United States District Court, D. New Jersey
September 13, 2005.
IN RE: REMERON END-PAYOR ANTITRUST LITIGATION. STATES AND COMMONWEALTHS OF TEXAS, et al., Plaintiffs,
ORGANON USA INC. AND AKZO NOBEL N.V., Defendants.
The opinion of the court was delivered by: FAITH HOCHBERG, District Judge
This matter is before the Court upon a settlement agreement
between the manufacturers of the anti-depressant drug Remeron,
Organon USA Inc. and Akzo Nobel N.V. (Defendants or Organon), and
the end-payor purchasers of Remeron along with all Attorney
Generals of the United States of America and territories. The
settling parties seek (1) final approval of their class action
settlement agreement and plan of distribution, (2) final
certification of an end-payor settlement class pursuant to
Fed.R.Civ.P. 23, and (3) award of attorneys' fees to Plaintiffs'
Counsel, reimbursement of litigation expenses, and incentive awards to named Plaintiffs. The Court preliminarily
approved the settlement on January 25, 2005 after a preliminary
fairness hearing on December 1, 2004. The final Fairness Hearing
was conducted on June 28, 2005.
A. The Litigation
1. The Complaint
In 2002, end-payor purchasers of Remeron filed class action
complaints against Defendants. Complaints were filed by United
Food and Commercial Workers Local 56 Health & Welfare Fund, Board
of Trustees of United Food and Commercial Workers Local 56 Health
& Welfare Fund, Vista Healthplan, Inc., Gayle Taylor, Dianne
Mason and Robert Kapella (End-Payor Plaintiffs or Plaintiffs).
These complaints were followed by a Consolidated Class Action
Complaint on September 11, 2002, and thereafter by an Amended
Consolidated Class Action Complaint (Complaint) in In re Remeron
End-Payor Antitrust Litigation, Master Docket No. 02-CV-2007
(D.N.J.), filed January 5, 2004.
The Complaint alleges violations of the Sherman Act,
15 U.S.C. § 2, and violations of state antitrust and/or unfair competition
statutes. It alleges that Defendants (a) obtained United States
Patent No. 5,977,099 ('099 patent) through fraud on the United
States Patent and Trademark Office (PTO), (b) improperly listed
the '099 patent in the United States Food and Drug
Administration's (FDA's) "Approved Therapeutic Equivalence
Evaluations" (Orange Book) to preserve their monopoly, (c)
improperly delayed the listing of that patent in the Orange Book
to prolong their monopoly, and (d) thereafter improperly
commenced lawsuits asserting sham claims of patent infringement
under the Hatch-Waxman Act, 21 U.S.C. § 355, and the United
States patent laws against generic drug companies (Generic Manufacturers), which sought permission to
market generic versions of Organon's antidepressant drug,
The Complaint alleges that Defendants took these several
actions in order to forestall the market entry of FDA-approved
generic versions of Remeron (i.e., generic mirtazapine). As a
result, end-payor purchasers composed of Third-Party Payors
(such as health benefit funds, HMOs, health insurers and
hospitals), governmental entities, and individual consumers
were allegedly required to purchase brand-name Remeron at
monopoly prices instead of being able to purchase generic
mirtazapine at a fraction of the price. Absent Defendants'
illegal activities, it is alleged that patients would have been
able to purchase lower-priced generic mirtazapine earlier,
resulting in a savings of millions of dollars.
2. Extensive Discovery and Litigation Prior to Settlement
This litigation was complex and hotly contested from the
outset, beginning with Defendants' initial unsuccessful efforts
to obtain a stay from the Magistrate Judge. On December 18, 2002,
this Court granted summary judgment in favor of certain Generic
Manufacturers with respect to Organon's patent claims against
them. Following that decision, class action complaints and
individual complaints were filed by various direct purchasers of
Remeron (Direct Purchasers), who are not a part of this
litigation or settlement.
The Court then entered a case management Order on June 18,
2003, coordinating discovery in the End-Payor class actions, the
Direct Purchaser cases, and the antitrust counterclaims filed by
the Generic Manufacturers. Additional coordination and case
management Orders were issued on July 16, 2003; August 11, 2003;
and December 11, 2003, and several Orders regarding discovery
were issued September 26, 2003; December 23, 2003; January 15, 2004; January
16, 2004; February 3, 2004; February 10, 2004; and February 13,
On December 3, 2003, the Court granted Defendants' motion to
dismiss several antitrust counterclaims by Generic Manufacturers
including the (a) allegation that the '099 patent had been
improperly listed by Defendants in the FDA's Orange Book for
anticompetitive reasons, and (b) allegation that the Defendants'
patent litigation against the Generic Manufacturers was baseless
and brought for anticompetitive purposes to prolong Defendants'
Overall, discovery was extensive. Approximately 800,000 pages
of documents and data were produced by Defendants and third
parties. Documents produced included hundreds of thousands of
pages relating to Defendants' various anti-generic strategies for
Remeron; Defendants' internal patent planning and life cycle
management strategy; Defendants' regulatory and Orange Book
listing strategies; Defendants' clinical development files, which
contained additional documentation regarding other regulatory
exclusivity strategies for Remeron; Defendants' patent files,
including file wrapper and patent prosecution history
documentation; and numerous scientific and medical articles and
other publications which impacted upon the issues of
non-infringement and invalidity of the '099 patent. End-Payor
Plaintiffs' briefs revealed extensive research into the various
legal and regulatory issues in this case, including an analysis
of various FDA regulations and the case law interpreting those
End-Payor Plaintiffs' counsel pressed Defendants on the
adequacy of their document production at a hearing on December
19, 2003, through a Notice of Deposition of Corporate Defendants
Pursuant to Fed.R.Civ.P. 30(b)(6), and through a letter brief
on February 2, 2004. They took depositions of numerous current or
former employees of the Defendants. These included many high-level executives and employees, who were deposed on
complicated and highly technical issues relating to Defendants'
various legal, regulatory, marketing and other anti-generic
strategies for Remeron. Plaintiffs also consulted heavily with
counsel for the Direct Purchasers, counsel for the Generic
Manufacturers, and the State Attorneys General. In all, over 50
depositions were taken.
The End-Payor Plaintiffs also provided extensive discovery,
including Rule 26 Initial Disclosures on October 15, 2002,
answers to interrogatories on September 8, 2003, supplemental
voluminous document production, and deposition testimony by the
two institutional End-Payor Plaintiff Class Representatives
(Vista Healthplan, Inc. and United Food & Commercial Workers
Local 56 Health & Welfare Fund). End-Payor Plaintiffs also
engaged and met extensively with economic and other experts to
develop support for theories of liability and to measure the
monetary harm suffered by End-Payors of Remeron.
Defendants moved to dismiss or stay the End-Payor Plaintiffs'
Consolidated Amended Complaint on November 14, 2002. End-Payor
Plaintiffs filed a comprehensive Memorandum in Opposition to
Defendants' Motion to Dismiss or Stay on January 17, 2003, and a
Notice of Supplemental Authority in opposition on February 6,
2003, as well as a letter brief regarding subsequent authority on
April 25, 2003, and a letter brief on further supplemental
authority on June 3, 2003. Defendants filed their Reply
Memorandum in Support of Motion to Dismiss or Stay on February
21, 2003, and filed a response to End-Payor Plaintiffs' April 25
letter brief on May 8, 2003, and a response to End-Payor
Plaintiffs' June 3 letter brief on June 5, 2003.
Defendants opposed End-Payor Plaintiffs' motion for leave to
file the End-Payor Plaintiffs' Consolidated Amended Complaint.
End-Payor Plaintiffs filed an extensive Memorandum of Law in
Support of Plaintiffs' Motion for Leave to Amend on November 18,
2003. After briefing and oral argument, the Court granted End-Payor Plaintiffs' motion for
leave to amend on December 31, 2003. Following oral argument,
Defendants' initial motion to dismiss was denied as moot in light
of End-Payor Plaintiffs' Amended Consolidated Complaint, by Order
dated January 15, 2004.
Defendants thereafter moved to dismiss End-Payor Plaintiffs'
Amended Consolidated Class Action Complaint on January 20, 2004.
End-Payor Plaintiffs moved to certify a nationwide class of End
Payors, including consumers as well as public (non-federal) and
private institutional End Payors, on October 27, 2003. End-Payor
Plaintiffs filed a comprehensive Memorandum of Law in Support of
Plaintiffs' Motion for Class Certification, together with a
detailed and extensive Declaration from Harvard University health
economist Professor Richard G. Frank in support of class
certification. The Court had not issued a ruling on these two
motions at the time of the proposed settlement.
As the End-Payor Plaintiffs were developing their case, the
working group of State Attorneys General were conducting their
own economic and factual investigation relating to the claims,
underlying events, and conduct alleged by the End-Payor
Plaintiffs and others. Beginning in March 2003, the Office of the
Attorney General of Texas issued Civil Investigative Demands
(CIDs) for documents and answers to written interrogatories to
the Defendants and to third parties, including the Generic
Manufacturers. A multi-state working group of State Attorneys
General that was formed during the summer of 2003 conducted a
targeted review of the 200 CD-ROMs of document images produced in
response to the CIDs. The working group also reviewed transcripts
of depositions and hearings from the patent litigation and the
End-Payor and Direct Purchaser litigation. The State Attorneys
General also researched and analyzed may legal and regulatory
issues involving patents, the FDA and the Hatch-Waxman process.
In addition, the State Attorneys General gathered data relating
to purchases of Remeron from their state agencies, including
their state Medicaid programs, as well as sales and pricing data from the Defendants and the Generic
Manufacturers, and retained economists to analyze the data and
create damages estimates. The State Attorneys General undertook
extensive legal research and analysis and consulted with economic
and intellectual property law experts regarding the theories of
liability at issue in this case.
B. Mediation and Settlement
In December 2003, the parties began to explore the possibility
of settlement with the working group of State Attorneys General.
The settlement negotiations included a multi-day global
settlement mediation before Judge Politan in January 2004. This
was followed by a series of settlement discussions between
Defendants' and End-Payor Plaintiffs' counsel in coordination
with the working group of State Attorneys General. These
discussions laid the groundwork, but settlement was not achieved
until the end of a two-day settlement conference before this
Court. The broad outlines of this agreement were discussed with
the Court in chambers on February 18, 2004.
For the next half year, the End-Payor Plaintiffs and the States
together engaged in further negotiations with Defendants to craft
and finalize the detailed written settlement agreement. Other
negotiations included crafting and finalizing the escrow
agreement, the proposed preliminary approval order, the proposed
final judgment, and the class notice of the proposed settlement.
The working group of State Attorneys General, in conjunction with
the Federal Trade Commission, engaged in many further
negotiations with Defendants to draft and finalize the Stipulated
Injunction. State Attorneys General who were not involved in the
working group were later invited to join the settlement.
