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Vol. 26 No. 4 February 11, 2011

COURT DENIES CERTIFICATION

IN ANTITRUST CLASS ACTION
FRAUGHT WITH BASELESS CLAIMS
by
George S. Cary and Steven J. Kaiser
In Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, No 04-5898,
2010 U.S. Dist. LEXIS 105646 (E.D. Pa. Sept. 30, 2010), Judge Lawrence F. Stengel denied the plaintiffs’
motion to certify an antitrust class of indirect purchasers of the antidepressant Wellbutrin SR against its
manufacturer GlaxoSmithKline (“GSK”). Judge Stengel concluded that the class could not be certified
because a significant number of class members did not have claims.
The reasoning of Judge Stengel’s decision demonstrates how careful and considered analysis can
avoid the mistake of allowing dubious or non-existent claims to be swept into a class action to the detriment
of defendants and, often, to other class members. The opinion highlights that a court must undertake a
vigorous analysis, including engaging in fact finding where there are disputes between the parties and their
experts. The case makes clear that, unlike in the summary judgment context where the plaintiff is given the
benefit of competing evidence and expert opinion, a motion for class certification requires the court to
affirmatively resolve such disputes, including among experts.
Background. Plaintiffs – indirect purchasers of GSK’s antidepressant Wellbutrin SR – alleged that
GSK violated state antitrust and consumer protection laws by pursuing sham patent litigation to prevent the
launching of generic versions of Wellbutrin SR. Plaintiffs asserted that but for the sham litigation, generic
versions of Wellbutrin SR would have been available more than two years before they were. Plaintiffs
contended that the absence of generic competition enabled GSK to maintain higher prices for branded
Wellbutrin SR and to prevent consumers from using less expensive generic versions of Wellbutrin SR.
Plaintiffs asked the court to certify a class consisting of indirect purchasers of Wellbutrin SR (i.e.,
non-governmental entities that purchased Wellbutrin SR from someone other than GSK). Such purchasers
were defined to include any person who paid “all or some” of the purchase price. Sheet Metal, at *6.
According to the court, “[t]his class could include potentially hundreds of thousands of individual
consumers and more than twenty thousand third party payors – health benefit plans, health maintenance
organizations, and health insurers, among them – who purchased Wellbutrin SR.” Id.
The contest over class certification is often a critical part of antitrust litigation because the alleged
overcharges suffered by any individual purchaser are often not significant enough to justify the expense of
litigation. When such claims are aggregated in a class, however, they often prompt settlements of tens and
hundreds of millions of dollars and sometimes even more. The size of the class can therefore dramatically

