Court Lowers the Bar for Numerosity Requirement in Nexium Antitrust Litigation

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On the heels of his November 14, 2013 order certifying a class of individual consumers and other payors who alleged that defendant pharmaceutical companies engaged in anti-competitive practices resulting in overcharges for the drug Nexium, Judge William G. Young of the District of Massachusetts entered an order on December 11, 2013, this time certifying a class of “Direct Purchaser” wholesalers and retailers who purchased branded Nexium directly from defendant AstraZeneca.  While Judge Young’s November 14, 2013 memorandum and order focused primarily on discussion concerning the Rule 23(b)(3) damages class including members lacking any injury from the defendants’ alleged practices, the most notable aspect of this most recent order is the Court’s discussion of Rule 23(a)’s numerosity requirement. Download In re Nexium Antitrust Litigation Civil Action No. 12 md 02409 WGY December

Wholesalers, retailers, and consumers brought this putative class action against several defendants for alleged violations of federal antitrust laws involving AstraZeneca’s heartburn medication, Nexium.  Wholesaler and retailer plaintiffs sought certification of a class of “Direct Purchasers” who purchased Nexium directly from AstraZeneca and who will purchase generic Nexium directly from one or more of the other “Generic Defendants.”  Unlike the defendants’ opposition to the previous consumers’ motion for class certification, this time the defendants strongly contested whether the Direct Purchaser plaintiffs satisfied Rule 23(a)’s numerosity requirement. 

At the outset, the Court noted the general rule that classes exceeding forty plaintiffs are deemed sufficient for Rule 23(a) purposes.  However, the Court noted that some classes of fewer plaintiffs have previously been certified in the District of Massachusetts.  Specifically, the Court referenced In re Prograf Antitrust Litig., No. 1:11-cv-10344-RWZ, 2013 WL 2395083 (D. Mass. Spr. 23, 2013) (Judge Zobel certified a class of twenty-five pharmaceutical wholesalers) and In re Citigroup, Inc. Capital Accumulation Plan Litig., No. 00cv11912-NG, 2010 WL 9067986 (D. Mass. Jan. 6, 2010) (Judge Gertner certified a subclass of twenty participants in an employee stock compensation program).  In Nexium, the Direct Purchaser plaintiffs and defendants presented conflicting evidence as to the number of putative class members.  Plaintiffs’ expert measured the putative class according to two “but-for” generic drug entry dates, April 14, 2008 and January 1, 2012, resulting in either thirty-one or twenty-six class members.  Alternatively, defendants pegged the proper figures at twenty-nine or twenty-four members, which they argued accounted for consolidation of entities with their respective parent companies.  The Court adopted defendants’ proposed numbers of twenty-nine or twenty-four.  Despite both ranges falling well below the general forty-member threshold for satisfying numerosity, the Court opined “…it is clear that district courts have taken a more flexible approach to the numerosity analysis.”  Nexium, p. 4.  The Court reasoned that the test for numerosity requires courts to address whether joinder of all members is impracticable. 

Explaining that because size of the putative class alone does not establish a “clear case for numerosity,” the Court identified several “non-numeric” factors which must be considered in determining whether joinder is impracticable.  They include geographic location of the proposed class members, the nature of the action, and matters of judicial economy.

First, the Court agreed with the Direct Purchasers that, because members of the putative class are geographically dispersed throughout the country, joinder would be difficult, inconvenient, and costly.  Second, the Court recognized that many courts have given favorable treatment to class actions in the private enforcement of antitrust laws, in part because a class action is a fitting mechanism for such enforcement.  Third, the Court concluded that judicial economy would be served through a class action where members seek damages stemming from the same transactions between AstraZeneca and the other generic drug defendants.  The Court determined that plaintiffs had met Rule 23(a)(1)’s numerosity requirement in light of the foregoing analysis of objective and subjective factors.

The Court next reviewed the issue of adequacy.  Defendants disputed whether two assignees of Direct Purchaser claims, both of which were excluded from plaintiffs’ expert’s report identifying Direct Purchasers, could be included in the proposed class and serve as class representatives.  The Court rejected defendants’ arguments. 

The Court then reviewed the requirements of Rule 23(b)(3).  It held that the Direct Purchasers had established that they could prove common damages using a reasonable and acceptable methodology based on sales data and benchmarked against a similar drug, Prevacid, and its generic equivalent.  With regard to superiority, the Court noted that it was a “close call” as to whether the requirement had been satisfied.  Defendants  made “powerful” arguments that these class members are economically well-suited for individual suits because of their alleged one billion dollars in damages claimed per plaintiff.  However, despite the close call, “the complex nature of this litigation, the fact that complete joinder of the Direct Purchaser class is impracticable, and the ‘desirability’ of concentrating litigation in this single forum” led the Court to its ultimate conclusion that class treatment is superior to other methods of adjudication.  Accordingly, the Court certified a class of all persons or entities in the United States who purchased branded Nexium directly from AstraZeneca at any time during the relevant period.