In Re: Niaspan Antitrust Litigation v.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 21-2895

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IN RE: NIASPAN ANTITRUST LITIGATION

A.G.C. Building Trades Welfare Plan;

City of Providence, Rhode Island;

Electrical Workers 242 and 294 Health & Welfare Fund;

International Union of Operating Engineers Local 49 Health

and Welfare Fund; International Union of Operating

Engineers Local 132 Health and Welfare Fund;

New England Electrical Workers Benefits Fund;

Painters District Council No. 30 Health & Welfare Fund;

United Food & Commercial Workers Local 1776 &

Participating Employers Health and Welfare Fund; Miles

Wallis; Carol Prasse,

Appellants

_______________

On Appeal from the United States District Court

For the Eastern District of Pennsylvania

(D.C. No. 2-13-md-02460)

District Judge: Honorable Timothy J. Savage

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Argued

September 6, 2022

Before: JORDAN, HARDIMAN and MATEY, Circuit

Judges

(Filed: April 24, 2023)

_______________

Justin N. Boley

Tyler J. Story

Kenneth A. Wexler

Wexler Boley & Elgersma

311 South Wacker Drive – Ste. 5450

Chicago, IL 60606

Richard M. Brunell

Steve D. Shadowen

Hilliard & Shadowen

1135 West 6th Street – Ste. 125

Austin, TX 78703

Michael M. Buchman

Motley Rice

777 Third Avenue – 27th Fl.

New York, NY 10017

Ruthanne M. Deutsch

Hyland Hunt [ARGUED]

Alexandra P. Mansbach

Deutsch Hunt

300 New Jersey Avenue, NW – Ste. 900

Washington, DC 20001

2

Marvin A. Miller

Miller Law

145 South Wells Street – 18th Fl.

Chicago, IL 60606

Jeffrey L. Kodroff

John A. Macoretta

Spector Roseman & Kodroff

2001 Market Street – Ste. 3420

Philadelphia, PA 19103

Sharon K. Robertson

Cohen Milstein

88 Pine Street – 14th Fl.

New York, NY 10005

Counsel for Appellant

Elaine J. Goldenberg [ARGUED]

Sarah Weiner

Munger Tolles & Olson

601 Massachusetts Avenue, NW – Ste. 500e

Washington, DC 20001

Paul H. Saint-Antoine

John S. Yi

Faegre Drinker Biddle & Reath

One Logan Square – Ste. 2000

Philadelphia, PA 19103

3

Stuart N. Senator

Jeffrey Y. Wu

Munger Tolles & Olson

350 S. Grand Avenue – 50th Fl.

Los Angeles, CA 90071

Counsel for Appellees Abbott Laboratories,

Abbott Respiratory LLC and Abbvie Inc.

Devora W. Allon

Kirkland & Ellis

601 Lexington Avenue

New York, NY 10022

Alexandra I. Russell

Kirkland & Ellis

1301 Pennsylvania Avenue, NW

Washington, DC 20004

Counsel for Appellees Barr Pharmaceuticals LLC,

Duramed Pharmaceuticals Sales Corp., Teva

Pharmaceutical Industries Ltd. Teva

Pharmaceuticals USA Inc., Teva Women’s Health

Inc. f/k/a Duramed Pharmaceuticals, Inc.

Matthew J. Perez

DiCello Levitt

485 Lexington Avenue – 10th Fl.

New York, NY 10017

4

Gary I. Smith, Jr.

Hausfield

325 Chestnut Street – Ste. 900

Philadelphia, PA 19106

Counsel for Amicus Committee to Support

the Antitrust Laws

Cory L. Andrews

John M. Masslon, II

Washington Legal Foundation

2009 Massachusetts Avenue, NW

Washington, DC 20036

Counsel for Amicus Washington Legal Foundation

Randy Stutz

10418 Ewell Avenue

Kensington, MD 20895

Counsel for Amicus American Antitrust Institute

Adam G. Unikowsky

Jenner & Block

1099 New York Avenue, NS – Ste. 900

Washington DC 20001

Counsel for Amicus Chamber of Commerce of

The United States of America

_______________

OPINION OF THE COURT

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5

JORDAN, Circuit Judge.

The Appellants, a group consisting primarily of union

health and welfare insurance plans, claim that Abbvie, Inc., the

manufacturer of the drug Niaspan, paid off a potential

manufacturer of a generic version of the drug to delay the

generic’s launch. This putative class action was brought to

recover damages based on the allegedly inflated prices charged

by Abbvie in violation of state antitrust and consumer

protection laws, and this appeal concerns the District Court’s

denial of the motion for class certification. For reasons more

fully discussed herein, the District Court held that the class was

not ascertainable. In re Niaspan Antitrust Litig., 555 F. Supp.