C. Preliminary Approval of the Settlement and Execution of the
On October 20, 2004, End-Payor Plaintiffs and the Plaintiff
States filed their Memorandum in Support of End-Payor Plaintiffs'
and States' Motion for Preliminary Approval of Proposed
Settlement. Contemporaneous with the filing of that Memorandum, a Complaint
including all of the 50 States, the District of Columbia, and all
U.S. territories was filed with the Court, along with the fully
executed settlement agreement.*fn1
On November 17, 2004, the Court issued an Order requesting
End-Payor Plaintiffs and Plaintiff States submit a brief
addressing in further detail their proposed Notice Plan. On
November 24, 2004, End-Payor Plaintiffs and Plaintiff States
submitted a Supplemental Memorandum in Further Support of
Plaintiffs' Motion for Preliminary Approval that addressed the
issues raised. On December 1, 2004, the Court held a hearing on
the proposed preliminary approval of the settlement. At that
hearing, the Court requested that the parties develop a proposed
Plan of Distribution and include details regarding that plan in
the notices, which the parties did. On January 14, 2005, the
End-Payor Plaintiffs and Plaintiff States submitted a Second
Supplemental Memorandum in Further Support of Plaintiffs' Motion
for Preliminary Approval, setting forth the proposed Plan of
Distribution and revised notices. On January 24, 2005, the Court
followed up with an e-mail to the parties seeking additional
information regarding certain language in the proposed order and
the notice. End-Payor Plaintiffs and Plaintiff States responded
to the Court's questions by return e-mail and revised the
long-form and summary notices in response to the Court's
On January 25, 2005, the Court entered an Order Conditionally
Certifying Settlement Class, Preliminarily Approving Proposed
Settlement, and Preliminarily Approving Representation of
Attorneys General. In compliance with the settlement agreement
and the Court's January 25, 2005 Order, Defendants paid $35
million into escrow on February 1, 2005. Then the Notice Plan was carried out. The claims administrator,
Complete Claim Solutions (CCS), mailed 13,431 notice packages to
Third-Party Payor (TPP) class members. As of May 25, 2005, with
the cooperation of the pharmacies, CCS had caused to be mailed
854,046 notice packets to potential consumer class members. The
media consultant retained by CCS published the summary notice in
national publications, such as Reader's Digest, Parade, USA
Today and USA Weekend. To provide adequate coverage for class
members residing in one of the United States Territories, the
media consultant published summary notice in El Nuevo Dia, the
Pacific Daily News and the Virgin Islands Daily News. The media
consultant also published the summary notice in an industry
periodical, National Underwriter, to reach TPP class members.
Additionally, CCS contacted 22,643 physicians, and numerous
mental health, senior and women's organizations soliciting their
assistance in notifying their members of the settlement. CCS
distributed Public Service Announcements (PSAs) to 1,000 radio
stations. As of May 25, 2005, 60 radio stations reported airing
the PSAs a total of 11,179 times. CCS designed and developed a
website for potential class members to obtain information and for
consumer class members to file a claim online; and CCS set up and
operates a toll-free 800 telephone number to answer class
members' questions. As of May 25, 2005, over 40,000 visits have
been made to the website and nearly 30,000 calls have been made
to the toll-free telephone number.
D. The Settlement Terms
A copy of the settlement agreement and its exhibits were filed
with the Court on October 20, 2004 with the motion by End-Payor
Plaintiffs and States for preliminary settlement approval.
1. Monetary Payments And Distributions
The settlement provides for settlement payments by Defendants
in a total amount of up to Thirty-Six Million Dollars
($36,000,000.00) (Settlement Consideration) consisting of: (1)
Thirty-Three Million Dollars ($33,000,000.00) that Defendants paid into an
escrow account on February 1, 2005, plus any interest, dividends
and other distributions and payments earned on that sum while in
escrow (Settlement Fund); (2) Two Million Dollars ($2,000,000.00)
that Defendants paid on February 1, 2005 into a separate escrow
account to pay for costs and expenses of settlement class notice
and future costs of settlement administration, plus any interest,
dividends and other distributions and payments earned on that sum
while in escrow (Notice Fund); and (3) up to One Million Dollars
($1,000,000.00) that the Defendants will pay to the States
following the effective date of the settlement agreement for
their reasonable attorneys' fees and expenses incurred in their
investigations of Defendants relating to this matter and in
connection with the approval and administration of this
a. The Settlement Fund
On February 1, 2005, Defendants deposited into escrow the sum
of Thirty-Three Million Dollars ($33,000,000.00). This Settlement
Fund may be used for purposes of distribution to the members of
the settlement class and the Plaintiff States, payment of further
notice or administrative costs in excess of the amount of the
Notice Fund up to $500,000.00, and payment of End-Payor
Plaintiffs' attorneys' fees and costs, and incentive awards for
the class representatives.
Under the Plan of Distribution, the net settlement amount (the
settlement fund less notice and claims administration costs,
attorneys' fees, expenses, and incentive awards) will be
allocated as follows: 32.8% to consumers, 16.5% to state
governmental purchasers, and 50.7% to TPPs. End-Payor Plaintiffs'
Co-Lead Counsel have applied to the Court for an attorneys' fees
award from the Settlement Fund equal to $7.8 million (23.6% of
the Settlement Fund) plus 23.6% of interest that has accrued on
the Settlement Fund, as well as reimbursement of almost
$500,000.00 in expenses (including expert fees and costs). Attorneys' fees and expenses
will be distributed by End-Payor Plaintiffs' Co-Lead Counsel
among the ten law firms that initiated and litigated these End
Payor cases. In addition, End-Payor Plaintiffs seek an award of
incentive awards to the Class Representatives in the amount of
Seventy-Five Thousand Dollars ($75,000.00).
b. The Notice Fund
Defendants deposited into escrow a separate amount of Two
Million Dollars ($2,000,000.00) used exclusively for the payment
of notice and administrative fees and costs reasonably incurred
for the purpose of providing notice of settlement to members of
the settlement class, processing claims and administering the
settlement, paying any taxes and tax expenses with respect to the
escrow accounts, and paying reasonable fees and costs to the
c. Payment to State Attorneys General
After the effective date of the settlement agreement,
Defendants will reimburse the Plaintiff States for their
reasonable attorneys' fees and expenses incurred in connection
with their investigations of Defendants relating to this matter,
as well as their future reasonable attorneys' fees and expenses
to be incurred in connection with settlement approval and
administration. The aggregate amount of all such fees and
expenses of all Plaintiff States that shall be reimbursable shall
not exceed One Million Dollars ($1,000,000.00).
d. Any Unclaimed Money
Any amount in the Settlement Fund that remains after payment of
all claims, Court-approved fees, costs, expenses, and incentive
awards, and any supplemental distribution to settlement class
members and Court-approved supplemental fees and costs, will be
distributed to charitable organizations or state agencies that
provide health or legal services to settlement class members, as recommended by End-Payor Plaintiffs' Co-Lead Counsel and/or State
Liaison Counsel and approved by the Court.
2. Injunctive Relief
Defendants have agreed to an injunction prohibiting certain
future conduct (Injunction), which will become effective when the
settlement agreement becomes effective. The Injunction, which was
negotiated by the Plaintiff States in conjunction with the
Federal Trade Commission states, inter alia, that Defendants
(a) "shall not seek, maintain, certify to, or take any other
action in furtherance of, the listing or continued listing of any
Patent in the Orange Book where the listing of such Patent in the
Orange Book violates Applicable Law" and (b) "shall not" provide
to the FDA "Listing Information that [is] false or misleading."
3. Release of Claims
Members of the settlement class (who have not made valid and
timely elections to exclude themselves from the settlement class)
release and discharge forever the Defendants from all claims
which could have been asserted from the facts and circumstances
giving rise to this case, from the beginning of time through
January 25, 2005 (the date this Court preliminarily approved the
A. Class Certification for Purposes of Settlement
In its Order preliminarily approving the settlement agreement,
the Court conditionally certified the Settlement Class, defined
in the settlement agreement as:
All End Payors (including any assignees of such End
Payors) who purchased and/or paid all or part of the
purchase price of Mirtazapine Products in the United
States during the period beginning June 15, 2001
through January 25, 2005 (the date of the Preliminary
Approval Order). Excluded from the Settlement Class are (i)
Defendants and any of their subsidiaries and
affiliates, (ii) all federal governmental entities,
agencies and instrumentalities, and (iii) all
wholesalers and retailers and all persons or entities
that purchased Mirtazapine Products primarily for
purposes of resale.
The Court also preliminarily approved the following as Class
United Food and Commercial Workers Local 56 Health &
Welfare Fund, and Board of Trustees of United Food
and Commercial Workers Local 56 Health & Welfare
Fund, a health benefit fund operated for the benefit
of present and retired members of the union local and
Vista Healthplan, Inc., a health maintenance
organization that provides comprehensive healthcare
benefits to its members; and
Gayle Taylor, Dianne Mason, and Robert Kapella, all
of whom are consumers who purchased Remeron during
the Class Period.
Under Rule 23 of the Federal Rules of Civil Procedure, the
Court must engage in a two-step analysis in order to determine
whether it should certify a class action for settlement purposes.
First, the Court must determine whether the End-Payor Plaintiffs
and Plaintiff States have satisfied the prerequisites for
maintaining a class action as set forth in Fed.R.Civ.P. 23(a).
If the End-Payor Plaintiffs and Plaintiff States can satisfy
these prerequisites, the Court must then determine whether the
alternative requirements of Rule 23(b)(2) or 23(b)(3) are met.
See Fed.R.Civ.P. 23(a) advisory committee's note.
"Confronted with a request for settlement-only class
certification, a district court need not inquire whether the
case, if tried, would present intractable management problems,
see Fed. Rule Civ. Proc. 23(b)(3)(D), for the proposal is that
there be no trial." Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 619 (1997).
1. The Requirements of Rule 23(a)
Rule 23(a) provides that class members may maintain a class
action as representatives of a class if they show the court that: (a) the class members are so numerous that joinder of
all members is impracticable;
(b) the action addresses questions of law or fact
common to the class;
(c) the claims or defenses of the class
representatives are typical of the claims or defenses
of the class; and
(d) the class representative parties will fairly and
adequately protect the interests of the class.
Courts will ordinarily discharge the prerequisite of numerosity
if the class is so large that "joinder of all members is
impracticable." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019
(9th Cir. 1998). "The plaintiff need not precisely enumerate the
potential size of the proposed class, nor is the plaintiff
required to demonstrate that joinder would be impossible."
Cannon v. Cherry Hill Toyota, Inc., 184 F.R.D. 540, 543 (D.N.J.
1999); accord Wachtel v. Guardian Life Ins. Co.,
223 F.R.D. 196, 211 (D.N.J. 2004). Moreover, "[i]t is proper for the court
to accept common sense assumptions in order to support a finding
of numerosity." Cumberland Farms, Inc. v. Browning-Ferris
Indus., 120 F.R.D. 642, 646 (E.D. Pa. 1988) (citation omitted);
accord In re Nasdaq Market-Makers Antitrust Litig.,
169 F.R.D. 493, 509 (S.D.N.Y. 1996).
Here, the plaintiff class consists of End Payors, including
consumers, who paid all or part of the price of Remeron in the
United States during the class period. "There can be no serious
question that joinder of all these parties, geographically
dispersed throughout the United States, would be impracticable."
In re Corrugated Container Antitrust Litig., 80 F.R.D. 244, 247
(S.D. Tex. 1978). Hundreds of thousands of class members have
received notice and tens of thousands have filed proofs of claim
across. The class thus easily fulfills the numerosity
requirement. "[N]umbers in excess of forty, particularly those exceeding one hundred or one thousand
have sustained the [numerosity] requirement." Weiss v. York
Hosp., 745 F.2d 786, 808 n. 35 (3d Cir. 1984).
The threshold commonality inquiry is whether there are any
questions of fact or law that are common to the class.
Fed.R.Civ.P. 23(a)(2). "[C]ommonality does not require an identity of
claims or facts among class members." Newton v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 259 F.3d 154, 183 (3d Cir. 2001).
Rather, "[t]he commonality requirement will be satisfied if the
named plaintiffs share at least one question of fact or law with
the grievances of the prospective class." "Even where individual
facts and circumstances do become important to the resolution,
class treatment is not precluded." Baby Neal v. Casey,
43 F.3d 48, 57 (3d Cir. 1994) Id. at 57. "The threshold of commonality
is not high." In re School Asbestos Litig., 789 F.2d 996, 1010
(3d Cir. 1986).
In this case, many common questions exist. They include, inter
alia, (1) what is the relevant product market?; (2) did
Defendants have market power in that market?; and (3) did
Defendants unlawfully monopolize that market? Antitrust actions
often present common questions of law and fact, and are,
therefore, frequently certified as class actions. See, e.g.,
Transamerican Ref. Corp. v. Dravo Corp., 130 F.R.D. 70, 73 (S.D.
