The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
IN RE: NOVARTIS AND PAR
ANTITRUST LITIGATION
Case No. 1:18-cv-04361 (AKH)
THIS DOCUMENT RELATES TO:
All Direct Purchaser Class Actions
~qPRGROSPP| ORDER GRANTING DIRECT PURCHASER CLASS PLAINTIFFS’
UNOPPOSED MOTION FOR CERTIFICATION OF A SETTLEMENT CLASS,
APPOINTMENT OF CLASS COUNSEL, PRELIMINARY APPROVAL OF PROPOSED
SETTLEMENT, APPROVAL OF THE FORM AND MANNER OF NOTICE TO THE
CLASS AND PROPOSED SCHEDULE FOR A FAIRNESS HEARING
Upon review and consideration of Direct Purchaser Class Plaintiffs’ Unopposed Motion
for Certification of a Settlement Class, Appointment of Class Counsel, Preliminary Approval of
Proposed Settlement, Approval of the Form and Manner of Notice to the Class, Proposed
Schedule for a Fairness Hearing, and exhibits thereto, and any hearing thereon, IT IS HEREBY
ORDERED, ADJUDGED AND DECREED that said motion is GRANTED as follows:
Jurisdiction
1. This Order hereby incorporates by reference the definitions in the Settlement
Agreement among Novartis, Named Plaintiffs, and the Direct Purchaser Class, and all capitalized
terms used and not otherwise defined herein shall have the meanings set forth in the Settlement
Agreement.
2. This Court has jurisdiction over each of the named plaintiffs, Drogueria Betances,
LLC (“Betances”), Rochester Drug Co-Operative, Inc. (“RDC”), FWK Holdings, LLC (“FWK”)
and KPH Healthcare Services, Inc., a/k/a Kinney Drugs, Inc. (“KPH”) (collectively the “Named
Plaintiffs” or “Direct Purchaser Class Plaintiffs”) and Novartis Pharmaceuticals Corporation and
Novartis AG (collectively “Novartis”), and jurisdiction over the litigation to which Direct
Purchaser Class Plaintiffs and Novartis are parties.
Certification of the Proposed Class
The Court makes the following determinations as required by Federal Rule of
Civil Procedure 23 solely in connection with the proposed settlement:
3. Pursuant to Rule 23(c)(1)(B), the Class, which shall hereinafter be denominated
“the Class,” is defined as follows:
All persons or entities in the United States, including its territories,
possessions, and the Commonwealth of Puerto Rico, who
purchased Exforge directly from Novartis, or who purchased a
generic version of Exforge directly from Par, at any time during
the Class Period from September 21, 2012, until March 30, 2015.
(“Exforge Direct Purchasers”). Excluded from the Class are
Novartis and Par and their officers, directors, management and
employees, predecessors, subsidiaries and affiliates, and all federal
governmental entities.
Also excluded from the Class for purposes of this Settlement
Agreement are the following entities: CVS Pharmacy, Inc. (which
includes Omnicare), Rite Aid Corporation, Rite Aid Hdqtrs. Corp.,
Walgreen Co., The Kroger Co. (which includes Peytons), and H-E-
B LP. (“Retailer Plaintiffs”).
4. Pursuant to Rule 23(a)(1), the Court determines that the Class is so numerous and
geographically dispersed that joinder of all members is impracticable. The Class has (at least) 50
members geographically dispersed throughout the United States, which is sufficient to satisfy the
impracticality of joinder requirement of Rule 23(a)(]).
