This case, which involves intersecting questions of antitrust law and class action procedure, comes to us on appeal from the United States District Court for the Southern District of Florida. Louisiana Wholesale Drug Co. (“Louisiana Wholesale”) and Valley Drug Co. (“Valley Drug”) allege that the defendant Abbott Laboratories (“Abbott”), violated section 4 of the Clayton Act, 15 U.S.C. § 15
1
, and section one of the Sherman Antitrust Act, 15 U.S.C. § 1
2
, when it entered into settlement agreements with defendants Geneva Pharmaceuticals, Inc., (“Geneva”) and Zenith Goldline Pharmaceuticals, Inc. (“Zenith”) because the effect of the agreements was to preserve Abbott’s monopoly position in the market for the drug terazosin hydro
*1132
chloride by keeping Geneva and Zenith’s less expensive generic terazosin products off the market. The plaintiffs sought class certification for their antitrust claims under Rule 23(b)(3)
3
of the Federal Rules of Civil Procedure, and on September 20, 2001, the district court granted the plaintiffs’ consolidated motions.
In re Terazo-sin Hydrochloride Antitrust Litigation,
I.
The facts of this case have been discussed extensively both by the district court and by this court in a companion case,
Valley Drug Co. v. Geneva Pharmaceuticals, Inc.,
In 1987, Abbott began exclusively marketing the chemical compound, terazosin hydrochloride, under the trademark name “Hytrin.” Hytrin, which is used in the treatment of hypertension and benign prostatic hyperplasia, proved to be a profitable drug for the company. According to the Federal Trade Commission (“FTC”), Hytrin generated $540 million in sales for Abbott in 1998 alone. This figure constituted more than twenty percent of Abbott’s net sales of pharmaceutical products in the United States that year.
In re Terazosin Hydrochloride Antitrust Litigation,
The commercial success of Hytrin predictably whetted the appetites of generic drug manufacturers who are in the business of developing products that have similar chemical properties to successful phar- *1133 maceutieal drugs but cost less than the original, and hence are usually more attractive to consumers (or at least their health maintenance organizations). In 1990, one generic drug maker, Geneva, began to take steps to create a terazosin hydrochloride drug that would contain the same active ingredients but different inactive ingredients from those used in Hytrin. Like Hytrin, the generic drug developed by Geneva would be sold and marketed in tablet and capsule form.
Although in some contexts imitation may be the sincerest form of flattery, in the pharmaceutical industry imitation is almost invariably the subject of robust litigation because imitation, in the form of generic drug competition, оften severely threatens to dissipate the profits a company gains from sales of the original, patented drug. The scenario between Abbott and Geneva conformed to this pattern: shortly after Abbott received notice of Geneva’s intended challenge to its patents, the company exercised its statutory right to sue Geneva for patent infringement by initiating several actions against Geneva in the United States District Court for the Northern District of Illinois. 8 The ensuing litigation between the parties delayed Geneva’s efforts to market its own generic drug for an indefinite period of time pending resolution of the parties’ ongoing patent disputes.
In June 1994, Zenith also emerged as a contender in the race to bring the first generic terazosin hydrochloride drug to market when it filed an Abbreviated New Drug Application (“ANDA”) for a terazo-sin hydrochloride drug that challenged one of Abbott’s Hytrin patents. 9 After Abbott learned of Zenith’s challenge, it promptly brought two suits аgainst Zenith for patent infringement. Thus, from 1994 onwards, Abbott found itself involved in concurrent disputes with both Geneva and Zenith over the validity of its Hytrin patents while Geneva and Zenith competed with each other to bring the first generic terazosin hydrochloride drug to market. 10
As mentioned before, the somewhat complex history of Abbott’s legal disputes *1134 with Geneva and Zenith concerning the validity of Abbott’s Hytrin patents has been thoroughly covered by this circuit in Valley Drug and by the district court in In re Terazosin Hydrochloride Litigation I. For present purposes, suffice it is to say that in late March and early April 1998, Abbott ultimately entered into separate, confidential, settlement agreements with both Zenith (March 31) and Geneva (April 1) to resolve its ongoing patent litigation disputes with the two generic drug manufacturers. These agreements terminated on August 13,1999, apparently in response to a FTC investigation of the agreements, which resulted in a consent settlement. See Matter of Abbott Labs., No. C-3945 (F.T.C. May 22, 2000), also available at http ://www.ftc.gov/os/2000/05/c3945.do.htm.