Tex. 1990) (antitrust price-fixing claims and common law fraud);
Cusick v. NV Nederlandsche Combinatie Voor Chemische Industrie,
317 F. Supp. 1022, 1024 (E.D. Pa. 1970) (consumer class action
charging monopolization). The commonality requirement is
The Third Circuit has "set a low threshold for satisfying" the
typicality requirement holding that "[i]f the claims of the named
plaintiffs and class members involve the same conduct by the
defendant, typicality is established." Newton v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 259 F.3d 154, 1838-4 (3d Cir. 2001);
accord Baby Neal v. Casey, 43 F.3d 48, 58 (3d Cir. 1994)
(stating "cases challenging the same unlawful conduct which
affects both the named plaintiffs and the putative class usually
satisfy the typicality requirement").
The typicality requirement "does not mandate that all putative
class members share identical claims." Newton, 259 F.3d at 84;
see also Hassine v. Jeffes, 846 F.2d 169, 176-77 (3d Cir.
1988). Plainly, "there is nothing in Rule 23(a)(3) which requires
named plaintiffs to be clones of each other or clones of other
class members." In re Lorazepam & Clorazepate Antitrust Litig.,
202 F.R.D. 12, 27 (D.D.C. 2001); accord In re Catfish Antitrust
Litig., 826 F.Supp. 1019, 1036 (N.D. Miss. 1993).
In this case, the Class Representatives' and the class members'
claims are identically predicated upon Defendants' alleged
actions of improper listing and late listing of the '099 Patent
in the Orange Book, fraud on the PTO, and filing of allegedly
baseless patent infringement lawsuits against Generic
Manufacturers. Thus, "[t]here are no differences as to the type
of relief sought or the theories of liability upon which
plaintiffs will proceed." In re Corrugated Container Antitrust
Litig., 80 F.R.D. 244 (S.D. Tex. 1978). The Class
Representatives' claims and those of the class members arise from
the same course of conduct. "[S]ince the various claims alleged
appear to stem from a single course of conduct . . . we cannot
conclude that the district court abused its discretion in holding
that the typicality requirement was met." Grasty v. Amalgamated
Clothing and Textile Workers Union, 828 F.2d 123, 130 (3d Cir.
1987). Accordingly, the Class Representatives' claims are typical
of those of the class members.
d. Adequacy of Representation The final requirement of Rule 23(a) is that "the representative
parties will fairly and adequately protect the interests of the
class." Fed.R.Civ.P. 23(a)(4). The Third Circuit has held that
"adequate representation depends on two factors: (i) the
plaintiff's attorney must be qualified, experienced, and
generally able to conduct the proposed litigation, and (ii) the
plaintiff must not have interests antagonistic to those of the
class." Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 923
(3d Cir. 1992); accord In re Warfarin Sodium Antitrust Litig.,
391 F.3d 516, 532 (3d Cir. 2004); Wetzel v. Liberty Mutual Ins.
Co., 508 F.2d 239, 247 (3d Cir. 1975).
As to the first factor, End-Payor Plaintiffs' counsel have
successfully prosecuted numerous antitrust class actions.
Plaintiffs' Co-Lead Counsel, Arthur M. Kaplan, is a graduate of
the Harvard Law School (J.D., cum laude, 1970) and has been
active in antitrust and other complex litigation. Mr. Kaplan was
Co-Lead Counsel for plaintiffs in the In re Nasdaq Market-Makers
Antitrust Litig., 187 F.R.D. 465 (S.D.N.Y. 1998), in which
plaintiffs achieved settlements totaling $1.027 billion.*fn2
End-Payor Plaintiffs' Co-Lead Counsel Joseph H. Meltzer likewise
is experienced. Mr. Meltzer is a graduate of the Temple
University School of Law (J.D., cum laude) and has focused his
practice exclusively on antitrust and complex class action
litigation. In addition to prominent roles in prosecuting several
major antitrust class actions to successful conclusions,
including In re Sorbates Direct Purchaser Antitrust Litig.,
C98-4886 (N.D. Cal. 2001) (settlements exceeding $92 million),
Mr. Meltzer was appointed Co-Lead Counsel in Ryan-House v.
GlaxoSmithKline plc, C.A. 2:02cv442 (E.D. Va.), a pharmaceutical antitrust class action brought on behalf
of end payors of the prescription medication Augmentin which
recently settled for $29 million. End-Payor Plaintiffs' Acting
Co-Lead Counsel Jeffrey S. Istvan is a 1992 graduate of the
University of Virginia School of Law, where he was a Hardy Cross
Dillard Scholar. Following a federal judicial clerkship, he has
been active in antitrust and consumer class actions. Mr. Istvan
was sole lead counsel in Parsky v. Wachovia Bank, N.A., 2001 WL
535786 (C.C.P. Phila. May 8, 2001), a consumer class action that
recently settled for approximately than $23 million and worked on
several large antitrust class actions, including In re Copper
Antitrust Litig., M.D.L. No. 1303 (7th Cir. 2004) (appeal
pending); In re Polypropylene Carpet Antitrust Litig.,
93 F. Supp. 2d 1348 (N.D. Ga. 2000) (settlements totaling $50 million);
and In re Commercial Explosives Antitrust Litig.,
945 F. Supp. 1489 (D. Utah 1996) (settlements totaling $77 million).
The State Attorneys General, as counsel for the Plaintiff
States, have considerable expertise in complex antitrust parens
patriae and class action litigation. State Liaison Counsel
Patricia A. Conners, Director of the Antitrust Division of the
Florida Attorney General's Office and past Chair of the National
Association of Attorneys General ("NAAG") Multistate Antitrust
Task Force. She was an Assistant Attorney General in the
Antitrust Division, working on such notable cases as Florida v.
Borden, Inc., the 1989 school milk bid-rigging cases that
resulted in a $36 million recovery for Florida school boards and
Florida v. Abbott Laboratories, Inc., the first of the
so-called Infant Formula cases, and the Disposable Contact Lens
Litigation, which settled in 2002 for $80 million. She has
practiced antitrust law exclusively since 1987. State Liaison
Counsel Kim Van Winkle is an Assistant Attorney General in the
Office of the Attorney General of Texas, where she has practiced
antitrust law exclusively since 1998. Ms. Van Winkle graduated in
1997 with honors from the University of Texas School of Law, with a joint Master of Public Affairs degree from
the Lyndon B. Johnson School of Public Affairs. She has
participated in the investigation and litigation of numerous
complex, multistate antitrust cases, including In re Buspirone
Antitrust Litigation, No. 01-CV-11401, MDL 1413 (S.D.N.Y. Mar.
7, 2003) (final approval granted for $100 million settlement of
end-payor action alleging monopolization of drug markets through
patent abuse). These attorneys are qualified, experienced, and
have skillfully worked on this litigation.
The Class Representatives' interests are not antagonistic to
those of the absent class members. The central issues in this
case are critical to the claims of both groups. In proving these
common issues, the Class Representatives further the absent class
members' claims no less than their own. Cf. In re Cardizem CD
Antitrust Litig., 218 F.R.D. 508, 518 (E.D. Mich. 2003) ("Each
Class member . . . has a common interest in establishing that he,
she, or it was financially injured by Defendants' conduct and in
an aggregate damages computation"); In re Warfarin Sodium
Antitrust Litig., 212 F.R.D. 231, 251 (D. Del. 2002), aff'd,
391 F.3d 516 (3d Cir. 2004) ("The named plaintiffs share a strong
interest in establishing liability of defendant, seeking the same
type of damages (compensation for overpayment) for the same type
of injury (overpayment for warfarin sodium)"). Further, "it is
difficult to imagine a better representative of the retail
consumers within a state than the state's attorney general." In
re Antibiotic Antitrust Actions, 333 F. Supp. 278, 280 (S.D.N.Y.
1971); accord In re Lorazepam & Clorazepate Antitrust Litig.,
205 F.R.D. 369, 387 (D.D.C. 2002) (stating the plaintiff states
"have evidenced a genuine interest in this litigation, and are
qualified and experienced."). States, acting through their
attorneys general, have frequently been held to be the "best
representatives of the consumers residing within their
jurisdictions." In re Ampicillin Antitrust Litig.,
55 F.R.D. 269, 274 (D.D.C. 1972); see also West Virginia v. Chas Pfizer & Co.,
Inc., 440 F.2d 1079, 1089-91 (2d Cir. 1971). Thus, the adequacy
requirement has been met.
2. The Requirements of Rule 23(b)(3)
Once the requirements of Rule 23(a) are met, Rule 23(b)(3)
permits the maintenance of a class action if "the court finds [a]
that the questions of law or fact common to the members of the
class predominate over any questions affecting only individual
members, and [b] that a class action is superior to other
available methods for the fair and efficient adjudication of the
"The Rule 23(b)(3) predominance inquiry tests whether proposed
classes are sufficiently cohesive to warrant adjudication by
representation." Amchem Prod., Inc. V. Windsor, 521 U.S. 591,
623 (1997). As the Supreme Court has observed, "[p]redominance is
a test readily met in certain cases alleging . . . violations of
the antitrust laws." Amchem, 521 U.S. at 625. In particular,
"[a]ntitrust actions involving common questions of liability for
monopolization . . . have frequently been held to predominate for
the preliminary stage of class certification." Lorazepam &
Clorazepate, 202 F.R.D. at 29. "The presence of individual
questions . . . does not mean that the common questions of law
and fact do not predominate." Eisenberg v. Gagnon,
766 F.2d 770, 786 (3d Cir. 1985).
a. Questions of Law and Fact Common to the Class Predominate
"As is true in many antitrust cases, the alleged violations of
the antitrust laws at issue here respecting . . . monopolization
relate solely to Defendants' conduct, and as such proof for these
issues will not vary among class members." Lorazepam &
Clorazepate, 202 F.R.D. at 29 (internal quotation marks and
citation omitted). As the Third Circuit held in In re Linerboard
Antitrust Litig., 305 F.3d 145 (3d Cir. 2002), cert. denied,
538 U.S. 977 (2003) that "common issues . . . predominate here
because the inquiry necessarily focuses on defendants' conduct,
that is, what defendants did rather than what plaintiffs did." Id. at 163 (citation omitted); see also
Warfarin Sodium, 391 F.3d at 528. "The common questions of law,
the elements of the monopolization claim fully enumerated, . . .
dwarf, rather than merely predominate over, any individual
questions." Sollenbarger v. Mountain States Tel. and Tel. Co.,
121 F.R.D. 417, 427 (D.N.M. 1988); see also Davis v. Southern
Bell Tel. Co., 1993 WL 593999, *7 (S.D. Fla. Dec. 23, 1993)
("[T]he issues of antitrust violation, injury, and damages all
turn on class-wide proof").
In this case, the claims of all class members arise from the
same facts giving rise to the same legal claims, as discussed in
the above sections on commonality and typicality. Accordingly,
the predominance requirement is satisfied.
b. A Class Action is Superior to Other Available Methods
"In the case of consumers, the class members here have little
interest in `individually controlling the prosecution or defense
of separate actions,' Fed.R.Civ.P. 23(b)(3)(A), because each
consumer has a very small claim in relation to the cost of
prosecuting a lawsuit." Warfarin Sodium, 212 F.R.D. at 251.
Indeed, "[w]here it is not economically feasible to obtain relief
. . . aggrieved persons may be without any effective redress
unless they employ the class action device." Deposit Guar. Nat'l
Bank v. Roper, 445 U.S. 326, 339 (1980).
In contrast to the inefficiency of duplicative individual
lawsuits, "[t]he efficacy of resolving all plaintiffs' claims in
a single proceeding is beyond discussion." Sollenbarger v.
Mountain States Tel. and Tel. Co., 121 F.R.D. 417, 436 (D.N.M.