3d 155, 169 (E.D.P.A. 2021) (“Niaspan III”). The Appellants

now propose to shore up their methodology for demonstrating

ascertainability, but because their new suggestion was not

properly put before the District Court, the argument is

forfeited, and we will not consider its merits. The Appellants

additionally challenge the District Court’s factual findings and

the legal standard the Court applied. As we explain, however,

neither were in error. In their final bid to preserve their case,

the Appellants ask us to reconsider our ascertainability

requirement in its entirety, claiming it is inconsistent with

Federal Rule of Civil Procedure 23. We are not at liberty to do

so and, instead, reiterate our precedent. Accordingly, we will

affirm.

6

I. BACKGROUND

A. Factual Background

1. The Functioning of the Prescription

Drug Market

When consumers with health insurance enter a

pharmacy to pick up their prescription drugs, they typically pay

only a fraction or none of the cost of their medication. Instead,

their prescription drug plan pays most, or all, of the drugs’ cost.

The sponsors of these plans are often called “end-payors” or

“indirect purchasers” of the drugs because they do not purchase

the products directly, as consumers do, but nevertheless pay a

portion or all of the drugs’ price.

Not all end-payors are health plan sponsors, and not all

health plan sponsors are end-payors. The identity of the end-

payor is based on the structure of each particular prescription

drug plan. The sponsor of such plans is usually an employer

or union, and they may organize their health plans as being

fully insured, self-insured, or a hybrid of the two. In a self-

insured health plan, the plan pays for its beneficiaries’

prescription drugs using funds provided by the sponsor and by

its beneficiaries. Because a self-insured plan sponsor bears the

financial risk for the health benefits of its participants, it is an

end-payor of prescription drugs. Conversely, in a fully insured

plan, the plan sponsor pays premiums to a health insurer, and

that insurer bears the financial responsibility for the payments

of prescription drugs, making it, rather than the plan sponsor,

the end-payor.

7

Before a pharmacy fills a prescription for a patient with

a prescription drug plan, it must determine who the end-payor

is and how the payment obligation will be met (i.e., how much

will be paid by the consumer and how much will be paid by the

end-payor). This process, known as “claims adjudication,”

allows consumers to pay only a comparatively small portion,

or none, of a prescription drug’s cost, rather than paying the

entire cost up front and then seeking reimbursement from an

insurer. A small number of companies, called Pharmacy

Benefit Managers (“PBM”), facilitate the claims adjudication

process about fifteen million times a day. The PBM industry

is highly concentrated, with the seven largest PBMs processing

over 90 percent of the annual U.S. prescription drug volume

from 2016 through 2018.

Claims adjudication is made possible through the real-

time exchange of data identifying end-payors. The electronic

system that facilitates this exchange of information was

developed by the National Council for Prescription Drug

Programs (the “NCPDP”). Since 2003, federal regulations

have required the use of the NCPDP Telecommunications

Standards for electronic submission and processing of drug

prescriptions. See Health Insurance Reform: Standards for

Electronic Transactions, 65 Fed. Reg. 50,312, 50,368 (Aug. 17,

2000) (to be codified at 45 C.F.R. pts. 160 and 162). Under

those standards, various reference numbers like Bank

Identification Numbers, Processor Control Numbers, Plan ID

Numbers, and Group Identification Numbers are used to ensure

that each claim is properly routed. The reference numbers tell

the electronic routing system where to direct the claim so that

it can be adjudicated and paid to the pharmacy, ultimately

generating a fixed payment liability between the PBM and the

8

end-payor on whose behalf the funds are transferred to the

pharmacy.

As a result of this virtually instantaneous process

facilitated by PBMs, a pharmacy can immediately know what

amount to charge a patient. In short, “PBMs serve as

intermediaries between prescription-drug plans and the

pharmacies that beneficiaries use.” Rutledge v. Pharm. Care

Mgmt. Ass’n, 141 S. Ct. 474, 478 (2020). When a consumer,

as a direct purchaser of a drug and the beneficiary of a

prescription-drug plan, has a prescription filled, “the pharmacy

checks with a PBM to determine that person’s coverage and

copayment information. After the beneficiary leaves with his

or her prescription, the PBM reimburses the pharmacy for the

prescription, less the amount of the beneficiary’s copayment.

