825 Eighth Avenue
Worldwide Plaza
New York, NY 10019
3
David L. Comerford
Katherine M. Katchen
Akin Gump Strauss Hauer & Feld
2001 Market Street
Two Commerce Square, Suite 4100
Philadelphia, PA 19103
Catherine E. Creely
Cohn & Marks
1333 New Hampshire Avenue, N.W.
Washington, DC 20036
C. Fairley Spillman
Akin Gump Strauss Hauer & Feld
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, DC 20036
J. Douglas Baldridge [ARGUED]
Christopher K. Diamond
Danielle R. Foley
Molly Geissenhainer
Venable
575 7th Street, N.W.
Washington, DC 20004
John J. O’Malley
Anthony S. Volpe
Volpe & Koenig
30 South 17th Street
Suite 1600
4
Philadelphia, PA 19103
Erin C. Dougherty
Lathrop B. Nelson, III
Montgomery McCracken Walker & Rhoads
123 South Broad Street
28th Floor
Philadelphia, PA 19109
Katherine R. Katz
Karen N. Walker
Gregory L. Skidmore
Kirkland & Ellis
655 15th Street, N.W.
Suite 1200
Washington, DC 20005
James C. Burling
Mark A. Ford
WilmerHale
60 State Street
Boston, MA 02109
Frank R. Emmerich, Jr.
Nancy J. Gellman
John A. Guernsey
Conrad O’Brien
1500 Market Street
West Towers, Suite 3900
Philadelphia, PA 19102
5
Emily R. Whelan
Whatley Kallas
60 State Street
7th Floor
Boston, MA 02109
Jeffrey B. Korn
William H. Rooney
Willkie, Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Joseph E. Wolfson
Stevens & Lee
620 Freedom Business Center
Suite 200
King of Prussia, PA 19406
Counsel for Appellants
Anna T. Neill
Scott E. Perwin
Lauren C. Ravkind
Kenny Nachwalter
1441 Brickell Avenue
Four Season Tower, Suite 1100
Miami, FL 33131
Moira E. Cain-Mannix
Bernard D. Marcus
Marcus & Shapira
301 Grant Street
6
One Oxford Centre, 35th Floor
Pittsburgh, PA 15219
Monica L. Rebuck
Barry L. Refsin
Hangley Aronchick Segal Pudlin & Schiller
4400 Deer Path Road
Suite 200
Harrisburg, PA 17110
Eugene P. Endress
Matthew M. Holub
Thomas J. Maas
Brian Sodikoff
Katten Muchin Roseman
525 West Monroe Street
Suite 1600
Chicago, IL 60661
James W. Matthews
Foley & Lardner
111 Huntington Avenue
Boston, MA 02199
Counsel for Amicus Appellee
________________
OPINION
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7
SMITH, Circuit Judge.
“The class action is an ingenious device for
economizing on the expense of litigation and enabling small
claims to be litigated. The two points are closely related. If
every small claim had to be litigated separately, the
vindication of small claims would be rare. The fixed costs of
litigation make it impossible.” Thorogood v. Sears, Roebuck
and Co., 547 F.3d 742, 744 (7th Cir. 2008). But not every
group of plaintiffs should be granted class action status,
because “[t]he class action is an ‘exception to the usual rule
that litigation is conducted by and on behalf of the individual
named parties only.” Wal-Mart Stores, Inc. v. Dukes, 564
U.S. 338, 348 (2011) (quoting Califano v. Yamasaki, 442
U.S. 682, 700-01 (1979)).
When thinking of a class action brought under Rule
23(b)(3), we typically think of a large aggregation of
individuals (hundreds or even thousands), each with small
claims. This case is quite different from that. Here, we are
faced with a putative class of twenty-two large and
sophisticated corporations, most of which have multi-million
dollar claims, who wish to take advantage of the class action
device. While we do not foreclose the possibility of class
status in this case, or where the putative class is of similar
composition, Plaintiffs have not met their burden of showing
that the numerosity requirement of Rule 23(a)(1) has been
satisfied. We now provide a framework for district courts to
apply when conducting their numerosity analyses, and we
will remand to the District Court to allow such an analysis in
this case.
8
I.
A. Regulatory Framework
The 1984 Drug Price Competition and Patent Term
Restoration Act (the “Hatch-Waxman Act”), 98 Stat. 1585, as
amended, provides a regulatory framework designed in part to
(1) ensure that only rigorously tested drugs are marketed, (2)
incentivize drug manufacturers to invest in new research and
development, and (3) encourage generic entry into the
marketplace. The Hatch-Waxman Act requires a drug
manufacturer wishing to market a new brand-name drug to
first submit a New Drug Application (“NDA”) to the federal
Food and Drug Administration (“FDA”), and then undergo a
long, complex, and costly testing process. See 21 U.S.C.
§ 355(b)(1) (requiring, among other things, “full reports of
investigations” into safety and effectiveness; “a full list of the
articles used as components”; and a “full description” of how
the drug is manufactured, processed, and packed); see also
F.T.C. v. Actavis, Inc., 133 S. Ct. 2223, 2228-29 (2013)
(describing the statutory framework). If this process is
successful, the FDA will grant the drug manufacturer
approval to market the brand-name drug. After this approval,
a generic manufacturer can obtain similar approval by
submitting an Abbreviated New Drug Application (“ANDA”)
that “shows that the generic drug has the same active
ingredients as, and is biologically equivalent to, the brand-
name drug.” Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S,
132 S. Ct. 1670, 1676 (2012) (citing 21 U.S.C.
§§ 355(j)(2)(A)(ii), (iv)). This way, a generic manufacturer is
not required to undergo the same costly approval procedures
to develop a drug that has already satisfied the FDA. Actavis,
9
133 S. Ct. at 2228 (“The Hatch-Waxman process, by allowing
the generic to piggy-back on the pioneer’s approval efforts,
‘speed[s] the introduction of low-cost generic drugs to
market,’ thereby furthering drug competition.” (quoting
Caraco, 132 S. Ct. at 1676)).
The FDA will not give final approval to produce a
generic version of a drug that is entitled to non-patent
exclusivity under the Hatch-Waxman Act, and it “cannot
authorize a generic drug that would infringe a patent.”
Caraco, 132 S. Ct. at 1676. Thus, among other things, an
ANDA’s approval will depend on “the scope and duration of
the patents covering the brand-name drug.” Id. Brand
manufacturers are required to include the patent number and
expiration date of the patent that covers the drug or that
covers a method of using that drug in their NDAs, which are
then published by the FDA in the Orange Book, more
formally known as the Approved Drug Products with
Therapeutic Equivalence Evaluations. Id. (citing 21 U.S.C.
§ 355(b)(1) and 21 C.F.R. §§ 314.53(c)(2)(ii)(P)(3), (3)
(2011)). Once a patent has been listed in the Orange Book,
the generic manufacturer is free to file an ANDA if it can
certify that its proposed generic drug will not actually violate
the brand manufacturer’s patents. Id. Under 21 U.S.C.
§ 355(j)(2)(A)(vii), there are four ways in which a generic
manufacturer can make this certification:
(I) that such patent information has not been
filed,
(II) that such patent has expired,
10
(III) of the date on which such patent will
expire, or
(IV) that such patent is invalid or will not be
infringed by the manufacture, use, or sale of the
new drug for which the application is
submitted.
An ANDA with a paragraph IV certification may only be
filed after the expiration of the fourth year of the New
Chemical Entity (“NCE”) five-year exclusivity period. 1 21
U.S.C. § 355(j)(5)(E)(ii). The “‘paragraph IV’ route[]
automatically counts as patent infringement.” Actavis, 133 S.
Ct. at 2228 (citing 35 U.S.C. § 271(e)(2)(A)). As a result,
this often “means provoking litigation” instituted by the brand
manufacturer. Caraco, 132 S. Ct. at 1677.
If the brand manufacturer initiates a patent
infringement suit, the FDA must withhold approval of the
generic for at least 30 months while the parties litigate the
validity or infringement of the patent. Actavis, 133 S. Ct. at
2228 (citing 21 U.S.C. § 355(j)(5)(B)(iii)). If the suit has
concluded at the end of this 30-month period, then the FDA
will follow the outcome of the litigation. Id. However, if the
litigation is still proceeding, the FDA may give its approval to
the generic drug manufacturer to begin marketing a generic
version of the drug. Id. The generic manufacture then has
1
This exclusivity period is granted via the Hatch-Waxman
Act, and has nothing to do with whether the drug is covered
by a patent.
11
the option to “launch at risk,” meaning that if the ongoing
court proceeding ultimately determines that the patent was
valid and infringed, the generic firm will be liable for lost
profits despite the FDA’s approval. C. Scott Hemphill,
Paying for Delay: Pharmaceutical Patent Settlement as a
Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553, 1609
(2006).
In order to incentivize a generic drug manufacturer to
challenge weak patents, the Hatch-Waxman Act provides that
the first generic manufacturer to file a paragraph IV
certification will enjoy a 180-day exclusivity period. 21
U.S.C. § 355(j)(5)(B)(iv). This means that during this
exclusivity period, “no other generic can compete with the
brand-name drug,” Actavis, 133 S. Ct. at 2229, an opportunity
that can be “‘worth several hundred million dollars,’” to the
first-filer, id. (quoting Hemphill, supra, at 1579). 2 It is during
this generic exclusivity period that the “vast majority of
potential profits for a generic drug manufacturer materialize.”
Id. (internal quotation marks omitted). That is because once
2
It is a common practice for a brand manufacturer to market
its own generic version of the drug when generic entry
occurs. Unlike an ANDA filer, the brand manufacturer is not
barred from entering the generic market during the 180-day
exclusivity period to which the first paragraph IV filer is
entitled. See Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d
51, 54 (D.C. Cir. 2005) (holding that 21 U.S.C.
§ 355(j)(5)(B)(iv) did not prevent the filer of the original
NDA from launching its own generic during the 180-day
exclusivity period).
12
the exclusivity period has expired other generic
manufacturers are free to enter the market, bringing the price
down to competitive levels. Importantly, this 180-day
exclusivity period belongs only to the first generic
manufacturer to file; if the first-filer forfeits its exclusivity
rights, no other generic manufacturer is entitled to it. Id.
(citing 21 U.S.C. § 355(j)(5)(D)).
B. Facts
In April 1997, the United States Patent and Trademark
Office issued U.S. Patent No. 5,618,845 (“the ′845 patent”) to
Cephalon, Inc. (“Cephalon”), a pharmaceutical company.
The ′845 patent claimed a specific particle-size distribution of
modafinil, a wakefulness-promoting agent used to treat
narcolepsy and other sleep disorders, and Cephalon later
applied for a reissue of the patent, resulting in the issuance of
U.S. Reissue Patent No. 37,516 (“the ′516 patent”) in January
2002. Thus, Cephaolon’s use of modafinil was protected by a
patent until October 6, 2014, to be later extended until April
6, 2015.
In December 1998, the FDA approved Cephalon’s
NDA for the brand-name drug Provigil and granted it NCE
exclusivity. This five-year period of exclusivity was
extended until December 24, 2005, due to Cephalon’s status
as an orphan drug. 3 In March 2006, Cephalon obtained
3
An orphan drug is used to treat a rare disease or ailment.
Because pharmaceutical companies may lack the financial
incentive to develop such drugs, the Orphan Drug Act
13
pediatric exclusivity, which added an additional six months of
exclusivity. 21 U.S.C. § 355a(c). Thus, in the absence of the
‘516 patent, Cephalon’s exclusivity period for modafinil
would have ended on June 24, 2006.
On December 24, 2002, the first day that an ANDA for
modafinil could be filed, four generic drug manufacturers –
Teva Pharmaceutical Industries, Ltd. and Teva
Pharmaceuticals, USA, Inc. (collectively “Teva”); Ranbaxy
Laboratories, Ltd. and Ranbaxy Pharmaceuticals, Inc.
(collectively “Ranbaxy”); Mylan Pharmaceuticals, Inc. and
Mylan Inc. (collectively “Mylan”); and Barr Laboratories,
Inc. (“Barr”) – each independently filed an ANDA with
paragraph IV certifications seeking to sell generic modafinil
products. Due to FDA guidance promulgated after the
paragraph IV certifications in this case were filed, all four
generic manufacturers were treated as being the first filer, and
thus all four would have shared in the 180-day exclusivity
period, making it less valuable to each individual generic
manufacturer. See Guidance for Industry on 180-Day
Exclusivity when Multiple Abbreviated New Drug
Applications are Submitted on the Same Day, 68 Fed. Reg.
