In re Loestrin 24 Fe Antitrust Litig.

• Citation: 410 F.Supp.3d 352
• Decision Date: 17 October 2019
• Docket Number: Master File No. 1:13-md-2472-WES-PAS,MDL No. 13-2472
• Parties: IN RE LOESTRIN 24 FE ANTITRUST LITIGATION This Document Relates to: All End-Payor Class Actions
• Court: U.S. District Court — District of Rhode Island

410 F.Supp.3d 352

IN RE LOESTRIN 24 FE ANTITRUST LITIGATION

This Document Relates to: All End-Payor Class Actions

MDL No. 13-2472

Master File No. 1:13-md-2472-WES-PAS

United States District Court, D. Rhode Island.

Signed October 17, 2019

MEMORANDUM OF DECISION ON CLASS CERTIFICATION AND ORDER REGARDING MOTIONS TO EXCLUDE CERTAIN EXPERT OPINIONS AND DEFENDANTS' RENEWED MOTION TO DISMISS

WILLIAM E. SMITH, Chief Judge.

In this putative class action, the End-Payor Plaintiffs ("EPPs") allege that Defendants Warner Chilcott (US), LLC, Warner Chilcott Sales (US), LLC, Warner Chilcott Company, LLC, Warner Chilcott plc, and Warner Chilcott Limited (collectively, "Warner Chilcott") and Defendants Watson Pharmaceuticals, Inc. and Watson Laboratories, Inc. (together, "Watson",¹ and collectively, with Warner Chilcott, "Defendants") violated state and federal law through a series of actions intended to delay and suppress generic competition for the oral contraceptive Loestrin 24 Fe ("Loestrin 24").² The EPPs moved for class certification. See generally EPPs' Mot. for Class Certification and Appointment of Class Counsel, ECF No. 526; Mem. of Law in Supp. of EPPs' Mot. for Class Certification and Appointment of Counsel ("EPPs' Mot. for Class Certification"), ECF No. 528-1. In order to allow sufficient time for notice to the class prior to trial, which is slated to commence on January 6, 2020, the Court – having found the prerequisites of Rule 23 fully satisfied – issued an Order dated September 17, 2019, granting in part and denying in part the EPPs' Motion for Class Certification, promising an opinion explaining the Order.³ See ECF No. 1226. This Memorandum serves that purpose.

In addition to explaining the reasoning underlying the Order on the EPPs' Motion for Class Certification, for the reasons set forth below, Defendants' Renewed Motion to Dismiss and Motion for Judgment on the Pleadings as to Claims in EPPs' Second Amended Consolidated Class Action Complaint, ECF No. 576, is GRANTED IN PART and DENIED IN PART; Defendants' Motion to Exclude the Opinion and Testimony of EPPs' Expert Gary L. French, Ph.D., ECF No. 575, is DENIED; EPPs' Motion to Exclude the Opinions and Testimony of James W. Hughes, Ph.D. ("EPPs' Mot. to Exclude Hughes"), ECF No. 634, is GRANTED IN PART AND DENIED IN PART; Defendants' Motion to Exclude the Opinions and Testimony of EPPs' Experts Eric Miller, Laura Craft, and Myron Winkelman, ECF No. 698, is GRANTED IN PART AND DENIED IN PART; and the EPPs' Motion to Exclude the Opinions and Testimony of Mr. Timothy E. Kosty and Dr. Bruce A. Strombom ("EPPs' Mot. to Exclude Kosty and Strombom"), ECF No. 733, is DENIED.

I. Background

The Court constrains its recitation of the factual and procedural background to that relevant to the EPPs' Motion for Class Certification.⁴

The EPPs are health and welfare benefit plans, health and welfare benefit funds, and employee benefit welfare funds (collectively, the "Third-Party Payors" or the "TPPs") and consumers who purchased, paid for, and/or provided reimbursement for Loestrin 24 and Minastrin 24 ("Minastrin") and/or their AB-rated generic equivalents.⁵ End-Payor Pls.' Second Am. Consolidated Class Action Compl. ("EPP Compl.") ¶¶ 15-26, ECF No. 169. They allege that, in the first instance, Warner Chilcott committed fraud on the Patent and Trademark Office in enforcing the patent for Loestrin 24 and filing sham litigation against potential generic competitors. In re Loestrin 24 Fe Antitrust Litig., 261 F. Supp. 3d 307, 318-21 (D.R.I. 2017) ("Loestrin I"). The EPPs further allege that Warner Chilcott then settled its sham patent lawsuits against Watson and Lupin Pharmaceuticals, Inc. and/or Lupin Ltd. ("Lupin") by making large and unjustified payments in exchange for their agreement to stay out of the Loestrin 24 market. Id. at 321-23.⁶ Before generic entry was set to occur, Warner Chilcott introduced a new drug, Minastrin (a chewable version of Loestrin 24 with added sweetener on reminder days), to erode the brand Loestrin 24 prescription base before generic entry. Id. at 323-24. This alleged product hop allowed Warner Chilcott to retain branded sales (in Minastrin) once generic Loestrin 24 entered and state automatic substitution laws kicked in. Id.

