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Meijer, Inc. v. Warner Chilcott Holdings Co. III

July 10, 2008

MEIJER, INC., ET AL., PLAINTIFFS,
v.
WARNER CHILCOTT HOLDINGS COMPANY III, LTD., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

This matter comes before the Court on the Direct Purchaser Class Plaintiffs' Motion [179] for Final Approval of Settlement With Warner Chilcott Defendants Only. The Direct Purchaser Class Plaintiffs previously moved for preliminary approval of the settlement, which the Court granted by Order dated January 2, 2008. The Direct Purchaser Class Plaintiffs filed their Motion for Final Approval on May 27, 2008. On June 30, 2008, the Court held a fairness hearing related to the settlement, as required by Federal Rule of Civil Procedure 23(e). The arguments and representations made on the record during that fairness hearing are hereby expressly incorporated and made a part of this Memorandum Opinion.

Upon a searching review of the Direct Purchaser Class Plaintiffs' Motions for preliminary and final approval of the settlement, the arguments and representations made at the fairness hearing, the relevant statutes and case law, and the entire record herein, the Court shall grant the Direct Purchaser Class Plaintiffs' [179] Motion for Final Approval of Settlement With Warner Chilcott Defendants Only.

BACKGROUND

A. Factual and Procedural Background

Plaintiffs--Meijer, Inc., Meijer Distribution, Inc., Louisiana Wholesale Drug Co., Inc., Rochester Drug Co-operative, Inc., American Sales Company, Inc., SAJ Distributors, Inc., and Stephen L. LaFrance Holdings, Inc. (collectively "Direct Purchaser Class Plaintiffs" or "Plaintiffs")--brought this action pursuant to Federal Rule of Civil Procedure 23 on behalf of themselves and a class of direct purchasers of Ovcon 35 during the period April 22, 2004 through December 31, 2006.*fn1 The Direct Purchaser Class Plaintiffs named as Defendants to this action Warner Chilcott Holdings Company III, Ltd., Warner Chilcott Corporation, Warner Chilcott (US) Inc., Warner Chilcott Company, Inc., Galen (Chemicals), Ltd. (together "Warner Chilcott"), and Barr Pharmaceuticals, Inc. ("Barr") (collectively with Warner Chilcott, "Defendants").

This action began in November 2005 with the filing of six separate complaints in six separate actions by various Direct Purchaser Class Plaintiffs. 5/27/08 Decl. of Linda P. Nussbaum, Esq. in Support of Direct Purchaser Plaintiffs' Motion, attached as exhibit thereto (hereinafter "Nussbaum Decl.") ¶ 4. Each of the complaints alleged that Warner Chilcott and Barr had violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by illegally delaying the entry of a generic version of Warner Chilcott's Ovcon 35 onto the market. Id. In particular, the complaints alleged that, in exchange for a $20 million payment from Warner Chilcott, Barr agreed not to sell its generic Ovcon 35 in competition with Warner Chilcott's Ovcon 35. Id. According to the complaints, this agreement denied direct purchasers of Ovcon 35 the benefits of generic competition and caused them to pay higher prices for Ovcon 35. Id. At or around the same time as the filing of the Direct Purchaser Class Plaintiffs' complaints, related actions involving the same factual allegations were filed by the Federal Trade Commission, the Attorneys' General of thirty-four (34) States and the District of Columbia, individual direct purchasers, an indirect purchaser class, and a third party payor class. Id. ¶ 5. On April 14, 2006, the Direct Purchaser Class Plaintiffs filed an Amended Class Action Complaint in the above-captioned action and dismissed the other actions brought by Direct Purchaser Class Plaintiffs. See 4/4/06 Minute Order; Am. Class Act. Compl., Docket No. [30].

The Court entered a scheduling order regarding fact and expert discovery between the parties to this action. Pursuant to that scheduling order, since March 2006, extensive document, deposition, and expert discovery has taken place. Nussbaum Decl. ¶ 6. In particular, Defendants produced more than 1.3 million pages of documents, and third parties--pursuant to subpoenas-- have produced thousands of additional pages of documents, all of which have been reviewed and analyzed by teams of attorneys and paralegals for the Direct Purchaser Class. Id. Further, in conjunction with the plaintiffs in the other related actions, the Direct Purchaser Class Plaintiffs took and defended the depositions of more than 25 fact witnesses, more than a dozen experts, and numerous third parties. Id. Direct Purchaser Class Counsel took the lead in many of these depositions, which included the depositions of Barr's and Warner Chilcott's experts. Id. In addition, Direct Purchaser Class Counsel retained experts as to the pharmaceutical industry and economics, damages, and pharmaceutical supply chain issues, and consulted with these experts "regarding economic, pharmaceutical, and marketing issues, including the quantification of damages incurred by the Direct Purchaser Class." Id.

