CASTRO, M.D., P.A. v. SANOFI PASTEUR INC.
Filing
521
OPINION. Signed by Judge John Michael Vazquez on 10/20/2017. (ek)
Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ADRIANA M. CASTRO, M.D., P.A.,
SUGARTOWN PEDIACTRICS, LLC, and
MARQUEZ & BENGOCHEA, M.D., P.A., on
behalf of themselves and all others similarly
situated,
Civ. No. 11-7178 (JMV)(MAH)
OPINION
Plaintiffs,
V.
SANOFI PASTEUR INC.,
Defendants.
John Michael Vazguez, U.S.D.J.
This case comes before the Court on the Parties’ joint motion for final approval of the
settlement in this healthcare-related antitrust class action. Also pending is Plaintiffs’ motion for
an award of attorneys’ fees, reimbursement of expenses, and payment of service awards. The
proposed settlement is for $61.5 million in cash and the release of Defendant Sanofi Pasteur’s
counterclaim. The class is comprised of approximately 30,000 members including pediatricians,
physician groups, and other vaccine purchasers. The underlying dispute arose out of a claim
made by Plaintiffs against Defendant, a manufacturer of pediatric vaccines including Menactra,
the brand name for Defendant’s conjugate quadrivalent meningococcal, or MCV4, vaccine.
Plaintiffs alleged that Defendant bundled its pediatric vaccines for sale to keep and enhance its
monopoly in the market afler a competitor planned to produce their own vaccine. Of the class
members, only 16 have opted out and none have objected to the settlement.
The Court reviewed the submissions in support of the motions and held a final settlement
hearing on October 3, 2017. For the reasons discussed below, both motions are GRANTED.
I.
Background & Procedural History
This settlement represents the culmination of several years of hard-fought and complex
litigation. Plaintiffs filed their First Consolidated Amended Class Action Complaint (“CAC” or
“Compl.”) on January 20, 2012. D.E. 28. The CAC alleged that Defendant, through Menactra,
has a 93% monopoly of the meningococcal pediatric vaccine market. Compl. at ¶2. Menactra
inoculates against bacterial meningitis. Id. After Novartis, the only other producer of a
meningococcal vaccine in the U.S., planned to enter the meningococcal vaccine market with its
Menveo vaccine, Defendant allegedly bundled its other pediatric vaccines with Menactra to force
physicians to buy their vaccines at higher prices. Id. at ¶J1-5. As a result, purchasers of the
Menveo vaccine incurred “substantial price penalties” if they bought even small quantities of the
drug. Id. at3.
On February 27, 2012, Defendant filed a motion to dismiss and a counterclaim against
Plaintiff and proposed class members. D.E. 50. After the stand-alone counterclaim was struck,
the motion to dismiss was also denied, and Defendant answered and asserted its counterclaim
again on August 21, 2012. D.E. 100, 111. Defendants claimed that Plaintiffs and other
purported class members had “engaged in unlawful collective action” by forming physician
buying groups, or “PBGs,” causing the prices of vaccines to fall. D.E. 111.
Discovery has been lengthy, contentious and expensive. Document discovery produced
over one million documents, the parties conducted thirty depositions, and the Court eventually
appointed a Special Master, Ronald J. Riccio, to resolve discovery disputes. See D.E. 191,
Declaration of Co-Lead Counsel Eric L. Cramer, Esq. (hereinafter “Cramer Decl.) at ¶12.
2
Special Master Riccio made several Reports & Recommendations. See, e.g., D.E. 211, 212, 213,
229, 238, 239. Expert discovery was similarly complex and ultimately bifurcated into class and
merits phases. D.E. 104. The class certification process was lengthy, and included an appeal by
Defendant to the Third Circuit challenging the order certifying the class, which was denied. See
Castro v. Sanofi Pasteur Inc., No. 15-8099 (3d Cir. Dec. 8,2015). The class was defined as:
All persons or entities in the United States and its territories that
purchase Menactra directly from defendant Sanofi Pasteur Inc.
(“Sanofi”) or any of its divisions, subsidiaries, predecessors or
affiliates, such a VaxServe, Inc., during the period from March 1,
2010 through such time as the effects of Sanofi’s illegal conduct
have ceased (“Class Period”), and excluding all govenmiental
entities, Sanofi, Sanofi s divisions, subsidiaries, predecessors, and
affiliates of Kaiser Permanente and the Kaiser Foundation
(collectively, “Kaiser”), and an purchases by entities buying
Menactra pursuant to a publicly-negotiated price (i.e., governmental
purchasers). D.E. 416.