Plaintiffs are regional wholesalers who purchased Hytrin directly from Abbott during the period the defendants’ agreements were in effect. They characterize the defendants’ settlement agreements as “illegal” market-allocation arrangements that harmed direct purchasers of Hytrin by causing them to be overcharged by (1) keeping interchangeable, but less expensive, generic versions of Hytrin off the market; and (2) causing direct purchasers to lose discounts on Hytrin that they might have received if the settlement agreements had not shielded Abbott from generic competition. The district court agreed with the plaintiffs and granted them partial summary judgment on the issue of whether the defendants’ settlement agreements constituted per se violations of § 1 of the Sherman Act. In re Terazosin Hydrochloride I. 11
On November 30, 1999, the plaintiffs moved for class certification on behalf of all persons who directly purchased terazo-sin hydrochloride from Abbott during the period March 31, 1998 through the time when the settlement agreements terminated. The district court granted plaintiffs’ consolidated motions for class certification on September 20, 2001, and
sua sponte
amended the order on September 28, to define the class as “all entities who purchased Hytrin, also known by the chemical name terazosin hydrochloride, directly from Abbott at any time during the period commencing March 31, 1998, through August 13, 1999.”
In re Terazosin Hydrochloride Antitrust Litig.,
On appeal, the defendants raise a number of issues which can be condensed into two questions: (1) whether the district court erred in accepting an “overcharge” methodology for measuring impact and damages where generic drugs and branded *1135 drugs allegedly constitute separate, economically differentiated products, and (2) whether the district court .erred by foreclosing discovery on the question of whether some class members benefitted from the conduct alleged to have harmed the class members on the whole. We find that because the district court improperly certified the class, this case must be remanded to permit the parties to conduct further discovery on the important issue of whether some class members have separate, antagonistic interests from the named representatives. As this issue decides the case, we do not need to reach the other argu-' ments presented to this court by the defendants.
II.
The burden of proof to establish the propriety of class certification rests with the advocate of the class.
Jones v. Diamond,
III.
Rule 23 establishes the legal roadmap courts must follow when determining whether class certification is appropriate. 13 Pursuant to Rule 23(a), a class may be certified only if (1) the class is so numer *1136 ous that joinder of all members would be impracticable; (2) there are questions of fact and law common to the class; (3) the claims or defenses of the representatives are typical of the claims and defenses of the unnamed members; and (4) the named representatives will be able to represent the interests of the class adequately and fairly. Fed.R.Civ.P. 23(a).
These four prerequisites of Rule 23(a) are commonly referred to as “numerosity, commonality, typicality, and adequacy of representation, and they are designed to limit class claims to those fairly encompassed by the named plaintiffs’ individual claims.”
Prado-Steiman v. Bush,
The district court ruled that class certification was appropriate in this case because it found that the plaintiffs’ claims satisfied the prerequisites of Rule 23(a) and the “predominance” requirement of Rule 23(b)(3).
In re Terazosin Hydrochloride II,
As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits. Fed. R.Civ. P. 23(c)(1).
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Rule 23(a)(4) requires that the representative party in a class action “must adequately protect the interests of those he purports to represent.”
Phillips v. Klassen,
Significantly, the existence of minor conflicts alone will not defeat a party’s claim to class certification: the conflict must be a “fundamental” one going to the specific issues in controversy.
Id.
at 326-27; 1 Herbert Newberg & Alba Conte,
Newberg on Class Actions
§ 3.26 at 3-143 to 144 (3d ed.1992). A fundamental conflict exists where some party members claim to have been harmed by the same conduct that benefitted other members of the class. In such a situation, the named representatives cannot “vigorously prosecute the interests of the class through qualified counsel” because their interests are actually or potentially antagonistic to, or in conflict with, the interests and objectives of other class members.
