In re Loestrin 24 Fe Antitrust Litig.
| Decision Date | 17 July 2020 |
| Docket Number | MDL No. 2472,Master File No. 1:13-md-2472-WES-PAS |
| Parties | IN RE: LOESTRIN 24 FE ANTITRUST LITIGATION, THIS DOCUMENT RELATES TO: Direct Purchaser Actions |
| Court | U.S. District Court — District of Rhode Island |
REPORT AND RECOMMENDATION REGARDING DIRECT PURCHASER CLASS MOTION FOR APPROVAL OF ATTORNEYS' FEES, EXPENSES AND A SERVICE AWARD
The first of the direct purchaser complaints in these now-consolidated class action cases was filed in this Court in May 2013. The cases arise under the antitrust laws and broadly allege that Defendants illegally entered into reverse payment settlements of patent litigation and engaged in other illegal conduct to reduce competition in the market in which a brand name prescription oral contraceptive, Loestrin 24 Fe, was sold. Over vigorous objection, the Court certified the Direct Purchaser Plaintiff ("DPP") Class on July 2, 2019. In re Loestrin 24 Fe Antitrust Litig., MDL No. 13-2472-WES-PAS, 2019 WL 3214257, at *1 (D.R.I. July 2, 2019), appellate review denied, Ahold U.S.A., Inc. v. Warner Chilcott Public Ltd. Co., No. 19-8014 (1st Cir. Jan. 7, 2020). By motion filed on January 22, 2020, as amended on February 24, 2020, the DPP Class asked the Court to approve a proposed settlement ("Settlement") signed by DPP Class representative Ahold USA, Inc. ("Ahold"), that calls, inter alia, for a cash payment of $120 million ("Settlement Fund") for the benefit of the DPP Class. ECF Nos. 1394, 1409. By Order entered on March 23, 2020, the Court preliminarily found that this Settlement is "sufficiently fair, reasonable, and adequate, in the best interests of the members of the Direct Purchaser Class, within a range that responsible and highly experienced counsel could accept considering all relevant risks and factors of litigation, and arrived at by arm's-length negotiations." ECF No. 1426 at 3. The Court also preliminarily found that:
[I]t is fair and in the best interest of the Direct Purchaser Class to provide a service award out of the Settlement Fund not to exceed $100,000 for class representative Ahold and allow Co-Lead Counsel to use the Settlement Funds to pay attorneys' fees as well as costs and expenses incurred by counsel in an amount to be determined and approved by the Court in accordance with the schedule for final approval of the Settlement set forth herein.
Id. at 3-4. The Court scheduled a Fairness Hearing for August 27, 2020, to consider whether the Settlement should be finally approved, whether attorneys' fees, costs, expenses and a service award for Ahold should be paid from the Settlement Fund, and whether final judgment should enter. Id. at 5-6.
Pursuant to the schedule set by the Court in anticipation of the Fairness Hearing, on April 20, 2020, invoking Fed. R. Civ. P. 23(h), the DPP Class filed an Unopposed Motion for an Award of Attorneys' Fees, Reimbursement of Expenses, and Service Award for the Class Representative. ECF No. 1428. The motion asks the Court to approve the following payments out of the Settlement Fund:
Id. at 1. Mindful of my work in scrutinizing the reasonableness of DPP Counsel's time and expenses on behalf of the DPP Class on a quarterly basis since the outset of the litigation pursuant to Case Management Order Number 3 (ECF No. 90) and Case Management Order Number 3 - Supplement (Direct) (ECF No. 104) (collectively, "CMO No. 3"), the Court referredthe motion to me pursuant to 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 23(h). As mandated by Fed. R. Civ. P. 54(d)(2)(D), such a referral is for a report and recommendation. R.A. by Martinez v. Dep't of Children, Youth & Families, 18 F. Supp. 2d 157, 159 (D.R.I. 1998) (); see also Eon Corp. IP Holdings, LLC v. AT&T Mobility, Inc., Civ. No.: 11-1555(FAB/SCC), 2013 WL 12234619, at *1 n.1 (D.P.R. Feb. 25, 2013) ().
For the reasons that follow, I recommend that the motion be granted and that, to the extent that the proposed DPP Settlement is otherwise approved, the Court should also approve the requested payments from the Settlement Fund.