45252, 45255 (Aug. 1, 2003).
Because the filing of the paragraph IV certification
“automatically counts as patent infringement,” Actavis, 133 S.
Ct. at 2228 (citing 35 U.S.C. § 271(e)(2)(A)), Cephalon sued
the four generic manufacturers for patent infringement in the
provides the brand manufacturer with a seven-year period of
non-patent exclusivity. See 21 U.S.C. § 360cc(a).
14
District of New Jersey on March 28, 2003. While motions for
summary judgment were pending, Cephalon entered into
what are known as “reverse-payment settlements” 4 with each
of the four generic manufacturers. First, Cephalon settled
with Teva on December 9, 2005. This agreement ended the
patent litigation between Cephalon and Teva, and as a result
Teva was granted a license to sell modafinil in October 2012,
which was before the expiration of Cephalon’s patent but
several years later than Teva could have entered the market if
it had launched its generic “at-risk.” In exchange for its
agreement to settle, Teva was paid millions of dollars to stay
out of the market via royalty agreements, supply agreements,
and other contractual provisions. Importantly, the only term
of the deal that was publicized was what is known as the
“contingent launch provision.” This provision allowed Teva
to enter the generic modafinil market if any other company
entered the market for any reason.
Almost two weeks later, on December 22, 2005,
Ranbaxy entered into a similar reverse-payment settlement
agreement with Cephalon on slightly less favorable terms, but
also with a contingent launch provision. Again, the
4
In a reverse-payment settlement, “a party with no claim for
damages (something that is usually true of a paragraph IV
litigation defendant) walks away with money simply so that it
will stay away from the patentee’s market.” F.T.C. v.
Actavis, Inc. 133 S. Ct. 2223, 2233 (2013). Such agreements
are subject to antitrust scrutiny under the “rule of reason”
inquiry because such settlements, “where large and
unjustified, can bring with it the risk of significant
anticompetitive effects.” Id. at 2237.
15
contingent launch provision was publicized via press release.
Two weeks after the Ranbaxy settlement, on January 9, 2006,
Mylan entered into a similar agreement – on less favorable
terms than Ranbaxy – but also with a publicized contingent
launch provision. The final remaining paragraph IV filer,
Barr, settled on the least favorable terms on February 1, 2006.
It too had a contingent launch provision, which was
publicized as well. Because no subsequent paragraph IV filer
would be entitled to the 180-day exclusivity period, there was
no incentive for another generic manufacturer to unilaterally
bear the litigation expenses for the reward that it would have
to share with any other generic manufacturer who wanted to
enter the market. See 21 U.S.C. § 355(j)(5)(D). 5
The Direct Purchaser Plaintiff (“DPP”) putative class,
appellees in this case, filed suit on April 27, 2006, alleging a
global conspiracy involving Cephalon and all four generic
5
Generic manufacturer Apotex Inc. nonetheless filed a
declaratory judgment action in the Eastern District of
Pennsylvania in June 2006 alleging non-infringement,
invalidity, and unenforceability of the ′516 patent. Apotex
Inc. v. Cephalon, Inc., No. 2:06-cv-2768, 2011 WL 6090696,
at *1 (E.D. Pa. Nov. 7, 2011). The District Court held that
the patent was invalid and unenforceable on November 7,
2011, a ruling which was upheld on appeal. Apotex Inc. v.
Cephalon, Inc., 500 F. App’x 959 (Fed. Cir. 2013) (per
curiam). The District Court, in a separate opinion, also held
that Apotex would not infringe the ′516 patent. Apotex, Inc.
v. Cephalon, Inc., No. 2:06-cv-2768, 2012 WL 1080148, at
*1 (E.D. Pa. Mar. 28, 2012)
16
defendants under 15 U.S.C. § 1; four separate conspiracies
between Cephalon and each generic defendant under the same
statute; and a monopolization claim against Cephalon under
15 U.S.C. § 2. The DPP class is made up of wholesalers who
purchased Provigil directly from Cephalon. 6
The District Court, with the full support of the parties,
ordered that motions regarding class certification were not to
be filed until after fact and expert discovery and the motions
for summary judgment had been filed. Thus, the DPP class
did not file its motion for class certification until May 12,
2014, after more than eight years of litigation.
Approximately one month later, on June 23, 2014, the District
Court granted summary judgment in favor of all of the
defendants on the DPP class’ global antitrust conspiracy
claim. Over the next 13 months, several letter motions and
hearings were held on the class certification issue, and the
District Court certified the DPP class on July 27, 2015.
During this period, Cephalon, Teva, and Barr settled with the
DPP class for $512 million on April 17, 2015. A settlement
6
Other parties challenging the reverse-payment settlement
agreements are a putative class of end-payors, generic
competitor Apotex Inc., several retail plaintiffs, and the
F.T.C., which originally filed suit in the District Court for the
District of Colombia before being transferred to Judge
Goldberg’s docket. The FTC sued only Cephalon. Teva
purchased Cephalon on October 14, 2011, and on May 18,
2015, the F.T.C. settled with Teva for $1.2 billion. The
remaining suits are consolidated for purposes of liability, and
they have all been stayed pending our ruling on the DPP class
certification issue.
17
class, which has the exact same composition as the putative
DPP class at issue here, was also certified on July 27, 2015,
and the settlement itself was approved by the District Court
on October 15, 2015. Thus, the only defendants remaining at
the time of the DPP certification decision being appealed
were Ranbaxy and Mylan (collectively “Defendants”).
II.
Defendants challenge two aspects of the District
Court’s class certification decision – numerosity and
predominance. Thus, even though other issues were
contested at the District Court level, we focus only on the
District Court’s numerosity analysis under Rule 23(a)(1) and
its predominance analysis under Rule 23(b)(3).
Plaintiffs argued before the District Court that the class
was comprised of twenty-two members. Defendants
challenged the inclusion of four of these members. Thus, the
District Court began its numerosity analysis by determining
the proper class size because “relevant precedent makes
significant distinctions between classes containing more than
twenty class members and those containing twenty or fewer.”
King Drug Co. of Florence, Inc. v. Cephalon, Inc., 309
F.R.D. 195, 204 (E.D. Pa. 2015). Defendants challenged two
class members’ inclusion solely for numerosity purposes
because they were partial assignees of two other class
members. They argued that counting the partial assignees
would essentially allow the DPP class to “double dip” and
artificially inflate the class size. Defendants next challenged
the inclusion of a class member that ceased operations prior
to generic entry actually occurred, arguing that there was no
18
way to know whether it would have actually purchased
generic modafinil. Lastly, Defendants challenged the class
status of a class member that only purchased branded Provigil
from Cephalon after generic modafinil had already entered
the market. Defendants argued that there was no overcharge
as a result of this. The District Court rejected all of
Defendants’ challenges to the class size. Id. at 204-06.
The District Court next considered whether joinder of
these twenty-two class members was impracticable such that
class certification was appropriate under Rule 23(a)(1).
While the District Court acknowledged that a class of twenty-
two members was small compared to most class actions, the
District Court found persuasive several district court cases in
the reverse-payment settlement context with similarly-
situated classes where the numerosity requirement was found
to be satisfied. Id. at 204 (collecting cases)
In analyzing whether joinder was impracticable, the
District Court examined five factors: “(1) judicial economy,
(2) geographic dispersion, (3) financial resources of class
members, (4) the claimant’s ability to institute individual
suits, and (5) requests for injunctive relief that could affect
future class members.” Id. at 203-04 (quoting In re
Wellbutrin XL Antitrust Litig., No. 08-2431, 2011 WL
3563385, at *3 (E.D. Pa. Aug. 11, 2011)). The District Court
placed great weight on the judicial economy factor, with
particular emphasis on the late stage of the litigation.
Specifically, the Court stated: “Considering the extensive
history of this litigation and the exhaustive discovery that has
been conducted, . . . judicial economy is best served by
trying this case as a class action. Joinder of the absent class
19
members would likely require additional rounds of discovery,
which would only further delay a trial date.” Id. at 206-07.
Relatedly, the District Court also expressed the
concern that if the class was not certified at this late date,
unnamed class members would bring individual suits in other
jurisdictions instead of seeking to be joined in the suit before
him. Id. at 207 (“Further, if cases were brought within other
jurisdictions, additional discovery is certainly a possibility,
and separate trials could result in inconsistent verdicts.”).
The other primary factor that the District Court found to
weigh in favor of numerosity was the geographic dispersion
of the class members, who were spread out over thirteen
states and Puerto Rico. Id.
On the other hand, the Court noted that some factors
weighed against class certification. First, the class members’
vast financial resources weighed against certification, as each
was a sophisticated corporation. Id. The District Court also
looked to their incentive to bring individual claims, stating
that the class members’ ability to bring individual suits
generally weighed against certification, but equivocating
somewhat because the six class members with claims below
$1 million “likely do not have the same incentive to engage in
costly antitrust litigation on their own.” Id. It is not clear
what weight was ultimately placed on the parties’ financial
incentive to bring suit, and the District Court appeared to treat
this as either a neutral factor or one that weighed in favor of
Defendants. Ultimately, the District Court held that the
requirements of Rule 23(a)(1) were satisfied and the class was
sufficiently numerous such that joinder was impracticable.
Id.
20
The District Court next addressed Defendants’
predominance argument that, after the District Court’s grant
of summary judgment on the global conspiracy claim,
common issues of law and fact did not predominate over
individualized inquiries under Rule 23(b)(3). Id. at 209.
Defendants argued that the damages model of Plaintiffs’
expert, Dr. Leitzinger, no longer matched Plaintiffs’ theory of
liability because it did not isolate the harm caused by each
individual reverse-payment settlement. Defendants claimed
that this mismatch is analogous to the problem at issue in the
Supreme Court’s decision in Comcast Corp. v. Behrend, 133
S. Ct. 1426 (2013). Related to this argument, Defendants
relied upon the doctrine of antitrust standing to support the
view that, in the absence of a global conspiracy, each class
member would have to show which agreement harmed him,
and that this would necessarily be an individualized inquiry.
The District Court rejected these arguments, concluding that
Plaintiffs had antitrust standing and that the doctrine of joint
and several liability was appropriate. Thus, it concluded that
Comcast was not controlling because Dr. Leitzinger’s
damages model “matches Plaintiffs’ remaining theory of
liability and impact.” Id. at 214.
III.
“The class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.” Wal-Mart, 564 U.S. at 348 (internal
quotation marks omitted). In order to justify this exception to
the rule, “every putative class action must satisfy the four
requirements of Rule 23(a) and the requirements of either
Rule 23(b)(1), (2), or (3).” Marcus v. BMW of N.A., LLC,
21
687 F.3d 583, 590 (2012). In order to satisfy Rule 23(a), a
plaintiff must show:
(1) the class must be “so numerous that joinder
of all members is impracticable” (numerosity);
(2) there must be “questions of law or fact
common to the class” (commonality); (3) “the
claims or defenses of the representative parties”
must be “typical of the claims or defenses of the
class” (typicality); and (4) the named plaintiffs
must “fairly and adequately protect the interests
of the class” (adequacy of representation, or
simply adequacy).
In re Cmty. Bank of N. Va., 622 F.3d 275, 291 (3d Cir. 2010)
(quoting Fed. R. Civ. P. 23). Rule 23(b)(3), which is the
basis for certification here, “requires that (i) common
questions of law or fact predominate (predominance), and (ii)
the class action is the superior method for adjudication
(superiority).” Marcus, 687 F.3d at 591 (quoting In re Cmty.
Bank of N. Va., 622 F.3d at 291). “The party seeking
certification bears the burden of establishing each element of
Rule 23 by a preponderance of the evidence.” Id.
We have held that “the decision to certify a class calls
for findings by the court, not merely a ‘threshold showing’ by
a party, that each requirement of Rule 23 is met,” and that
“[f]actual determinations supporting Rule 23 findings must be
made by a preponderance of the evidence.” In re Hydrogen
Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008).
In addition, a court “must resolve all factual or legal disputes
relevant to class certification, even if they overlap with the
22
merits – including disputes touching on elements of the cause
of action.” Id. Class certification will thus be “proper only
‘if the trial court, is satisfied, after a rigorous analysis, that the
prerequisites’ of Rule 23 are met.” Id. (quoting Gen. Tel. Co.
of Sw. v. Falcon, 457 U.S. 147, 161 (1982)); see also Newton
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154,
166 (3d Cir. 2001) (“A class certification decision requires a
thorough examination of the factual and legal allegations.”).