5. Pursuant to Rule 23(c)(1)(B), the Court determines that the following issues
relating to claims and/or defenses (expressed in summary fashion) present common, class-wide
questions:
a. whether Novartis and Par Pharmaceutical, Inc. (“Par”) conspired to
suppress generic competition to Exforge;
b. whether Par agreed to delay its entry into the market with generic Exforge;
c. whether Novartis made a large reverse payment to Par;
d. whether Novartis’s reverse payment to Par was for a purpose other than
the delayed entry of generic Exforge;
e. whether Novartis’s reverse payment to Par and Par’s associated delayed
launch of generic Exforge were reasonably necessary to yield and/or were
the least restrictive means of yielding a procompetitive benefit that is
cognizable and non-pretextual;
f. whether Novartis’s challenged conduct is illegal under the antitrust rule of
reason;
g. whether Novartis’s challenged conduct suppressed generic competition to
Exforge;
h. whether Novartis possessed market or monopoly power over Exforge;
i. to the extent a relevant market must be defined, what that definition is;
j. whether the activities of Novartis’s have substantially affected interstate
commerce;
k. whether, and to what extent, Novartis’s conduct caused antitrust injury
(overcharges) to Direct Purchaser Class Plaintiffs and the Direct Purchaser
Class; and
l. the quantum of overcharge damages paid by the Direct Purchaser Class in
the aggregate.
6. The Court determines that the foregoing class wide issues relating to claims and/or
defenses are questions of law or fact common to the Class that satisfy Rule 23(a)(2).
7. The Named Plaintiffs are hereby appointed as representatives of the Class, for the
following reasons:
a. The Named Plaintiffs allege, on behalf of the Class, the same manner of
injury from the same course of conduct that they complain of themselves,
and assert on their own behalf the same legal theory that they assert for the
Class. The Court therefore determines that the Named Plaintiffs’ claims
are typical of the claims of the proposed Class within the meaning of Rule
23(a)(3); and
b. Pursuant to Rule 23(a)(4), the Court determines that the Named Plaintiffs
Betances, RDC, FWK, and KPH will fairly and adequately protect the
interests of the Class. The Named Plaintiffs’ interests do not conflict with
the interests of absent members of the Class. All of the members of the
Class share a common interest in proving Novartis’s and Par’s alleged
anticompetitive conduct, and all Class Members share a common interest
in recovering the overcharge damages sought in the Complaint. Moreover,
the Class is made up of business entities and any Class Member that
wishes to opt out will be given an opportunity to do so. Furthermore, the
Named Plaintiffs are well qualified to represent the Class in this case,
given their experience in prior cases, and the vigor with which they have
prosecuted this action thus far.
8. Pursuant to Rule 23(b)(3), the Court determines that, in connection with and solely
for purposes of settlement, common questions of law and fact predominate over questions
affecting only individual members. In light of the classwide claims, issues, and defenses set forth
above, the issues in this action that are subject to generalized proof, and thus applicable to the
Class as a whole, predominate over those issues that are subject only to individualized proof. See
Sykes v, Mel S. Harris & Assocs. LLC, 780 F.3d 70, 81-82 (2d Cir. 2015).
9. Also pursuant to Rule 23(b)(3), the Court determines that, in connection with and
solely for purposes of settlement, a class action is superior to other available methods for the fair
and efficient adjudication of this action. The Court believes it is desirable, for purposes of
judicial and litigation efficiency, to concentrate the claims of the Class in a single action. The
Court also believes that there are few manageability problems presented by a case such as this,
particularly in light of the Settlement preliminarily approved in this Order.
10. Pursuant to Fed. R. Civ. P. 23(c)(1)(B) and 23(g), the Court having considered the
factors provided in Rule 23(g)(1)(A), the Court appoints Garwin Gerstein & Fisher LLP as lead
counsel, having previously appointed that firm as interim lead counsel on August 3, 2018. ECF
No. 59 4 8.
Preliminary Approval of the Proposed Settlement
11. Pursuant to Rule 23(e)(1)(B)(i), the Court finds that it will likely be able to
approve the Settlement under Rule 23(e)(2), and therefore preliminarily approves the Settlement
as set forth in the Settlement Agreement, including the releases contained therein, as being fair,
reasonable and adequate to the Class based on the relevant factors under Rule 23(e)(2) and City
of Detroit v. Grinnell Corporation, 495 F.2d 448, 463 (2d Cir. 1974), subject to the right of any
class member to challenge the fairness, reasonableness or adequacy of the Settlement Agreement
and to show cause, if any exists, why a final judgment dismissing the Action against Novartis,
and ordering the release of the Released Claims against Releasees, should not be entered after
due and adequate notice to the Class as set forth in the Settlement Agreement and after a hearing
on final approval.
12. The Court finds that the proposed settlement, which includes a cash payment of
$126,850,000 by Novartis into an escrow account for the benefit of the Class (the “Settlement
Fund”) in exchange for, inter alia, dismissal of the litigation between Direct Purchaser Class
Plaintiffs and Novartis with prejudice and releases of certain claims against Novartis by Direct
Purchaser Class Plaintiffs and the Class, as set forth in the Settlement Agreement, was arrived at
by arm’s-length negotiations by highly experienced counsel after years of litigation and a
mediation led by experienced mediator Eric D. Green, falls within the range of possibly
approvable settlements, and is hereby preliminarily approved, subject to further consideration at
the Fairness Hearing provided for below.
Approval of the Plan of Notice to the Class and Plan of Allocation
13. The proposed form of Notice to Class Members of the pendency of this Class
Action and the proposed Settlement thereof (annexed as Exhibit B to the Settlement Agreement)
satisfies the requirements of Rule 23(e) and due process, is otherwise fair and reasonable, and
Woe is approved. Class Counsel shall cause the Notice substantially in the form attached to
the Settlement Agreement to be disseminated by i[23]23 , 2023 (15 days following the entry of
this Order) via first-class mail to the last known address of each entity that purchased Exforge
and/or generic Exforge directly from Novartis and Par respectively during the Class Period.
14. Members of the Class may request exclusion from the Class or object to the
Settlement no later than 3 | 97 / 23, 2023 36 days from the date that the Notice is mailed to
each member of the Class). Class Counsel or their designee shall monitor and record any and all
opt-out requests that are received.
15. Pursuant to the Class Action Fairness Act of 2005 (““CAFA”) Novartis shall serve
notices as required under CAFA within 10 days from the date Direct Purchaser Class Plaintiffs
file the Settlement Documents with the Court. Novartis shall contemporaneously provide Class
Counsel with copies of any such notices.
16. The Court appoints RG/2 Claims Administration to serve as claims administrator
and to assist Class Counsel in disseminating the Notice. All expenses incurred by the claims
administrator must be reasonable, are subject to Court approval, and shall be payable solely from
the Settlement Fund. The proposed Plan of Allocation satisfies the requirements of Rule 23(e), is
otherwise fair and reasonable, and is, therefore, preliminarily approved, subject to further
consideration at the Final Fairness Hearing
17. The Court appoints The First State Trust Company to serve as Escrow Agent for
the purpose of administering the escrow account holding the Settlement Fund. All expenses
incurred by the Escrow Agent must be reasonable, are subject to Court approval, and shall be
payable solely from the Settlement Fund. A copy of the Escrow Agreement executed by The
First State Trust Company and Plaintiffs’ Counsel is annexed as Exhibit D to the Settlement
Agreement. The Court approves the establishment of the Settlement Fund under the Settlement
Agreement as a qualified settlement fund (“QSF”) pursuant to Internal Revenue Code Section
468B and the Treasury Regulations promulgated thereunder, and retains continuing jurisdiction
as to any issue that may arise in connection with the formation and/or administration of the QSF.
Plaintiffs’ Counsel are, in accordance with the Settlkement Agreement, authorized to expend
funds from the QSF for the payment of the costs of notice, payment of taxes, and settlement
administration costs
Final Fairness Hearing
18. A hearing on final approval (the “Fairness Hearing”) shall be held before this
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Court at 7 AP gy Woe “4 f b, 2624 ,2023¢at the United States District Court AG
for the Southern District of New York, 500 Pearl Street, Courtroom 14D, New York, NY 10007-
1312. At the Fairness Hearing, the Court will consider, inter alia: (a) the fairness,
reasonableness and adequacy of the Settlement and whether the Settlement should be finally
approved; (b) whether the Court should approve the proposed plan of distribution of the
Settlement Fund among Class members; (c) whether the Court should approve awards of
attorneys’ fees and reimbursement of expenses to Class Counsel; (d) whether service awards
should be awarded to the Named Plaintiffs; and (e) whether entry of a Final Judgment and Order
terminating the litigation between Direct Purchaser Class Plaintiffs and Novartis should be
entered. The Fairness Hearing may be rescheduled or continued; in this event, the Court will
furnish all counsel with appropriate notice. Class Counsel shall be responsible for
communicating any such notice promptly to the Class by posting a conspicuous notice on Class
Counsel’s website, www.garwingerstein.com.
19. Class members who wish to: (a) object with respect to the proposed Settlement;
and/or (b) wish to appear in person at the Fairness Hearing, must first send an Objection and, if
intending to appear, a Notice of Intention to Appear, along with a Summary Statement outlining
the position(s) to be asserted and the grounds therefore together with copies of any supporting
papers or briefs, via first class mail, postage prepaid, to the Clerk of the United States District
Court for the Southern District of New York, 500 Pearl Street, New York, NY 10007-1312, with
copies to the following counsel:
On behalf of Direct Purchaser Class Plaintiffs and the Class:
Bruce E, Gerstein
Dan Litvin
GARWIN GERSTEIN & FISHER, LLP
Wall Street Plaza
88 Pine Street, 10th Floor
New York, NY 10005
bgerstein@garwingerstein.com
dlitvin@garwingerstein.com
On behalf of Novartis:
Evan R. Chesler
Rachel G. Skaistis
CRAVATH, SWAINE & MOORE LLP
Worldwide Plaza
$25 Eighth Avenue
New York, NY 10019
(212) 474-1000
echesler@cravath.com
rskaistis@cravath.com
To be valid, any such Objection and/or Notice of Intention to Appear and Summary □□□□
| j 3
statement must be postmarked no later than 4 z , 2023 ot days from the date
that the Notice is mailed to each member of the Class). Except as herein provided, no person or
entity shall be entitled to contest the terms of the proposed Settlement. All persons and entities
who fail to file an Objection and/or Notice of Intention to Appear as well as a Summary
Statement as provided above shall be deemed to have waived any such objections by appeal,
collateral attack or otherwise and will not be heard at the Fairness Hearing.
20. All briefs and materials in support of the final approval of the settlement and the
entry of Final Judgment proposed by the parties to the Settlement Agreement shall be filed with
the Court by 3 | 30 23 , 2023 (21 days after the expiration of the deadline for Class é
members to request exclusion from the Class or object to the Settlement and/or attorney’s fees,
expenses and service awards).
21. All briefs and materials in support of the application for an award of attorneys’
fees and reimbursement of expenses, and service awards for the Named Plaintiffs, shall be filed
with the Court by & a 7 [ 2-3 , 2023 (14 days prior to the expiration of the deadline M
for Class members to request exclusion from the Class or object to the Settlement and/or
attorney’s fees, expenses and service awards).
22. All proceedings in the action between the Direct Purchaser Class Plaintiffs and
Novartis are hereby stayed until such time as the Court renders a final decision regarding the
approval of the Settlement and, if the Court approves the Settlement, enters Final Judgment and
dismisses such actions with prejudice.
23. Neither this Order, nor the Settlement Agreement, nor any other Settlement-related
document, nor anything contained herein or therein or contemplated hereby or thereby, nor any
proceedings undertaken in accordance with the terms set forth in the Settlement Agreement or
herein or in any other Settlement-related document, shall constitute, be construed as or be
deemed to be evidence of or an admission or concession by Novartis as to the validity of any
claim that has been or could have been asserted by Direct Purchaser Class Plaintiffs against
Novartis or as to any liability by Novartis as to any matter set forth in this Order, or as to
whether any class, in this case or others, may be certified for purposes of litigation and trial.
g. |\
SO ORDERED this 6 _ day of tay » 2023
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A A vy
¢ Honorable Alvin K. Hellerstein
nited States District Judge :