District Court Grants Final Approval of $120 Million Settlement in Loestrin, Faruqi & Faruqi, LLP, Co-Lead Counsel

On August 27, 2020, Chief Judge William E. Smith of the District of Rhode Island granted final approval of a $120 million settlement of antitrust claims asserted on behalf of a certified class of direct purchasers of the drug Loestrin in In re Loestrin 24 Fe Antitrust Litigation, Civ. No. 13-md-02472 (D.R.I. Aug. 27, 2020).  Chief Judge Smith also awarded attorneys’ fees equaling one-third of the settlement fund, an amount in excess of $38 million.  In doing so, Chief Judge Smith praised the high-quality of counsels’ “vigorous” and “rigorous” work performed over seven years of hard-fought litigation.  Faruqi & Faruqi partner Peter Kohn served as co-lead counsel in the case.

Plaintiffs’ allegations included patent fraud, a pay-for-delay deal, and a product hop from Loestrin 24 to Minastrin 24.  As the Court summarized it in a prior decision, “Plaintiffs’ case . . . is simply that generics should have been available for them to purchase earlier.  And indeed they would have been but for Defendants’ allegedly anticompetitive conduct, including:  protecting Loestrin with a patent Warner Chilcott knew was invalid; filing sham patent infringement lawsuits against prospective generic entrants; settling those suits to split monopoly profits; and formulating a new drug (Minastrin) only to limit generic substitution.”  Docket No. 1380 at 2-3 (citation omitted).

However, while plaintiffs’ claims could be stated simply, the litigation was anything but simple.  In a Report and Recommendation supporting counsel’s fee request, Magistrate Judge Patricia Sullivan, who presided over various parts of the case during its seven-year course, described the nebulous legal landscape as it existed at the beginning of the case: “With no definitive guidance from the Supreme Court regarding the viability of an antitrust claim based on the anticompetitive effects of a reverse payment settlement of patent litigation involving a branded pharmaceutical, and no government investigation to make the path straight, in March 2012, DPP [Direct Purchaser Plaintiff] Counsel began their pre-suit investigation of what became the DPP actions.” Docket No. 1443 at 3.

And in fact, the complaint in the case was at first dismissed, on the grounds that the reverse-payment at issue was not a bald cash transfer, but rather was concealed through favorable side-deals granted from the brand to the generic manufacturers.  An appeal to the First Circuit resulted in a reversal, and one of the earliest interpretations by an intermediate appellate court of the Supreme Court’s decision in FTC v. Actavis, 570 U.S. 136 (2013).  See In re Loestrin 24 Fe Antitrust Litig., 814 F.3d 538 (1st Cir. 2016).

After their success before the First Circuit, counsel continued to litigate through a second motion to dismiss, certification of a Class of direct purchasers (which included another successful trip to the First Circuit, this time to defeat Defendants’ appeal of certification of the Class), and defeat of Defendants’ motion for summary judgment aimed at every aspect of the Class’s claims.  With trial approaching in early 2020, counsel filed and defended motions in limine and engaged in trial preparation and jury selection.  

Settlement of the Class’s claims was reached only days before counsel were prepared to go to trial.  In her Report and Recommendation, Magistrate Judge Sullivan noted that the settlement represented a significant percentage of the Class’ alleged damages, and recognized the enormous effort it took to get to reach that result:

I further find that DPP Counsel have demonstrated that they are skillful and well-experienced and that they have effectively and efficiently prosecuted this complex and protracted litigation to the benefit of the DPP Class. This work arced over almost seven years in this Court, ongoing for close to eight years, with DPP Counsel achieving ultimate and hard-fought success in establishing the legal viability of the DPP Class claims, in one of the first cases following Actavis, and in continuing the fight to the brink of trial, including full-blown trial preparation. . . . I find that, over the years since the work began, DPP Counsel undertook numerous and significant risks, performed excellent work on behalf of the DPP Class with no guarantee that they would be compensated and reasonably expended millions of dollars in out-of-pocket expenses with no guarantee of reimbursement.

Docket No. 1443 at p 11-12.

Counsel were further pleased to report that no class member elected to opt-out of the settlement, or object to it or the attorneys’ fee award.  Faruqi & Faruqi, and all of Class counsel in this case, are extremely proud of this result to the benefit of our clients and the members of the Direct Purchaser Class.

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