The above order of events has consequences for the Court's ability to assess – as antitrust law requires – what the world would have looked like but for Defendants' alleged anticompetitive conduct.⁷ Because, the EPPs say, Defendants executed the product hop and pulled brand Loestrin 24 from the market before automatic substitution laws took effect, there is a dearth of evidence reflecting how the market would have responded to generic entry in a but-for world. This paucity of evidence means that the EPPs and Defendants, and their respective experts, do not agree on which methodology best constructs the contours of the but-for world.

Complicating things further, after the EPPs filed their Motion for Class Certification, the First Circuit issued its opinion in In re Asacol Antitrust Litigation, 907 F.3d 42 (1st Cir. 2018) ("Asacol

"). That decision 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 entities and/or persons from the class in a manner that is both administratively feasible and protective of the defendant's Seventh Amendment and due process rights. Id. at 52. In a case like this one, where the parties do not dispute that there is some percentage of uninjured consumers who would have purchased a more expensive brand product over a less expensive generic in the but-for world, this task proves impossible with respect to any class containing individual consumers.

II. Discussion

A. Defendants' Renewed Motion to Dismiss and For Judgment on the Pleadings

Only a direct purchaser – and not others further down the chain of distribution – that incurred overcharges from an antitrust violation may recover damages under federal antitrust law. Illinois Brick Co. v. Illinois, 431 U.S. 720, 746-47, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). This "indirect-purchaser rule", however, does not bar indirect purchasers from bringing claims under state law where states otherwise recognize such a cause of action, either through Illinois Brick-repealer laws or otherwise. California v. ARC America Corp., 490 U.S. 93, 103, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989). The EPPs lodge their claims under the laws of forty-eight states, Puerto Rico, and the District of Columbia.⁸ See generally Appendix A, Notice of Submission in Resp. to Court's Sept. 17, 2019 Order ("EPP State Law Claims Chart"), ECF No. 1231-1; EPP Compl. Defendants moved to dismiss all of the EPPs' state law claims in their Motion to Dismiss the EPPs' Second Amended Complaint. See Defs.' Mot. to Dismiss All Claims in All Pls.' May 9, 2016 Compls. 131-75 ("Defs.' Mot. to Dismiss"), ECF No. 192. The Court deferred ruling on these state-specific issues until class certification, Loestrin I, 261 F. Supp. 3d at 359–61, and Defendants have filed a Renewed Motion to Dismiss. See generally Defs.' Mem. of Law in Opp'n to EPPs' Mot. for Class Certification and in Supp. of Defs.' Renewed Mot. to Dismiss and Mot. for J. on the Pleadings ("Defs.' Renewed Mot. to Dismiss"), ECF No. 574-2.

1. Article III Standing⁹

Defendants assert that the named TPPs¹⁰ do not have Article III standing to bring claims on behalf of TPPs injured in states other than those in which the named TPPs were injured. Id. at 4, 52-53. Remarkably, Defendants pursue this argument despite the First Circuit's recent holding to the contrary in Asacol. See id. at 53 (acknowledging that the First Circuit recently rejected this argument in Asacol but arguing the court did not address all controlling Supreme Court precedent (citing Asacol, 907 F.3d at 42 )). Because this Court is bound by the decisions of the First Circuit, absent intervening Supreme Court precedent, it is clear the EPP class representatives must demonstrate that they have "the necessary stake in litigating conduct ... to which [the named plaintiffs] ha[ve] not been subject" in order to establish that they have standing in other jurisdictions.¹¹ Asacol, 907 F.3d at 48 (quoting Blum v. Yaretsky, 457 U.S. 991, 999, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982) ). And as long as they satisfy that requirement, which they do, they have standing to "litigate as class representatives materially identical claims by other persons under the same laws under which [their] claims arise." Id. at 47.

Defendants further contend that the TPPs may only establish injury in the states in which they are headquartered and not in the states in which they provided reimbursement for the drugs at issue. Defs.' Renewed Mot. to Dismiss 54 (conceding standing in states where the named TPPs are headquartered). The Court is not persuaded and holds that the named TPPs allege injury, and thus have standing, in states where they purchased the drugs at issue and/or reimbursed their members for purchases of the drugs at issue. See In re Niaspan Antitrust Litig., 42 F. Supp. 3d 735, 758 (E.D. Pa. 2014) ("Niaspan") (holding that named indirect purchaser plaintiffs may bring suit "under the laws of states in which they reside or in which they either purchased or made reimbursements for [the drug]"); In re Flonase Antitrust Litig., 692 F. Supp. 2d 524, 533 (E.D. Pa. 2010) ("Flonase

") ("Plaintiffs suffered injury and have standing in states where they purchased a drug or reimbursed their members for purchases of a drug.");¹² In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 157 (E.D. Pa. 2009) ("Wellbutrin XL") (holding that indirect purchaser plaintiffs had standing to bring claims under the laws of the state where "plaintiffs themselves are located" and "their members made purchases of" the drug). But see In re K-Dur Antitrust Litig., No. CIV.A. 01-1652(JAG),...