See, e.g., In re HealthSouth,
For this reason, in
Pickett v. Iowa Beef Processors,
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This circuit is not alone in interpreting Rule 23(a)(4) to preclude class certification where the economic interests and objectives of the named representatives differ significantly from the economic interests and objectives of unnamed class members. In
Bieneman v. City of Chicago,
When viewed in the light cast by the aforementioned cases, the district court’s decision to certify a class of Hytrin purchasers notwithstanding the existence of a potential, significant conflict among class members cannot be countenanced. Here, the plaintiffs have not met their burden under Rule 23(a)(4) of demonstrating that no fundamental conflict exists within the class. In particular, they have not offered any facts to challenge the defendants’ assertions that the three national wholesalers, whose transactions with Abbott constitute over fifty percent of the plaintiffs’ total claims, experienced a net gain from the absence of generic drugs in the market for terazosin hydrochloride. 18 By contrast to plaintiffs’ silence on this pivotal issue, the defendants strenuously argue that a number of the parties included in the class certified by the district court, particularly the three national wholesalers, sell their products on a “cost-plus” basis pursuant to which they charge the same percentage mark-up from their acquisition cost on both branded -and generic drugs. 19 Given *1139 the existence of these contracts and other factors relevant to the industry, some of these national wholesalers arguably make more money on the sale of the branded product than on the generic product because the wholesalers charge more for, and collect more from, branded products than generic drugs.
While the defendants lay great emрhasis on the existence of “cost-plus contracts,” this fact, standing on its own, would be insufficient to prove net economic benefit if it were not for the specific nature of the product and the industry involved in this case. In addition to noting that the national wholesalers charge more, and receive more, from selling higher-priced branded Hytrin, the defendants claim— and we do not disagree or agree at this point — that because of the inelastic demand for certain pharmaceutical products, “a drop in price of terazosin (due to generic competition or otherwise) does not lead to an increase in sales volumes on which a wholesaler could make up its lower margin.” (Def. Brief on Appeal of Class Certification. No. 02-10171-J at 10). The reason for this according to Abbott is that “[s]o-called ‘maintenance drugs’ that are taken continuously to treat a severe chronic condition — like terazosin — are one of the very rare categories of products whose sales are not responsive to price fluctuations. Indeed, the total demand for tera-zosin actually decreased after generic entry.” Id.
Along with this fact, the record indicates that some of the national wholesalers are further injured rather than benefitted by generic competition because the wholesalers, who play a central role in the distribution of branded drugs, are often bypassed in the distribution chain for many generic sales, causing them to lose sales. For example, retail pharmacies like Rite-Aid, one of McKesson’s largest customers, purchased most of their branded Hytrin from wholesalers while purchasing the bulk of their generic terazosin drugs directly from Geneva, a generic drug manufacturer. From the record provided to us thus far, it seems likely that the national wholesalers lose both margin and volume with generic competition. Thus, these class members appear to benefit from the effects of the conduct alleged to be wrongful by the named plaintiffs because their net economic situation is better off when branded drugs dominate the market. Class certification under these circumstances would be inappropriate.
See Phillips,
It is important to stress that as an appellate court reviewing this record, we do not here pass judgment on the ultimate legitimacy of Abbott’s arguments. It may turn out that the national wholesalers presently encompassed by the class do not experience a net benefit from the absence of generic competition because of factors not disclosed in the record before us thus far or because, after a careful assessment *1140 of the facts, the evidence provided by the defendants is deemed to be inaccurate or unreliable. If for either of these reasons it is determined that no fundamental conflict actually exists, the plaintiffs may yet meet their burden of proof necessary to maintain a class action under Rule 23(a)(4). At this stage, however, the record needed to decide this issue remains incomplete because the district court improperly denied Abbott’s request to conduct so-called “downstream discovery,” i.e., discovery regarding the wholesalers’ sales practices. To understand why the district court made its decision requires an understanding of antitrust law in general and antitrust standing in particular.
The plaintiffs contend, and the district court agreed, that “downstream discovery” should be foreclosed by the Supreme Court’s holdings in
Hanover Shoe v. United Shoe Machinery Corp.,
As we have acknowledged,
“Hanover Shoe
said that a manufacturer cannot assert a ‘passing on’ defense (that is, the defense that the plaintiff has no damages when he passed the overcharge on down the production line) against a direct purchaser of its product.”