Thus, while a district court “possesses broad discretion
to control proceedings and frame issues for consideration
under Rule 23,” such discretion “does not soften the rule
[that] a class may not be certified without a finding that each
Rule 23 requirement is met.” Hydrogen Peroxide, 552 F.3d
at 310. This is particularly true because, acknowledging the
practicalities of class litigation, we have said that class
certification “is often the defining moment in class actions
(for it may sound the ‘death knell’ of the litigation on the part
of plaintiffs, or create unwarranted pressure to settle
nonmeritorious claims on the part of defendants).” Newton,
259 F.3d at 162.
“We review a class certification order for abuse of
discretion, which occurs if the district court’s decision rests
upon a clearly erroneous finding of fact, an errant conclusion
of law or an improper application of law to fact.” Hydrogen
Peroxide, 552 F.3d at 312 (internal quotation marks omitted).
Although Defendants raise the issue of predominance first,
the requirements of Rule 23(a) are “threshold requirements,”
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997),
and we therefore address them first.
23
A. Numerosity
Rule 23(a)(1) sets forth what is commonly known as
the numerosity requirement. The text is, however,
conspicuously devoid of any numerical minimum required for
class certification. Instead, the rule simply states that the
numerosity requirement is satisfied when “the class is so
numerous that joinder of all members is impracticable.” Fed
R. Civ. P. 23(a)(1). “Impracticable does not mean
impossible,” Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir.
1993), and refers rather to the difficulties of achieving
joinder. This calls for an inherently fact-based analysis that
requires a district court judge to “take into account the
context of the particular case,” thereby providing district
courts considerable discretion in making numerosity
determinations. Pa. Pub. Sch. Emps. Ret. Sys. v. Morgan
Stanley & Co., 772 F.3d 111, 120 (2d Cir. 2014). A district
court abuses that discretion, however, when it considers
issues that have no place in the numerosity requirement.
Hydrogen Peroxide, 552 F.3d at 312. In this case, the District
Court abused its discretion by improperly emphasizing the
late stage of the proceeding and by not considering the ability
of individual class members to pursue their cases through the
use of joinder. 7
While “[n]o minimum number of plaintiffs is required
to maintain a suit as a class action,” our Court has said that
“generally if the named plaintiff demonstrates that the
7
Despite this conclusion, we recognize the thoughtful work
of the District Court, which was diligently done even though
there is a paucity of precedent on the numerosity issue.
24
potential number of plaintiffs exceeds 40, the first prong of
Rule 23(a) has been met.” Stewart v. Abraham, 275 F.3d
220, 226-27 (3d Cir. 2001); see also Robidoux, 987 F.2d at
936 (“[T]he difficulty in joining as few as 40 putative class
members should raise a presumption that joinder is
impracticable.”). At the other end of the spectrum, the
Supreme Court has stated in dicta that a class of fifteen was
“too small to meet the numerosity requirement.” Gen. Tel.
Co. of the Nw, Inc. v. EEOC, 446 U.S. 318, 331 (1980).
Leading treatises have collected cases and recognized the
general rule that “[a] class of 20 or fewer is usually
insufficiently numerous . . . [a] class of 41 or more is usually
sufficiently numerous . . . . [while] [c]lasses with between 21
and 40 members are given varying treatment. These mid-
sized classes may or may not meet the numerosity
requirement depending on the circumstances of each
particular case.” 5 James Wm. Moore, et al., Moore’s
Federal Practice § 23.22; see also 5 William B. Rubenstein,
Newberg on Class Actions § 3:12 (“As a general guideline . . .
a class that encompasses fewer than 20 members will likely
not be certified absent other indications of impracticability of
joinder, while a class of 40 or more members raises a
presumption of impracticability of joinder based on numbers
alone.” (internal footnotes omitted)); Cox v. Am. Cast Iron
Pipe Co., 784 F.2d 1546, 1553 (3d Cir. 1986) (citing Moore
favorably).
At this point, we need not specify a “floor” at which a
putative class will fail to satisfy the numerosity requirement.
Instead, we simply note that the number of class members is
the starting point of our numerosity analysis. Although
district courts are always under an obligation to ensure that
25
joinder is impracticable, their inquiry into impracticability
should be particularly rigorous when the putative class
consists of fewer than forty members. Because the District
Court certified a class of twenty-two members, which is only
slightly above the twenty-member floor suggested by the
leading treatises, we first address Defendants’ challenge to
the size of the putative class concerning the partial
assignment of some claims. After determining that the class
is comprised of twenty-two members, we scrutinize the
District Court’s numerosity reasoning in this case. Because
the District Court erred in its analysis of the two most
important factors applicable here, we see no need to examine
the other factors and will remand for the District Court to
again engage in a numerosity inquiry consistent with the
reasoning in this opinion.
1. The Size of the Class
The District Court rejected Defendants’ argument that
two class members should not be included in the class for
numerosity purposes because they were partial assignees of
two other class members. If Defendants were correct, the
class would be comprised of only twenty class members, not
twenty-two. On the other hand, for the first time on appeal,
Plaintiffs argue that they have uncovered three more
assignees of claims, and that the class consists of twenty-five
members.
Defendants appear to have abandoned their partial
assignment argument on appeal, arguing in one sentence that
“four of the 22 potential class members were improperly
26
included in the class.” Appellant Br. at 48. 8 Defendants
make no reference to case law and rely simply on cursory
citations to the record. We could, for good reason, deem
these arguments abandoned and waived on appeal. Kost v.
Kozakiewicz, 1 F.3d 176, 182 (3d Cir. 1993). However,
because we are remanding the numerosity issue to the District
Court, we think it appropriate to consider this issue pertaining
to the size of the class because the partial assignability issue
impacts whether the three additional class members should be
included in the class on remand. See Bagot v. Ashcroft, 398
F.3d 252, 256 (3d Cir. 2005) (“This Court has discretionary
power to address issues that have been waived.”).
8
Defendants raised two other challenges to the size of the
class before the District Court and in a cursory manner on
appeal. They argue (1) that named plaintiff King Drug
Company of Florence, Inc. (“King Drug”) should not be
included in the class because it went out of business before
generic modafinil entered the market in 2012, and thus there
is no way of knowing if it would have even purchased generic
modafinil, and (2) that Drogueria Betances should not be
included in the class because all of its brand modafinil
purchases were made after generic entry. We see no need to
question the inclusion of these two class members. King
Drug presented testimony showing that it would have
purchased generic modafinil instead of Provigil if it had been
on the market. Similarly, the experts of both parties agreed
that it takes several months before prices fall to competitive
levels after generic entry. Because Drogueria Betances made
its brand modafinil purchases only one month after generic
entry, it is conceivable that it paid an overcharge.
27
Initially, Defendants’ partial assignment argument
makes intuitive sense. Why should Plaintiffs be able to take
one claim and turn it into two for numerosity purposes? How
is this not a form of “double dipping”? Nevertheless, no
matter how intuitively appealing this argument may be, it
lacks legal support. The text of Rule 23(a)(1) says nothing
about the number of claims; instead, it refers to the number of
class members. Fed. R. Civ. P. 23(a)(1) (requiring an inquiry
into whether “the class is so numerous that joinder of all
members is impracticable” (emphasis added)).
Moreover, as the District Court recognized, there is
persuasive circuit precedent establishing that partial assignees
are appropriately considered to be members of a class. In In
re Fine Paper Litigation, 632 F.2d 1081, 1089 (3d Cir. 1980),
the state of Washington was the recipient of partial
assignments of antitrust claims. It sought to be excluded from
the settlement class, and the district court held, among other
reasons for denying the right to opt out, that “the state’s
assertion of the assigned claims would result in an
impermissible fragmentation of the . . . causes of action.” Id.
We reversed and “reject[ed] the defendant’s position that the
partial assignments improperly fragment the claim.” Id. at
1090. We looked to section 156 of the Restatement of
Contracts for guidance and concluded that “[a]n assignment
of a fractional part of a single and entire right against an
obligor is operative as if the part had been a separate right.”
Id. at 1091; Restatement (First) of Contracts § 156 (“An
assignment of either a fractional part of a single and entire
right against an obligor . . . is operative as to that part or
28
amount to the same extent and in the same manner as if the
part had been a separate right.”). 9
At the same time, we held that when the “collective
right to the entire claim” is split, “the partial assignee may not
maintain the original suit” unless the obligor has consented in
order to protect the “right[] of the obligor to be free of
successive and repeated suits growing out of the same basic
facts.” In re Fine Paper Litig., 632 F.2d at 1091. When the
obligor does not consent to these separate suits, then these
rights are protected by the use of the joinder rules or the class
action mechanism. Id. Thus, the state of Washington could
be made a party that, unlike other class members, did “not
have the right to opt out.” Id. In our case, Defendants are
really seeking the opposite of what we said was permissible
in Fine Paper Litigation: they want us to say that these two
partial assignees must proceed independent of the class.
While Fine Paper Litigation did not address
numerosity, we consider its reasoning instructive. Crucially,
we held there that a partial assignment “is operative as if the
part had been a separate right.” Id. at 1091. Moreover, Fine
Paper Litigation envisioned the class action mechanism as a
proper tool for partial assignees to participate in the lawsuit,
9
Nearly identical language is found in the Second
Restatement of Contracts, which was pending approval at the
time of In re Fine Paper Litigation. Restatement (Second) of
Contracts § 326 (“[A]n assignment of a part of a right . . . is
operative as to that part to the same extent and in the same
manner as if the part had been a separate right.”).
29
albeit with fewer individual rights than other claimants. We
agree with the District Court that, unless there is evidence that
the class plaintiffs are seeking to artificially inflate the
number of claimants, partial assignees may properly be
treated as class members. On remand, the District Court will
need to consider whether the three new assignees that
Plaintiffs first mention on appeal should be considered as
class members. 10 Thus, at this point, we assume that the class
consists of twenty-two members.
2. Impracticability of Joinder
In Marcus, we recognized the three core purposes of
the numerosity requirement:
10
Although normally “Rule 23(a)(1) does not require a
plaintiff to offer direct evidence of the exact number and
identities of the class members,” Marcus v. BMW of N.A.,
LLC, 687 F.3d 583, 596 (3d Cir. 2012), when the number of
class members is so small that any deviation may impact the
district court’s numerosity analysis, plaintiffs must provide
evidence of each class member’s identity or risk having that
member not counted. The declaration of the settlement
administrator that there are three more class members is not
enough in this case, where we are at the low end of what is
deemed to be a sufficient number of class members. This is
particularly true where all assignees – partial or otherwise –
are large corporations whose identity is easily ascertainable.
On remand, Plaintiffs will need to provide more evidence
concerning these three potential class members if they wish to
have them counted for numerosity purposes.
30
First, it ensures judicial economy. It does so by
freeing federal courts from the onerous rule of
compulsory joinder inherited from the English
Courts of Chancery and the law of equity.
Courts no longer have to conduct a single,
administratively burdensome action with all
interested parties compelled to join and be
present. The impracticability of joinder, or
numerosity, requirement also promotes judicial
economy by sparing courts the burden of having
to decide numerous, sufficiently similar
individual actions seriatim. As for its second
objective, Rule 23(a)(1) creates greater access
to judicial relief, particularly for those persons
with claims that would be uneconomical to
litigate individually. Finally, the rule prevents
putative class representatives and their counsel,
when joinder can be easily accomplished, from
unnecessarily depriving members of a small
class of their right to a day in court to
adjudicate their own claims.
687 F.3d at 594-95 (internal citations omitted). However, in
Marcus, we had no need to provide a list of factors that
should be considered in the numerosity analysis, because it
was “[m]ere speculation” that anyone other than the named
plaintiff was a class member. Id. at 596-97.
We have not had occasion to list relevant factors that
are appropriate for district court judges to consider when
determining whether joinder would be impracticable. We do
so now. This non-exhaustive list includes: judicial economy,
31
the claimants’ ability and motivation to litigate as joined
plaintiffs, the financial resources of class members, the
geographic dispersion of class members, the ability to identify
future claimants, and whether the claims are for injunctive
relief or for damages. See 5 Moore’s Federal Practice
§ 23.22; 5 Newberg on Class Actions § 3.12 (“These factors
include: judicial economy arising from avoidance of a
multiplicity of actions, geographic dispersion of class
members, size of individual claims, financial resources of
class members, and the ability of claimants to institute
individual suits.”); Pa. Pub. Sch. Emps. Ret. Sys., 772 F.3d at
120 (“However, the numerosity inquiry is not strictly
mathematical but must take into account the context of the
particular case, in particular whether a class is superior to
joinder based on other relevant factors including: (i) judicial
economy, (ii) geographic dispersion, (iii) the financial
resources of class members, (iv) their ability to sue
separately, and (v) requests for injunctive relief that would
involve future class members.” (citing Robidoux, 987 F.2d at
936)).