The prescription-drug plan, in turn, reimburses the PBM.” Id.

The PBM data captures only the identity of the entity

responsible for paying it. While health plan sponsors may

contract directly with a PBM to administer their prescription

drug benefits, there are plan sponsors that elect to contract with

yet another intermediary, called a third-party administrator

(“TPA”), to work on their behalf with PBMs. A TPA helps the

sponsor manage their group plan benefits and assists with the

claims adjudication and reimbursement process. A TPA may

be an insurance company or a company dedicated to providing

only TPA services. When an insurer provides TPA services to

another entity but does not provide a fully insured health plan,

it is said to be providing an administrative-services-only plan

and is called an “ASO” in that relationship. A TPA is never an

end-payor because, even though it initially pays for the plan

beneficiaries’ prescriptions, it is later reimbursed. When a

9

sponsor elects to contract with a TPA, the PBM has no

relationship with the end-payor.

2. Niaspan and the Proposed Class

Abbvie Inc. markets and sells Niaspan, a brand-name

prescription drug used to treat lipid disorders, such as high

cholesterol. The active ingredient in Niaspan is niacin, or

vitamin B3, which has been sold as a dietary supplement in the

United States since the early 20th century. In re Niaspan

Antitrust Litig., 42 F. Supp. 3d 735, 742 (E.D. Pa. 2014)

(“Niaspan I”). Niacin, however, has several side effects,

including potential liver toxicity when consumed at high

levels. Id. In the early 1990s, Kos Pharmaceuticals (“Kos”),

later acquired by Abbvie, developed and patented a

therapeutically effective time-released version of niacin, which

does not cause some of the side effects previously associated

with the vitamin, and it marketed the drug using the trademark

Niaspan. Niaspan has been sold by Abbvie – and its

predecessors – since 1997.

In 2001, Barr Pharmaceuticals (“Barr”), later acquired

by Teva Pharmaceutical Industries Ltd., filed an Abbreviated

New Drug Application (“ANDA”) with the Food and Drug

Administration (“FDA”), seeking authorization to manufacture

and sell a generic equivalent of Niaspan. The ANDA process

provides for streamlined FDA approval of generic drugs and,

as part of that process, Barr filed certifications with the FDA

stating that it did not infringe any of the patents on Niaspan or

that those patents were invalid or unenforceable. Kos, before

its acquisition by Abbvie, responded by filing a patent

infringement lawsuit against Barr in 2002. Because Barr was

the first ANDA filer, it would have had, if successful in

10

clearing certain legal and administrative hurdles, a 180-day

period of “exclusive” marketing rights for a Niaspan-

equivalent generic drug. Id. But that period would have been

exclusive only with respect to other ANDA applicants; it

would not have prevented Kos from marketing its own brand-

generic version of that drug. Id. at 471. When a brand-name

drug manufacturer takes such a step, it is said to sell an

“authorized generic.” Id. “Launch of an [authorized generic]

allows the brand-name drug manufacturer to recover some of

the sales and profits it would otherwise lose when an ANDA

applicant begins to market and sell a generic version of that

manufacturer’s brand-name drug.” Id.

Kos began manufacturing an authorized generic so that

it could compete with Barr in the event Barr succeeded in

launching a generic version of Niaspan. Id. at 743. “By the

end of the first quarter of 2005, Kos had accumulated more

than $1.3 million in inventory in anticipation of launching an

[authorized generic].” Id. But the authorized generic was

never sold, and the merits of the patent infringement lawsuit

were never decided, because the parties entered into a

settlement agreement in 2005. Id. That settlement led to this

lawsuit.

Direct-purchaser plaintiffs and end-payor plaintiffs

filed separate suits in 2013. Both suits alleged that the

settlement agreement constituted an unlawful “reverse

payment” settlement. A “reverse payment” settlement, also

known as a “pay-for-delay” settlement, occurs when a brand-

name drug manufacturer brings a patent infringement action

against a generic drug manufacturer but then, in some fashion,

compensates the generic drug manufacturer for agreeing to

delay entering the market with a competing version of the

11

brand-name drug. Such agreements are called “reverse

payment” settlements because “the patentee ... pay[s] the

alleged infringer, rather than the other way around[.]” FTC v.

Actavis, Inc., 570 U.S. 136, 141 (2013).

