In re Lorazepam & Clorazepate Antitrust Litig.

Opinion

 [*99]  ROGERS, Circuit Judge: This appeal presents for the first time in this circuit the threshold question of when interlocutory review of a class certification decision is appropriate under Federal Rule of Civil Procedure 23(f). We take the opportunity to offer general guidance on the scope of our discretion under Rule 23(f) in considering the petition for Rule 23(f) review by Mylan Laboratories, Inc., Mylan Pharmaceuticals, Inc., UDL Laboratories, Inc., Profarmaco S.r.l., Cambrex Corporation, and GYMA Laboratories of America, Inc. (collectively "Mylan"), of the district court's certification of a class [**2]  of direct purchasers of the generic anti-anxiety drugs lorazepam and clorazepate from Mylan or UDL. Mylan contends that the district court erred in ruling that despite the Federal Trade Commission's ("FTC") procurement of a settlement against Mylan on behalf of a class of indirect purchasers, a class of direct purchasers had antitrust standing under Illinois Brick Co. v. Illinois, 431 U.S. 720, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977), and, in the alternative that the certified class consists of both direct and indirect purchasers in violation of Illinois Brick. ] We conclude that interlocutory appeal pursuant to Rule 23(f) typically is appropriate in three circumstances: (1) when there is a death-knell situation for either the plaintiff or defendant that is independent of the merits of the underlying claims, coupled with a class certification decision by the district court that is questionable, taking into account the district court's discretion over class certification; (2) when the certification decision presents an unsettled and fundamental issue  [*100]  of law relating to class actions, important both to the specific litigation and generally, that is likely to evade [**3]  end-of-the-case review; and (3) when the district court's class certification decision is manifestly erroneous. Applying these standards we deny Mylan's petition for interlocutory review.

The class action now pending in the district court was preceded by two lawsuits brought by the FTC and several States' Attorneys General against Mylan that were ultimately consolidated and ended in a settlement. On December 21, 1998, the FTC filed suit, pursuant to §§ 5 and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45, 53(b), against Mylan, Cambrex, Profarmaco, and GYMA Laboratories, seeking injunctive and equitable relief, including disgorgement of $ 120 million plus interest.  FTC v. Mylan Labs., Inc., 62 F. Supp. 2d 25, 32, 34 (D.D.C. 1999). The amended complaint alleged that the defendants had engaged in unfair methods of competition in violation of § 5(a) of the FTC Act, 15 U.S.C. § 45(a), by Mylan's entering into exclusive licensing agreements with the other defendants, allowing Mylan to control the supply of the active pharmaceutical ingredients ("API") for generic lorazepam and clorazepate tablets [**4]  so that Mylan could increase the price of these generic drugs. On December 22, 1998, the Attorneys General of ten States, later joined by an additional 22 States and the District of Columbia, brought suit against the same defendants and SST Corporation, seeking equitable relief and treble damages for violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and various State antitrust laws. Mylan, 62 F. Supp. 2d at 32; see also  In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 373 (D.D.C. 2002). As to the FTC, the district court denied the defendants' motion to dismiss, which argued that the district court lacked subject matter jurisdiction because the FTC was not authorized to seek either monetary relief or a permanent injunction in an antitrust case. Mylan, 62 F. Supp. 2d at 35-37. As to the States, the district court partially granted the defendants' motion to dismiss, inter alia, narrowing the States' federal claims to claims under § 4 of the Clayton Act for direct purchases and limiting restitution and disgorgement on behalf of indirect purchasers on a State-by-State basis. Id. at 37-53; [**5]  see also  FTC v. Mylan Labs., Inc., 99 F. Supp. 2d 1, 4-10 (D.D.C. 1999). Subsequently, the parties entered into a settlement agreement, which the district court approved on February 1, 2002. Mylan, 205 F.R.D. at 402. The settlement agreement provided, in part, that Mylan would pay disgorgement in the amount of $ 71,782,017 to satisfy the consumer claims in the States' lawsuit and $ 28,217,983 to satisfy the States' agency claims. The settlement agreement also provided that the FTC, States, State agencies, and consumers who did not exclude themselves from the settlement, would release their claims against the defendants.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.