These factors are only relevant to a binary choice at
the certification stage: a class action versus joinder of all
interested parties. At this point, we do not consider the
possibility that plaintiffs may bring individual suits. After all,
the text of Rule 23(a)(1) refers to whether “the class is so
numerous that joinder of all members is impracticable,” 11 not
11
The superiority analysis required under Rule 23(b)(3)
similarly calls for an inquiry into judicial economy and places
great weight on whether the individual members can bring
their own claims. However, superiority, unlike numerosity,
32
whether the class is so numerous that failing to certify
presents the risk of many separate lawsuits.
While all factors are relevant, we note at the outset that
not all are created equal. Instead, both judicial economy and
the ability to litigate as joined parties are of primary
importance. As we have held, judicial economy is one of the
purposes behind Rule 23(a)(1) and class actions in general.
Marcus, 687 F.3d at 594. The same is true of ensuring that
small-value claims have a mechanism by which they can be
economically litigated. Id.; Deposit Guaranty Nat’l Bank,
considers alternatives to class actions other than joinder. See
Fed. R. Civ. P. 23(b)(3) (requiring an inquiry into whether “a
class action is superior to other available methods for fairly
and efficiently adjudicating the controversy”); In re Warfarin
Sodium Antitrust Litig., 391 F.3d 516, 533-34 (3d Cir. 2004)
(“The superiority requirement ‘asks the court to balance, in
terms of fairness and efficiency, the merits of a class action
against those of alternative available methods of
adjudication.’” (quoting In re Prudential Ins. Co. Am. Sales
Practice Litig. Agent Actions, 148 F.3d 283, 316 (3d Cir.
1998))); id. at 534 (finding superiority to be satisfied because
“there are a potentially large number of class members in this
matter . . . . [and] each consumer has a very small claim in
relation to the cost of prosecuting a lawsuit. Thus, from the
consumers’ standpoint, a class action facilitates spreading of
the litigation costs among the numerous injured parties and
encourages private enforcement of the statutes.”).
Numerosity, of course, is a prerequisite to all class actions,
while a finding of superiority is necessary only in a (b)(3)
suit.
33
Jackson, Miss. v. Roper, 445 U.S. 326, 339 (1980) (“Where it
is not economically feasible to obtain relief within the
traditional framework of a multiplicity of small individual
suits for damages, aggrieved persons may be without any
effective redress unless they may employ the class action
device.”). If we were to say that judicial economy and the
ability of class members to bring their own suits as named
parties weighed in favor of class certification, how could the
other factors outweigh these considerations even though the
core purposes of a class action were being advanced? 12 In
this case, the District Court’s judicial economy analysis was
incorrect, as it improperly placed great weight on the late
stage of the proceeding. Additionally, the District Court did
not fully explore the ability of class members to join as
plaintiffs.
a. Judicial Economy
Judicial economy, a primary factor frequently cited,
looks to the administrative burden that multiple or aggregate
claims place upon the courts. Marcus, 687 F.3d at 594
(stating that the numerosity requirement “also promotes
judicial economy by sparing the courts the burden of having
12
The third purpose behind class actions mentioned in
Marcus, the due process concern of protecting the ability of
individual members to bring their own claims, Marcus, 687
F.3d at 594-95, is not present in Rule 23(b)(3) actions where
members have the right to opt out of the class and where the
identity of all class members is ascertainable such that there
will be no difficulties in ensuring that they receive notice of
the representative action. See Fed. R. Civ. P. 23(c)(2)(B)(v).
34
to decide numerous, sufficiently similar individual actions
seriatim”); id. (“Courts no longer have to conduct a single,
administratively burdensome action with all interested parties
compelled to join and be present.”). This factor takes into
account any efficiency considerations regarding the joinder of
all interested parties that the district court deems relevant,
including the number of parties and the nature of the action.
See 5 Moore’s Federal Practice § 23.22 (instructing a court
to consider “the actual, practical difficulties of joining all of
the potential class members” by inquiring whether joinder
“would be expensive, time-consuming, and logistically
unfeasible”). In analyzing judicial economy, we focus on
whether the class action mechanism is substantially more
efficient than joinder of all parties.
Here, the District Court “conclude[d] that judicial
economy [was] best served by trying this case as a class
action.” King Drug Co., 309 F.R.D. at 206. It made this
decision by looking to “the extensive history of the litigation
and the exhaustive discovery that ha[d] been conducted.” Id.
It expressed concern that further discovery would delay the
case even more, or that unnamed class members would opt to
file suit elsewhere, resulting in other civil actions with
additional discovery and the potential for inconsistent
verdicts. Id. at 206-07 (“Joinder of the absent class members
would likely require additional rounds of discovery, which
would only further delay a trial date. Further, if cases were
brought within other jurisdictions, additional discovery is
certainly a possibility.”). 13 While these predictions may
13
The dissent does not “read the District Court’s analysis [of
the judicial economy factor] as turning upon a consideration
35
come true, the late stage of litigation is not by itself an
appropriate consideration to take into account as part of a
numerosity analysis. 14
In complex cases such as this antitrust suit, the class
certification decision is often delayed until after years of fact
and expert discovery have been conducted and dispositive
motions have been litigated. See Hydrogen Peroxide, 552
F.3d at 324 (“But even with some limits on discovery and the
extent of the hearing, the district judge must receive enough
evidence, by affidavits, documents, or testimony, to be
satisfied that each Rule 23 requirement has been met.”
(quoting In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24,
of the late stage of the proceeding.” However, this analysis
consisted of three sentences in a single paragraph, each of
which focused on the late stage of the proceeding. King Drug
Co. of Florence, Inc. v. Cephalon, Inc., 309 F.R.D. 195, 206-
07 (E.D. Pa. 2015). We also note that the District Court’s
entire numerosity section spanned three pages, one of which
is nothing more than a summary of the parties’ arguments.
14
The dissent cites several cases that it claims “recognize that
it is appropriate for courts to consider the stage of the
proceedings when weighing judicial economy.” None of
these cases are class actions though, which we again
emphasize are the “exception to the usual rule that litigation
is conducted by and on behalf of the individual named parties
only.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348
(2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01
(1979)).
36
41 (2d Cir. 2006))). Courts routinely refuse to certify classes
based on the need to conduct further discovery before being
able to properly rule on a class certification motion. See In re
New Motor Vehicles Canadian Export Antitrust Litig., 522
F.3d 6, 26-27 (1st Cir. 2008) (noting that the district court
erred in preliminarily certifying the class because of the
“novelty and complexity of the theories advanced and the
gaps in the evidence proffered”); Valley Drug Co. v. Geneva
Pharm., Inc., 350 F.3d 1181, 1192 (11th Cir. 2003) (“[T]he
record needed to decide [the class certification] issue remains
incomplete because the district court improperly denied
Abbott’s request to conduct so-called ‘downstream
discovery.’”). However, such decisions do not prejudice a
plaintiff; the class certification motion is not denied, but only
deferred until after further discovery is conducted.
Conversely, a rule that would allow courts to consider
the late stage of litigation and the sunk costs already incurred
in their numerosity analyses would place a thumb on the scale
in favor of a numerosity finding for no reason other than the
fact that the complex nature of a case resulted in the class
certification decision being deferred for years. Our view is
consistent with the 2003 amendments to Rule 23(c)(1)(A)
which state that the class certification decision should be
made “a[t] an early practicable time after a person sues or is
sued as a class representative” as opposed to the previous rule
which said that the decision be made “as soon as practicable
after commencement of an action.” See Fed. R. Civ. P. 23
advisory committee’s notes to 2003 amendment (noting that
the “as soon as practicable” designation does not “capture[]
the many valid reasons that may justify deferring the initial
certification decision”). We have recognized that the rule
37
was modified in order to discourage “premature certification
determinations.” Richardson v. Bledsoe, __F.3d__, 2016 WL
3854216, at *4 (3d Cir. July 15, 2016) (quoting Weiss v.
Regal Collections, 385 F.3d 337, 347 (3d Cir. 2004)). 15
As the Advisory Committee noted, there are “many
valid reasons that may justify deferring the initial certification
decision,” including the need to conduct discovery, a
determination of what issues would be presented at trial, and
the defendant’s desire to “win dismissal or summary
judgment as to the individual plaintiffs without certification
and without binding the class that might have been certified.”
Fed. R. Civ. P. 23 advisory committee’s notes to 2003
amendment. Thus, while Rule 23(c)(1)(A) now encourages
further discovery so that all of the information and evidence
relevant to certification is before a district judge before she
makes the certification decision, the District Court’s analysis
here would seem to consider any lengthy period following the
filing of a putative class action as weighing in favor of
finding numerosity. This cannot be right. Judicial economy
does not permit consideration of the sunk costs from past
15
Weiss was abrogated on other grounds by Campbell-Ewald
Co. v. Gomez, 136 S. Ct.663 (2016). However, its reasoning
concerning the impropriety of “premature certification
decisions” was reaffirmed in Richardson, 2016 WL 3854216,
at *4.
38
discovery and litigation, or the need to conduct further
discovery if the class is not certified. 16
Moreover, while the District Court expressed concern
that “[j]oinder of the absent class members would likely
require additional rounds of discovery,” King Drug, 309
F.R.D. at 206, this does not mean that the litigation would
have to begin anew for the unnamed class members. If the
members all opted to join the case as individual plaintiffs, the
District Court could, in its discretion, limit discovery where
“is unreasonably cumulative or duplicative, or can be
obtained from some other source that is more convenient, less
burdensome, or less expensive.” Fed. R. Civ. P.
26(b)(2)(C)(i). At this point, Defendants have not shown
what further discovery they are entitled to; they only claim
that they are entitled to further discovery as a matter of due
process. 17 In addition, as a class, Plaintiffs have been using
16
The District Court also considered the effects on judicial
economy if individual suits in separate jurisdictions would be
filed absent class certification. However, the text of Rule
23(a)(1) envisions only two scenarios: joinder of all class
members or a class action. Fed R. Civ. P. 23(a)(1) (inquiring
whether “joinder of all members is impracticable”). The
possibility of individual suits filed in separate jurisdictions is
not a consideration that a district court should entertain in
deciding numerosity vel non.
17
In the District Court, Defendants never asked for discovery
from unnamed class members. Defendants claim that a
request for discovery of unnamed class members would have
been futile because it is highly circumscribed. However, the
39
the same experts. It is not clear that there would be a need for
that to change merely because Plaintiffs would be joined as
individual parties instead of moving forward as a class.
On remand, when considering the judicial economy
factor of the numerosity analysis, the District Court should
not take into account the sunk costs of the litigation or the
need to further delay trial were the class not to be certified. 18
citations that they provide in support of this view make clear
that this is merely a heightened standard, and if they could
show a need for discovery from unnamed class members the
District Court would allow it. See 5 Moore’s Federal
Practice § 33.20 (“Reasonable discovery . . . should be
permitted from unnamed class members when the special
circumstances of the case justify it.”); Clark v. Universal
Builders, Inc., 501 F.2d 324, 341 (7th Cir. 1974) (“The taking
of depositions of absent class members is – as is true of
written interrogatories – appropriate in special
circumstances.”).
18
The dissent suggests that we proclaim this rule “without
any citation to authority.” Of course, our dissenting colleague
fails to provide any citation to authority to support a contrary
rule. In fact, the only authorities that we can find to support
the dissent’s position are the District Court’s opinion in this
case, and another district court opinion from the Eastern
District of Pennsylvania upon which the District Court here
relied, In re Wellbutrin XL Antitrust Litig., No. 08-2431, 2011
WL 3563385, at *3 (E.D. Pa. Aug. 11, 2011). This is a
matter of first impression for any court of appeals. Indeed,
our Court has never even identified the factors that a district
40
In other words, without considering the late stage of the
litigation, it should determine whether a class action would
have been a substantially more efficient mechanism of
litigating this suit than joinder of all parties. This primarily
involves considerations of docket control, taking into account
practicalities as simple as that of every attorney making an
appearance on the record. At the same time, the District
Court is free to rely on its superior understanding of how the
case has proceeded to date for the purpose of determining
whether the class mechanism would have actually been a
substantially more efficient use of judicial resources than
joinder of the parties at the onset of the litigation.
b. Ability and Motivation to be Joined as
Plaintiffs
The second purpose behind the numerosity
requirement is to further the broader class action goal of
providing those with small claims reasonable access to a
court should consider in its numerosity analysis despite the
dissent’s assertion that the District Court in this case
“properly considered every factor we have ever held to be
relevant” in this analysis. We cannot abdicate our
responsibility to conduct a de novo review of legal issues.