According to the end-payor plaintiffs in the present suit

– now the Appellants – the reverse-payment settlement

between Kos and Barr violated state antitrust and consumer

protection laws. 1 They claim that Kos paid Barr to delay the

launch of its generic competitor to Niaspan until 2012, thereby

forcing the Appellants to pay hundreds of millions of dollars in

inflated prices due to Kos’s extended monopoly in the market

for Niaspan. Specifically, they assert that Kos agreed to pay

Barr a royalty on all sales of Niaspan along with a lump-sum

payment to compensate Barr for its investment in developing

its generic and for delaying its market entry. Niaspan I, 42 F.

Supp. 3d at 744. In support of their allegations, the Appellants

point to public filings Barr made in 2007 and 2008, in which it

claimed to have received $45 million in payments from Kos

for the 2006 calendar year, $37 million for the 2007 calendar

year, and that it expected to receive a similar amount of

revenue for the 2008 calendar year. Id. at 745.

The Appellants claim that, as a result of the alleged

reverse-payment settlement, putative class members “were

1

The Appellants evidently are relying on alleged

violations of state laws rather than violations of the Sherman

Antitrust Act because indirect purchasers, which the

Appellants are, have no claim for damages under federal

antitrust law. Ill. Brick Co. v. Illinois., 431 U.S. 720, 729

(1977).

12

denied the opportunity to purchase generic Niaspan before

[2013], and were further denied the benefit of the price

competition that would have ensued in a competitive

environment where Kos launched an authorized generic

Niaspan to compete with Barr[.]” (J.A. at 5.) They claim that

this anticompetitive settlement cost them more than $320

million in overcharges, and they sought certification of a class

of end-payors who either purchased, paid for, or provided

reimbursements for the purchase price of Niaspan or its generic

version in various states from 2007 to 2018.

The proposed class excluded six types of entities:

(1) Defendants and their subsidiaries, or

affiliates;

(2) All federal or state government entities other

than cities, towns or municipalities with self-

funded prescription drug plans;

(3) All entities that, after September 20, 2013,

paid and/or provided reimbursement for branded

Niaspan and did not pay and/or provide

reimbursement for generic Niaspan;

(4) All entities who [sic] purchased Niaspan for

purposes of resale or directly from defendants or

their affiliates;

(5) Fully insured health plans (i.e., plans that

purchased insurance from another third party

payor covering 100% of the Plan’s

reimbursement obligations to its members); and

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(6) Pharmacy Benefit Managers.

(J.A. at 74.) (alteration in original). Only the fifth exclusion –

for fully insured health plans – is relevant in this appeal.

3. The Battle of the Experts

In seeking class certification, the Appellants argued that

they could successfully identify and exclude fully insured

health plans (which, by definition, are not end-payors) from the

putative class because they could determine whether a plan is

fully insured or self-insured based upon the records of PBMs.

But the PBM data captures only the identity of the entity

directly paying the PBM. It does not identify whether that

entity is participating in the process as a fully insured health

plan sponsor, a self-funded health plan sponsor, an insurer, or

a TPA. Over the course of this litigation, the Appellants

adopted shifting methodologies for determining what role an

entity had in the payment process as a means for excluding

fully insured health plans from the class. Indeed, the

Appellants’ methodology changed each time Abbvie tested its

reliability. 2

2

Abbvie is not the only Appellee. In full, that list

includes Abbott Laboratories, Abbott Respiratory LLC, Barr

Pharmaceuticals LLC, Duramed Pharmaceuticals Sales Corp.,

Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals

USA Inc., and Teva Women’s Health Inc. f/k/a Duramed

Pharmaceuticals, Inc. For ease of reference, however, we refer

to the Appellees collectively and in the singular as “Abbvie.”

14

In support of their claim that fully insured health plans

can be identified from the PBMs’ records and so excluded from

the class in an administratively feasible manner, the Appellants

presented several declarations from Ms. Laura Craft, a data

analytics expert and the president of OnPoint Analytics, Inc.

In her first declaration, dated October 19, 2018, Ms. Craft

stated that she could apply the fully insured health plan

exclusion and compile a list of class members from PBM

records. She said, “OnPoint would be able to merge the data

from various sources, identify and eliminate data errors,

transform the data to standardize fields, eliminate duplicates,

and compile a list reflecting the identities of the class members

contained in the data.” (J.A. at 704.) She also asserted that

this process is “manageable and can be carried out

programmatically[,]” and that OnPoint has “extensive

experience applying these types of exclusions to

pharmaceutical data.” (J.A. at 703-04.) She did not, however,

divulge the specifics of how she would apply the exclusion.

