In Tyson Foods, the Supreme Court declined to resolve the issue of whether a class may be certified if it contains members who were not injured and have no legal right to damages. Dealing with this increasingly common issue in class action litigation, the First Circuit recently summarized circuit precedent on the issue – and ultimately reversed a district court decision certifying a class that contained class members who had not suffered any injury.
Plaintiffs filed the suit against defendant drug manufacturers for violations of various state consumer protection and antitrust laws, alleging they had suppressed generic versions of a drug by pulling it from the market months before its patent expired while simultaneously introducing a replacement with longer patent protection. The United States District Court for the District of Massachusetts granted plaintiffs’ motion to certify the class, finding named plaintiffs had standing to bring claims on behalf of class members in 26 states and had met the requirements of Rule 23 despite the fact that approximately 10 percent of the purchasers had not suffered an injury caused by the defendants’ conduct. The court found the uninjured class members were de minimis and could be separated out in a later proceeding. The First Circuit granted defendants leave to file an interlocutory appeal and subsequently reversed.
The circuit court first reviewed the district court’s finding that named plaintiffs had Article III standing, explaining that plaintiffs’ claims need not be identical to those of the putative class members but that it must determine whether the differences meant plaintiffs lacked a sufficient personal stake in litigating the claims. Because the parties agreed that the laws of the different states were materially the same and the court determined that subtle differences did not change the analysis, plaintiffs satisfied Article III.
Next, the circuit court looked to the requirement of Rule 23(b)(3) that common questions predominate over individual issues. It accepted the district court’s conclusions that 10 percent of class members would not have purchased a generic drug, and that a class may be certified despite the existence of individual issues where the adjudication is feasible and defendants’ rights are protected. However, the circuit court found that the case could not be tried on a class basis without undermining the defendants’ rights.
Plaintiffs attempted to rely on a prior First Circuit opinion, In re Nexium Antitrust Litigation, which found that unrebutted affidavits stating that consumers would have purchased a generic drug if available would be sufficient to determine which class members had been injured. Here, however, the court had no reason to believe that such affidavits would be available or sufficient, and defendants had already stated an intention to rebut any such evidence. Additionally, a review by a claims administrator to remove uninjured consumers would not provide defendants a meaningful opportunity to contest whether class members would actually have purchased generic drugs, and the case would be unmanageable, as any individual class member, and thousands overall, might not have suffered an injury.
Plaintiffs next argued that these differences did not matter since they could prove classwide antitrust impact through expert testimony, relying on the Supreme Court’s precedent in Tyson Foods, an overtime compensation case in which the Court approved of the use of an expert report calculating employees’ average time spent donning and removing protective equipment in order to establish total hours worked. However, the First Circuit distinguished that precedent as limited to the use of statistical evidence in employment cases – and thus inapplicable to prove individual injury of class members in the case at bar. The court emphasized that class actions do not create a class entity but, rather, aggregate individual claims. Because approximately 10 percent of class members had not suffered any injury, the First Circuit reversed the lower court’s certification decision.
In re Asacol Antitrust Litig., No. 18-1065 (1st Cir. Oct. 15, 2018).