See In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305,
312 (3d Cir. 2008) (recognizing that although class
certification decisions are reviewed for abuse of discretion,
“[w]hether an incorrect legal standard has been used is an
issue of law to be reviewed de novo” (internal quotation
marks omitted)).
41
judicial forum for the resolution of those claims. Thus, the
ability and motivation of Plaintiffs to pursue their litigation
via joinder is the second factor upon which we focus. See
Marcus, 687 F.3d at 594 (stating that the numerosity
requirement “creates greater access to judicial relief,
particularly for those persons with claims that would be
uneconomical to litigate individually”). 19
This primarily20 involves an examination of the stakes
at issue for the individual claims and the complexity of the
litigation, which will typically correlate with the costs of
pursuing these claims. Though joinder is certainly more
19
We read Marcus’s language about the ability “to litigate
individually,” Marcus, 687 F.3d at 594, to refer to each
plaintiff appearing on the record as a joined party, and not
whether each individual plaintiff can litigate his or her own
claim as the sole plaintiff. While the latter concern is
certainly a policy justification for the class device generally,
as we emphasize, Rule 23(a)(1) requires only the binary
choice between class actions and joinder of all parties.
20
Other considerations may be relevant to a district court in
determining class members’ ability and motivation to be
joined as named plaintiffs. For example, the District Court
here recognized that a fear of retaliation may hinder the
ability and motivation of a party to appear as a named
plaintiff. In this case, the District Court noted that there was
no proof of any fear of retaliation, and we do not disturb that
factual finding on appeal. King Drug Co. of Florence, Inc. v.
Cephalon, Inc., 309 F.R.D. 195, 207 (E.D. Pa. 2015).
42
economical for most plaintiffs than pursuing the case alone, it
is often still uneconomical for an individual with a negative
value claim to join a lawsuit. 21 After all, each plaintiff may
need to hire his own counsel to protect his individual interests
– although total litigation costs would still likely be lower due
to joint litigation agreements. Similarly, each plaintiff would
be subject to discovery, whereas the defendants would have
to show a greater need for discovery from unnamed plaintiffs
in a class action. 22 See Clark v. Universal Builders, Inc., 501
F.2d 324, 340-41 (7th Cir. 1974) (placing the burden on
defendants to show the need for discovery from unnamed
class members to ensure that the discovery is not requested
“as a tactic to take undue advantage of the class members or
as a stratagem to reduce the number of claimants” (internal
quotation marks omitted)).
The District Court did not properly consider this
factor, as it focused instead on whether the individual
21
A negative value claim is a “claim[] that could not be
brought on an individual basis because the transaction costs
of bringing an individual action exceed the potential relief.”
In re Baby Prods. Antitrust Litig., 708 F.3d 163, 179 (3d Cir.
2013).
22
While discovery from joined parties is not subject to the
heightened discovery standard of unnamed class members,
even in a non-class action a district court has the discretion to
limit unnecessary discovery pursuant to Rule 26(b)(C).
43
plaintiffs could have brought their own, individual suits. 23
However, the numerosity rule does not envision the
23
The dissent contends that we misread the District Court’s
analysis, and argues that “the focus of the District Court’s
opinion is on joinder throughout.” Yet every reference to
joinder that the dissent cites comes from portions of the
District Court opinion that were not about the ability of the
plaintiffs to litigate via joinder. Instead, these references are:
“[j]oinder of the absent class members would likely require
additional rounds of discovery,” which appears in the judicial
economy section; “[t]he considerable geographic dispersion
of the parties would certainly present challenges to plaintiffs
in attempting to coordinate the litigation if all class members
were joined,” which obviously is in the geographic dispersion
section; and “Plaintiffs have demonstrated by a
preponderance of the evidence that the parties are sufficiently
numerous so as to make joinder impracticable,” which is in
the conclusion of the numerosity analysis. Even a cursory
look at the section on the ability and incentive of the class
members to litigate reveals that the District Court was
focused on the alternative of individual suits, not on joinder.
See King Drug, 309 F.R.D. at 207 (“Two factors that may
weigh against Plaintiffs are the financial resources of the class
members and the parties’ abilities to bring individual suits.”)
(emphasis added); id. (“These prospective class members
likely do not have the same incentive to engage in costly
antitrust litigation on their own.”) (emphasis added). To the
extent that the District Court did properly consider the
alternative of joinder, as the dissent contends, on remand the
District Court has the opportunity to more clearly state this
44
alternative of individual suits; it considers only the alternative
of joinder. Here, the class members, based on the record
before us, appear likely to have the ability and incentive to
bring suit as joined parties, thus preventing the alleged
wrongdoers from escaping liability. 24 In fact, three class
when it conducts its rigorous numerosity analysis. At this
point, the references to “individual suits” and “on their own”
prominently stand out when surrounded by the references to
“joinder” in the other sections.
24
Most of the dissent’s possible reasons why the class
members would not be likely to join as named plaintiffs –
“desire to have one’s self and own law firm control the
litigation, choice of favorable forum, familiarity with the
local jurisdictions laws and procedures, [and] fear of being
dragged into settlement” – are equally applicable to the
decision of whether to opt out of the class. See Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 813 (1985) (discussing
the importance of allowing opt outs because if a “plaintiff’s
claim is sufficiently large or important that he wishes to
litigate it on his own, he will likely have retained an attorney
or have thought about filing suit, and should be fully capable
of exercising his right to ‘opt out’”). Moreover, these reasons
do not show why joinder is “impracticable”; they simply
show that joinder may not be the preferred method of
proceeding with the case. If a plaintiff wants to proceed
individually, it has that choice. The plaintiff does not need to
join the suit – just as it need not remain a member of a
certified class – if it wants to control its own litigation,
choose a more favorable forum, select a jurisdiction whose
45
members, none of whom are named plaintiffs, each have
claims estimated at over $1 billion – even before the trebling
of damages. These three make up over 97% of the total value
of the class claims, and can hardly be considered as
candidates who need the aggregative advantages of the class
device. While this factor could weigh in favor of class status
if the remaining class members had very small claims, that is
simply not the case here. Thirteen of the other nineteen class
members have claims that are greater than $1 million, the
value that the two parties seem to agree is the appropriate
figure at which point bringing one’s own suit becomes
economical. On the other hand, there are only six class
members with claims below $1 million each. While it may be
uneconomical for these claims to be pursued in individual
litigation, there has been no showing that it would be
uneconomical for these six class members to be individually
joined as parties in a traditional lawsuit. On remand, the
District Court should consider this issue. Even if it were
uneconomical for some or all of these six individual plaintiffs
to join the suit, the District Court must still determine
whether, considering all the other relevant factors, class status
– which is “an exception to the usual rule that litigation is
laws and procedures it is familiar with, or avoid being
dragged into a settlement. Cf. In re Diet Drugs Prods.
Liability Litig., 369 F.3d 293, 308 (3d Cir. 2004) (“By
waiving an initial opt-out, the class member surrenders what
may be valuable rights, in return for countervailing
benefits.”).
46
conducted by and on behalf of the individual named parties
only,” Wal-Mart Stores, 564 U.S. at 348 – is appropriate here.
The District Court abused its discretion in analyzing
the two most important numerosity factors when it considered
the late stage of the litigation as relevant to the judicial
economy factor and failed to properly consider the ability and
motivation of the plaintiffs to proceed as joined, as opposed
to individual, parties. We therefore remand for the District
Court to conduct a rigorous numerosity analysis for this class
of twenty-two (or twenty-five) members. In conducting this
rigorous analysis, factors that the District Court may consider
include the financial resources of the class members, the
geographic dispersion of the class members, the ability to
identify future claimants, together with the fact that these
claims are for damages, and not injunctive relief.
Contrary to the dissent’s assertion, we are not
“erecting roadblocks that do not exist.” Although the dissent
suggests that Defendants have not yet shown why joinder is
practicable, that suggestion is beside the point. The burden is
on Plaintiffs to show why joinder is impracticable. Marcus,
687 F.3d at 591 (“The party seeking certification bears the
burden of establishing each element of Rule 23” – including
the numerosity requirement – “by a preponderance of the
evidence.”); id. at 595 (“Critically, numerosity—like all Rule
23 requirements—must be proven by a preponderance of the
evidence.”). Moreover, the dissent would have Defendants’
inability to articulate an argument against finding numerosity
obviate a district court’s obligation to conduct “a rigorous
analysis” and determine “that the prerequisites of Rule 23(a)
have been satisfied.” Wal-Mart, 564 U.S. at 351 (internal
47
quotation marks omitted); Hydrogen Peroxide, 552 F.3d at
310 (“[A] class may not be certified without a finding that
each Rule 23 requirement is met.”).
Finally, the dissent makes the extravagant claim that
“nothing about [this case] cries out for anything but class
treatment.” Yet this is not the typical class action where
hundreds or thousands of claims are aggregated in order to
ensure that the wrongdoer is held accountable and that small
claims are vindicated. See Thorogood, 547 F.3d at 744.
Putting aside the small number of class members in this case,
the judges in the majority have never seen a class action
where three class members, each with billions of dollars at
stake and close to 100% of the total value of class claims
between them, have been allowed to sit on the sidelines as
unnamed class members. Plaintiffs must satisfy their burden
of showing why we should allow this unique putative class to
take advantage of this “exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.” Wal-Mart, 564 U.S. at 348 (internal
quotation marks omitted). At this point, they have failed to
meet that burden, and any suggestion that this is a run-of-the-
mill class action ignores the facts of this case. 25
25
The dissent makes the argument that if the class were not
certified, then several individual judges would have to
address what it terms “the real issues before the Court.” Yet
the only other issue before the Court is the Comcast
predominance issue. If the class were not certified because of
a failure to satisfy the numerosity requirement, there would
be no Comcast argument, as predominance is a question that
48
B. Predominance.
Although we remand for the District Court to
reconsider its numerosity analysis, we also see a need to
address Defendants’ predominance argument. This argument
makes selective use of language from the Supreme Court’s
recent decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426
(2013). The interpretation of Comcast advanced by
Defendants is overly broad and simplistic, and, if the class
were to meet the numerosity requirement on remand, the
predominance argument advanced by Defendants is
untenable.
Under Rule 23(b)(3), “questions of law or fact
common to class members [must] predominate over any
questions affecting only individual members.” 26 This
“inquiry tests whether proposed classes are sufficiently
cohesive to warrant adjudication by representation.” Amchem
Prods., 521 U.S. at 623. “If anything, Rule 23(b)(3)’s
predominance criterion is even more demanding than Rule
23(a),” Comcast, 133 S. Ct. at 1432, as it is “[f]ramed for
situations in which ‘class-action treatment is not as clearly
arises only in the class action context. Additionally, the fact
that there is a “key issue” that the parties seek to litigate does
not justify class status.
26
Rule 23(b)(3) also states that “a class action [must be]
superior to other available methods for fairly and efficiently
adjudicating the controversy.” This second requirement –
superiority – is not at issue in this appeal.
49
called for’ as it is in Rule 23(b)(1) and (b)(2) situations.”
Amchem Prods., 521 U.S. at 615 (quoting Fed. R. Civ. P. 23
advisory committee’s notes to 1966 amendment). This
“inquiry is especially dependent upon the merits of a
plaintiff’s claim, since the nature of the evidence that will
suffice to resolve a question determines whether the question
is common or individual.” In re Constar Int’l Inc. Sec. Litig.,
585 F.3d 774, 780 (3d Cir. 2009) (internal quotation marks
omitted)). The Supreme Court has noted that “[a]n individual
question is one where members of a proposed class will need
to present evidence that varies from member to member,
while a common question is one where the same evidence
will suffice for each member to make a prima facie showing
[or] the issue is susceptible to generalized, class-wide proof.”
Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045
(2016) (internal quotation marks omitted).
The predominance requirement applies to damages as
well, because the efficiencies of the class action mechanism
would be negated if “[q]uestions of individual damage
calculations . . . overwhelm questions common to the class.”
Comcast, 133 S. Ct. at 1433. This does not mean, however,
that damages must be “susceptible of measurement across the
entire class for purposes of Rule 23(b)(3).” Neale v. Volvo
Cars of N.A., LLC, 794 F.3d 353, 374 (3d Cir. 2015) (internal
quotation marks omitted).