With no definitive guidance from the Supreme Court regarding the viability of an antitrust claim based on the anticompetitive effects of a reverse payment settlement of patent litigation involving a branded pharmaceutical, and no government investigation to make the path straight, in March 2012, DPP Counsel began their pre-suit investigation of what became the DPP actions. In May 2013, the first class complaint was filed in this District. Kohn Decl. ¶ 6.1 Soon after, on June 17, 2013, the Supreme Court decided Fed. Trade Comm'n v. Actavis, Inc., 570 U.S. 136 (2013), which holds that a patent settlement agreement providing for a reverse payment that is large and unjustified is not immunized from antitrust attack; however, Actavis "le[ft] to the lower courts the structuring of present rule-of-reason antitrust litigation." 570 U.S. at 160.In October 2013, the Judicial Panel on Multidistrict Litigation transferred cases filed elsewhere to this Court. In re: Loestrin 24 Fe Antitrust Litig., 978 F. Supp. 2d 1371, 1372 (J.P.M.L. 2013). In December 2013, the DPP Consolidated Amended Complaint ("CAC") was filed. Kohn Decl. ¶ 7.
Defendants responded to the DPP CAC (and other complaints) with a motion to dismiss that was one of the first such challenges post-Actavis. The Court granted the motion, though in so doing, it noted that "[i]t was a close call, involving a challenging interpretation of a very recent and confusing Supreme Court case." In re Loestrin 24 Fe Antitrust Litig., 45 F. Supp. 3d 180, 194 (D.R.I. 2014). Following intensive appellate litigation, the First Circuit vacated; its decision is a seminal interpretation of Actavis. In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538 (1st Cir. 2016). After remand and a second DPP CAC (ECF No. 164), Defendants' renewed motion to dismiss was denied in a lengthy decision that issued on August 8, 2017. In re Loestrin 24 Fe Antitrust Litig., 261 F. Supp. 3d 307 (D.R.I. 2017). This time the Court upheld all of the DPP Class claims. See id.
While the second motion to dismiss was still pending, DPP Counsel (together with counsel in the other cases) finally began discovery in earnest. An enormous undertaking, discovery for the DPP Class claims required a substantial investment of time and sophisticated expertise in managing Electronically Stored Information, strategically pursuing motions to compel, procuring critical expert opinions and taking and defending depositions. The discovery flowed both ways. Over vigorous objection, the Court ruled that Plaintiffs, including the DPP Class representative, Ahold, had to search for and produce documents related to oral contraceptives to allow Defendants to explore the potential existence of robust price competition.In re Loestrin 24 Fe Antitrust Litig., Master File No. 1:13-md-2472-S-PAS, 2017 WL 1491911, at *2-3, 7 (D.R.I. Mar. 15, 2017).
In July 2018, DPP Counsel moved for class certification (ECF No. 513); this critical motion was granted on July 2, 2019. In re Loestrin 24 Fe Antitrust Litig., 2019 WL 3214257, at *1. On January 7, 2020, the First Circuit denied review of the District Court's certification of the DPP Class. Ahold U.S.A., Inc., No. 19-8014. Meanwhile, during 2018 and 2019, the DPP Class successfully resisted Defendants' motions for summary judgment. Ultimately, on December 17, 2019, the DPP Class prevailed when the Court denied Defendants' motion for summary judgment on market power and Defendants' motion for summary judgment on all claims. In re Loestrin 24 Fe Antitrust Litig., 433 F. Supp. 3d 274 (D.R.I. 2019). During the same period, the parties also litigated many Daubert motions; these ended with none of the DPP's experts significantly precluded from testifying at trial. With trial approaching in early 2020, DPP Counsel filed and defended motions in limine and engaged in trial preparation and jury selection.
Days before the trial was scheduled to commence, the Settlement was reached; the agreement memorializing the Settlement was signed on January 14, 2020. ECF No. 1396-1. Throughout the eight years that DPP Counsel performed this work, which has now yielded a substantial recovery for the DPP Class, they were paid nothing. Kohn Decl. ¶ 98. They assumed representation of the DPP Class on a purely contingent basis, advanced all expenses on behalf of the DPP class and have borne all of the risks arising from this litigation. Id.
At the outset of the matter, on February 28, 2014, the Court established a mandatory procedure for ongoing monitoring of lodestar fees and expenses for the common benefit of theDPP Class and assigned to me the task of implementing the procedure.2 CMO No. 3. Paragraphs 11 and 12 of CMO No. 3 made DPP Counsel subject to guidelines for what might be included in the common benefit lodestar and expenses and specified that DPP Counsel would be "eligible to receive common benefit attorneys' fees and cost reimbursement" only for fees and expenses submitted timely to me on a quarterly basis. Id. at ¶ 11. CMO No. 3 required DPP Counsel to make quarterly confidential ex parte submissions in specified formats prepared by an independent certified public accountant...
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