‘
The class period was later amended with an end date of December 31, 2014. D.E. 476.
The Court also conducted a Daubert hearing concerning expert testimony on the class. The
hearing lasted three days, from September 9, 2009 through September 11, 2001. D.E. 380, 417,
418, 419. The class expert reports totaled over 1,000 pages. Cramer Deci. at ¶25. The merit
expert reports were also 1,000 pages, exclusive of appendices and supporting data. Id.
On April 24, 2017, the Court granted preliminary approval of the settlement, and
approved Rust Consulting as the settlement administrator. D.E. 512. The Court also ordered a
notice plan on April 24, 2017. Id. The parties also held extensive settlement negotiations,
beginning with a private mediation in November 2014. Cramer Decl. at ¶39.
The Court ordered that the notice to class members of the proposed settlement
(“Settlement Notice”) and the proposed summary form of notice (“Summary Notice”) be
disseminated in three ways: (1) direct first class mail of the Settlement Notice to class members,
3
(2) publication of the Summary Notice in the Pediatrics medical journal’; and (3) posting the
Settlement Notice and Summary Notice on a litigation specific-website established by the
settlement administrator. D.E. 5 14-1, Declaration of Jessica Jenkins Regarding Notice by
Mailing and Publication (hereinafter “Jenkins Decl.”) at ¶J4-16. In addition, the settlement
administrator created a case-specific website, email address, toll-free phone number, and post
office box to facilitate communication with potential class members. Id. The website eventually
received approximately 1,734 visits, and the hotline received 147 calls. Id. at ¶J1 4, 16.
The proposed distribution plan will allocate the settlement fund on apro rata basis
calculated by each claimant’s (class members who timely submit valid claim forms) total
Menactra purchases made during the class period. D.E. 5 15-2, Plan of Distribution of the Net
Settlement Fund at 1-2. Sanofi will provide data showing the Menactra purchases made, and the
Plan Administrator will mail a Claim Form to each Class Member with the details of their
purchases included. Id. The pro rata share will be calculated by dividing the total volume of
Menactra purchases made by a Claimant by the total volume of Menactra purchases for all
Claimants. Id. That pro rata share will then be multiplied by the total net settlement fund
amount. Id.
‘The Court approved publication of the notice in Pediatrics, but as a result of a
miscommunication, the notice was published in AAP News, published by the American Academy
of Pediatrics. D.E. 515, Memorandum of Law in Support of Joint Motion for final Approval of
Class Action Settlement (hereinafter “Joint Motion”) at 17. However, because AAP has a larger
circulation than Pediatrics and a similar readership, the Court finds publication in AAP News not
materially different than in Pediatrics. However, the Court also notes that in the future, if such
an error occurs, the better practice is to notify the Court immediately and ensure that the Court
does not want any corrective action taken.
4
Approximately 30% of the purchases of Menactra during the class period were made by
three national wholesalers of pediatric vaccines: AmerisourceBergen, Cardinal Health, and
McKesson. Cramer DecI. at ¶3. All three fully support the settlement terms. Id.
Final Settlement Approval
II.
a. Rule 23
Under Rule 23(e)(2) of the Federal Rules of Civil Procedure, the Court may approve a
proposed settlement of a class action afler a hearing if the settlement “is fair, reasonable and
adequate.” fed. R. Civ. P. 23(e)(2). The law encourages and favors settlement of civil actions in
federal courts, particularly in complex class actions. In re General Motors Corp. Pick-Up Truck
fuel Tank Products Liability Litigation, 55 F.3d 768, 784 (3d Cir. 1995). As a result, when a
settlement is reached on terms agreeable to all parties, it is to he encouraged. Bell Ati. Corp.
V.