1988). "[T]he class action mechanism offers substantial economies
of time, effort and expense for the litigants as well as the
Court." In re Terazosin Hydrochloride, 220 F.R.D. 672, 700
(S.D. Fl. 2004). In this very expensive litigation involving hundreds of
thousands documents, it would not have been economically feasible
for many plaintiffs to seek individual redress. Judicial economy
as well as fairness to Defendants makes the litigation of such
claims in one action far more desirable than numerous separate
actions litigating the same issues.
Because the End-Payor Plaintiffs and Plaintiff States have
satisfied all of the requirements under Fed.R.Civ.P. 23(a) and
the requirements of Fed.R.Civ.P. 23(b)(3), this Court
certifies the proposed class for purposes of this settlement.
B. The Notice of Settlement
The settlement class members are entitled to notice of the
proposed settlement and an opportunity to be heard. See
Fed.R.Civ.P. 23(e) ; Phillips Petroleum Co. v. Shutts, 472 U.S. 797
(1985). The notice period in this case began on March 14, 2005,
and continued for forty-five (45) calendar days until April 27,
2005. Under the settlement agreement and Preliminary Approval
Order, settlement class members had that Notice Period of 45 days
to submit any requests to opt-out of the class and until May 28,
2005 to submit objections.
1. Notice Plan
The Notice Plan consisted of multiple components designed to
reach consumers through paid print and broadcast media through
Public Service Announcements, earned media, and direct mailed
notice (to the extent that information could be obtained) to
purchasers of Remeron. The media plan provided an estimated reach
of more than 90 percent, and frequency realized may have been as
much as 2.5 times.*fn3 a. Published Notice
Syndicated data, audited data and proprietary research from the
National Mental Health Association and the National Foundation
for Depressive Illness were reviewed to identify the media
vehicles that would most effectively deliver the message to
potential class members in the U.S. and its territories
(specifically, Guam, U.S. Virgin Islands, and Puerto Rico). The
resulting plan was that the summary notice (about 1 page) be
placed in a combination of national Sunday Supplements, USA
Today, and Reader's Digest to reach consumers, plus an
insertion in National Underwriter to reach Third-Party Payors.
The Notice Plan's consumer published media schedule was based
upon techniques specifically designed for legal notification.
The long-form notice (several pages) provides detailed
information about the proposed settlement, including a summary of
the monetary and injunctive terms, the allocation percentages,
the requested attorneys' fees, litigation costs and incentive
awards, and detailed information on the terms of the releases. In
addition, the long-form notice provides information about the
fairness hearing date, and Settlement Class members' rights to
object or opt out (and deadlines and procedures). Finally, the
long-form notice included a Claim Form to be completed and
returned by Class members. The Claim Form also is available on a
dedicated website, www.RemeronSettlement.com, or by calling a
toll-free 800 telephone number provided in the long-form notice
and the summary notice.
b. Mailed Notice
Direct mail notices consisted of mailing the settlement notice
packet (including the long-form notice and a Claim Form) to
inform potential class members of their rights and how they could participate in the class action. This direct mail settlement
notice packet was sent to all potential TPP class members
included in CCS' proprietary TPP mailing database, which includes
13,431 TPPs (e.g., insurance companies, healthcare and welfare
funds, self-insureds, etc.) and record keepers (e.g., third-party
administrators and pharmacy benefit managers).
In addition, potential consumer class members were contacted by
direct mail with the assistance of pharmacies and psychiatrists.
Many potential class members were mailed a settlement notice
packet by their pharmacy and/or psychiatrist. Twenty-six large
national pharmacies participated in mailing settlement notice
packets to their customers who purchased Remeron and mirtazapine
during the claim period, including 14 of the top 25 drug chains,
6 of the top 7 mass merchant pharmacies, and 3 of the top 6
supermarket pharmacies. In all, more than 850,000 settlement
notice packets were mailed to potential class members through
this program. This direct mail program provided an opportunity to
reach those class members who may have missed the summary notice
in their newspapers.
c. News Media
CCS implemented a campaign to expand notice through free or
"earned" media which included contacting consumer groups such as
AARP, mental health groups such as the National Alliance for the
Mentally Ill, National Federation for Depressive Illnesses,
National Mental Health Association, National Community
Pharmacists Association, and issuing a press release over
Businesswire. The State Attorneys General have undertaken further
efforts to expand notice through the news media. A number of
Attorneys General issued press releases about the settlement,
notice and claims process, including the toll-free telephone
numbers and website address. These press releases were run in
newspapers and broadcast on the radio.
d. Toll-Free Telephone Number Complete Claims Solutions has obtained a toll-free telephone
number that allows callers to request the notice of settlement
and obtain a Claim Form. It also allows them to find out other
information about the settlement. This number was included in the
summary notice, the notice of settlement, and on the website,
e. Internet Website
In addition to the media outlets described above, Complete
Claims Solutions developed and maintains a website at
www.RemeronSettlement.com, which can be accessed by the
settlement class members. This website includes the summary
notice and long-form notice and a Claim Form.
f. Results of Notice Effort
CCS received nearly 65,000 individual consumer claims and 1,156
TPP claims. In addition, over 40,000 visits have been made to the
settlement website, and approximately 30,000 telephone calls have
been made to the toll-free number.
2. The Notice Plan Meets the Requirements of Due Process
"In order to satisfy due process, notice to class members must
be reasonably calculated under all the circumstances, to apprise
interested parties of the pendency of the action and afford them
an opportunity to present their objections." In re AremisSoft
Corp. Sec. Litig., 210 F.R.D. 109, 119 (D.N.J. 2002) (internal
quotations and citation omitted). In Rule 23(b)(3) actions,
"class members must receive the best notice practicable under the
circumstances." Id. at 119-20 (quoting Fed.R.Civ.P.
23(c)(2)(B)); see also Varacallo v. Massachusetts Mut. Life Ins.
Co., 226 F.R.D. 207, 225 (D.N.J. 2005).
The notice forms are similar to those successfully used in
numerous other class settlements. See, e.g., In re Toys `R' Us
Antitrust Litig., 191 F.R.D. 347 (E.D.N.Y. 2000); In re
Linerboard Antitrust Litig., 321 F. Supp. 2d 619, 627 (E.D. Pa. 2004).
This Court reviewed the summary notice and the long-form notice
in detail and suggested several changes, which were made, prior
to the preliminary approval of the settlement. The final product
is clear and comprehensive, and is written in simple terminology.
The notices "fairly, accurately, and neutrally describe the
claims and parties in the litigation, the terms of the proposed
settlement and the identity of persons entitled to participate in
it," and apprise affected class members of their options with
regard to the proposed settlement. Foe v. Cuomo,
700 F. Supp. 107, 113 (E.D.N.Y. 1988).
For those whose names and addresses cannot be determined by
reasonable efforts, notice by publication suffices under both
Rule 23(c)(2) and under the Due Process Clause. Carlough v.
Amchem Products, Inc., 158 F.R.D. 314, 325 (E.D. Pa. 1993)
(citing Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306, 317-18 (1950)). Under the circumstances of this case, where
End-Payor Plaintiffs, Plaintiff States and Defendants have
limited and/or incomplete access to the names or addresses of
End-Payors who purchased Remeron during the Class
Period,*fn4 the law requires reasonably feasible notice by
publication coupled with such mailed notice. The plan is
allocated $2 million for this task and for processing returned
Claims Forms, spending over $750,000 on publication notice alone.
The Notice Plan meets the requirements of due process. C. Final Approval of Class Action Settlement
1. State Attorneys' General Authority to Settle All Consumer
Plaintiff States, by their Attorneys General, have the
authority to settle and release indirect purchaser claims in a
parens patriae or other representative capacity. "A State has a
quasi-sovereign interest in the health and well being both
physical and economic of its residents in general." Alfred L.
Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 607 (1982). That
federal authority is supplemented by state statutory provisions
and case law. All Attorneys' General have authority to represent
consumers, depending on the state, in at least one of the
following four ways: (1) parens patriae authority expressly
conferred by the state legislature, (2) authority expressly
conferred by the state legislature that is the functional
equivalent of parens patriae authority, (3) judicially recognized
authority to represent consumers, or (4) authority to proceed as
a class representative of consumers pursuant to Fed.R.Civ.P.
23. See, e.g., In re Lorazepam & Clorazepate Antitrust Litig.
("Lorazepam"), 205 F.R.D. at 386-87.
2. Settlements That Meet Certain Conditions Are Presumed Fair
The Third Circuit affords an initial presumption of fairness
for a settlement "if the court finds that: (1) the negotiations
occurred at arm's length; (2) there was sufficient discovery; (3)
the proponents of the settlement are experienced in similar
litigation; and (4) only a small fraction of the class objected."
In re Cendant Corp. Litig., 264 F.3d 201, 233 n. 18 (3d Cir.
2001). As discussed in Part I above, this case has seen heated
litigation between the parties and the review of hundreds of
thousands of documents and dozens of depositions. The Plaintiffs'
lawyers involved have a great deal of experience in antitrust
litigations such as these, as discussed in Part II(A)(1)(d), and
favor settlement. Defendants' Counsel, including Dean Ringel of
Cahill, Gordon, & Reindel and Joseph Rebein of Shook, Hardy & Bacon, are prominent litigators from
successful law firms and also favor settlement.
The Court is also satisfied with the qualifications of State
Attorneys General who also favor settlement. Furthermore, "[t]he
participation of the State Attorneys General furnishes extra
assurance that consumers' interests are protected." In re Toys
`R' Us Antitrust Litig., 191 F.R.D. 347, 351 (E.D.N.Y. 2000);
accord New York v. Reebok Int'l. Ltd., 96 F.3d 44, 48 (2d Cir.
1996) (noting that Attorneys General in parens actions are
motivated by concern for the public interest); Wellman v.
Dickinson, 497 F. Supp. 824, 830 (S.D.N.Y. 1980).
Finally, there have been few objectors to the settlement, as
discussed in Part II(C)(4)(b). This Court determines that an
initial presumption of fairness attaches, although such finding
is not dispositive.
3. Standard for Court Approval of Settlement
A class action may be settled under Rule 23(e) upon a judicial
finding that the settlement is "fair, reasonable, and adequate."
Fed.R.Civ.P. 23(e)(1)(C). Under Rule 23(e), this Court must
determine whether the settlement is within a range that
responsible and experienced attorneys could accept considering
all relevant risks and factors of litigation. See Walsh v. Great
Atlantic and Pacific Tea Co., 96 F.R.D. 632, 642 (D.N.J. 1983).
The range "recognizes the uncertainties of law and fact in any
particular case and the concomitant risks and costs necessarily
inherent in taking any litigation to completion." Newman v.
Stein, 464 F.2d 689, 693 (2d Cir. 1972).
Because a settlement represents an exercise of judgment by the
negotiating parties, cases have consistently held that the
function of a court reviewing a settlement is neither to rewrite
the settlement agreement reached by the parties nor to try the
case by resolving issues left unresolved by the settlement. Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799,
801 (3d Cir. 1974); Bullock v. Administrator of Kircher's
Estate, 84 F.R.D. 1, 4 (D.N.J. 1979). "The temptation to convert
a settlement hearing into a full trial on the merits must be
resisted." Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1315 (3d
To determine whether the settlement is fair, reasonable and
adequate under Rule 23(e), courts in the Third Circuit apply the
nine-factor test enunciated in Girsh v. Jepson, 521 F.2d 153,
157 (3d Cir. 1975), and recently reaffirmed in Warfarin Sodium,
391 F.3d at 534-35. These factors are:
(a) The complexity, expense, and likely duration of
(b) the reaction of the class to the settlement;
(c) the stage of the proceedings and the amount of
(d) the risks of establishing liability;
(e) the risks of establishing damages;
(f) the risks of maintaining the class action through
(g) the ability of the defendants to withstand a
(h) the range of reasonableness of the settlement
fund in light of the best possible recovery; and
(i) the range of reasonableness of the settlement
fund to a possible recovery in light of all the
attendant risks of litigation.