When Abbvie deposed Ms. Craft and asked her how she

would identify and exclude fully insured health plans, she

stated that a Form 5500, “a form ... filed by the IRS and used

by the Department of Labor to track and monitor on an annual

basis which health plans are fully insured[,]” is “the standard

tool for identifying fully insured health plans, and it is routinely

used whenever that process is undertaken.” (J.A. at 376.)

Abbvie, however, identified inconsistencies on the Form 5500

of one of the named plaintiffs as an example of the difficulties

in identifying and excluding fully insured health plans using

Form 5500 filings. Given those inconsistencies, the District

Court rejected that proposed ascertainability methodology.

15

Ms. Craft accordingly abandoned that approach.

Instead, she claimed in her August 25, 2020, supplemental

declaration that, because NCPDP standards require “complete

electronic transaction routing information[,]” for the claims

adjudication process, “fully-insured health plans do not have

to be ‘identified’ and ‘removed’ from the data provided by

PBMs – the PBM data will reflect the fact that the third-party

insurance provider is the payor.” (J.A. at 263-64.) In other

words, she claimed that the PBM data fields would directly

identify class members because the routing information would

“identify the entity that issued the coverage and will be paying

for the prescription, rather than the employer or plan that

sponsored it.” (J.A. at 264.)

In response, Abbvie submitted a supplemental report by

its own expert, Mr. Donald Dietz, a licensed pharmacist in

Pennsylvania and co-founder of Pharmacy Healthcare

Solutions, LLC, a business consulting organization that advises

retail pharmacies, managed care plans, PBMs, pharmaceutical

manufacturers, and software engineers on strategic business

and marketing issues. Mr. Dietz stated that “the NCPDP data

fields [Ms. Craft] references do not contain the necessary

information to identify the relevant proposed [end-payor] Class

Member, and specifically, do not distinguish between different

types of entities that may be involved in a given transaction.” 3

(J.A. at 458.) He explained that, although the NCPDP data

fields can be used to identify who the PBM billed, it would

remain unclear whether the billed entity qualifies for inclusion

3

Some documents in the record refer to “end-payors”

as “third-party payors” or “TPPs.” For simplicity, we only

use the term “end-payors.”

16

in the class, due to the complex contractual relationships that

can exist among the parties involved in each transaction.

For instance, Mr. Dietz explained, many health plan

sponsors contract with an intermediary – a TPA – to help them

process their group health plan benefits. Additionally, many

insurers provide TPA services in an ASO capacity. According

to Mr. Dietz, it is unclear from the face of the PBM data

whether an entity is a member of the proposed class because,

as both self-insured and fully insured health plans may use an

intermediary, “it may be difficult to recognize what role the

intermediary is playing for a given transaction from PBM data

alone.” (J.A. at 459.) For example, a self-insured health plan

sponsor may contract with an insurer operating in an ASO

capacity, who in turn subcontracts with a PBM. In that

situation, “[i]t is necessary to determine the role the insurance

company is playing, [that is, whether it is] acting as the insurer,

and thus is a potential [end-payor] Class Member, versus

simply acting as an ASO, in which case it is not a Class

Member.” (J.A. at 460.) But Mr. Dietz stated that this

determination “cannot be done with the available data.” (J.A.

at 460.)

Ms. Craft later admitted in a deposition that PBM data

“is not designed to identify the ASO or TPA relationships.”

(J.A. at 859.) In that same deposition, she also asserted, for the

first time, that the fully insured health plan exclusion can be

applied based on “the nature of the plan.” (J.A. at 857.) On

that point, she stated that, “if it’s an HMO,” a Health

Maintenance Organization, “we know categorically that we

must be looking at a fully insured plan[.]” (J.A. at 857.)

Abbvie countered that “Ms. Craft is wrong: in reality an HMO

plan can be either self-funded or fully insured.” (J.A. at 85.)

17

Ms. Craft then submitted a deposition errata, eliminating the

word “categorically” and changing her testimony to: “if it’s an

HMO, it’s a fully funded plan, except in those cases typically

involving a very large employer that is ‘renting’ the HMO

network[.]” (J.A. at 970.)

Ms. Craft also responded to Mr. Dietz’s supplemental

expert report in a reply report. She listed instances in which

she purported to identify plans as fully insured based on data

in the “Account” and “Carrier” fields of the PBM data.