Bolger, 2 F.3d 1304. 1314 & n.16 (3d Cir. 1993).
b. Girsh Factors
In determining the reasonableness, fairness, and adequacy of a proposed settlement for the
purposes of Rule 23(e), courts consider the following factors, known as the Girsch factors:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
the complexity, expense and likely duration of the litigation;
the reaction of the class to the settlement;
the stage of the proceedings and the amount of discovery completed;
the risks of establishing liability;
the risks of establishing damages;
the risks of maintaining the class action through the trial;
the ability of the defendants to withstand a greater judgment;
the range of reasonableness of the settlement fund in light of the best
possible recovery; and
the range of reasonableness of the settlement fund in light of all the
attendant risks of litigation.
In reNat’lfootballLeague, 821 F.3d at 437 (citing Girsh v. Jepson, 521 f.2d 153, 157 (3d Cir.
1975)). The settling parties bear the burden of establishing that the Girsh factors weigh in favor
5
of approval. But the ultimate decision of whether to approve a proposed settlement “is left to the
sound discretion of the district court.” Girsh, 521 F.2d at 157.
1. Complexity, Expense & Likely Duration of Litigation
The first factor considers “the probable costs, in both time and money, of continued
litigation.” In re Gen. Motors., 55 F.3d at 812 (quoting Bryan v. Pittsburgh Plate Glass Co., 494
f.2d 799, 801 (3d Cir. 1974)). Courts must weigh the proposed settlement “against the enormous
time and expense of achieving a potentially more favorable result through further litigation.” In
re Remeron End-Payor Antitrust Litig., 2005 WL 300880$, at *4 (D.N.J. Nov. 9, 2005) (citation
omitted). “Settlement is favored under this factor if litigation is expected to be complex, expensive
and time consuming.” Yedlowski V. Roka Bioscience, 2016 WL 6661336, at *12 (D.N.J. Nov. 10,
2016) (quoting In re RoyalDutch/Shell Transp. Sec. Litig., 200$ WL 9447623, at *17 (D.N.J. Dec.
9, 2008)).
This litigation has already spanned six years. The matter has been exhaustively litigated,2
with both sides spending literally thousands of hours and millions of dollars. In addition, an
“antitrust class action is arguably the most complex action to prosecute.” In re Remeron, 2005
WL 2230314, at *13 (citations omitted). This case is no exception. Moreover, there was no
corresponding governmental action; Plaintiffs developed the case on their own. Continuing this
case through summary judgment or trial would undoubtedly result in a great deal more expense.
The parties would have to fully brief Defendant’s summary judgment motion, and if Plaintiffs
were successful, then extensive pretrial motions, a lengthy trial, and (most likely) post-trial
motions and appeals would ensue. The first Girsh factor favors the proposed settlement.
2
In fact, Defendant filed its motion for summary judgment, D.E. 649, before settlement was
reached.
6
2. Reaction of Class to Settlement
The second Girsh factor “gauge[s] whether members of the class support the settlement.”
In re Prudential Ins. Co. America Sales Practice Litigation Agent Actions, 14$ F.3d 283, 318 (3d
Cir. 199$). As such, courts look at the “number and vociferousness of the objectors.
.
.
.
[and]
generally assume[] that silence constitutes tacit consent to the agreement.” In re Gen. Motors, 55
F.3d at 812 (quoting Bell Ati. Corp., 2 F.3d at 1313 & n.15).
To date, there are no objections to the settlement by any class member. Additionally, the
three sophisticated national wholesale class members have all joined the settlement and submitted
letters in support of its terms. This lack of objection weighs in favor of approving the settlement.3
3. State of the Proceedings
The purpose of this factor is to determine “the degree of case development that class
counsel have accomplished prior to settlement.” In re Cendant Corp. Litig., 264 f.3d 201, 235
(3d Cir. 2001). “[C]ourts can determine whether counsel had an adequate appreciation of the
merits of the case before negotiating.” Id. (citing In re Gen. Motors, 55 F.3d at 813). As noted,
there has been extensive class and merits discovery in this case. Over one million documents
have been produced, over 30 depositions have been taken, and the Court conducted a multi-day
Daubert hearing. The parties have litigated this case for six years. They have fully briefed
The Court notes that some courts have suggested that the lack of objectors essentially requires a
finding that the settlement is fair and reasonable. See, e.g., In re Linerboard Antitrttst Litig, 296
F. Supp. 2d 56$, 578 (E.D. Pa. 2003) (“[T]his unanimous approval of the proposed settlement{]
by the class members is entitled to nearly dispositive weight in this court’s evaluation of the
proposed settlement” (quoting Fisher Bros v. Phelps Dodge Indtts., Inc., 604 F. $upp. 446, 451
(E.D. Pa. 1985)). The Court does not necessarily agree with this conclusion but recognizes that
the lack of objectors provides a strong indication that the settlement is fair and reasonable,
particularly where, as here, sophisticated claimants affirmatively support the settlement.