George S. Cary is a partner and Steven J. Kaiser is counsel in the Washington, D.C. office of
the law firm Cleary Gottlieb Steen & Hamilton LLP.
affect how much each class member receives and can also affect the total amount for which the defendant is
at risk.
The standard for class certification is set forth in Rule 23 of the Federal Rules of Civil Procedure.
Where, as in Sheet Metal, money damages are sought, the court must find that, in addition to satisfying
certain conditions that were readily met in Sheet Metal relating to the size of the putative class and the
adequacy of the plaintiffs as class representatives, “the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy.” See FED R. CIV. PRO.
23(b)(3).
Judge Stengal’s Decision. Judge Stengal began by highlighting the Supreme Court’s admonition in
General Telephone Co. v. Falcon, 457 U.S. 147, 161 (1982), that, in ensuring that the elements for class
certification have been established, the court must undertake a “vigorous analysis.” He noted that
certification in antitrust cases “should not be presumed,” but rather must be subjected to the same sort of
vigorous analysis as in other cases. Sheet Metal, at *19.
The court focused on whether plaintiffs had established that injury to each class member – a
prerequisite for the claims that the putative class sought to assert – could be shown by common proof or, in
the alternative, that a class member by class member analysis was required. Were such an individualized
exercise required among the projected hundreds of thousands of class members, common questions of law or
fact would not predominate, and class certification would be inappropriate. See Bell Atl. Corp. v. AT&T
Corp., 339 F.3d 294, 302 (5th Cir. 2003).
The court observed that whether there was such common impact depended on whether the plaintiffs
had shown “that prices for [both generic and branded Wellbutrin SR] were affected during the class period”
and that “all purported class members actually suffered damages as a result of GSK’s allegedly anti-
competitive activity.” Sheet Metal, *19. In considering this issue, the court focused on the Third Circuit’s
recent decision in In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 311 (3d Cir. 2008), in which
the Third Circuit held that “the task for plaintiffs at class certification is to demonstrate that the element of
antitrust impact is capable of proof at trial through evidence that is common to the class rather than the
individual to its members.”
The court noted that, among other things, Hydrogen Peroxide requires courts to be critical of expert
testimony and not accept it as dispositive to the class certification question simply because it is admissible.
Sheet Metal, at *20. Rather, a court must make factual findings as between competing expert testimony.
The court was presented with such competing expert testimony. The plaintiffs’ expert, Dr. Meredith
Rosenthal, opined based largely on economic literature that each and every class member was, one way or
the other, harmed by delayed generic entry because even those who would have used branded Wellbutrin SR
would have enjoyed lower prices had there been generic entry. Sheet Metal, at *30-36.
GSK’s expert, Dr. John Bigelow, pointed out that the class, as the plaintiffs defined it, included
many uninjured parties. As an initial matter, Dr. Bigelow observed that, had GSK faced generic entry, it
would not have promoted Wellbutrin SR as much as it did, particularly directly to consumers. As a result,
GSK argued, some patients would never have been prescribed Wellbutrin SR in the first place, “in light of
the fierce competition in the antidepressant market.” Sheet Metal, at *44. GSK argued that patients who
chose Wellbutrin SR as a result of the advertising should not be members of the class because the
advertising that caused them to choose Wellbutrin SR would not have occurred in the absence of GSK
believing it would have ongoing exclusivity.
Dr. Bigelow also disputed the plaintiffs’ assertion that, with the launch of generic versions of
Wellbutrin SR, prices for branded Wellbutrin SR would have changed in a way that would have benefited all
class members. Rather, according to Dr. Bigelow, prices actually increased post entry. As such, any

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member of the class that would not have chosen generic Wellbutrin SR (or have it chosen for them) actually
benefited from the absence of generic entry and should not be members of the class. Sheet Metal, at *47-50.
Dr. Bigelow also testified that certain putative class members had forms of insurance under which
they could not have been harmed by the absence of generic Wellbutrin SR. Such insurance includes
insurance that does not require a co-pay for prescription drugs and insurance where the co-pay would have
been the same whether generic or branded Wellbutrin SR were prescribed (or dispensed). Because such
insurance would, in effect, hold patients harmless regardless of which type of Wellbutrin SR they
“purchased,” they could not have been harmed and therefore should not be members of the class. Sheet
Metal, at *53-57.
The court found that there was another – and in some senses even more fundamental – flaw in the
plaintiffs’ argument that each class member was adversely impacted. In particular, the court observed that,
even assuming GSK’s conduct led to unlawfully high prices being charged to GSK’s customers, it did not
necessarily follow that each of those customers (numbered in the hundreds) themselves passed on such
overcharges to their own customers or that, even if they did, that the overcharges ultimately reached the
members of the proposed class. Sheet Metal, at *64-65.
The court rejected plaintiffs’ contention that the court’s earlier decision to certify a direct purchaser
class necessarily established such “pass through” for purpose of the motion to certify an indirect purchaser
class. In essence, the court held that an indirect purchaser plaintiff itself must make a showing of
overcharge to the direct purchasers and that the direct purchaser passed those overcharges on (at least in
part): “The end-payor plaintiffs cannot avoid this burden by relying in the work of the direct purchaser
plaintiffs.” Sheet Metal, at *67. The court noted that the problem it identified – that the proposed class
definition tended to include uninjured parties – was not relevant to the direct purchaser class certification
decision.
Considering all of the evidence before it, including most prominently the disputed expert testimony,
the court concluded that the plaintiffs had failed “to show on a class-wide basis, (1) that GSK's anti-
competitive conduct caused supra-competitive prices for [Wellbutrin] SR and (2) that every end-payor
bought [Wellbutrin] SR at a supra-competitive price.” Id. at *76. The court found that, for those purchasers
of Wellbutrin SR that would have purchased the branded version regardless of a generic alternative, there
was no evidence that the entry of such a generic alternative would have reduced the price of the branded
version (or caused it to rise more slowly than it otherwise would have). The court further concluded that,
because not all direct purchasers necessarily passed through overcharges and because of the variability in
insurance plans, “there are presumably significant numbers of third party payors and consumer plaintiffs,
who, as a result of their applicable co-payment and co-insurance structures, did not suffer any out-of-pocket
losses.” Sheet Metal, at *87. Because of these issues, the court was “satisfied the defendant has shown
there are a great number of uninjured class members, that it would therefore take many mini-trials to
determine which of the class members are uninjured. Plaintiffs have failed to show they can exclude these
uninjured consumers.” Sheet Metal, at *95.
The court also rejected the plaintiffs’ proposed method for calculating damages, which would have
used the “real world” experience that occurred when generic Wellbutrin SR entered the market in 2004.
Although the court held that it did not need to resolve the issue, it indicated that it was skeptical of the
plaintiffs’ methodology:
The evidence presented shows there are substantial variations in the prices
paid by individual class members. Different class members purchased
different forms of the drug, either branded or generic. End-payors bought the
[Wellbutrin] SR at different times. Insurance plans vary across the class.
Certain class members are less price sensitive than others. The plaintiffs’ use
of average prices masks these individual variations. Just because an average
price was increased or decreased by the alleged foreclosure does not mean that

