In Re Modafinil Antitrust Litigation, 837 F.3d 238

Background

Cephalon held patents and regulatory exclusivity for Provigil (modafinil); multiple generics filed paragraph IV ANDAs seeking to enter the market, triggering patent litigation and later reverse-payment settlement agreements between Cephalon and four generic firms.
Four generics (Teva, Ranbaxy, Mylan, Barr) settled with contingent-launch provisions that delayed generic competition; plaintiffs allege market-wide foreclosure and overcharges.
A putative direct-purchaser class of 22 wholesaler members (later settlement and some settlements approved) sought certification under Rule 23(b)(3); the District Court certified the class after extended discovery and summary judgment eliminating the global conspiracy claim.
Defendants challenged certification on numerosity (Rule 23(a)(1)) and predominance (Rule 23(b)(3)); the Third Circuit reviews for abuse of discretion but requires a rigorous, fact-based showing by plaintiffs.
The Third Circuit vacated and remanded the numerosity finding, announcing a non-exhaustive list of factors for courts to weigh (judicial economy, ability/motivation to litigate as joined plaintiffs, financial resources, geographic dispersion, identifiability of future claimants, injunctive vs. damages relief), and addressed predominance related to Comcast and antitrust standing.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Numerosity (Rule 23(a)(1)) — is joinder impracticable for a 22-member class?	Class members are geographically dispersed, some claims small, and joinder would be inefficient given discovery already conducted.	Twenty-two (or fewer) sophisticated corporate members can be joined; plaintiffs bear the burden to prove impracticability.	Vacated and remanded: district court abused discretion by overemphasizing late-stage litigation; remand for a rigorous numerosity analysis using enumerated factors.
Partial assignments / class size — should partial assignees count as separate class members?	Partial assignees should be counted as class members.	Counting partial assignees artificially inflates class size (double-dipping).	Partial assignees may be class members; In re Fine Paper supports treating fractional assignments as separate rights; include on remand with careful proof of identities.
Judicial economy and late-stage proceedings — may district court consider sunk costs/late stage in numerosity?	Late-stage litigation supports certification because decertification would duplicate discovery and delay trial.	Late stage alone should not determine numerosity.	Court: district court erred to rely on sunk costs/late stage; judicial-economy analysis must ask whether class would be substantially more efficient than joinder absent consideration of sunk costs.
Predominance / Comcast & antitrust standing — must damages model isolate harm from each individual reverse-payment?	Plaintiffs’ expert modeled market-wide harm and relies on joint-and-several liability for concurrent tortfeasors; impact is common because settlements jointly foreclosed the market.	After summary judgment eliminating global conspiracy, Comcast requires a damages model tied to the remaining (individual) theories; antitrust standing requires identifying which agreement harmed which purchaser.	Predominance survives: Plaintiffs’ theory treats each settlement as contributing to a market-wide foreclosure; joint-and-several liability can supply classwide impact proof, so Comcast does not mandate a new model allocating harm to each defendant.

Key Cases Cited

Thorogood v. Sears, Roebuck & Co., 547 F.3d 742 (7th Cir. 2008) (class action purpose: aggregate small claims and economize litigation).
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (class action is an exception to ordinary litigation; Rule 23 rigor).
Marcus v. BMW of N. Am., LLC, 687 F.3d 583 (3d Cir. 2012) (numerosity and purposes of class treatment).
In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir. 2008) (need for rigorous, fact-based class-certification findings; review standards).
Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (damages model must measure damages attributable to the classwide theory of harm).
Gen. Tel. Co. of the Northwest, Inc. v. EEOC, 446 U.S. 318 (1980) (numerosity considerations and guidance).
In re Fine Paper Litigation, 632 F.2d 1081 (3d Cir. 1980) (partial assignments operate as separate rights; partial assignees can participate in class mechanisms).
F.T.C. v. Actavis, Inc., 570 U.S. 136 (2013) (reverse-payment settlements subject to antitrust scrutiny under rule-of-reason).