7
motions to dismiss, the motion for class certification—including an appeal to the Third Circuit—
and have engaged in extensive discovery. Accordingly, Lead Plaintiffs are well aware of the
relative strengths and weaknesses of their case against Sanofi. See, e.g., In re Genta Sec. Litig.,
2008 WL 2229843, at *6 (D.N.J. May 28, 2008). This factor also weighs in favor of approving
the settlement.
4. Risks of Establishing Liability & Damages
The purpose of these factors is to “balance the likelihood of success and the potential damage
award if the case were taken to trial against the benefits of an immediate settlement.” In re
Prudential, 148 F.3d at 319. “By evaluating the risks of establishing liability, the district court
can examine what the potential rewards (or downside) of litigation might have been had class
counsel elected to litigate the claims rather than settle them.” In re Gen. Motors, 55 F.3d at 814.
Where there is a prospect of long, contentious, and uncertain litigation along with a lack of
evidence required to support claims in such protracted litigation, these factors weigh in favor of
approval. See In re Cendant Corp. Litig., 264 F.3d at 238.
a Liability
Plaintiffs used a novel theory to show liability in this case. Unlike many antitrust
matters, Plaintiff did not provide evidence of increased costs to Defendants’ competitors.
Rather, Plaintiffs, by way of expert testimony, proceeded on a “divided market theory,” which no
previous court had expressly accepted. Thus, Plaintiffs’ ability to prove liability was in no way a
certainty.
b. Damages
Proving damages in antitrust cases is difficult and depends on extensive expert testimony,
“which can become an esoteric exercise with unpredictable results.” In re Elec. Carbon Prods.
8
Antitrust Litig., 447 F.Supp.2d 389, 401 (D.N.J. 2006). Rather than showing either the periods
before or after the bundling, or another similarly competitive period in the market, Plaintiffs
relied on the “Bertrand price model” to show damages. The differentiated Bertrand model had
not been used in this context before, and is normally used instead to illustrate competition after a
merger. Professor Elhauge’s testimony, especially his use of the Bertrand model to prove
damages to Plaintiffs, was hotly contested in this litigation. Moreover, as Plaintiffs counsel
points out, Defendant “certainly would have continued to press [their counterarguments] on
appeal if Plaintiffs were to prevail at trial.” Joint Motion at 32. Plaintiffs counsel also notes
that Judge Arleo’s Opinion on Defendant’s Daubert motion to exclude Professor Elhauge’s
testimony, D.E. 415, “appears to be the first time that a differentiated Bertrand model was found
reliable as a means of assessing impact and damages in an antitrust class action.” Id. at 11.
Both liability and damages were hotly contested and both parties had evidence supporting
their respective positions. In sum, the risks associated with both liability and damages lead the
Court to conclude that this factor favors approving the settlement.
5. Risks of Retaining Class Certification throughout Trial
The risk of losing class certification persists through every litigation; there will always be a
‘risk’ or possibility of decertification, and consequently the court can always claim this factor
weighs in favor of settlement.” In re Prudential, 148 f.3d at 321. Given that this is a risk in any
case, this factor weighs in favor of approving the settlement, although not strongly as there was
no specific indication for the Court to conclude that the risk was greater in this matter.
6. Defendant’s Ability to Withstand Greater Judgment
This factor “is concerned with whetherdefendants could withstand a judgment for an amount
significantly greater than the [s]ettlement.” In re Cendant Corp. Litig., 264 F.3d at 240
9
(emphasis added). Financially, Defendant can certainly withstand a greater judgment, but this
factor cannot be considered in a vacuum, i.e. a party’s financial resources. Instead, it must be
analyzed in light of the context of the actual case. For example, if a plaintiff has a strong case in
terms of both liability and damages, but a defendant (who could afford more) proposes an
unreasonably low settlement amount, this factor would weigh against approving the settlement.