Id. (quoting Girsh, 521 F.2d at 156-57).*fn5
4. Evaluation of the Settlement Under Applicable Standards
a. The Complexity, Expense and Likely Duration of the
By reaching a favorable settlement prior to dispositive motions
or trial, the End-Payor Plaintiffs and Plaintiff States avoided
significant expense and delay, and ensured recovery. An
"antitrust action is arguably the most complex action to
prosecute." In re Linerboard Antitrust Litig., 2004 WL 1221350, at *10 (E.D. Pa. June 2, 2004) (citations omitted); see
also Nichols v. SmithKline Beecham Corp., 2005 WL 950616, at *12
(E.D. Pa. Apr. 22, 2005) (same). This litigation involves
complicated patent, regulatory, and antitrust laws, including
interpretation of provisions of the Hatch Waxman Act and their
application to antitrust law.
Although the End-Payor Plaintiffs have conducted a substantial
amount of discovery, significant additional work would be
necessary if this case proceeded beyond the current 12b6 and
class certification stages. First, expert witness reports and
depositions would need to be undertaken. Then, summary judgment
motions would need to be resolved. In the Direct Purchaser case,
which recently came to a preliminary settlement, thousands of
pages of materials were filed with this Court on summary judgment
issues such as market definition, market power, and improper/late
listing in the FDA Orange Book. These issues would most
likely come up again in the End-Payor Plaintiffs' litigation.
Furthermore, a trial on the merits of the action would entail
considerable expense. Market definition alone would require
dozens of hours of testimony at this stage. Finally, trial would
likely not end the litigation, given the right to appeal. This
factor weighs in favor of the settlement. See In re Linerboard
Antitrust Litig., 292 F. Supp. 2d 631, 642 (E.D. Pa. 2003)
(noting that the "protracted nature of class action antitrust
litigation means that any recovery would be delayed for several
years," and thus settlement's "substantial and immediate
benefits" to class members favors settlement approval);
Slomovics v. All for a Dollar, Inc., 906 F. Supp. 146, 149
(E.D.N.Y. 1995) (where litigation is potentially lengthy and will
result in great expense, settlement is in the best interest of
the class members).
b. The Reaction Of The Settlement Group As described above in Part II(B)(1)(b), CCS sent out 13,431
notices to third-party payors, and caused the mailing of more
than 850,000 notices to potential consumer class members across
the country. In addition, CCS developed and maintained a website
and a toll-free telephone "hotline" to provide information about
the settlement and arranged for publication of the summary notice
over a period of approximately six weeks in selected publications
throughout the country.
In response, no TTP excluded itself from the
settlement,*fn6 and about 70 individual consumers timely
submitted Requests for Exclusion. Given that the TPP portion of
the class is made up largely of sophisticated managed care
companies, the fact that not one of them wishes to exclude itself
is strong evidence of a positive reaction to the settlement.
Equally strong evidence is the very low number of consumer
opt-outs relative to the hundreds of the thousands notified and
the tens of thousands who submitted claims forms.
Also relevant is the number of objections. Eight individuals
and two TPPs filed objections.*fn7 This Court has considered
all of the objectors' written submissions*fn8 and the three
oral arguments that were made at the Fairness Hearing. The
non-monetary objections that have been filed are the following: (1) the name of the charity that would receive left
over funds has not been disclosed, (2) Rider A, a confidential
attachment to the settlement agreement containing provisions
regarding the number of opt-outs that would lead to termination
of the settlement, was not disclosed, (3) consumer information
should have been subpoenaed from the ten largest retail
pharmacies and those consumers should have received direct
payments without having to file Claims Forms, and (4) the
settlement should not contain a boilerplate provision that allows
for modification of the settlement without notice to the class,
despite agreement by the settling parties and Court approval, and
(5) 30 days after the 45-day notice period was an insufficient
amount of time to object to the settlement and the 45-day notice
period was an insufficient amount of time to opt-out of the
These objections are considered in turn. First, when providing
notice, the law does not require that the charity that may
receive left over funds be disclosed in notice to the class. See
Mangone v. First USA Bank, 206 F.R.D. 222, 230 (S.D. Ill. 2001)
("Courts have broad discretion in distributing unclaimed class
funds, and where the parties agree on the distribution of
unclaimed class funds, the court should defer to that method of
distribution.") (citing Wilson v. Southwest Airlines, Inc.,
880 F.2d 807, 815-16 (5th Cir. 1989) (where parties agree to
distribution of unclaimed class fund, and agreed distribution is
equitable, court will defer to such agreement)). More
importantly, this objection is moot as the claims administrator
has advised that there are no surplus funds because of the high
response to the notice.
Second, Courts have held that information regarding conditions
that may terminate a settlement need not be detailed in the
notice to the class. See In re Warfarin Sodium Antitrust
Litig., 212 F.R.D. 231, 253 (D. Del. 2002) (stating that notice
did not need to include details on "the confidential `opt-out'
threshold beyond which defendant reserved the right to withdraw
from the settlement"). The Court, the Attorneys General, and Class Counsel know the contents
of Rider A and agreed to its sealing in the interest of
consummating the settlement. The Rider has no legitimate bearing
on a class member's decision to opt-out of the settlement,
object, or file a claims form.
Third, the suggested subpoenas of the top 10 retail pharmacies
is unnecessary given that 14 of the top 25 pharmacy chains, 3 of
the top 6 supermarket, and 6 of the top 7 mass merchant retailers
voluntarily participated in searching their databases for Remeron
purchasers and sending notices with Claims Forms to them. This
process led to 800,000 notices being sent and nearly 65,000
consumer claims being filed. As to the objector's additional
suggestion to automatically distribute money to those who
purchased Remeron through a top 10 pharmacy, this Court will not
favor one group of class members over another. See, e.g., In re
Diet Drugs Prods. Liab. Litig., 93 Fed. Appx. 338, 343 (3d Cir.
2004) ("a class action settlement cannot arbitrarily prefer one
group of plaintiffs over another because such a rule would be
inimical to the very principles of class advocacy"). In addition,
there are practical problems with the suggestion, including those
associated with blindly sending checks to addresses that may be
Fourth, the boilerplate provision that allows for modification
of the settlement without notice to class is satisfactory and
necessary. The class is protected from adverse modifications by
Rule 23 and the requirements of due process, regardless of what
the provision says, and the Court is charged with enforcing these
protections. Minor modifications may be necessary to a settlement
agreement (indeed may be favorable to the class), and additional
class notice is not always required because, e.g., of the cost of
notice that would take recovered money from the class. See In re
Prudential Ins. Co. of America Sales Practice Litig.,
962 F. Supp. 450, 473 n. 10 ("Class members need not be informed of the
[amendment to the settlement agreement] because the [settlement]
is only more valuable with these changes"). In this case, the adjustment that was made to the
settlement that favored the class, after notice went out, was
followed by additional notice and by opportunity for any opt-outs
to return to the class in order to partake in the additional
Fifth, 30 days after a 45-day notice period is a sufficient
amount of time to object to the settlement. This Court suggested
this deadline to Plaintiffs' Counsel shortly after the
preliminary fairness hearing. Many district courts have set a
similar deadline in antitrust class action settlements. In In re
Augmentin Antitrust Litig. (Case No. 02-CV-442, E.D. Va.), Judge
Morgan approved a forty-five day notice period and set the
opt-out and objection deadline two weeks from the close of the
notice period. In In re Buspirone Antitrust Litig. (Case No.
01-CV-7951-JGK, S.D.N.Y), Judge Koeltl set the opt-out and
objection deadline forty-five days after the notice date. And in
In re Lorazepam & Clorazepate Antitrust Litig. (Case No.
99-276-TFH/JMF, D.D.C.), Judge Hogan also set the objection
deadline forty-five days after the notice date. Indeed, the
objector Health Care Service Corporation, submitted its objection
on May 16, 2005, two weeks before the May 28, 2005 objection
deadline, thus revealing the adequacy of the objection period.
As to the opt-out deadline, this Court passes no judgment
because the issue is moot. Of over 800,000 notices only two
objections were made stating insufficient time to opt-out during
the 45-day notice period. On the other hand, at least 65,000
class members chose not to opt-out, as evidenced by their filing
of claims forms. At the Fairness Hearing, both objectors on this
issue took the opportunity to be heard. Counsel to Health Care
Service Corporation informed the Court at the Fairness Hearing
that, despite objecting, the company did not wish to opt-out.
Counsel to Nadine Street, the other objector in this regard, also
spoke at the Fairness Hearing. Rather than expressing a desire to opt-out of the settlement, the lawyer requested
additional time to forge an objection to Plaintiffs' motion for
attorneys' fees, which the Court granted, as discussed in Part
II(E)(1)(b). Thus, the issue is moot.
Six additional objection points were made pertaining to the
class's compensation. They are the following: (1) one group in
the class (TPPs or individual consumers) is getting more than its
fair share than the other group, (2) the Plan of Distribution's
reliance on "expenditures" rather than "damages" is inappropriate
and unfairly benefits TPPs, (3) claim rates of the TPPs or
individual consumers should not be considered in distributing
monies between the two groups, (4) money should "spill over" from
the individual consumers' allocation to the TPPs' allocation
before any money is made available for a cy pres distribution,
(5) the individual consumers are not receiving sufficient
compensation, and (6) class members from states whose antitrust
laws do not provide for the recovery of damages to indirect
purchasers should not receive compensation.
These objections are also considered in turn. First, both the
TPP group and the individual consumer group make the same
argument that the other group is getting more than it should. Two
(of two) TPP objectors contend that they are entitled to more
than the Plan of Distribution's dedicated 50.7%, while at the
same time five (of seven) individual consumers contend that the
individuals are entitled to more than the Plan of Distribution's
dedicated 32.8%. As discussed in Part II(D), the Court finds the
Plan of Distribution to be fair. These conflicting objections are
without merit.*fn10 Second, the reasons put forth as to why reliance on
"expenditures" would be inappropriate is inapplicable here. The
objector, Eugene Clasby, is concerned that damages based on the
end-payors "expenditures" would be skewed in favor of TPPs
because such a measurement would not discount for co-payments
paid by individual consumers or for certain rebates received by
TPPs. However, the "expenditures" data used in this case in fact
does factor in these offsets. Furthermore, the Third Circuit has
approved settlement allocations based on expenditures rather than
damages, see In re Warfarin Sodium Antitrust Litig.,
391 F.3d at 539, and this precise objection by Eugene Clasby was overruled
in Nichols v. SmithKline Beecham Corp., 2005 WL 950616, *18
(E.D. Pa. Apr. 22, 2005).
Third, claim rates were not a factor in determining the Plan of
Distribution's distribution percentages. The allocation is based
on each group's expenditures. That TPPs might be more likely to
claim their damages did not give them a higher percentage of the
Fourth, the issue of "spill over" from individual consumers to
TPPs prior to any cy pres distribution is moot. The claims
administrator has reported that consumer claims already exceed
the amount available to them by a very wide margin, thus no funds
remain for a cy pres distribution or a transfer to the TPPs.
Fifth, the individual consumers are receiving adequate
compensation. They are receiving an estimated $8.1 million in the
aggregate which, based on the estimated number of claims filed,
will result in each claiming consumer receiving approximately 34
cents for every dollar spent on Remeron. Discounting for
litigation risk, cost, and delay, as discussed in Part I and Part
II(C)(4), this Court cannot find that such a recovery is
Sixth, class members from states whose antitrust laws do not
provide for the recovery of charges to indirect purchasers should
still receive compensation if the parties agreed to it. An important part of a settlement like this one is that Defendants
achieve "total peace," thus all potential plaintiffs must be
compensated in order to preclude future litigation attempts and
allow such a settlement to consummate. See In re Chicken
Antitrust Litig., 669 F.2d 228, 238 (5th Cir. 1982).