Abbvie, however, presented public documents showing that for

two of the four examples examined by the Court, 4 Mitre

Corporation and Target, Ms. Craft was incorrect because those

two plans were self-insured. (See J.A. at 1038) (“Plan benefits

are self-insured by The MITRE Corporation, which is

responsible for their payment.”); (see also J.A. at 1051)

(“[Target] retain[s] a substantial portion of the risk related to

4

Ms. Craft included a total of twenty-two examples in

her reply report, but the District Court only credited four of

the examples because:

Ms. Craft [did] not provide a systematic method

for identifying mere intermediaries, which are

not class members, in any of her examples.

Instead, for each example in which she purported

to identify a mere intermediary in the PBM data

… Ms. Craft relied on what she “would normally

expect to see” in a particular situation … . The

Court concludes that such an ad hoc approach for

identifying and excluding non-class members

falls far short of a reliable and administratively

feasible mechanism.

Niaspan III, 555 F. Supp. 3d at 167 n.8.

18

... medical and dental claims.”). In those two examples, Kaiser

Colorado and Kaiser California North were listed in the

“Carrier” field and Mitre Corporation and Target in the

“Account” field, respectively. Abbvie stated that, based on the

public documents it presented, Kaiser was acting as an ASO in

both instances and not as an end-payor despite what Ms. Craft

had said.

The Appellants argued in response that the identified

errors were “legally irrelevant” because, at the class

certification stage, they needed only to show that potential

class members can be identified, not the actual identity of all

class members. (J.A. at 1074.) They claimed to have met their

burden because “the only two potential class members for these

particular transactions are reflected in the data[.]” (J.A. at

1075-76.) From this, the Appellants asserted that the specific

class member “can be verified” from the two potential class

members “through affidavits[,]” but the Appellants did not

explain what the affidavits would ask or how they would be

corroborated. (J.A. at 1076.)

B. Procedural Background

Stepping back to the beginning of this litigation, the first

of seventeen putative class-action lawsuits against Abbvie was

filed in April 2013 in the United States District Court for the

Eastern District of Pennsylvania. 5 Niaspan I, 42 F. Supp. 3d

5

Sixteen of those lawsuits were filed in the United

States District Court for the Eastern District of Pennsylvania

and one was filed in the United States District Court for the

District of Rhode Island. Niaspan I, 42 F. Supp. 3d at 745, n.5.

19

at 745. The Judicial Panel on Multidistrict Litigation

transferred eight of the cases to a judge of that Court, who

issued an order: “(1) direct[ing] ... the eight transferred actions

be coordinated for pretrial purposes with nine tag-along actions

…; and (2) consolidat[ing] all pending End-Payor Actions for

pretrial purposes and all pending Direct-Purchaser Actions for

pretrial purposes.” Id. The three direct-purchaser plaintiff

actions and fourteen end-payor plaintiff actions were

consolidated into two separate class actions, respectively, and

both sets of plaintiffs filed consolidated amended class action

complaints in January 2014. 6 Id.; see also Practice and

Procedure Order Upon Transfer Pursuant to 28 U.S.C. §

1407(a), In re Niaspan Antitrust Litig., No. 13-MD-2460 (E.D.

Pa. Dec. 23, 2013), D.I. 37.

After several years of discovery, the end-payor

plaintiffs – again, the current Appellants – filed a motion for

class certification under Rule 23(b)(3). They proposed a broad

class, including both consumers and end-payors, with ten

exclusions, one of which was the fully insured health plan

exclusion discussed above, and they alleged violations of fifty-

three state laws across twenty-six jurisdictions. The District

Court denied class certification on several grounds, including

the Appellants’ failure to establish ascertainability. In re

Niaspan Antitrust Litig., 464 F. Supp. 3d 678, 725 (E.D. Pa.

2020) (“Niaspan II”). The denial was without prejudice to the

Appellants giving their motion another try on modified

6

The direct-purchaser plaintiffs allege that the reverse

payment settlement violates the Sherman Antitrust Act. In re

Niaspan Antitrust Litig., 397 F. Supp. 3d 668, 674 (E.D. Pa.

2019). That class action was certified in 2019. Id. at 691.

20

grounds. Id. With respect to ascertainability, the District Court

determined that “[the end-payor plaintiffs] have failed to carry

their burden of showing a reliable and administratively feasible

mechanism for identifying class members by a preponderance

of the evidence.” Id. at 701.

In response, those plaintiffs filed a renewed motion for

class certification with a significantly narrowed class

definition. Niaspan III, 555 F. Supp. 3d at 159. They removed

consumers from the class definition, reduced the number of

exclusions from ten to six, and invoked twenty-three, as

opposed to fifty-three, state laws. Id. at 160.