Defendants contend that Plaintiffs cannot satisfy the
predominance requirement of Rule 23(b)(3). They make two
interrelated arguments: (1) Plaintiffs’ theory of liability runs
afoul of Comcast because, after the grant of summary
judgment on the global conspiracy claim, Plaintiffs’ damages
50
model no longer corresponds to their remaining theory of
liability that there were four independent Section 1
conspiracies; and (2) predominance cannot be demonstrated
because Plaintiffs’ remaining theory of liability must isolate
the harm that each individual reverse-payment settlement
agreement caused each individual class member under the
doctrine of antitrust standing. 27
1. Comcast Argument
Comcast was an antitrust suit brought by a class of
Comcast subscribers. The plaintiffs initially had four theories
27
Plaintiffs argue that we should exercise our pendent
appellate jurisdiction and review the District Court’s grant of
summary judgment on the global antitrust conspiracy claim
because reversal on this claim would moot the Comcast issue.
The use of the pendent appellate jurisdiction doctrine “is an
exercise of discretion by a Court of Appeals and should be
used sparingly.” United States v. Spears, 859 F.2d 284, 287
(3d Cir. 1988). If we were to reverse on the Comcast issue,
we would deem it prudent to examine the global antitrust
conspiracy claim. However, because we would affirm on
predominance grounds, we do not deem the class certification
order and the summary judgment order to be so “inextricably
intertwined” that the exercise of our pendent appellate
jurisdiction would be appropriate. CTF Hotel Holdings, Inc.
v. Marriott Int’l, Inc., 381 F.3d 131, 136 (3d Cir. 2004)
(internal quotation marks omitted). Accordingly, we express
no view on the merits of Plaintiffs’ global antitrust conspiracy
claim.
51
of antitrust impact: (1) “Comcast’s clustering made it
profitable for Comcast to withhold local sports programming
from its competitors”; (2) “Comcast’s activities reduced the
level of competition from ‘overbuilders’”; (3) “Comcast
reduced the level of ‘benchmark’ competition on which cable
customers rely to compare prices”; and (4) “clustering
increased Comcast’s bargaining power relative to content
providers.” 133 S. Ct. at 1430-31. Their damages model “did
not isolate damages resulting from any one theory of antitrust
impact,” id. at 1431, and simply “assumed the validity of all
four theories of antitrust impact,” id. at 1434. The district
court limited its certification order to the overbuilding theory
because it was the only antitrust theory capable of classwide
proof, but found the predominance requirement to be satisfied
even though the damages model was not altered to reflect the
only theory of harm remaining. Id. at 1431. A divided panel
of our Court affirmed, Behrend v. Comcast Corp., 655 F.3d
182 (3d Cir. 2011), with Judge Jordan writing separately to
say that he “would vacate the certification order to the extent
it provides for a single class as to proof of damages,” id. at
209 (Jordan, J., concurring in the judgment in part and
dissenting in part), because the model of plaintiffs’ expert “no
longer fits Plaintiffs’ sole theory of antitrust impact, and,
instead, produces damages calculations that are not the certain
result of the wrong,” id. at 217 (internal quotation marks
omitted).
The Supreme Court reversed, holding that while the
damages model does not need to be exact, “a model
purporting to serve as evidence of damages in [a] class action
must measure only those damages attributable to that theory.
If the model does not even attempt to do that, it cannot
52
possibly establish that damages are susceptible of
measurement across the entire class for purposes of Rule
23(b)(3).” Comcast, 133 S. Ct. at 1433. Because the
plaintiffs’ damages model reflected injury from all four
alleged antitrust violations, and because only the overbuilding
theory of harm remained, the damages model was unable to
“bridge the differences between supra-competitive prices in
general and supra-competitive prices attributable to the
deterrence of overbuilding.” Id. at 1435. The Supreme Court
explained “[p]rices whose level above what an expert deems
‘competitive’ has been caused by factors unrelated to an
accepted theory of antitrust harm are not ‘anticompetitive’ in
any sense relevant here.” Id.
In the case before us, Plaintiffs’ expert, Dr. Leitzinger,
created a damages model that calculated the savings to the
class if generic entry had occurred earlier. He noted the
prices and overcharges actually paid by the class members
and compared that to but-for worlds that included the launch
of anywhere between one and five generic competitors.
Crucially, this model did not allocate damages amongst the
five original defendants (Cephalon and the four generic
manufacturers), attribute a certain amount of harm from each
individual reverse-payment settlement, or identify which class
members were harmed by which reverse-payment settlement.
In Defendants’ view, because only individual conspiracies
remain, any damages model must reflect the harm caused by
each individual conspiracy to each individual class member,
and the use of the same damages model that envisioned a
53
global conspiracy “does not even attempt,” Id. at 1433, to
correspond to this remaining theory of liability. 28
However, Plaintiffs’ theory of liability is not that each
individual agreement caused an individual harm, such that a
new damages model would be required under Comcast.
Instead, their theory of liability is that each individual
agreement contributed to the market-wide harm, and that all
five original defendants are jointly and severally liable 29 for
this harm as concurrent tortfeasors. This theory may
ultimately be proven wrong, but it does match Plaintiffs’
damages theory. Defendants next try to argue that Plaintiffs’
theory of liability must isolate the harm from each individual
28
Defendants have not challenged the substance of Dr.
Leitzinger’s methodology.
29
Under the doctrine of joint and several liability, “[i]f the
tortious conduct of each of two or more persons is a legal
cause of harm that cannot be apportioned, each is subject to
liability for the entire harm, irrespective of whether their
conduct is concurring or consecutive.” Restatement (Second)
of Torts § 879 (1979); United States v. Alcan Aluminum
Corp., 964 F.2d 252, 268 (3d Cir. 1992) (applying the
doctrine of joint and several liability to an environmental
statute when the harm was indivisible amongst the
tortfeasors). The Third Restatement of Torts provides no
guidance. Restatement (Third) of Torts: Apportionment of
Liability § 17 (stating that “the law of the applicable
jurisdiction determines whether” whether concurrent
tortfeasors “are jointly and severally liable”).
54
agreement, and that any reliance on joint and several liability
conflicts with the requirements of antitrust standing.
2. Antitrust Impact
Defendants argue that Plaintiffs are attempting to
circumvent the doctrine of antitrust standing by asserting the
theory of joint and several liability. In essence, they are
arguing that the joint and several theory of liability is not
“plausible in theory,” Hydrogen Peroxide, 552 F.3d at 325,
because under the doctrine of antitrust standing Plaintiffs
must show how each individual agreement harmed each
individual class member.
In an antitrust class action, “impact often is critically
important for the purpose of evaluating Rule 23(b)(3)’s
predominance requirement because it is an element of the
claim that may call for individual, as opposed to common,
proof.” Id. at 311. A district court must thus undertake a
“rigorous assessment of the available evidence and the
method or methods by which plaintiffs propose to use the
evidence to prove impact at trial.” Id. at 312. The class
should only be certified “if such impact is plausible in theory
[and] it is also susceptible to proof at trial through available
evidence common to the class.” Id. at 325. This inquiry
often involves an overlap into the merits. Id. at 324.
Defendants argue that, in the absence of the global
conspiracy claim, Plaintiffs must prove which class members
suffered an injury under a specific bilateral agreement. They
state that under the doctrine of antitrust standing, a class
member who would have purchased generic modafinil from
55
Ranbaxy cannot hold Mylan liable; a class member who
would have purchased generic modafinil from Mylan cannot
hold Ranbaxy liable; and a class member who would have
purchased generic modafinil from Teva cannot hold either
Ranbaxy or Mylan liable. If correct, such individualized
inquiries would defeat predominance, and Plaintiffs’ joint and
several liability theory would not be plausible. We agree with
the general proposition that an antitrust plaintiff cannot defeat
the doctrine of antitrust standing by resort to common-law
tort principles untethered to antitrust law. But Defendants’
objection is misplaced in this case because the common law
principle of joint and several liability is being invoked by
Plaintiffs for the proper purpose of establishing antitrust
impact and therefore antitrust standing.
The doctrine of antitrust standing requires a plaintiff to
“prove more than injury causally linked to an illegal presence
in the market.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477, 489 (1977). 30 This inquiry instead looks to
whether the plaintiff suffered an antitrust injury, i.e., an
30
Antitrust standing, unlike Article III standing, is not a
jurisdictional requirement. Associated Gen. Contractors of
Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519,
535 n.31 (1983) (“Harm to the antitrust plaintiff is sufficient
to satisfy the constitutional standing requirement of injury in
fact, but the court must make a further determination whether
the plaintiff is a proper party to bring a private antitrust
action.”); Ethypharm S.A. France v. Abbott Labs., 707 F.3d
223, 232 (3d Cir. 2013) (describing antitrust standing as a
prudential limitation that “does not affect the subject matter
jurisdiction of the court, as Article III standing does”).
56
“injury of the type the antitrust laws were intended to prevent
and that flows from that which makes defendants’ acts
unlawful.” Id. In Associated General Contractors of
California, Inc. v. California State Council of Carpenters
(AGC), 459 U.S. 519, 537-38 (1983), the Supreme Court
stated that many factors go into this determination. We have
condensed these factors into a multi-part test:
(1) the causal connection between the antitrust
violation and the harm to the plaintiff and the
intent by the defendant to cause that harm, with
neither factor alone conferring standing; (2)
whether the plaintiff’s alleged injury is of the
type for which the antitrust laws were intended
to provide redress; (3) the directness of the
injury, which addresses the concerns that liberal
application of standing principles might
produce speculative claims; (4) the existence of
more direct victims of the alleged antitrust
violations; and (5) the potential for duplicative
recovery or complex apportionment of
damages.
Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 232-33
(3d Cir. 2013) (quoting In re Lower Lake Erie Iron Ore
Antitrust Litig., 998 F.2d 1144, 1165-66 (3d Cir. 1993)). We
have said that the “directness of injury” is “the focal point by
which the remainder of the AGC factors are guided.” Lower
Lake Erie, 998 F.2d at 1166 n.19 (citing Holmes v. Sec.
Investor Prot. Corp., 503 U.S. 258, 269 (1992)).
57
Defendants rely solely on a pre-AGC case of ours,
Mid-West Paper Products Co. v. Continental Group, Inc., 596
F.2d 573 (3d Cir. 1979), which concerned the “all-important[]
directness factor,” in support of their position that Plaintiffs
lack antitrust standing to bring claims against generic
manufacturers from whom they would not have purchased.
Lower Lake Erie, 998 F.2d at 1167-68 (conducting an
analysis of the AGC factors and discussing Midwest-Paper in
the directness of injury section). 31 In Mid-West Paper, the
plaintiff claimed that it “suffered as a direct purchaser of
consumer bags from competitors of the defendants, who
allegedly were able to charge artificially inflated prices as a
consequence of defendants’ price-fixing.” 596 F.2d at 580
(footnote omitted). We held that the plaintiff, who was not a
customer of any member of the conspiracy, lacked antitrust
standing to sue the conspiracy members even though it paid
higher prices as a result of the conspiracy. In other words, the
customer of a competitor of conspiracy members was not
“one whose protection is the fundamental purpose of the
antitrust laws.” Id. at 583 (internal quotation marks omitted).
In reaching this conclusion in Mid-West Paper, we
took several factors into consideration. First, we noted that it
would be “almost impossible, and at the very least unwieldy”
to calculate the harm to the plaintiff from the conspiracy,
because so many variables went into the competitor’s price
31
Because the parties only dispute the relevance of Mid-West
Paper and the “directness” factor, and we reject Defendants’
understanding of Mid-West Paper, we will not analyze the
other factors of antitrust standing.
58
calculation irrespective of the existence of the monopoly. Id.
at 584. The value of any harm caused by the anticompetitive
conduct would be speculative and “would transform this
antitrust litigation into the sort of complex economic
proceeding” that the direct-purchaser rule 32 was adopted in
part to prevent. Id. at 585. In addition, the defendants were
“not in a direct or immediate relationship” to the plaintiff, and
they gained no advantage from the plaintiff’s injury. Id. at
583. Moreover, there was another group of victims who were
more likely to sue the conspiracy members – those who
purchased directly from them – and one of the purposes of the
antitrust standing doctrine is to “compensate[] those victims
who are most likely to assume the mantle of private attorneys
general for the injuries that they suffered.” Id. at 585. For
that reason, we “concentrate[] the entire award in the hands of
the direct purchasers in all but unusual circumstances and
thereby giv[e] them an incentive to sue.” Id. If we were to
allow the customer of a competitor to sue for treble damages
when the “causal link to defendants’ activities is [so]
tenuous,” it would “subject antitrust violators to potentially
ruinous liabilities, well in excess of their illegally-earned
profits, because . . . [violators] would be held accountable for
higher prices that arguably ensued in the entire industry.” Id.
at 586.