See In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 538 (3d Cir. 2004). On the other hand,
where (as here) the matter is complex and expensive, coupled with risks as to both liability and
damages, the Court considers a party’s ability to withstand a greater judgment against the
likelihood of recovering the greater amount. In this case, the sixth factor does not weigh against
approving the settlement.
7. The Range of Reasonableness of the Settlement Fund in Light of the Best Possible
Recovery & the Attendant Risk of Litigation
These factors aim to “evaluate whether the settlement represents a good value for a weak
case or a poor value for a strong case.” In re Warfarin Sodium Antitrust Litig., 391 F.3d 516,
538 (3d Cir. 2006). “In conducting this evaluation, it is recognized that settlement represents a
compromise in which the highest hopes for recovery are yielded in exchange for certainty and
resolution and [courts should] guard against demanding to[o] large a settlement based on the
court’s view of the merits of the litigation.” See In re Johnson & Johnson Derivative Litig., 900
F. Supp. 2d 467, 484-85 (D.N.J. 2012) (internal quotations omitted). These factors consider
“whether the settlement is reasonable in light of the best possible recovery and the risks the
parties would face if the case went to trial.” Pro v. Hertz Equip. Rental Corp., 2013 WL
3167736, at *5 (D.N.J. June 20, 2013) (quoting In re Prudential, 148 F.3d at 322).
The Cramer Declaration presents a table comparing the settlement amount to other
“analogous healthcare-related antitrust bundling cases,” some of which were brought by class
10
counsel using the same experts and consultants. Cramer DecI. at ¶20. While Plaintiffs experts
pointed to a potentially larger settlement, Defendant’s experts “yielded much lower results.”
Joint Motion at 35. Plaintiffs counsel estimates that the total damages of overcharging on
purchases of Menactra is $439 million. Id. The Settlement represents approximately 14% of
those damages, which both parties agree is “within.
.
.
the range of possible settlements.” Id. at
35-36.
The Court agrees. The settlement is within a reasonable range in light of the risks faced by
both parties if the case proceeded to trial and in light of the best possible recovery. In addition to
the liability concerns addressed above, Defendant also has expert evidence indicating that the
amount of damages should be significantly lower than those sought by Plaintiffs even if Plaintiff
prevailed on liability.
c. Prudential Factors
The Third Circuit also requires courts to consider whether the settlement satisfies several
additional factors as set forth in In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions,
14$ F.3d 283 (3d Cir. 199$). See, e.g., Yedlowski, 2016 WL 6661336, at *12 (quoting In re Pet
Food Prods. Liab. Litig., 629 F.3d 333, 350 (3d Cir. 2010)). The Prudential factors include:
[1] [T]he maturity of the underlying substantive issues
.; [2] the
existence and probable outcome of claims by other classes and
subclasses; [3] the comparison between the results achieved by the
settlement for individual class or subclass members and the results
achieved or likely to be achieved —for other claimants; [4] whether
class or subclass members are accorded the right to opt out of the
settlement; [5] whether any provisions for attorneys fees are reasonable;
and [6] whether the procedure for processing individual claims under
the settlement is fair and reasonable.
.
—
11
.
.
Id. The Court does not have to perform analysis on each Prtcdential factor—rather it must address
the factors that are relevant to the particular case at hand. See In re Prudential, 148 F.3d at 323324. The Prudential factors relevant to this case are factors one, four, five, and six.
1. The Maturity of the Underlying Substantive Issues
As discussed above, there has been full discovery in this case, which itself has been extensively
litigated. The underlying substantive issues have been fully developed.
2. Whether Class Members are Accorded the Right to Opt Out of the Settlement
Class members were accorded the right to opt out. Moreover, as discussed above, only 16
of the nearly 30,000 class members have elected to opt out of the Settlement.
3. Whether the Provisions for Attorneys’ Fees are Reasonable
As discussed more fully below, Plaintiffs counsel is requesting one-third of the settlement
amount in fees (in addition to its request for expenses). The Court finds this request to be
reasonable as is explained below.