Furthermore, Plaintiffs are being compensated not just for state
antitrust law violations but also for the common law claim of
unjust enrichment. These two objectors, both represented by
Stephen Tsai, provide no legal authority for their position nor
do they at all consider that the Settlement Fund would likely
have been much smaller if end-payors from certain states were
barred from compensation (assuming the settlement would still
have been consummated at all). The objection is without merit.
c. The Stage of the Proceedings and the Amount of Discovery
In examining the stage of the litigation at which a settlement
was reached, the proper question is "whether counsel had an
adequate appreciation of the merits of the case before
negotiating." Warfarin Sodium, 391 F.3d at 537. Under this
standard, End-Payor Plaintiffs and the Plaintiff States were
clearly in a position to make the necessary risk assessments in
the context of settlement negotiations. As discussed in Part I,
End-Payor Plaintiffs conducted an extensive economic and factual
investigation, including review hundreds of thousands of pages of
documents and data produced by Defendants and third parties,
taking depositions of many current or former employees of the
Defendants, and consultation with counsel for the Direct
Purchasers, counsel for the Generic Manufacturers, the State
Attorneys General, and others.
The Office of the Attorney General of Texas also began an
investigation into Defendants' alleged Remeron monopoly
maintenance practices in March 2003, and a multi-state working
group was formed in July 2003 with several other State Attorneys
General to pursue that investigation. The investigation included
issuance of Civil Investigative Demands to Defendants and third
parties, and review of documents produced. In cooperation with the Federal
Trade Commission, the Plaintiff States conducted interviews of
experts, potential experts, and potential witnesses. The
Plaintiff States reviewed and analyzed thousands of documents
from the Defendants' voluminous production, and read numerous
deposition and hearing transcripts.
"The pursuit of early settlement is a tactic that merits
encouragement; it is entirely appropriate to reward expeditious
and efficient resolution of disputes." In re Vitamins Antitrust
Litig., 1999 WL 1335318, at *4 (D.D.C. Nov. 23, 1999). "Early
settlements benefit everyone involved in the process and
everything that can be done to encourage such settlements,
especially in complex class action cases, should be done." In re
M.D.C. Holdings Sec. Litig., 1990 WL 454747, at *7 (S.D. Cal.
Aug. 30, 1990). Given the extensive amount of time devoted to
this case, End-Payor Plaintiffs and Plaintiff States have
obtained sufficient information to adequately evaluate the merits
of their claims.
d & e. The Risks of Establishing Liability and Damages
These two factors "survey the potential risks and rewards of
proceeding to litigation in order to weigh the likelihood of
success against the benefits of an immediate settlement."
Warfarin Sodium, 391 F.3d at 537. End-Payor Plaintiffs and the
Plaintiff States initially proceeded against Defendants on four
theories of antitrust liability: (1) Fraud on the PTO in
connection with the prosecution and obtaining of the '099 patent;
(2) wrongful listing of the '099 patent in the Orange Book; (3)
sham patent litigation against generic competitors based on the
'099 patent; and (4) late listing of the '099 patent.
This Court issued a series of rulings that limited the
possibility of Plaintiffs achieving ultimate success on the
merits. First, regarding the Generic Manufacturers' claims
against Organon, the Court on December 3, 2003 dismissed those
antitrust claims that were based on the theory that the '099 Patent was improperly listed in the Orange Book. The Court held
that "the then existing statute and regulation,
21 U.S.C. §§ 355(b)(1) and (c)(2) and 21 C.F.R. § 314.53(b), gave Organon a
reasonable basis for listing in the Orange Book." Organon, Inc.
v. Mylan Pharm., Inc., 293 F. Supp. 2d 453, 459 (D.N.J. 2003).
The Court also dismissed the allegations that Organon initiated
sham patent infringement lawsuits against the Generic
Manufacturers, ruling that Organon's infringement theory was
reasonable, in large part because of the existence at the time of
three district court decisions allowing such claims against
Although these rulings were made in the litigation involving
the Generic Manufacturers, this Court applied those rulings to
the Direct Purchaser litigation (and, by inference, to this
litigation) under the doctrine of collateral estoppel or the
doctrine of law of the case. In re Remeron Antitrust Litig.,
335 F. Supp. 2d 522, 526, n. 4 (D.N.J. 2004). This Court also
dismissed the Direct Purchasers' antitrust claims based on fraud
on the PTO in that Opinion.
As a result of these rulings, the late listing claim is, for
practical purposes, the only remaining claim in End-Payor
Plaintiffs' and the Plaintiff States' case.*fn11 Without
this settlement, this final claim would need to survive summary
judgment, where the definition of the relevant antitrust market
would be the dominant threshold issue. In the Direct Purchaser
case, this Court denied the Direct Purchaser class's motion for
summary judgment regarding their proposed antitrust market
definition and whether the Defendants had monopoly power in that
market. In re Remeron Direct Purchaser Antitrust Litig.,
367 F.Supp.2d 675 (D.N.J. 2005). This Court held that the "direct
evidence" the plaintiffs put forth was, on its own, insufficient
to establish monopoly power. Thus, unless End-Payor Plaintiffs
could perhaps put forth more convincing direct evidence than that of
the Direct Purchaser plaintiffs, End-Payor Plaintiffs would need
to use the traditional market definition approach in order to
demonstrate monopoly power, thus increasing the risk of losing of
merits and significantly increasing the amount of discovery and
expert analysis needed.
Finally, trial itself would be risky to Plaintiffs on their one
surviving claim. See e.g., In re Brand Name Prescription Drugs
Antitrust Litig., 186 F.3d 781, 785 (7th Cir. 1999) (plaintiff
class suffered directed verdict after eight weeks of trial);
United States Football League v. Nat'l Football League,
644 F.Supp. 1040 (S.D.N.Y. 1986), aff'd, 842 F.2d 1335 (2d Cir.
1988) (antitrust jury awarded $1.00 in nominal damages to
successful plaintiffs). These risks of proving liability and
damages weigh in favor of approving this settlement.
f. Risks of Maintaining Class Action Status Through Trial
"Because the prospects for obtaining certification have a great
impact on the range of recovery one can expect to reap from the
[class] action, this factor measures the likelihood of obtaining
and keeping a class certification if the action were to proceed
to trial." Warfarin Sodium, 391 F.3d at 537 (internal quotes
and citation omitted). The End-Payor Plaintiffs moved for class
certification on October 27, 2003. As a result of the settlement
discussions that began shortly thereafter, the Defendants'
response to the class certification motion was extended to April
12, 2004. The Defendants never filed their response, as the
settlement had been tentatively reached by the time their
response was due. Consequently, the record does not reflect
vigorous opposition, but class certification throughout trial is
not guaranteed. This factor neither favors nor disfavors
g. Defendants' Ability to Withstand a Greater Judgment
The parties do not contend that Defendants could not withstand
a larger judgment. However, many settlements have been approved where a settling defendant
has had the ability to pay greater amounts. See, e.g., Warfarin
Sodium, 391 F.3d at 538 ("[T]he fact that DuPont could afford to
pay more does not mean that it is obligated to pay any more than
what the . . . class members are entitled to under the theories
of liability that existed at the time the settlement was
reached."); Young Soon Oh v. AT & T Corp., 225 F.R.D. 142,
150-51 (D.N.J. 2004); In re Linerboard Antitrust Litig.,
321 F. Supp. 2d 619, 632 (E.D. Pa. 2004); Erie County Retirees Assoc.
v. County of Erie, Pennsylvania, 192 F. Supp. 2d 369, 376 (W.D.
Pa. 2002); Lazy Oil Co. v. Witco Corp., 95 F. Supp. 2d 290, 318
(W.D. Pa. 1997). This factor does not favor nor disfavor
h & i. The range of reasonableness of the settlement fund in
light of the best possible recovery and all the attendant risks
A court evaluating a proposed class action settlement should
also consider "whether the settlement represents a good value for
a weak case or a poor value for a strong case." Warfarin
Sodium, 391 F.3d at 538; Girsh, 521 F.2d at 157 (court must
examine the range of reasonableness of the settlement fund to a
possible recovery in light of all the attendant risks of
litigation); see also Hammon v. Barry, 752 F. Supp. 1087, 1095
(D.D.C. 1990) (court must "evaluate the strengths and weaknesses
of class members' claims within the framework of their likelihood
of establishing liability and damages at trial"). In the process,
however, a court must "avoid deciding or trying to decide the
likely outcome of a trial on the merits." In re Nat'l Student
Mktg. Litig., 68 F.R.D. 151, 155 (D.D.C. 1974).
Continued litigation of this lawsuit would require further
decisions by the Court on (a) End-Payor Plaintiffs' pending class
certification motion, (b) Defendants' pending motion to dismiss
the End-Payor Plaintiffs' Amended Consolidated Complaint, (c)
future summary judgment motions, and (d) at trial.
(i) Estimated Damages
On the basis of estimates by End-Payor Plaintiffs' expert
economists, the maximum antitrust single damages totaled
$109,704,738.00. Economists retained by the Plaintiff States
reached a similar estimate of antitrust single damages for
settlement purposes. These estimates likely overstate the amount
of damages that would be available to Plaintiffs absent this
settlement, because they were compiled before the Court issued
its decisions that effectively limited End-Payor Plaintiffs' and
Plaintiff States' claims to only a late listing claim. This claim
has a shorter period of antitrust injury than some of the others.
(ii) Comparison of the Settlement Amount to Estimated Damages
and Weighed Against the Risks of Non-Recovery
In order to evaluate the propriety of an antitrust class action
settlement's monetary component, a court should compare the
settlement recovery to the estimated single damages. In re
Ampicillin Antitrust Litig., 82 F.R.D. 652, 654 (D.D.C. 1979)
(citing Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.
1974)). Although in certain circumstances a plaintiff class may
recover treble damages if it prevails at trial, that result is
far from certain. Moreover, in the present case, End-Payor
Plaintiffs and Plaintiff States represent consumers pursuant to
state laws that provide for varying levels of recovery some
provide only for recovery of equitable relief, and many do not
provide for recovery of treble damages.
As the Second Circuit emphasized in Detroit v. Grinnell Corp,
495 F.2d at 455, an antitrust class action settlement may be
approved even if the settlement amounts to a small percentage of
the single damages sought, if the settlement is reasonable
relative to other factors, such as the risk of no recovery. "In fact there is no reason, at least in theory, why
satisfactory settlement could not amount to a hundredth or even a
thousandth part of a single percent of the potential recovery."
Relative to maximum estimated damages of $109,704,738, the
Settlement Consideration represents about one-third of single
damages, quite a substantial recovery, especially given that
three of the initial four theories of antitrust liability can no
longer be advanced. This recovery must, of course, be weighed
against the substantial risks of continued litigation, including
future risks at summary judgment and trial. The Court is
satisfied that the settlement agreement accounts for the risks
inherent in this complex litigation and provides appropriate
relief in light of these risks.
Given this Court's analysis, the Court concludes that the
nine-factor test utilized by the Third Circuit is satisfied. The
settlement is fair, adequate, and reasonable under Federal Rule
of Civil Procedure 23(e).
D. Approval Of The Plan of Distribution
"As with settlement agreements, courts consider whether
distribution plans are fair, reasonable, and adequate." In re
Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 381
(D.D.C. 2002); see also In re Vitamins Antitrust Litig., 2000
WL 1737867, at *6 (D.D.C. Mar. 31, 2000). "[I]n evaluating the
formula for apportioning the settlement fund, the Court keeps in
mind that district courts enjoy broad supervisory powers over the
administration of class action settlements to allocate the
proceeds among the claiming class members equitably." Hammon v.
Barry, 752 F. Supp. 1087, 1095 (D.D.C. 1990) (internal quotation
marks and citations omitted); accord In re "Agent Orange" Prod.
Liability Litig., 818 F.2d 179, 181 (2d Cir. 1987).