The District Court again denied class certification. It

concluded that the plaintiffs “ha[d] not presented an

administratively feasible mechanism to distinguish between

class members and mere intermediaries such as fully insured

plans.” Id. at 169. At the outset, the Court noted that the issue

Mr. Dietz raised in his November 6, 2020, supplemental report

– “that [end-payor plaintiffs] failed to present an

administratively feasible methodology ‘for determining whom

the ultimate payor was’ in transactions involving fully insured

plans, or other intermediaries, such as TPAs or ASOs” – is not

de minimis. 7 Id. at 165. Relying on survey results from the

7

The Appellants have argued that the District Court was

somehow suggesting that an administratively feasible method

must be one in which fact-finding to discover class members is

so data-driven that individualized inquiry approaches what

could be called a “de minimis” level. (See Opening Br. at 40.)

That is not a fair interpretation of the Court’s words. Read in

context, it is apparent that the District Court was, with

understatement, pointing out that the plaintiffs’ proposed

21

PBM Institute, a membership organization that helps

healthcare purchasers maximize the value of their drug benefit

plans, the District Court concluded, based on expert testimony

from both sides, that “between 38 and 55 percent of employers’

contractual relationships with their PBM was through a TPA”

and that “approximately 88% of all employment-based

prescription drug plans are fully insured.” Id. (internal

quotation marks omitted). It also gave little credence to Ms.

Craft’s declarations because she “adopt[ed] a methodology that

change[d] as [the] defendants test[ed] its reliability and, in the

end, fail[ed] to accomplish what [wa]s required.” Id. at 169.

Specifically, the Court noted “that fully insured plans [we]re

included in Ms. Craft’s examples, and they cannot be class

members.” Id. at 167. The Court held that, “[g]iven that fully

insured plans are extremely common” and that the PBM data

may include “‘approximately 20 million class transactions,’ it

is insufficient for the [End-Payor Plaintiffs] to narrow the

identification of ‘potential class members’ to one of two

entities as in the examples selected by Ms. Craft.” Id. at 168.

In sum, the end-payor plaintiffs failed to persuade the

District Court that they could “identify, without individualized

inquiry, the … class members in Ms. Craft’s examples, let

alone [in] the millions of transactions at issue in this case.” Id.

As the use of affidavits was not put squarely before the Court,

it was not obligated to consider whether they constituted an

administratively feasible mechanism to distinguish between

class members and intermediaries.

methodology would leave an enormous amount of

individualized fact-finding to be done.

22

The end-payor plaintiffs became the Appellants when,

pursuant to Federal Rule of Civil Procedure 23(f), they were

granted leave to appeal the denial of class certification.

II. DISCUSSION 8

The Appellants argue that their proposed methodology

for ascertaining class membership satisfies our criteria for

administrative feasibility. They claim that the District Court’s

factual findings on the prevalence of intermediaries, the

Court’s understanding of their methodology, and the Court’s

failure to consider the potential use of affidavits in identifying

class members are all clearly erroneous. The Appellants also

argue that the District Court applied the wrong ascertainability

standard. Alternatively, they argue that, “[i]f ascertainability

means that a class cannot be certified here, then [we] should

reconsider whether [our] ‘implicit’ ascertainability

requirement is consistent with Rule 23.” (Opening Br. at 55.)

We address each of those arguments, though not in that order.

8

The District Court had jurisdiction pursuant to 28

U.S.C. § 1332(d). We exercise jurisdiction under 28 U.S.C.

§ 1292(e) and Federal Rule of Civil Procedure 23(f). “We

review a class certification order for abuse of discretion, which

occurs if the district court’s decision rests upon a clearly

erroneous finding of fact, an errant conclusion of law or an

improper application of law to fact.” In re Hydrogen Peroxide

Antitrust Litig., 552 F.3d 305, 312 (3d Cir. 2008) (internal

quotation marks omitted).

23

A. The Rule 23 Legal Framework

Our precedent requires that, in a class action under Rule

23(b)(3), “class [members] … be ‘currently and readily

ascertainable based on objective criteria.’” Hargrove v.