4. Whether the Procedure for Processing Individual claims under the Settlement is Fair
and Reasonable
The proposed procedure is fair and reasonable. Class members were notified by letter
mailed on May 15, 2017 that they had until July 10, 2017 to either opt out or object. Class members
who did not opt out will be able submit their claim requests using a Claim Form. The form will
be mailed to them and also available on the litigation website. Class members can also obtain
information via a toll free number. Class Members can also dispute the basis for their pro rata
share of the settlement.
d. The Proposed Distribution Plan
The distribution plan proposed is also fair, reasonable, and adequate. Pro rata distributions
of settlement funds are “consistently upheld.” In re Ocean Power Tee/is., Inc., No. 14-cv-3799,
12
2016 WL 6778218, at *23 (D.N.J. Nov. 15, 2016) (citing Sullivan v. DB Investments, Inc., 667
F.3d 273 (3d Cir. 2011)). Because Defendant is providing the purchase details, there will be less
room for error in calculating each claimant’s pro rata share, as the data will come from one source.
Yet, claimants will also be able to contest their share if they believe that there has been an error.
Additionally, if less than 100% of the class submits claims, the pro rata share for those who do
will be larger. None of the settlement fund will revert to Defendant.
e. Notice Plan
Prttdential, pursuant to the Due Process Clause of the Fifth Amendment and Rule 23(e),
requires that adequate notice be provided to potential class members by “the combination of
reasonable notice and the opportunity to be head and the opportunity to withdraw from the class.”
Prudential, 14$ F.3d at 306. The Court approved the proposed notice plan, which included direct
mailing to potential class members and publication.
Online and phone resources were also
available, including the ability to inspect all pertinent documents. D.E. 476. The notices provided
information to potential class members, including the date of the final hearing at which they would
be allowed to speak, and how to opt out of the settlement. As to due process, the notices were
sufficiently clear, detailed and instructive. The notices indicated the legal claims, the class and
class period, the ternis of the settlement, the request for fees and expenses, the date and location
of the fairness hearing, and the opportunity to opt out or object. The settlement administrator also
took reasonable steps to update addresses and re-mail the notice information when initial mailings
were returned as undeliverable.
Finally, pursuant to the Class Action Fairness Act, 28 U.S.C.
§ 1715, Defendant duly notified regulators of the settlement on February 3, 2017.
III.
Attorneys’ Fees, Expenses & Service Awards
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Plaintiffs counsel also makes a claim for attorneys’ fees of one-third of the settlement
amount, or $20.5 million; reimbursement of litigation expenses; and $100,000 service awards for
each of the three class representatives. In common fund cases such as this one, attorneys’ fees are
typically awarded through the percentage-of-recovery method. See In re Rite Aid Corp. Sec. Litig.,
396 f.3d 294, 300 (3d Cir. 2005). The percentage-of-recovery method provides for attorneys’ fees
by awarding a reasonable percentage ofthe common fund. Id. The percentage-of-recovery method
is preferred in common fund cases because it “rewards counsel for success and penalizes it for
failure.” Id. (quoting In re Prudential, 14$ F.3d at 333).
The Third Circuit, however, suggests that when district courts use the percentage-ofrecovery method, they also employ the lodestar method to cross-check the fee and ensure that it is
reasonable. Id. at 305. “The lodestar award is calculated by multiplying the number of hours
reasonably worked on a client’s case by a reasonable hourly billing rate for such services based on
the given geographical area, the nature of the services provided, and the experience of the
attorneys.” Id.
The cross-check occurs by dividing the proposed fee award by the lodestar
calculation, resulting in a lodestar multiplier. If “the multiplier is too great, the court should
reconsider its calculation under the percentage-of-recovery method, with an eye toward reducing
the award.” Id. at 306 (quoting In re Prudential, 14$ F.3d at 33 8-40). A court, however, need not
apply these factors “in a formulaic way because each case is different.” Id. (quoting In re Rite Aid,
396 F..3d at 301.
A. The Percentage-of-Recovery Method
As discussed, Plaintiffs counsel seeks a fee award of one-third of the settlement fund.
When analyzing a fee award under the percentage-of-recovery method, courts consider several
factors, including:
14
(1)
(2)
(3)
(4)
(5)
(6)
(7)
the size of the fund created and the number of persons benefitted;
the presence or absence of substantial objections by members of the
class to the settlement terms and/or fees requested by counsel;
the skill and efficiency of the attorneys involved;
the complexity and duration of the litigation;
the risk of nonpayment;
the amount of time devoted to the case by plaintiffs’ counsel; and
the awards in similar cases.