At the Court's request, End-Payor Plaintiffs' Co-Lead Counsel
and State Liaison Counsel jointly proposed a Plan of Distribution to the Court. As
described in the long form notice, the Plan of Distribution is as
32.8% of the Net Settlement Fund will be allocated to
consumers ("Consumer Fund"), 16.5% of the Net
Settlement Fund will be allocated to state
governmental purchasers ("State Fund"), and 50.7% of
the Net Settlement Fund will be allocated to
Third-Party Payors ("TPP Fund"). Consumers who submit
valid claims will receive a pro rata share of the
Consumer Fund based on the amount he or she paid for
Mirtazapine Products during the Class Period, and on
how many other consumers file valid claims, and the
amount they paid for Mirtazapine Products during the
Class Period. Third-Party Payors who submit valid
claims will receive a pro rata share of the TPP
Fund based on the amount paid by that entity for
Mirtazapine Products during the Class Period and on
how many other Third-Party Payors file valid claims,
and the amount they paid for Mirtazapine Products
during the Class Period. The maximum payment to any
Class Member may be limited to 100% of the amount
that Class Member paid for Mirtazapine Products
during the Class Period.
This distribution plan was based on Plaintiffs' expert
economists' findings, using data produced by defendants and the
Plaintiff States, as well as CMS statistics and data from other
reliable sources. These calculations were performed in
anticipation of the mediation of this case, and they were used in
the mediation and submitted to the Court confidentially during
Kim Van Winkle, Liaison Counsel for the Plaintiff States,
informed the Court by affidavit and orally at the Fairness
Hearing that she reviewed the proposed allocation on behalf of
consumers and the Plaintiff States and concluded it is fair,
reasonable and adequate for consumers and Plaintiff States.
Similarly, Kevin Love, counsel for Vista Healthplan Inc.,
informed the Court that he reviewed the proposed allocation, and
also concluded that it is fair, reasonable and adequate for TPPs.
Mr. Love retained and consulted with a separate expert economist
for TPPs only in reaching his conclusion.
As the Plan of Distribution appears fair based on the experts'
calculations, and all three groups of Plaintiffs including the Attorneys General support it, and the
few related objections that have been made were overruled in Part
II(C)(4)(b), this Court gives the plan final approval.
E. Plaintiffs' Motion for Award of Attorneys' Fees, Interest,
Reimbursement of Expenses, and Incentive Awards.
Class Counsel request that the Court award attorney fees in the
amount of $7.8 million plus interest accrued on that amount since
it has been held in escrow. The $7.8 million requested fee
represents 23.6% of the $33 million Settlement Fund.*fn12
Class Counsel also request recovery of reasonable litigation
expenses and incentive awards to named Plaintiffs.
1. Attorneys' Fees and Interest
This Court first finds that the percentage of fund method is
the proper method for compensating Plaintiffs' Counsel in this
common fund case. See, e.g., In re Prudential Ins. Co. Of
America Sales Practices Litig., 148 F.3d 283, 333 (3d Cir. 1998)
(stating "the percentage of recovery method is generally favored
in cases involving a common fund, and is designed to award fees
from the fund in a manner that rewards counsel for success and
penalizes it for failure"); In re Cendant Corp. PRIDES Litig.,
243 F.3d 722, 734 (3d Cir. 2001) (stating "the
percentage-of-recovery method has long been used in this Circuit
in common-fund cases").
The Third Circuit set forth with specificity the factors that a
court should consider in evaluating such requested attorneys'
fees in Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 (3d
Cir. 2000) (overturning a decision that reduced a requested fee
of 25% of the recovered fund to 18%). The Gunter factors "need
not be applied in a formulaic way, and their weight may vary on a
case-by-case basis." Oh v. AT & T Corp., 225 F.R.D. 142, 146 (D.N.J. 2004) (citing
Gunter, 223 F.3d at 195). The Gunter factors include (a) the
size of the fund created and number of persons benefitting from
the settlement, (b) the presence/absence of substantial
objections to the fee, (c) the skill of Plaintiffs' counsel, (d)
complexity and duration of the litigation, (e) the risk of
nonpayment, (f) amount of time devoted to the litigation, (g)
awards in similar cases. See Gunter, 223 F.3d at 195; In re
Aremissoft Corp. Sec. Litig., 210 F.R.D. 109, 129 (D.N.J. 2002).
a. The size of the fund created and the number of persons
benefitted by the settlement
Pursuant to the parties' settlement agreement, the class will
obtain an immediate and certain benefit of $33 million plus
accrued interest, less attorneys fees, expenses and incentive
award payments as awarded by the Court. Over 65,000 individuals
and entities will receive significant financial benefit, without
having to go through the time, expense, and risk of continued
b. The presence or absence of substantial objections to the
request for fees
In response to the Notice Plan, only one TPP and seven
individual consumers objected to the payment of the requested
attorneys' fees. Of the seven individuals, four are represented
by the same counsel and filed near verbatim statements.*fn13
The presence of a handful of objections does not mean that the
requested fee should be denied. Cf. In re Lloyd's American Trust
Fund Litig., 2002 WL 31663577, *3, *38 (S.D.N.Y. Nov. 26, 2002)
(approving fee request of 28% of settlement fund, even though 18%
of class members filed objections to the settlement on one or
more grounds); Automotive Refinishing Paint Antitrust Litig.,
(E.D. Pa. Oct. 13, 2004) (stating that, where nearly 60,000
notices sent out and only three objections were received, the
vast majority of the class members had no objection, which counseled in favor of a 32% fee award).
The single TPP objection was filed by Health Care Service
Corporation. In its papers, it objected that 30 days after the
close of the 45-day Notice Period was an insufficient amount of
time to file its objections and that Class Counsel do not deserve
their fee request. These objections were made without any legal
support and were made in a total of three sentences. The TPP's
objections are overruled. 30 days after the close of the 45-day
Notice Period is a sufficient amount of time to forge an
objection, as discussed in Part II(C)(4)(b). Further, Plaintiffs'
Counsel did provide support in the record for their time spent
litigating case and their contribution to the litigation process
has been explained throughout this Opinion.
Objector Nadine Street initially objected that the (a)
distribution to Plaintiffs' Counsel should be reduced to 15%, and
that (b) Ms. Street did not have sufficient information to
further support its objection because the deadline for filing
objections coincided with Plaintiffs' deadline for filing its
motion for attorneys' fees. As a result, at the Fairness Hearing,
the Court granted an extension of time to file objections
regarding attorneys' fees so that End-Payor Plaintiffs' brief in
support of attorneys' fees could be more fully considered by
Only Ms. Street took this opportunity, filing a second
objection which further explained her claim that only a 15%
distribution to Plaintiffs' Counsel was warranted. The bases were
essentially that several law firms were not necessary to litigate
Plaintiffs' claims and that Plaintiffs' papers in favor of their
fee request were deficient. Based on the complexity of this case
as explained in Part I and Part II(C)(4), and based on the
supporting documentation in favor of granting Plaintiffs'
attorney fees request, this Court finds Ms. Streets's objections to be
The nearly identical objections of Dot K. Kensigner, William L.
Bedford III, Susan Ruth Hall, and Robert L. Kensinger claimed
that Class Counsel should not be allowed a percentage of the $33
million Settlement Fund that was created but rather such fund
should first be discounted by the 16.5% portion going to the
State Attorneys General. The objections state that the State
Attorneys General "are already being paid $1 million in fees for
their recovery of the 16.5% that is being paid to the states."
The Court understands the thrust of the objection; however,
Plaintiffs' Counsel were largely responsible for creating a $35
million benefit for the class ($33 million Settlement Fund and $2
million Notice Fund). Class Counsel took the lead in creating
that fund for the states. The States Attorneys General have not
objected to Class Counsel's fees and have endorsed the
settlement. The objection is without merit.
The remaining objectors are Rhonda Marcus and Robert Geha. Both
of them take issue with the percentage of recovery counsel
requests but provide little substantiation of why the percentage
is excessive. In light of the consideration of the below factors
that consider Plaintiffs' Counsel fee award, these two objections
are also without merit. The courts do not hesitate to grant
attorneys' fees despite the presence of objections when the
rationale for awarding fees outweighs the objections. See e.g.,
Nichols v. SmithKline Beecham Corp., 2005 WL 950616, at *21
(E.D. Pa. Apr. 22, 2005) (awarding 30% fee despite six
substantive objections to settlement, three of which mentioned
attorneys' fees); Oh, 225 F.R.D. at 152 (awarding fee despite three objections);
In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 305 (3d Cir.
2005) (affirming district court's finding that only two
objections weighed in favor of awarding fee); Varacallo,
226 F.R.D. at 251 (awarding fee despite almost 50 objections in large
The absence of meaningful class member objection to the
proposed fee ordinarily supports the reasonableness of the
request. See In re Rite Aid Corp. Sec. Litig.,
146 F.Supp.2d 706, 735 (E.D. Pa. 2001); Fanning v. Acromed Corp., 2000 WL
1622741, at *6 (E.D. Pa. 2000). Further, a working group of State
Attorneys General, who worked alongside Class Counsel, have
concluded that the proposed settlement terms, including Class
Counsel's request for attorneys' fees, is fair and appropriate.
c. The skill of Plaintiffs' counsel
This settlement was achieved by Class Counsel who include some
of the preeminent antitrust firms in the country with decades of
experience in prosecuting and trying complex actions, as
described in Part II(A)(1)(d). Class Counsel have considerable
experience in FDA regulatory matters through other generic drug
litigations. The settlement result achieved is a reflection of
counsel's skill and expertise. See In re Warfarin Sodium
Antitrust Litig., 212 F.R.D. 231, 261 (D. Del. 2002) (class
counsel "showed their effectiveness through the favorable cash
settlement they were able to obtain"); see also In re Ikon
Office Solutions, Inc. Sec. Litig., 194 F.R.D. 166, 194 (E.D.
Pa. 2000) (awarding 30% fee and stating "the most significant
factor in this case is the quality of representation, as measured
by the `quality of the result achieved, the difficulties faced,
the speed and efficiency of the recovery, the standing,
experience and expertise of the counsel, the skill and
professionalism with which counsel prosecuted the case and the
performance and quality of opposing counsel'").
d. The complexity and duration of the litigation "As to the complexity of the case, `[a]n antitrust class action
is arguably the most complex action to prosecute.'" In re
Linerboard Antitrust Litig., 2004 WL 1221350, at *10 (E.D. Pa.
June 2, 2004) (quoting In re Motorsports Merchandise Antitrust
Litig., 112 F. Supp. 2d 1329, 1337 (N.D. Ga. 2000)). This matter
is extremely complicated, involving the patent, regulatory and
antitrust laws, including interpretation of complex provisions of
the Hatch Waxman Act, as discussed throughout this Opinion.
The discovery process in this case was difficult. Class Counsel
(i) reviewed over 800,000 million documents, (ii) for a time,
held regular lengthy conference calls with Defendants that
resulted in contentious debate and multiple motions to compel,
which were briefed and argued before the Court, and (iii)
participated in over fifty depositions, most of which were
technical and complicated covering subjects such as Orange Book
listing protocol and the science relating to the chemical
composition of mirtazapine products.