32
The direct-purchaser rule states that only immediate
customers of a supplier have antitrust standing to sue for
damages as customers even if the direct purchaser passes the
entirety of the higher price down the supply chain. Illinois
Brick Co. v. Illinois, 431 U.S. 720, 746 (1977)
59
As is clear from the above description, Defendants’
argument that Mid-West Paper means that a customer of a
non-defendant cannot have antitrust standing is an
oversimplification. Mid-West Paper reached its result
because it wanted to ensure that only those who are most
directly harmed by the anticompetitive conduct can sue to
remedy the antitrust violation. When, as in Mid-West Paper,
the anticompetitive conduct is price-fixing, the only
customers who will have antitrust standing are the direct
customers of the conspiracy members. The case before us is
not about price-fixing. It is, instead, a case about market
exclusion, as it concerns conduct that prevents a competitive
market from forming at all. 33 In such a scenario all market
customers should have antitrust standing to sue those engaged
in the allegedly anticompetitive conduct because all suffer
equally from the foreclosure of choice. See AGC, 459 U.S. at
538 (“[T]he Sherman Act was enacted to assure customers the
benefits of price competition, and our prior cases have
emphasized the central interest in protecting the economic
freedom of participants in the relevant market.”).
In fact, in Lower Lake Erie, we addressed market
exclusion in the market for the unloading of iron ore from
ships. Traditionally, iron ore was shipped across the Great
33
Preventing a market from forming differs from an attempt
to suppress competition in an established market. See Blue
Shield of Va. v. McCready, 457 U.S. 465, 483 (1982) (stating
that, in a conspiracy to suppress competition in the
psychotherapy market by restricting access to psychologists
(as opposed to psychiatrists), customers of the psychologists
would only be indirectly injured).
60
Lakes, unloaded at railroad-owned docks onto a railroad, and
then transported to the steel mills. Lower Lake Erie, 998 F.2d
at 1153-55. Large cranes called “huletts” were affixed to the
docks and were needed to unload the iron ore from the ships,
and, because the non-railroad-owned docks were not
equipped with huletts, they “were not competitors for this
segment of the ore business.” Id. at 1153. A new, less
expensive technology was developed that would allow the
iron ore to be unloaded without the use of huletts, and thus
open the transshipment market to non-railroad-owned docks.
Id. The railroad companies suppressed this new technology
by threatening non-railroad-owned docks with higher rates,
among other measures. Id.
The issue of antitrust standing arose when the steel
companies sued the railroad companies for higher rates paid
to the vessel companies. Id. at 1167. We held that this injury
was sufficiently direct, despite the railroad company’s
reliance on Mid-West Paper. Specifically, we noted that even
though the steel companies paid higher rates than it otherwise
would have to several ore transportation companies – both
defendants and non-defendants – “it was unquestionably the
steel companies who bore the brunt of the increased costs
attributed to the railroad’s agreement to thwart development
of the less expensive technology.” Id. at 1168; id. (“The steel
companies were the sole customers of the industry involved
in the transshipment of ore; indeed, the industry existed for
them.”). Although there were other victims of the harm, such
as the vessel companies, the dock companies, and trucking
companies, this did “not diminish the directness of the steel
companies’ injury.” Id. at 1168-69.
61
Unlike in Mid-West Paper, where there was a market
for consumer bags and we knew who was buying from whom,
there was no market in this case due to Defendants’ allegedly
anticompetitive conduct in delaying the availability of generic
modafinil. Just as the railroad docks and their older, more
expensive technology were the steel companies’ only choice
in Lower Lake Erie, Cephalon’s brand-name version of
modafinil – Provigil – was the only option available to the
DPP class. All other options were prevented from entering
the market by the allegedly anticompetitive conduct of the
railroad companies and the drug manufacturers, respectively.
Under Plaintiffs’ theory, each of the four generic
manufacturers allegedly entered into separate anticompetitive
arrangements with Cephalon. 34 If any one of them had
34
Defendants argue that either Teva – as the first company to
settle with Cephalon – or Barr – as the last to do so – caused
all of the injury, and that Mylan or Ranbaxy cannot be held
liable. While we have delved deep into the merits in order to
opine on the predominance question, this argument by
Defendants is inappropriate at the class certification stage. It
has nothing to do with whether common questions of law and
fact predominate, and instead goes to the issue of liability.
See Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1047
(2015) (“When, as here, ‘the concern about the proposed class
is not that it exhibits some fatal dissimilarity but, rather, a
fatal similarity—[an alleged] failure of proof as to an element
of the plaintiffs’ cause of action—courts should engage that
question as a matter of summary judgment, not class
certification.’” (quoting Richard A. Nagareda, Class
62
refused to enter into this arrangement, there would have been
no antitrust injury for anyone, as the market would have
worked as envisioned by the Hatch-Waxman Act: there
would have been between one and five generic manufacturers
competing with the brand-name modafinil during the 180-day
exclusivity period, after which there would have been a fully
competitive market. However, because all four entered into
these reverse-payment settlement agreements and prevented a
competitive market from forming, each contributed to the
market-wide harm, and each can be held jointly and severally
liable for such harm. This is not the sum of four separate
individual harms emanating from each agreement; instead, it
is a harm that all four agreements work jointly to produce,
even if there was no conspiracy between the generic
manufacturers. The class member who would have purchased
from Teva is harmed by the Ranbaxy and Mylan agreements
to the same extent that a Ranbaxy or Mylan customer would
be. Thus, any class member would have antitrust standing to
sue any or all of the four generic companies individually.
There is no need to pursue an individualized inquiry into the
harm caused by each agreement, and “questions of law or fact
common to class members predominate over any questions
affecting only individual members.” Fed. R. Civ. P. 23(b)(3).
Defendants’ attempt to dictate Plaintiffs’ theory of liability
based on the doctrine of antitrust standing should fail.
IV.
Certification in the Age of Aggregate Proof, 84 N.Y.U. L.
Rev. 97, 107 (2009)).
63
For the reasons stated above, we will vacate the
District Court’s class certification order, and we will remand
to the District Court for further consideration of whether
joinder of all class members is impracticable.
64
In re: Modafinil Antitrust Litigation
No. 15-3475
RENDELL, Circuit Judge, concurring in part and dissenting
in part.
Today, the Majority concludes that the able District
Court judge abused his discretion by purportedly focusing on
a consideration that we have never—indeed, by my research,
no court has ever—stated it should not consider. How can that
be? Furthermore, how can it be that the Majority
mischaracterizes the late stage of the proceedings as being the
focus of Judge Goldberg’s ruling when his reasoning actually
focuses on the considerations that our case law dictates it
should? Also how can it be that in analyzing judicial
economy district courts are prohibited from considering the
stage of the proceedings? I am perplexed. I am similarly
perplexed as to why the Majority is directing the District
Court on remand to figure out whether joinder is practicable
when the appellants have failed to make that case themselves.
I therefore respectfully dissent from part III.A of the
Majority’s opinion.
The District Court Correctly Applied Rule 23(a)(1)
The text of Rule 23(a)(1) provides the standard by
which a district court determines if a putative class is
numerous enough to be certified—the district court must
determine if “joinder of all members is impracticable.” See
also Newberg on Class Actions § 3:11 (5th ed.) (“[Rule
23(a)(1)’s] core requirement is that joinder be
1
impracticable.”). Because the focus of Rule 23(a)(1) is on the
practicability of joinder, it is well-established that “[t]he
numerosity requirement requires examination of the specific
facts of each case and imposes no absolute limitations.” Gen.
Tel. Co. of the Nw. v. EEOC, 446 U.S. 318, 330 (1980); see
also Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001)
(“No minimum number of plaintiffs is required to maintain a
suit as a class action . . . .”); Newberg on Class Actions § 3:11
(“Numerousness—the presence of many class members—
provides an obvious situation in which joinder may be
impracticable, but it is not the only such situation; thus, Rule
23(a)(1)’s analysis may, in specific circumstances, focus on
other factors as well.”). In examining the “specific facts of
each case,” Gen. Tel. Co., 446 U.S. at 330, we have instructed
courts to bear in mind the underpinnings of the numerosity
requirement. The first of these is “judicial economy by
sparing courts the burden of having to decide numerous,
sufficiently similar individual actions seriatim.” Marcus v.
BMW of N. Am., LLC, 687 F.3d 583, 594 (3d Cir. 2012). The
second is “greater access to judicial relief, particularly for
those persons with claims that would be uneconomical to
litigate individually.” Id. 1
Here, the District Court, after making a careful finding
that the putative class consisted of 22 members, had to make
a close call. Our cases have recognized that “[w]hile there are
1
As the Majority notes, the third underpinning, to
“prevent[] putative class representatives and their counsel,
when joinder can be easily accomplished, from unnecessarily
depriving members of a small class of their right to a day in
court to adjudicate their own claims,” id., is not relevant to
23(b)(3) actions. See Majority Op. 34 n.12.
2
exceptions, numbers under twenty-one have generally been
held to be too few.” Weiss v. York Hosp., 745 F.2d 786, 808
n.35 (3d Cir. 1984) (quoting 3B J. Moore, Moore’s Federal
Practice ¶ 23.05[1], at 23–150 (2d ed. 1982)). This
recognition, however, does not stem from any mechanical
numerical requirement, but rather from an understanding that
the considerations bearing on the practicability of joinder are
less likely to be met in classes with fewer than 21 members.
See Newberg on Class Actions § 3:11 (“Numerousness—the
presence of many class members—provides an obvious
situation in which joinder may be impracticable, but it is not
the only such situation; thus, Rule 23(a)(1)’s analysis may, in
specific circumstances, focus on other factors as well.”).
Recognizing the closeness of the issue, the District Court did
exactly as we have instructed it to do and looked to factors
bearing on the objectives we cited in Marcus. 2 Indeed, the
District Court examined the very factors that the Majority
embraces: judicial economy, the geographic dispersion of
class members, the claimants’ ability and motivation to
litigate as joined plaintiffs, and the financial resources of
class members.
The District Court first considered whether judicial
economy weighs in favor of finding joinder to be
impracticable:
2
The Majority asserts that the factors we should
consider have not been previously set forth. But Marcus’s
recitation of the policies that animate numerosity provides a
helpful standard from which the factors to consider are
readily discernible.
3
Considering the extensive history of this
litigation and the exhaustive discovery that has
been conducted, I conclude that judicial
economy is best served by trying this case as a
class action. Joinder of the absent class
members would likely require additional rounds
of discovery, which would only further delay a
trial date. Further, if cases were brought within
other jurisdictions, additional discovery is
certainly a possibility, and separate trials could
result in inconsistent verdicts.
JA-021. The reasons cited for finding judicial economy to
favor certification of the class are entirely appropriate.
“Judicial economy” means “[e]fficiency in the operation of
the courts and the judicial system; esp., the efficient
management of litigation so as to minimize duplication of
effort and to avoid wasting the judiciary’s time and
resources.” Judicial Economy, Black’s Law Dictionary (9th
ed. 2009). The District Court here noted that the additional
discovery and potential separate trials would further delay
litigation that was already near its end stages, wasting the
judiciary’s time and resources and requiring the duplication
of efforts.
The District Court next considered the geographic
dispersion of the class members, a factor widely recognized
as vital in determining whether joinder is practicable. See,
e.g., Pa. Pub. Sch. Emps. Ret. Sys. v. Morgan Stanley & Co.,
772 F.3d 111, 120 (2d Cir. 2014) (listing “geographic
dispersion” as a factor in the numerosity analysis); Newberg
on Class Actions § 3:12 (same); 7A Charles Allen Wright &
Arthur R. Miller, Federal Practice & Procedure § 1762 (3d
4
ed.) (same); 1 Moore’s Federal Practice § 23.22 (Matthew
Bender 3d ed.) (same). The District Court found this factor to
weigh heavily in favor of finding joinder impracticable,
noting that the “class members are spread out over thirteen
states and Puerto Rico.” JA-021. This, the District Court
found, “would certainly present challenges to Plaintiffs in
attempting to coordinate the litigation if all class members
were joined, particularly if additional discovery was
required.” JA-021. Again, this finding is certainly reasonable,
is supported by the record, and is in accordance with our
instructions as to the relevant considerations in the
numerosity calculation.