Id. (citing Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 & n.1 (3d Cir. 2000)). The list
is not exhaustive. Yedlowski, 2016 WL 6661336, at *19. As such, in In re Prudential, the Third
Circuit enumerated three additional factors that may be relevant:
(1)
(2)
(3)
the value of benefits accruing to class members attributable to the efforts of
class counsel as opposed to the efforts of other groups, such as government
agencies conducting investigations;
the percentage fee that would have been negotiated had the case been
subject to a private contingent fee agreement at the time counsel was
retained; and
any “innovative” terms of settlement.
Id.
Here, because the Gitnter factors substantially overlap with the Girsch factors, the Court
will refer to its earlier findings when reviewing the fee application. An analysis of these factors
supports the requested one-third fee award.
1. The Size of the Fund & Number of Persons Benefitted
For this factor, courts “consider the fee request in comparison to the size of the fund created
and the number of class members to be benefitted.” Yedlowski, 2016 WL 6661336, at *20
(quoting Rowe v. E.I. DuPont de Nernours & Co., 2011 WL 3837106, at *18 (D.N.J. Aug. 26,
2011)). Plaintiffs counsel indicates that this settlement is the largest of the comparable healthcare
related antitrust bundling cases brought in the last eight years. The Court does not have any
information to the contrary. The class consists of almost 30,000 members. The settlement amount
is considerable as is the number of persons/entities that will benefit.
15
2. Objections to the Fee Request
The class notice included details of the request for attorneys’ fees, litigation costs, and
service awards. There have been no objections. Notably, none of the three sophisticated class
members, who make up almost 30% of the class, object to the motion for fees, reimbursement, and
service awards; rather, they have submitted letters in support for the settlement.
3. The Skill & Efficiency of the Attorneys
“Lead Counsel’s skill and efficiency is ‘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.” Yedlowski, 2016 WL 6661336, at *20 (quoting
Hall v. AT&TMobitityLLC, No. 07-5325, 2010 WL 4053547, at *19 (D.N.J. Oct. 13, 2010)). In
addition, “[t]he quality and vigor of opposing counsel” is relevant when evaluating the quality of
services rendered by Lead Counsel. Id. at *21. Judge Arleo specifically lauded counsel on both
sides of this case on the record after the Daubert hearing, saying: “I just want to thank you for your
outstanding presentation.
.
.
it’s not lost on me at all when lawyers come very, very prepared. And
really, your clients should be very proud to have such fine lawyering.” Cramer Decl. at ¶33.
Plaintiffs’ counsel is experienced in this area, and Defendant’s counsel are similarly familiar with
these types of cases. Both sides were represented by experienced and well-regarded counsel who
vigorously and ably litigated this matter.
4. The Complexity and Duration of the Litigation
As discussed, this antitrust class action represent a most complex areas of litigation. This
complexity was compounded by the fact that Plaintiffs were advocating positions that had not yet
16
been formally adopted by the courts. As to the duration of the litigation, it was expansive in terms
of time, expense, discovery, and court proceedings.
5. The Risk of Nonpayment
“Courts across the country have consistently recognized that the risk of receiving little or
no recovery is a major factor in considering an award of attorneys’ fees.” Yedlowski, 2016 WL
6661336, at *21. Counsel lists in their brief a number of antitrust “cases in which plaintiffs succeed
at trial on liability but recovered no damages.” Plaintiffs counsel certainly accepted the real risk
of little or no payment when it undertook the case. This factor weighs in favor of approving the
fee request.
6. The Amount of Time Devoted to the Case
This factor will be addressed in the Court’s discussion of the lodestar cross-check.
However it is clear that the hours that Plaintiffs’ counsel devoted to this case—43,200—were
considerable.
7. Awards in Similar Cases
The one-third fee is within the range of fees typically awarded within the Third Circuit through
the percentage-of-recovery method; the Circuit has observed that fee awards generally range from
19% to 45% of the settlement fund. See In re Gen. Motors, 55 F.3d at 822. Thus, the requested
fee in this matter is within the normal range.
1. Value of Benefits Attributable to Class Counsel
As noted, this case was investigated and brought entirely by private counsel, there was no
corresponding government case against Defendant or similar purveyors of pediatric vaccines.
Class counsel, along with their experts including Dr. Elhuage, made novel arguments both on the
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merits and as to damages. Also, this case marks the first time the Bertrand model has been
approved in this context. This factor weighs strongly in favor approving the requested fee award.