Sleepy’s LLC, 974 F.3d 467, 477 (3d Cir. 2020). To satisfy

that requirement, “[p]laintiffs must show that ‘(1) the class is

defined with reference to objective criteria; and (2) there is a

reliable and administratively feasible mechanism for

determining whether putative class members fall within the

class definition.’” Id. at 469-70 (citation omitted). A plaintiff

must propose a classification method with evidentiary support

to meet the ascertainability requirement, and “trial courts ‘must

engage in a rigorous analysis and find each of Rule 23[]’s

requirements met by a preponderance of the evidence before

granting certification. They must do so even if it involves

judging credibility, weighing evidence, or deciding issues that

overlap with the merits of a plaintiff’s claims.” Harnish v.

Widener Univ. Sch. of Law, 833 F.3d 298, 304 (3d Cir. 2016)

(citation omitted) (alteration in original). If a district court

harbors uncertainty about whether the plaintiff has satisfied the

requirements of Rule 23, class certification should be denied.

Mielo v. Steak ‘n Shake Operations, Inc., 897 F.3d 467, 483

(3d Cir. 2018). But that “does not mean that a plaintiff must

be able to identify all class members at class certification –

instead, a plaintiff need only show that ‘class members can be

identified.’” Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d. Cir.

2015) (emphasis removed).

We have discussed the ascertainability requirement in

several cases. We first addressed it in Marcus v. BMW of North

America, LLC, where the plaintiffs proposed a class of New

Jersey owners and lessees of BMW vehicles equipped with

24

“run-flat tires ... [that] ha[d] gone flat and been replaced[.]”

687 F.3d 583, 592 (3d Cir. 2012). “The proposed class raise[d]

serious ascertainability issues” because the tires were

manufactured in Germany by a different company, and BMW

did not have records showing which vehicles were fitted with

the “run-flat” tires. Id. at 593. Additionally, dealerships

selling BMW vehicles regularly replaced the tires at

customers’ requests. Id. at 593-94. Compounding those

issues, the plaintiffs lacked a methodology for identifying,

consistent with the class definition, the owners and lessees of

BMW vehicles whose “run-flat tires” had gone flat and been

replaced. Id. at 594. Because the answers to those questions

were left to the “potential class members’ say so[,]” we

remanded to the district court to “resolve the critical issue of

whether the defendants’ records can ascertain class members

and, if not, whether there is a reliable, administratively feasible

alternative.” Id.

In Hayes v. Wal-Mart Stores, Inc., a putative class of

customers who purchased items with extended warranties

attempted to certify a class that included customers who

purchased a “Service Plan to cover as-is products.” 725 F.3d

349, 353 (3d Cir. 2013). The class excluded any customer

whose “as-is product was covered by a full manufacturer’s

warranty, was a last-one item [i.e., an item that is brand-new

but the store wishes to clear out] … who obtained service on

their product, and … who ha[d] been previously reimbursed

for the cost of the Service Plan.” Id. That class definition

required separate factual inquiries into: “(1) whether a

[customer] purchased a Service Plan for an as-is item, (2)

whether the as-is item was a ‘last one’ item or otherwise came

with a full manufacturer’s warranty, and (3) whether the

member nonetheless received service on the as-is item or a

25

refund of the cost of the Service Plan.” Id. at 356. On the then-

existing record, the plaintiffs could not satisfy that burden. Id.

We remanded so they could attempt to demonstrate a reliable

and administratively feasible method for ascertaining the class.

Id. We cautioned, however, that “class certification will

founder if the only proof of class membership is the say-so of

putative class members or if ascertaining the class requires

extensive and individualized fact-finding.” Id.

In Carrera v. Bayer Corp., the district court certified a

“class of consumers who purchased Bayer’s One-A-Day

WeightSmart diet supplement in Florida.” 727 F.3d 300, 303

(3d Cir. 2013). The defendants were the supplement

manufacturers, and they did not have access to any retail

records that could establish who purchased their products

during the defined class period. Id. at 304. The plaintiffs’

proposed methodology involved using “retailer records of

online sales and sales made with store loyalty or rewards

cards,” along with affidavits attesting purchases of the diet

supplements. Id. But the plaintiffs provided no evidence that

any purchasers, let alone the entire class, could be identified

using the proposed retail records. There was no evidence that

retailers even had records during the relevant period, and there

was no method to determine whether the affidavits would be

reliable. Id. at 309-11. We rejected the plaintiffs’ proposal and

remanded the case so that they could conduct further, limited

discovery on whether there was a reliable and administratively

feasible means of determining class membership. Id. at 312.

Next, in Byrd v. Aaron’s Inc., the plaintiffs alleged that

their leased computers contained spyware. 784 F.3d at 160.

The proposed class included lessees and purchasers of the

computers as well as members of their households who were

26

supposedly monitored through the spyware. