Challenges to Class Representative’s Adequacy and to Predominance of Common Issues Fail to Overturn Class Certification in Antitrust Class Case

In re Suboxone Antitrust Litig., 967 F.3d 264 (3d Cir. 2020). In this antitrust class action case, direct purchasers of Suboxone, a prescription pharmaceutical used to treat addiction to opioids, sued its manufacturer (“Reckitt”) for what Judge Shwartz summarized as “anticompetitive conduct that impeded the entry of generic versions of the drug into the market,” in violation of section 2 of the Sherman Act, 15 U.S.C. 2. The District Court certified a class. Reckitt appealed, but the Third Circuit affirmed, applying the abuse of discretion standard of review.

Reckitt contested two of the several required elements for class certification: the finding that the named plaintiff, Burlington Drug Co. Inc. (“Burlington”), was an adequate representative of the class, under Federal Rule of Civil Procedure 23 (a)(4), and the ruling that common issues of law or fact predominated over individual questions, under Rule 23(b)(3). Neither argument persuaded Judge Shwartz and the panel.

Judge Shwartz disposed of the adequacy argument in short order. Adequacy, she noted, requires only that the class representative have “[a] minimal degree of knowledge about the case” and “have no conflict of interest with class counsel and members of the class” (citations omitted). Only “fundamental” conflicts defeat adequacy, and hypothetical conflicts will not do so.

Reckitt contended that Burlington could have a conflict with class counsel as to strategy issues such as “(1) what allegations should be made, (2) who should be named as a defendant, (3) whether to accept a settlement, (4) whether to go to trial, and (5) whether litigation decisions will have effects on other cases.” Judge Shwartz rightly found all these notions “speculative or without basis.” She added that “Reckitt’s hypothetical conflicts would apply to most class actions,” an unacceptable result.

Reckitt also argued that Burlington was not in sufficient “control” of the litigation. But Judge Shwartz said that Reckitt had cited no Third Circuit precedent stating that a class representative must control the litigation. Regardless, Burlington was “not a disengaged representative. The record shows that Burlington is aware of its role as a fiduciary, understands the basis for the claimed injury, has an incentive to recover its proportionate share of damages, monitors the litigation, produced documents, and has the requisite interest in and knowledge about the case to satisfy the adequacy requirement.”

On predominance, Reckitt’s multiple arguments also failed. First, Reckitt claimed that the purchasers had not provided common proof of injury and damages that “matches a viable theory of liability,” as required by Comcast Corp. v. Behrend, 569 U.S. 27 (2013). But that argument was based on a mischaracterization of the purchasers’ theory that did not fully account for the theory and improperly sought to isolate multiple elements of Reckitt’s alleged misconduct instead of looking at “all the acts taken together.” Properly viewed, Judge Shwartz said, “common evidence exists to prove the Purchasers’ antitrust theory and the resulting injury.”

Second, Reckitt complained that plaintiffs’ damage model “only calculates aggregate damages, and the eventual need for individualized damages inquiries defeats predominance.” Judge Shwartz did not agree. Citing In re Modafinil Antitrust Litig., 837 F.3d 238 (3d Cir. 2016), she stated that “[a]ntitrust plaintiffs may satisfy the predominance requirement by using a model that estimates damages attributable to the antitrust injury, even if more individualized determinations are needed later to allocate damages among class members.” She went on to say that “[a]lthough allocating the damages among class members may be necessary after judgment, such individual questions do not ordinarily preclude use of the class action device.”

Accordingly, the panel affirmed the grant of class certification, praising the District Court’s opinion as “thorough, thoughtful, and well-reasoned.” Indeed, it was.