After the completion of this extensive discovery, which included the submission of expert reports and the taking and defending of expert depositions, the Direct Purchaser Class Plaintiffs filed their motion for class certification. Id. ¶ 7. Defendants vigorously opposed the motion for class certification, and on October 22, 2007, the Court issued a Memorandum Opinion and Order certifying the class, as defined in note 1, above. Id.; see generally 10/22/07 Class Cert. Mem. Op., Docket No. [143] and Order, Docket No. [137]. During the course of the class certification litigation, Defendants took the deposition of substantial absent class members, and Class Counsel secured the support and confidence of three such absent class members, known as the "Big Three" National Wholesalers--Cardinal Health, Inc., AmerisourceBergen Corp., and McKesson Corp. Nussbaum Decl. ¶ 4; see also Class Cert. Mem. Op., Docket No. [143] at 20-22. Finally, on November 14, 2007, the Direct Purchaser Class Plaintiffs filed a motion for partial summary judgment, see Docket Nos. [149] and [150], in which they argued that Defendants committed a per se violation of Section 1 of the Sherman Act. Barr filed a cross-motion for summary judgment. See Docket No. [157]. Warner Chilcott did not file a motion for summary judgment as the settlement negotiations between Warner Chilcott and the Direct Purchaser Class Plaintiffs had already begun. See 11/27/07 Minute Order. The cross-motions for summary judgment filed by the Direct Purchaser Class Plaintiffs and Barr are currently pending before this Court.

The Court initially referred this action to Magistrate Judge Alan Kay for mediation on November 13, 2006, at the request of the parties. See Docket No. [78]. Over the course of the following year, settlement negotiations between the Direct Purchaser Class Plaintiffs and Warner Chilcott occurred intermittently, via both in-person meetings and telephone calls with Magistrate Judge Kay, as well as private discussions between the parties. Nussbaum Decl. ¶ 9. On November 28, 2007, the Direct Purchaser Class Plaintiffs and Warner Chilcott entered into a Settlement Agreement of the Direct Purchaser Class Plaintiffs' claims against Warner Chilcott. Id. ¶ 10. A copy of that Settlement Agreement is attached at Exhibit A to Direct Purchaser Class Plaintiffs' Motion and the Court has thoroughly reviewed it. See Pls.' Mem., Ex. A. On December 7, 2007, Direct Purchaser Class Plaintiffs filed a Motion for Preliminary Approval of the Partial Settlement with Warner Chilcott. Id. ¶ 11; Docket No. [158]. On January 2, 2008, the Court entered an Order preliminarily approving the settlement with Warner Chilcott, amending the Class definition for purposes of the Settlement Agreement, see supra note 1, approving the Direct Purchaser Class Plaintiffs' proposed form of Notice, and directing Class Counsel to cause the dissemination of the Notice to the Class. See Docket No. [172]; Nussbaum Decl. ¶ 11.

B. The Terms of the Settlement Agreement

Pursuant to the Settlement Agreement, Warner Chilcott paid the Class nine million dollars ($9,000,000.00) into an escrow account within five days after the date this Court granted preliminary approval of the Settlement. Nussbaum Decl. ¶ 10; Pls.' Mem., Ex. A ¶ 6. In addition, Warner Chilcott agreed to cooperate with the Direct Purchaser Class Plaintiffs in certain ways in connection with their continued litigation of their claims against Barr in this action. Nussbaum Decl. ¶ 10; Pls.' Mem., Ex. A ¶ 14. In particular, Warner Chilcott agreed to produce additional documents to the Direct Purchaser Class Plaintiffs and to provide certificates of authenticity for documents that the Direct Purchaser Class Plaintiffs plan to use at trial against Barr. Nussbaum Decl. ¶ 10; Pls.' Mem., Ex. A ¶ 14. Further, Warner Chilcott agreed that certain experts it retained will not testify in this action and that those experts' reports and testimony are withdrawn. Nussbaum Decl. ¶ 10; Pls.' Mem., Ex. A ¶ 14. Direct Purchaser Class Plaintiffs and their counsel assert that "[t]his cooperation has real value in Plaintiffs' continuing litigation against Barr." Pls.' Mem. at 6; Nussbaum Decl. ¶ 10.

C. Form and Manner of Notice to the Class

As approved by the Court in its January 2, 2008 Order preliminarily approving the Settlement with Warner Chilcott, see Docket No. [172], EPIQ Systems served as Claims Administrator for the Settlement and oversaw the dissemination of Notice to the identified Class members. Nussbaum Decl. ¶ 12. On January 24, 2008, all entities that were identified as potential Class members in Warner Chilcott's business records were sent a copy of the Notice via first class mail. Id.; see also 5/19/08 Decl. of Michael Evans of EPIQ Systems Concerning the Mailing of Notice, filed as Exhibit to Plaintiffs' Motion (hereinafter "EPIQ Decl.") ¶¶ 1-4. EPIQ initially sent ninety-two Notices (ninety-one on January 24, 2008 and another on February 29, 2008). EPIQ Decl. ¶ 4. Of the Notices mailed, through May 15, 2008, EPIQ received sixteen Notices returned as undeliverable, and was able to re-mail five Notices based on updated mailing information. Id. EPIQ determined that the remaining 11 Notices returned as undeliverable were redundant mailings to subsidiaries of parent companies identified as potential Class members. Id. To the best of EPIQ's knowledge, a copy of the Notice has been sent to all parent companies identified as Class members. Id. During the June 30, 2008 Fairness Hearing in this matter, counsel for the Direct Purchaser Class Plaintiffs clarified ...


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