Lowell v. American Cyanamid Co.,
Nevertheless, plaintiffs’ brief is replete with references to Hanover Shoe and Illinois Brick as if these cases were a talisman warding away the requirements of Rule 23 and barring this court from exercising its duty to conduct an inquiry into whether the plaintiffs’ proposed class satisfies the four requirements of Rule 23(a). We do not interpret the holdings of Hanover Shoe and Illinois Brick in this broad fashion. Similarly, we disagree with Louisiana Wholesale and Valley Drug when they assert “it would be a complete perversion of the rule and rationale of these cases to stop indirect purchasers from be *1141 ing able to recover these overcharges.” (Pis. Brief on Appeal of Class Certification, No. 02-10171-J at 59). This argument misses the mark by our reasoning because our holding today in no way inhibits those direct purchasers who potentially experienced a net benefit from the defendants’ conduct from nevertheless bringing .suit against the defendants to recover their damages in the form of an overcharge.
We do not dispute that if the defendants’ settlement agreements illegally restrained competition, then all of the class members, including the three national wholesalers, would have suffered antitrust injury that is cognizable under
Hanover Shoe.
In such a scenario, the wholesalers would be afforded the right to sue the defendants for their alleged antitrust violations, even if they experienced a net gain, provided they choose to exercise their right to do so (and provided the
Hanover Shoe
“cost-plus exception” does not apply to them). Yet while we do not challenge this part of the plaintiffs’ arguments, we do note that neither
Hanover Shoe
nor its progeny imbue the named representatives in this case with the automatic right to certify a class where the economic reality of the situation reveals that a fundamental conflict may exist among the class members because of their different economic circumstances and different economic interests. Instead, we read
Hanover Shoe
as directing a court to overlook the potential net gain, or conversely the potential absence of a net loss, that a direct purchaser may in fact have experienced for the purposes of providing the direct purchaser with standing to sue and a means for calculating damages in antitrust violation litigation.
Hanover Shoe
does not hold that this net economic gain must be ignored or overlooked by a court when determining whether Rule 23 has been satisfied. Accordingly, in the absence of direction from the Supreme Court on this issue, we will not interpret the “fundamental conflict/antagonistic interests” prong of the Rule 23(a)(4) inquiry in this case any differently than we would apply it in all other contexts.
See, e.g., Pickett,
In the present case, the defendants have presented evidence that the cognizable antitrust injury suffered by the national wholesalers may have been outweighed by the economic benefits these parties experienced in the absence of generic competition. In short, the profits received by some class members from selling branded Hytrin in the absence of generic competition, and the greater volume of Hytrin sold by these parties in the absence of generic competition, may suggest a tradeoff the national wholesalers were content to make in order to experience greater profits. This economic reality would lead the national wholesalers and other similarly situated class members to have divergent interests and objectives from the named representatives with respect to the fundamental issues in controversy in this litigation. Along these lines, we note that this case has been brought by two regional wholesalers with relatively small claims who do not sell on a cost-plus basis, while the three national wholesalers with the bulk of the claims have chosen not to participate in the litigation or have assigned their interests to third-parties. This, along with the other evidence provided in the record, suggests that the interests of the named representatives are not substantially aligned with the interests of all of the class members whom they purport to represent because some of the class members would have experienced a net gain from the conduct alleged to be wrongful in this instance. It is highly
*1142
likely under such circumstances' that the economic interests of these putative class members would be substantially in conflict with the interests of the named representatives who did not experience a net gain from the defendants’ conduct.
See, e.g., In re HealthSouth,
213
F.R.D.
at 461-62, quoting
Telecomm Technical Services, Inc. v. Siemens Rolm Communications, Inc.,
Bearing in the mind that for purposes of analyzing whether any antagonistic interests exist between the proposed representatives and the rest of the class, “the defendant does not have to show actual antagonistic interest; the potentiality is enough,”
In re HealthSouth,
As another circuit noted in
Paper Systems, Inc. v. Nippon Paper Industries Co., Ltd.,
In short, all we hold today is that the claims of these disparate groups cannot be mixed together under Rule 23(a) where the economic reality of the situation leads some class members to have economic interests that are significantly different from — and potentially antagonistic to — the named representatives purporting to represent them.
22
We also note that this holding, which requires the district court to permit “downstream discovery” to determine whether a fundamental conflict exists among the class members, does not conflict with the Supreme Court’s concern that the ability of a party to assert a “passing-on” defense might undermine a plaintiffs ability to recovery damages by unduly complicating the issue of proof of damages. Plaintiffs, citing
Hanover Shoe,
which mentions that allowing a “passing on” defense would vastly complicate antitrust litigation by injecting “massive evidence and complicated theories,” suggеst that conducting “downstream discovery” here would require a complex netting process that the Court sought to avoid.
Hanover Shoe,
First, the district court retains discretion in determining how much discovery is enough to establish whether or not the class members experienced a net benefit or net loss in the absence of generic competition.- Second, and perhaps more importantly, this argument from counsel for Louisiana Wholesale and Valley Drug is baffling since it is the plaintiffs who initially informed the district court that "an algebraic formula easily could be devised to compute the plaintiffs’ claimed' damages. Many of the factors taken into account by plaintiffs’ experts in deriving their formula, e.g., “the amount of Hytrin purchased from Abbott by a class member,” “the expected price difference between Hytrin and the generic [substitute],” and “the expected substitution rate of generic terazo-sin [hydrochloride]” can just as easily be used in creating a formula to dеtermine whether certain class members experienced a net gain in the absence of generic competition.
In re Terazosin Hydrochloride II,
In this case, Louisiana Wholesale and Valley Drug chose not to proffer any evidence along these lines and, having failed to satisfy their burden, have not demonstrated that class certification is appropriate. Thus, where the record presently reveals that the antitrust injury suffered by some class members was arguably outweighed by the benefits they gained from the absence of generic competition, the actual еconomic interests of these members would substantially diverge from the objectives of the named representatives and other members. Rule 23(a)(4) does not permit a class to be certified under such circumstances because it would be impossible for the named representatives to “vigorously prosecute the interests of the class” if significant members in the class actually experience a net benefit from the conduct challenged by the named representatives.
In re HealthSouth,
For the foregoing reasons, we VACATE the district court’s order granting class certification and REMAND the case for proceedings consistent with this opinion.
SO ORDERED.
Notes
. Section 4 of the Clayton Act provides in relevant part:
[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee. 15 U.S.C. § 15(a).
. Section 1 of the Sherman Act provides in pertinent part:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. 15 U.S.C.
. The text of Rule 23(b)(3) is quoted in this opinion at infra, n. 13.
. The class originally certified by the district court in its September 20, 2001
Order Granting Plaintiffs' Consolidated Motion for Class Certification
encompassed "all purchasers of both brand name and generic drugs who also purchased terazosin hydrochloride directly from Abbott at any time during the period commencing March 31, 1998, through the time when the illegal agreements terminated."
In re Terazosin Hydrochloride,
. Rule 23(0 provides:
A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of thе order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders. Fed. R.Civ.P. 23(f).
. Geneva did not originally join the Rule 23(f) application brought by Abbott and Zenith because it had reached a potential settlement with plaintiffs. That settlement fell through, however, and Geneva subsequently moved to join in this appeal. Zenith later reached a tentative settlement of its own with the plaintiffs and consequently withdrew from the appeal before the parties submitted their briefs to this court.
.
Valley Drug
reversed a separate ruling by the district court that condemned the two settlement agreements entered into by Abbott and Zenith and Abbott and Geneva as per se violations of Section 1 of the Sherman Act.
.The relevant statute here is the Drug Price Competition & Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (1984) (codified as amended at 21 U.S.C. § 355). This act, which modifies the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-91 (“FDCA”), is generally referred to as the “Hatch-Waxman Amendments.” As noted by this court in
Valley Drug,
the Hatch-Waxman Amendments set forth the legal rules established by Congress to promote competition between companies that pioneer the development of a new drug and companies that develop generic substitutes.
. Pursuant to the Hatch-Waxman Amendments, applications for FDA approval of a new drug can be filed in one of two ways: as a new drug application (“NDA”) under § 355(b) or as an ANDA certification under § 355(j). An ANDA applicant is entitled to rely on the safety and efficacy studies filed with the application of a drug already listed and recorded by the FDA in the so-called “orange book.” Id.
. The Hatch-Waxman Amendments create a strong incentive for a generic competitor to be the first to file an ANDA and receive FDA approval: a 180-day period of marketing exclusivity vis-á-vis other generic competitors. In other words, the first filer to receive FDA approval is entitled to market the generic versions of the drug for 180 days without competition from any other generic drug manufacturers. This period of exclusivity does not begin, however, until any related
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patent litigation is resolved. Prior to 1998, the FDA's "successful defense” regulation provided an additional twist on winning the 180-day exclusivity prize: if a second or subsequent generic drug manufacturer files an ANDA and successfully defends itself against a patent infringement challenge by the branded-drug manufacturer before the first filer, thе 180-day exclusive marketing period is no longer an option for the first filer. The second filer can then enter the market first, but is not entitled to the period of exclusivity the first filer would have received had it prevailed first in its own challenge of the branded-drug manufacturer's patents. The successful defense requirement was eventually held to be an unreasonable interpretation of the Hatch-Waxman Act by two courts of appeal. See
Mova Pharm. Corp. v. Shalala,
. As noted previously at
infra,
n. 7, we reversed this decision of the district court in
Valley Drug,
. In
Bonner v. City of Prichard,
. In their entirety, Federal Rules of Civil Procedure 23(a) and (b) state:
(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
(1)the prosecution of separate actions by or against individual members of the class would create a risk of
(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for. the party opposing the class, or
(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties tо the adjudications or substantially impair or impede their ability to protect their interests; or
(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be *1136 encountered in the management of a class action. Fed.R.Civ.P.23(a) and (b).
. Rule 23(c)(1) provides:
. Although the trial court should not determine the merits of the plaintiffs' claim at the class certification stage, the trial court can and should consider the merits of the case to the degree necessary to determine whether the requirements of Rule 23 will be satisfied.
See,
e.g.,
Gen. Tel. Co. v. Falcon,
.In its brief discussion of whether the proposed class satisfied the "adequacy of representation” inquiry, the district court stated, "[t]he defendants have not reported any actual or apparent conflicts of interest between Louisiana Wholesale or Valley Drug and the proposed class.”
In re Terazosin Hydrochloride II,
. In
Pickett,
cattle producers acting on behalf of themselves and others similarly situated brought claims against Iowa Beef Processors, Inc. ("IBP”), under the Packers and Stockyards Act, 7 U.S.C. § 192, alleging thаt “forward contracts” or "marketing agreements” employed by the defendant constituted illegal, unfair business practices.
. As of 1996, there were six national wholesalers: McKesson HBOC ("McKesson”), AmeriSource, Bergen-Brunswig, Cardinal, Foxmeyer, and Bindley Western Industries ("BWI”). Foxmeyer subsequently filed for bankruptcy in August 1996 and McKesson acquired its assets.
See In re Brand Name Prescription Drugs Antitrust Litigation,
No. 94 C 897, MDL 997,
. Because both parties have raised the issue in their brief, it is worth noting that a distinction can and should be drawn between the cost-plus contracts employed in this industry and the cost-plus exception discussed by the Supreme Court in
Hanover Shoe v. United Shoe Machinery Corp.,
. We note that the three national drug wholesalers — McKesson, Cardinal, and Bergen-Brunswig — are sophisticated businesses that are more than capable of bringing a suit on their own behalf: each of these companies has been ranked in the top 100 of the recent Fortune 500 list. Given the high level of sophistication of the national drug wholesalers, these entities do not suffer a hardship from not being included in the proposed class because they are very able to proceed with individual claims if they feel they have been harmed.
Accord, Ansari v. New York University,
. Because the issue is not expressly before the court, we do not rule on the question of whether those class members who potentially experienced a net gain from defendant's conduct can form a class of their own to challenge the defendants for their alleged antitrust violations. Although we do not reach this issue, we believe the holdings of the Supreme Court in Hanover Shoe and Illinois Brick make this the likely conclusion provided the other prongs of Rule 23(a) are satisfied and at least one of the three alternative requirements under Rule 23(b) are met.
. Even if we assume
ex arguendo
that all of the plaintiff class members share one common interest, e.g., vindicating the nation's antitrust laws, this common interest alone would not be sufficient to satisfy Rule 23(a)(4) because a fundamental conflict still exists where the actual economic interests and objectives of the class members diverge because some members experienced a net benefit from the defendant's conduct while others are harmed.
See Pickett,