Further, the circumstances surrounding a difficult settlement
increase the complexity of a case. Cf. In re Lucent
Technologies, Inc., Sec. Litig., 327 F. Supp. 2d 426, 434
(D.N.J. 2004). Here, they were lengthy and difficult. Class
Counsel coordinated the settlement on behalf of End-Payor
Plaintiffs and among 56 states and territories. Class Counsel
also dealt with the negotiation of opt-out members. Class
Counsel's ability to successfully navigate these hurdles enabled
the settlement to come to fruition.
e. The risk of nonpayment
The instant case was presented with significant obstacles since
its filing. If the settlement is not consummated, class members
may very well receive nothing. End-Payor Plaintiffs and the
Plaintiff States proceeded against Defendants on four theories of
liability: (1) Fraud on the U.S. Patent and Trademark Office ("PTO") in connection with the prosecution and
obtaining of the '099 patent; (2) wrongful listing of the '099
patent in the Orange Book; (3) sham patent litigation against
generic competitors based on the '099 patent; and (4) late
listing of the '099 patent. As described in Part II(C)(4), three
of these claims face dismissal by this Court due to dismissals of
such claims in the Generic Manufacturer and Direct Purchaser
cases. The Plaintiffs would most likely have been left with their
late listing claim and would still have to defeat summary
judgment and win at trial. Accordingly, risk of non-payment in
this case weigh heavily in favor of approving the requested fee.
f. The amount of time devoted to the litigation
Plaintiffs' counsel have spent over 12,000 combined hours in
prosecuting this case on behalf of the class. The complexity of
this action required a significant amount of work by a number of
attorneys. Class Counsel performed investigations, filed
complaints, fought motions to dismiss, filed briefing in support
of class certification, participated in extensive and contentious
discovery including the review of hundreds of thousands of
documents and the conduct of dozens of depositions. Class
Counsel's "efforts in posturing this case for trial . . . played
a role in spurring the settlement, [and] produced a substantial
payout to the class." In re Newbridge Networks Sec. Litig.,
1998 U.S. Dist. LEXIS 23238, *11 (D.D.C. Oct. 22, 1998).
Moreover, counsel worked for the class to finalize the
settlement, to oversee claims administration, and will have to
work on any future appellate issues. Work was allocated in this
case between several law firms.
g. Awards in similar cases
In comparing the award in this action with amounts awarded in
similar actions, a court's analysis is two-pronged. First, the
court compares the actual award requested to other awards in comparable settlements. Second, the court ensures that the award
is in line with what an attorney would have received if the fee
was negotiated on the open market.
(i) The fee requested here is similar or lower to fees awarded
in comparable settlements
"A district court may not rely on a formulaic application of
the appropriate range in awarding fees but must consider the
relevant circumstances of the particular case." In re Cendant
PRIDES Litig., 243 F.3d 722, 736 (3d Cir. 2001). A comparison of
awards in similar cases is only a factor in determining the
appropriateness of a fee award. See Gunter, 223 F.3d at 195. In
considering this factor, the Court notes the survey of fee awards
that have occurred in similar cases. See, e.g., In re Rite Aid
Corp. Sec. Litig., 396 F.3d 294, 306-07 (3d Cir. 2005) (review
of 289 settlements demonstrates "average attorney's fees
percentage [of] 31.71%" with a median value that "turns out to be
one-third"); Cullen v. Whitman Medical Corp., 197 F.R.D. 136,
150 (E.D. Pa. 2000) ("the award of one-third of the fund for
attorneys' fees is consistent with fee awards in a number of
recent decisions within this district"); Varacallo v. Mass. Mut.
Life. Ins. Co., 226 F.R.D. 207, 249 (D.N.J. 2005) ("`Many
courts, including several in the Third Circuit, have considered
25% to be the standard "benchmark" figure for attorney fee awards
in class action lawsuits, with adjustments up or down for
significant case-specific factors'"); In re Linerboard Antitrust
Litig., 2004 WL 1221350, at *14 ("The above figures are in
accord with a recent Federal Judicial Center study that found
that in federal class actions generally median attorney fee
awards were in the range of 27 to 30 percent.").
Courts within the Third Circuit often award fees of 25% to 33%
of the recovery. See, e.g., In re Linerboard Antitrust Litig.,
2004 WL 1221350 (E.D. Pa. 2004) (approving 30% fee of a $202
million settlement in an antitrust class action); Nichols v.
SmithKline Beecham Corp., 2005 WL 950616 (E.D. Pa. 2005) (approving 30% fee of the $65 million settlement in
similar pharmaceutical antitrust action); In re ATI Technologies
Inc. Sec. Litig., 2003 U.S. Dist. LEXIS 7062 (E.D. Pa. Apr. 28,
2003) (awarding 30% of fund); In re Cell Pathways Sec. Litig.
II, 2002 U.S. Dist. LEXIS 18359 (E.D. Pa. Sept. 24, 2002) ("A
thirty percent fee is very comparable to awards in similar cases,
providing further support for approval of the fee petition");
Blackman v. O'Brien Envtl. Energy, Inc., 1999 U.S. Dist. LEXIS
7160 (E.D. Pa. May 11, 1999) (35% fee awarded). The percentage
fee requested in this case (23.6% of the fund) is consistent with
Moreover, Class Counsel's fee request compares favorably to
fees awarded in similar pharmaceutical antitrust actions. See
Augmentin Antitrust Litig., No. 2:02cv442, Final Order and
Judgment Approving Settlement and Awarding Attorneys' Fees,
Reimbursement of Expenses and Incentive Awards to the Named
Plaintiffs (E.D. Va. Jan. 10, 2005) (awarding a fee of 25% of the
$29 million indirect purchaser settlement fund); In re Relafen
Antitrust Litig., Master File No. 01-12239-WGY, Order and Final
Judgment (D. Mass. April 9, 2004) (awarding fees of 33 1/3% of
$175 million of settlement fund).
(ii) The fee requested here is consistent with a privately
negotiated contingent fee in the marketplace
"[W]hen deciding on appropriate fee levels in common-fund
cases, courts must do their best to award counsel the market
price for legal services, in light of the risk of nonpayment and
the normal rate of compensation in the market at the time." In
re Synthroid Marketing Litig., 264 F.3d 712, 718 (7th Cir.
2001). "The object . . . is to give the lawyer what he would have
gotten in the way of a fee in an arm's length negotiation." In
re Continental Illinois Sec. Litig., 962 F.2d 566, 572 (7th Cir.
Consequently, courts should look to the private market when
assessing the reasonableness of the percentage fee. See In re RJR Nabisco Inc. Sec. Litig., MDL
No. 818, 1992 WL 210138, *7 (S.D.N.Y. Aug. 24, 1992) ("What
should govern [fee] awards is . . . what the market pays in
similar cases"). A one-third contingency fee is generally
standard in individual cases. See, e.g., In re Copley
Pharmaceutical, 1 F. Supp. 2d 1407, 1412 (D. Wyo. 1998); see
also In re Aetna Sec. Litig., 2001 U.S. Dist. LEXIS 68 (E.D. Pa.
Jan. 4, 2001) ("thirty percent is in line with what is routinely
privately negotiated in contingency fee tort litigation"). The
requested fee award of 23.6% is below that general standard.
h. Lodestar Cross-check
A lodestar cross-check is not a Gunter factor but is a
"suggested practice." In re Cendant Corp, PRIDES Litig.,
243 F.3d at 735 (3d Cir. 2001). When performing the lodestar
cross-check, the Third Circuit has recognized that "`multiples
ranging from one to four are frequently awarded in common fund
cases when the lodestar method is applied.'" In re Prudential
Sales Practices Litig., 148 F.3d at 341 (quoting 3 Herbert
Newberg & Albert Conte, Newberg on Class Actions, § 14.03 at 14-5
(3d ed. 1992)). "The district courts may rely on summaries
submitted by the attorneys and need not review actual billing
records." In re Rite Aid Corp. Sec. Litig., 396 F.3d at 306-07
The record demonstrates that Class Counsel's lodestar in this
case is $4,506,294.25, resulting in a multiplier of 1.73. An
examination of recently approved multipliers reveals that the
multiplier requested here is on the low end of the spectrum.
See, e.g., Nichols v. SmithKline Beecham Corp., 2005 WL 950616,
*24 (E.D. Pa. Apr. 22, 2005) (approving multiplier of 3.15); In
re Linerboard Antitrust Litig., 2004 WL 1221350, *4 (E.D. Pa.
June 2, 2004) (approving a 2.66 multiplier); Weiss v.
Mercedes-Benz of N. Am., Inc., 899 F. Supp. 1297, 1304 (D.N.J.),
aff'd, 66 F.3d 314 (3d Cir. 1995) (approving a 9.3 multiplier);
In re Rite Aid Corp. Secs. Litig., 146 F. Supp. 2d 706, 736
(E.D. Pa. 2001) (multiple of over 6). This lodestar cross check corroborates the
result of the percentage of fund method.
Taking into consideration the above factors, this Court awards
Plaintiffs' Counsel $7.8 million of the Settlement Fund, plus
23.6% of the accrued interest on the Settlement Fund.
2. Reimbursement of Reasonable Expenses
In addition to their request for Attorneys' fees, Plaintffs'
Counsel seek reimbursement of $494,683.73 in expenses. "Counsel
in common fund cases is entitled to reimbursement of expenses
that were adequately documented and reasonably and appropriately
incurred in the prosecution of the case." In re Cendant Corp.,
232 F. Supp. 2d 327, 343 (D.N.J. 2002) (quoting In re Safety
Components Int'l, Inc., 166 F. Supp. 2d 72, 104 (D.N.J. 2001));
Abrams v. Lightolier, Inc., 50 F.3d 1204, 1225 (3d Cir. 1995).
Upon review of the affidavits submitted in support of this
request, the Court finds the requested amount to be fair and
reasonable. Plaintiffs' Counsels' expenses reflect costs expended
for purposes of prosecuting this litigation, including
substantial fees for experts; substantial costs associated with
creating and maintaining an electronic document database; travel
and lodging expenses; copying costs; and the costs of deposition
transcripts. Reimbursement of similar expenses is routinely
permitted. See e.g., Oh v. AT & T Corp., 225 F.R.D. 142, 154
(D.N.J. 2004) (finding the following expenses to be reasonable:
"(1) travel and lodging, (2) local meetings and transportation,
(3) depositions, (4) photocopies, (5) messengers and express
services, (6) telephone and fax, (7) Lexis/Westlaw legal
research, (8) filing, (10) postage, (11) the cost of hiring a
mediator, and (12) NJ Client Protection Fund relating to pro hac
vice"). 3. Incentive Awards to Named Plaintiffs
Finally, Plaintiffs' Counsel request the approval of $75,000 in
incentive awards to the five Class Representatives. They seek
$30,000 for each of the two TPPs and $5,000 for each of three
individual consumers. "Like the attorneys in this case, the class
representatives have conferred benefits on all other class
members and they deserve to be compensated accordingly." In re
Linerboard Antitrust Litig., 2004 WL 1221350, at *18 (citation
omitted). In the instant action, the Class Representatives, spent
a significant amount of their own time and expense litigating
these cases for the benefit of the absent members of the
settlement class, and as is recognized by a multitude of courts,
their efforts should not go unrecognized. See e.g., In re
Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 400
(D.D.C. 2002) ("Incentive awards are not uncommon in class action
litigation and particularly where . . . a common fund has been
created for the benefit of the entire class. . . . In fact,
[c]ourts routinely approve incentive awards to compensate named
plaintiffs for the services they provided and the risks they
incurred during the course of the class action litigation")
(internal quotations and citation omitted).
In the detailed notice sent to Class members, Class Counsel
indicated they would seek incentive awards in an amount not to
exceed $100,000.00. No class members objected. The amounts
requested are similar to amounts awarded in similar settlements.
See e.g., Nichols, 2005 WL 950616, at *24 (approving $5,000 to
each third-party payor named plaintiff, $2,500 to each consumer
named plaintiff); In re Linerboard Antitrust Litig., 2004 WL
1221350, *18 (E.D. Pa. 2004) (approving $25,000 to each
representative of the classes). The named Plaintiffs complied
with all reasonable demands and provided significant assistance
to counsel in the prosecution of this case. The requested
incentive awards are both appropriate and reasonable. III. CONCLUSION
For the foregoing reasons, (a) End-Payor Plaintiffs' and
Plaintiff States' motion for final approval of settlement, and
(b) Class Counsel for End-Payor Plaintiffs' motion for attorneys'
fees of $7.8 million (plus accrued interest), litigation
expenses, and incentive award to Class Representatives are
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