2. Percentage fee
As discussed above, a one-third contingency fee is relatively standard, and is supported
here by the sophisticated class members, who note that the fee here similar to what would have
been privately agreed upon.
3. Innovative Terms
This settlement includes standard terms, though counsel notes that the settlement also
includes a release of Defendant’s counterclaim. The Court finds real value in the dismissal of the
counterclaim because, if successful, it would have subjected Plaintiffs to liability (in addition to a
lack of recovery).
B. Lodestar Cross-Check
The lodestar cross-check “ensures that the proposed fee award does not result in counsel
being paid a rate vastly in excess of what any lawyer could reasonably charge per hour, thus
avoiding a ‘windfall’ to lead counsel.” In re Cendant Corp. Litig., 264 f.3d at 285. Again, to
perfonn the cross-check, a court divides the proposed fee award by the lodestar calculation,
resulting in a lodestar multiplier. In re AT&T Coip., 455 f.3d 160, 164 (3d Cir. 2006).
Plaintiffs’ counsel logged 43,200 hours of work on this case. Counsel will also have to
expend additional time, for example, by answering questions concerning the administration of the
net settlement fund. Yet, counsel is not seeking any payment for this additional effort. Using their
historical rates, counsel cites the lodestar as S22,086,998.45 (the result of multiplying the number
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of hours worked by the appropriate hourly rate).4 As a result, the lodestar multiplier is .928 (the
result of dividing the fee amount by the lodestar). This is sometimes referred to as a “negative
multiplier,” meaning that counsel is receiving less than they would have received if they had
instead been paid on an hourly basis. Because the lodestar cross-check results in a negative
multiplier, it provides strong evidence that the requested fee is reasonable.
C. Reimbursement of 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 C’endant Corp., 232 F. Supp. 2d 327, 343 (D.N.J. 2002). Plaintiffs counsel has asked for
reimbursement of $7,199,310.00 in out-of-pocket and unpaid expenses out of the settlement fund
before it is distributed to class members. The majority of this amount is the result of the extensive
expert testimony solicited by Plaintiffs counsel including from Professor Elhauge and Dr.
Leitzinger.
The total expenses for “Expert Consultants and Witnesses” was $5,716,357.70.
Cramer DecI. at ¶62. The next largest line item was for “hosting and managing the millions of
pages of documents” produced in discovery on a secure database; counsel owes a bill of
$633,727.04 for document management, the majority of which is for “hosting.” Id. at ¶64-66.
These fees are all properly charged to the class. See Yedlowski, 2016 WL 6661336, at *23.
The Court finds that these expenses are reasonable and sufficiently documented. As a result, the
Court will award the requested amount of $7,199,310.00 for reimbursement of expenses.
fl Service Awards
See Cramer Decl. at ¶54 for a table of the historical rates for each firm that contributed hours to
this case.
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Depending on the circumstances, class representatives may receive incentive awards. In
re Schering-Plottgh Corp. Enhance Securities Litig., 2013 WL 5505744, at *56 (D.N.J. Oct. 1,
2013).
Plaintiffs counsel has asked that the Court award $100,000 each to the class
representatives, Adriana M. Castro, M.D., P.A., Sugartown Pediatrics, LLC, and Marquez and
Bengochea, M.D., P.A. While the requested amount is higher than that awarded in an average
case, it is appropriate here. All three were subject to Defendant’s counterclaim (thereby exposing
themselves to potential liability), and all three participated in the lengthy and onerous discovery
process. For example, Marquez and Bengochea were the subject of multi-day depositions. Cramer
Dccl. at ¶70.
In addition, the class representatives aided counsel during written discovery,
producing thousands of pages of documents. No objection has been received to this award. The
Court finds that given the significant roles the class representatives played throughout the
litigation, the service awards are warranted.
IV.
Conclusion
For the reasons stated above, and for good cause shown, is the joint motion for approval of
the settlement is GRANTED. In addition, Plaintiffs’ motion for an award of attorney fees,
reimbursement of expenses, and payment of service awards to the class representatives is
GRANTED. Appropriate Orders accompany this Opinion. One Order addresses the settlement
and the other concerns the fee, expenses, and award application.
Dated: October20, 2017.
Joh1 Michael Vazie I.$.D.J.
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