After-Effects of In re Asacol: Recent District Court Decisions on Certification and Uninjured Class Members

About a year ago, I observed that the First Circuit in In re Asacol Antitrust Litigation had constrained plaintiffs’ ability to rely on affidavits to prove injury-in-fact.  In so doing, the First Circuit substantially curtailed its prior decision in In re Nexium Antitrust Litigation, which certified a class containing uninjured consumers because class members would be able to prove injury via affidavit.  In its In re Asacol decision, the First Circuit made it clear that trial-by-affidavit is a permissible means to establish injury only if the affidavits are unrebutted.

As the D.C. Circuit observed in relying on In re Asacol, that case “sharply limited” In re Nexium and established that “any winnowing mechanism” used to identify uninjured class members

must be truncated enough to ensure that common issues predominate, yet robust enough to preserve the defendants’ Seventh Amendment and due process rights to contest every element of liability and to present every colorable defense.

Absent such a mechanism, individual injury issues predominate, precluding certification – at least where there are more than a de minimis number of uninjured class members.

In the past year, the importance of the landmark In re Asacol decision has been confirmed as district courts in the First Circuit have cited that decision to limit the use of trial-by-affidavit to satisfy Rule 23’s predominance requirement.

Just last month, for instance, Judge Smith in the District of Rhode Island wrote in an opinion that In re Asacol

makes plain in this Circuit what may have been unclear before: in order to prevail on its motion for class certification, the class action plaintiff must provide a plan to identify and remove any uninjured . . . persons from the class in a manner that is both administratively feasible and protective of the defendant’s Seventh Amendment and due process rights.

Judge Smith went on to acknowledge that a proffer of contested affidavits will not meet In re Asacol’s standard.  Accordingly, Judge Smith concluded that he could not certify a class of consumer plaintiffs in an antitrust action where up to ten percent of the class were uninjured because they would have continued purchasing the defendant’s drug even absent anticompetitive conduct.  Judge Smith went on to note that he was “troubled that over ninety percent of consumers in the proposed [consumer] class may have been injured by Defendants’ alleged unlawful conduct, but now have no practical recourse.”  He went on to invite the First Circuit “to reconsider this holding,” or, if not, for Congress to “take up the issue.”  Nevertheless, he held that, “with respect to consumer injury-in-fact, individual issues predominate.”

Similarly, Judge Burroughs in the District of Massachusetts recently denied class certification as to a class of consumers alleging anticompetitive activity because at least 8% of the putative class was uninjured.  Judge Burroughs concluded that “identifying uninjured consumers with any degree of confidence would require an assessment of individual-specific facts” and concluded that the plaintiffs had not “put forth a reasonable and workable plan to weed out uninjured class members” given the defendants’ “intention to challenge individual class members’ claims of injury.”  Judge Burroughs also voiced concern that In re Asacol might leave some consumers with no practical remedy, but nevertheless followed the First Circuit’s directive.

These decisions confirm that In re Asacol truly does have “bite.”  Though Judge Smith has called for the First Circuit to reconsider In re Asacol, that outcome is unlikely.  In its In re Asacol decision, the First Circuit already noted the problem of remedying “small amounts of damage on large numbers of people,” but further observed that the problem does not justify “altering or reallocating substantive claims or departing from the rules of evidence.”  Rather, according to the court, it simply highlights the need to utilize “other tools,” such as regulatory action, parens patriae claims, presumptions created through substantive law, and use of res judicata to induce aggregate settlements.  While the First Circuit probably will not revisit this issue in the near future, the problem of uninjured class members is likely to make it all the way to the Supreme Court.  In the meantime, plaintiffs will have to continue to contend with In re Asacol.