Against these concerns about judicial economy and, in
particular, geographic dispersion, the District Court
considered that many of the class members were sophisticated
corporations with strong incentives to bring their own
lawsuits. But this was not true for every class member, as six
had claims below $1 million which might not be enough
incentive “to engage in costly antitrust litigation on their
own.” JA-022. This wholly appropriate consideration bears
upon the objective to provide “greater access to judicial relief,
particularly for those persons with claims that would be
uneconomical to litigate individually.” Marcus, 687 F.3d at
594.
Ultimately, the District Court found the factors
favoring the plaintiffs’ position (judicial economy and
geographic dispersion) to be more compelling than the factor
favoring the defendants’ position (the financial resources of
the class members). In short, the District Court considered the
policies we outlined in Marcus and made a thoughtful
determination in a close case. Our abuse-of-discretion
5
standard compels us to affirm that thoughtful determination.
Moreover, our clearly erroneous standard compels us to not
disturb the factual findings on which it was based.
The District Court Did Not Err in Considering the Stage of
the Proceedings
The Majority, however, concludes that the District
Court erred in its analysis of the “judicial economy” factor by
taking into consideration the stage of the proceedings. As an
initial note, I do not read the District Court’s analysis as
turning solely upon a consideration of the late stage of the
proceedings. Rather, the District Court examined many
factors, most notably the additional discovery and judicial
resources that would have to be expended were the cases to
be litigated outside of the class action mechanism, regardless
of how far advanced the classwide proceedings were.
At any rate, it is appropriate—indeed, necessary—for a
district court to consider the stage of the proceedings when
examining whether judicial economy favors class litigation or
individual litigation. In considering judicial economy, a
district judge must predict how the options before him will
play out. This prediction becomes nonsensical, however, if
the district judge cannot take into consideration the amount of
effort already expended. If you want to determine whether the
path you are following is the most economical, is it not
important to consider how far along that path you have
already traveled? 3
3
The Majority’s references to “sunk costs” are inapt.
See Majority Op. 37, 39, 40. Sunk costs are costs that have
already incurred and cannot be recovered. See Verizon
6
Unsurprisingly, then, courts widely—if not
universally—recognize that it is appropriate for courts to
consider the stage of the proceedings when weighing judicial
economy. See, e.g., Carnegie-Mellon Univ. v. Cohill, 484
U.S. 343, 350 (1988) (“[A] federal court should consider and
weigh in each case, and at every stage of the litigation, the
values of judicial economy, convenience, fairness, and comity
in order to decide whether to exercise jurisdiction over a case
brought in that court involving pendent state-law claims.”
(emphasis added)); Zambelli Fireworks Mfg. Co. v. Wood,
592 F.3d 412, 420-21 (3d Cir. 2010) (“However,
considerations of efficiency, fairness, and judicial economy
weigh against a wholesale dismissal of the action at this
stage.” (emphasis added)); Parker & Parsley Petroleum Co.
v. Dresser Indus., 972 F.2d 580, 587 (5th Cir. 1992) (“At the
stage of the proceedings when the motion was filed, judicial
economy would have been better served by dismissal.”
(emphasis added)); Park S. Hotel Corp. v. N.Y. Hotel Trades
Council, 851 F.2d 578, 582 (2d Cir. 1988) (“[J]udicial
economy would not be served by remanding the case at this
late stage for arbitration, which almost certainly would be
followed by further judicial proceedings.” (emphasis added));
United States v. Timmons, 672 F.2d 1373, 1380 (11th Cir.
1982) (“The district judge appropriately considered that
joinder would not serve the interests of judicial economy in
Commc’ns, Inc. v. FCC, 535 U.S. 467, 499 (2002) (“‘Sunk
costs’ are unrecoverable past costs . . . .” (emphasis added)).
The District Court’s analysis did not consider sunk costs, but
rather the relative costs, going forward, of joinder and class
litigation. To determine the relative costs, going forward, of
joinder and class litigation, one needs to know how much
remains to be done under either alternative.
7
view of the late stage of the proceedings . . . .” (emphasis
added)).
The Majority asserts, however, without citation to any
authority, that a district court cannot consider “the fact that
the complex nature of a case resulted in the class certification
decision being deferred for years,” see Majority Op. 37, or
“the need to further delay trial were the class not to be
certified,” see Majority Op. 40, or even “the need to conduct
further discovery if the class is not certified,” see Majority
Op. 39. But these are precisely the type of practicalities—how
long it would take, how complex it would be, how expensive
it would be—that help determine the practicability of joinder.
The Majority’s directive as to what a district court should
consider turns the issue into an exercise in abstraction. 4 If a
district judge cannot consider the practicalities of cost and
time, then judicial economy will be poorly served indeed, and
one of the core purposes of the class action mechanism—to
“save[] the resources of both the courts and the parties by
4
The Majority instructs district courts to consider
whether, in a hypothetical world, joinder would have been
more efficient than the class mechanism. Cf. Majority Op. 41
(“In other words, without considering the late stage of the
litigation, it should determine whether a class action would
have been a substantially more efficient mechanism of
litigating this suit than joinder of all parties. . . . At the same
time, the District Court is free to rely on its superior
understanding of how the case has proceeded to date for the
purpose of determining whether the class mechanism would
have actually been a substantially more efficient use of
judicial resources than joinder of the parties at the onset of the
litigation.”).
8
permitting an issue potentially affecting every [class member]
to be litigated in an economical fashion under Rule 23”—will
be undercut. See Califano v. Yamasaki, 442 U.S. 682, 701
(1979).
The District Court Properly Considered the Ability of
Plaintiffs to Litigate via Joinder
The Majority also characterizes the District Court’s
ruling as focusing not on the ability of the plaintiffs to litigate
via joinder but “focus[ing] instead on whether the individual
plaintiffs could have brought their own, individual suits.” See
Majority Op. 44. I disagree. To the contrary, the focus of the
District Court’s opinion is on joinder throughout. 5 See, e.g.,
5
The Majority, citing references to “individual suits”
in the District Court’s opinion, posits that “[e]ven a cursory
look at the section on the ability and incentive of the class
members to litigate reveals that the District Court was
focused on the alternative of individual suits, not on joinder.”
See Majority Op. 44 n.23. But the two concepts are not
exclusive of each other, as the Majority itself recognizes in
footnote 19, when it “read[s] Marcus’s language about the
ability ‘to litigate individually,’ to refer to each plaintiff
appearing on the record as a joined party, and not whether
each individual plaintiff can litigate his or her own claim as
the sole plaintiff.” See Majority Op. 42 n.19 (citation
omitted). Litigation not pursued on a classwide basis is
individual litigation, even if pursued via joinder, and the
parties joined in a proceeding remain responsible for the
individual litigation of their claims. See 7 Wright & Miller,
supra, § 1652 (“Consequently, rights that are separate and
distinct under the governing law are not transformed into joint
9
JA-020-22 (“Joinder of the absent class members would
likely require additional rounds of discovery, which would
only further delay a trial date.”); (“The considerable
geographic dispersion of the parties would certainly present
challenges to plaintiffs in attempting to coordinate the
litigation if all class members were joined, particularly if
additional discovery was required.” (emphasis added));
(“Accordingly, Plaintiffs have demonstrated by a
preponderance of the evidence that the parties are sufficiently
numerous so as to make joinder impracticable.”).
The Majority makes its own contrary finding,
surmising that the class members “appear likely to have the
ability and incentive to bring suit as joined parties.” See
Majority Op. 45. 6 It directs the District Court on remand to
consider whether it would be “uneconomical” for the six
smaller class members to be joined. It thus instructs the
District Court to make the case for joinder—a case the
defendants failed to support themselves. The defendants
offered little argument (let alone evidence) before the District
Court that, notwithstanding the vast geographic dispersion of
the plaintiffs, surely joinder would be practicable. Indeed, at
oral argument, counsel for Ranbaxy was asked whether
joinder was impracticable and responded, “I don’t know.”
rights when plaintiffs join under Rule 20 in a federal court
action; each plaintiff’s right of action remains distinct, as if it
had been brought separately.”).
6
This assertion stems from the defendants’ argument
that “[e]ach of the 16 absent class members has the ability
and the financial incentive to file its own claim.” See
Appellants’ Br. 45. The Majority adopts this speculation as
fact, but it is mere argument and speculation.
10
Oral Arg. at 9:30-10:00. 7 The Majority is erecting roadblocks
that do not exist.
Moreover, if one were to speculate as to the likelihood
of these plaintiffs, many competitors in a relatively small
market, agreeing to come together—for surely they couldn’t
be forced to do so—the speculation would be to the contrary.
Experience would dictate that many obvious practical reasons
stand in the way of joinder: desire to have one’s self and own
law firm control the litigation, choice of favorable forum,
familiarity with the local jurisdiction’s laws and procedures,
fear of being dragged into settlement, and concerns about the
costs of litigating in a far-flung locale. Further, the larger
plaintiffs could clearly afford to go their own way. Even in
cases that come before the Judicial Panel on Multidistrict
Litigation for joinder, where the issue involves only pre-trial
proceedings, 8 plaintiffs invariably raise reasons for opposing
joinder. 9 How can we possibly assume that the plaintiffs
7
An audio recording of the oral argument is available
online at
http://www2.ca3.uscourts.gov/oralargument/audio/15-
3475InReModafinil.mp3
8
This case would not be appropriate for an MDL as it
is ready for trial and pre-trial proceedings are largely
completed.
9
See, e.g., In re: Sci. Drilling Int’l, Inc., FLSA Litig.,
24 F. Supp. 3d 1364, 1364-65 (J.P.M.L. 2014) (“Plaintiffs
oppose centralization as unnecessary, stating that they
recognize the overlap in the actions and they already have
agreed to coordinate pretrial proceedings to avoid duplicative
discovery and inconsistent rulings.”); In re: Standard &
Poor’s Rating Agency Litig., 949 F. Supp. 2d 1360, 1361
11
would have the “ability and incentive” to bring suit as joined
parties? If the defendants had supported such a notion, that
would be another matter. But the Majority asks the District
Court to make its own record as to practicability. That is not
our role, nor the role of the District Court.
* * *
Lastly, I am struck by the inescapable fact that this
case has proceeded as a class action for years and nothing
about it cries out for anything but class treatment. 10 One has
(J.P.M.L. 2013) (“Plaintiffs oppose centralization and argue,
inter alia, that the Panel has never centralized litigation of
this type, that transfer to a distant forum will inconvenience
the states, and that transfer is unnecessary in light of the
historic cooperation among state attorneys general.”); In re
Le-Nature’s, Inc., Commercial Litig., 609 F. Supp. 2d 1372,
1373-74 (J.P.M.L. 2009) (“Plaintiffs opposed to
centralization argue, inter alia, that (1) the allegations
pertaining to the bottling actions make up only a minimal part
of the Trustee’s case; (2) all active parties to the bottling
actions have admitted that Le–Nature’s perpetrated a
systematic fraudulent scheme and, therefore, a large portion
of the allegations set forth in the Trustee’s action is
insignificant to the bottling actions; (3) the bottling actions
are straightforward fraud cases that can readily be handled by
their respective district courts; and (4) discovery can be
coordinated in the bottling actions without centralization.”).
10
The Majority contends that this is no “run-of-the-
mill class action” given the top-heavy distribution of the
claims among the class members. See Majority Op. 48. But
whether the class looks like other classes is not controlling as
12
only to read the Majority’s analysis of the real issues before
the Court to conclude that it is unimaginable that this case
should be torn apart at this late date and sent to the far corners
of the United States to start over again as separate actions
before several judges, each deciding anew the identical issues
facing each plaintiff’s claims. It should not be remanded at
this late date.
This should not happen because Judge Goldberg has
ably managed this case for a decade and properly considered
every factor we have ever held to be relevant in determining
whether a class is so numerous that joinder would be
impracticable. He has not abused his discretion in so doing or
made clearly erroneous findings of fact. I would therefore
affirm the judgment of the District Court in its entirety.
Accordingly, I respectfully dissent from Part III.A of the
Majority’s opinion.
to whether the requirements of Rule 23 have been met. Rule
23 was “designed to allow an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.” Califano, 442 U.S. at 700-01 (emphasis
added). The plaintiff’s burden under Rule 23 is merely to
demonstrate compliance by a preponderance of the
evidence—not to establish “proof beyond any doubt.” Reyes
v. Netdeposit, LLC, 802 F.3d 469, 485 (3d Cir. 2015). Here,
given the evidence the plaintiffs have adduced regarding,
inter alia, the impracticability of joinder and the
predominance of common questions of law and fact, and
given the paucity of contrary evidence adduced by the
defendants, I reiterate that nothing about this case cries out
for anything but class treatment.
13