First Circuit Reverses Class Certification Where Individualized Inquiries Would Be Required To Identify And Exclude Uninjured Class Members

Author:Mr Archis Parasharami and Daniel E. Jones
Profession:Mayer Brown

Plaintiffs frequently seek to certify class actions where the proposed classes contain a significant number of uninjured persons. The First Circuit recently reversed the certification of such a class in In re Asacol Antitrust Litigation, concluding that a class cannot be certified where the "individual inquiries" necessary to resolve whether each class member has suffered an injury-in-fact "overwhelm common issues." When such inquiries are needed to ensure that a defendant's due process and jury trial rights are honored, a plaintiff cannot satisfy Rule 23(b)(3)'s predominance requirement. The court also rejected the plaintiff's proposal to outsource these individualized inquiries to claims administrators.

We discuss the opinion in detail after the jump, but here are key takeaways for busy readers:

The decision explains why a proposed damages class likely fails the predominance test—and therefore cannot be certified—if there are more than a negligible number of uninjured class members and there is no administratively feasible way to weed out those uninjured class members without individualized inquiries. The use of affidavits by class members to establish injury (or any other element of their claim) does not suffice to avoid individualized inquiries so long as the defendant plans to contest those affidavits, because a class cannot be certified on the premise that a defendant will not be entitled to challenge a class member's ability to prove the elements of his or her claim. Policy justifications for consumer class actions cannot relax the requirements of Rule 23 or defendants' due process and jury trial rights. Background

In Asacol, the plaintiffs alleged that the defendant drug manufacturers engaged in anticompetitive conduct by withdrawing one of their drugs, Asacol, from the market shortly before the drug's patent protection expired and replacing it with a similar but not identical drug that was still under patent protection (as well as continuing to offer a different version of Asacol called "Asacol HD" that also was still under patent protection). The plaintiffs contended that, by doing so, the defendants blocked generic drug manufacturers from introducing a lower-cost generic version of Asacol. The plaintiffs were all union-sponsored benefit plans that purchased Asacol and one of its substitutes from third parties rather than directly from the manufacturer; plaintiffs were accordingly barred by the Illinois Brick doctrine from suing under federal antitrust law. Instead, they sued under the consumer-protection laws of twenty-five states and the District of Columbia that allow antitrust damage actions by indirect purchasers.

Plaintiffs moved to certify a class of indirect purchasers who both purchased Asacol prior to the expiration of its patent protection and purchased one of the defendants' substitute drugs. Based on the expert evidence submitted by the parties, the district court concluded that...

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