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 all members of the proposed class paid supra-competitive prices or that any
damage for an individual end-payor could be calculated in a formulaic way by
common proof.
Sheet Metal, at *102.
Analysis. Judge Stengel recognized what is in most instances the single most important issue in
class certification – whether the class as defined is limited to parties who actually have a viable claim. If
parties who have not been injured are allowed to be class members, the efficiency-enhancing potential of
class litigation – the aggregation of similar viable claims – would be perverted into a means for pursuing
claims that have no basis in law or fact.
Judge Stengel identified numerous reasons why the class as defined would sweep in a large number
of parties with no claim. Under the plaintiffs’ methodology, these parties’ purchases would be included in
the ultimate damages assessment, which of course would have directly prejudiced GSK by forcing it to face
damage claims from uninjured class members.
The difficulties that Judge Stengel identified are, of course, present in most indirect purchaser
antitrust cases. In particular, the fact that not all direct purchasers are in a position to “pass on” overcharges
is often seen. The issue is particularly acute in “ingredient” and “component” cases, where the overcharged
product is incorporated into a final product by a direct purchaser. Under the court’s holding, an indirect
purchaser plaintiff will need to demonstrate that each direct purchaser passed on at least a portion of the
ingredient or component overcharge in the finished product. This will often be a difficult if not
insurmountable burden, particularly in cases where the ingredient or component represents a relatively small
portion of the value of the finished product or where the downstream market is itself competitive.
Judge Stengel was also careful not to make the all-too-common mistake of accepting a “but-for”
world that only accounts for certain, pro-certification, factors. In particular, presented with evidence that
GSK would not have marketed Wellbutrin SR to consumers had it expected generic entry and that such
marketing increased the sales of Wellbutrin SR at the expense of other antidepressants, Judge Stengel
properly concluded that parties who purchased Wellbutrin SR as a result of the marketing would not have
claims and should not be in the class. (To be sure, Judge Stengel did not rest his denial of class certification
on this conclusion.)
Among the lessons that a party wishing to challenge class certification (whether in the antitrust
context or otherwise) should draw from the decision are that it should: (1) examine the class definition to see
if it includes parties with no claim, including, for example, parties that were not injured-in-fact; (2)
challenge unfounded or poorly reasoned expert testimony on the merits; and (3) not accept the plaintiffs’
“but for” world in assessing suitability for class treatment; but instead (4) present an alternative but-for
world that demonstrates why the class definition is overbroad and, indeed, that there is no way to determine
who should be in a class without resorting to mini-trials. As Judge Stengel held, in class certification
disputes, parties are entitled to “vigorous analysis” and factual findings, not the mere rubber stamping of the
plaintiffs’ class certification motion.

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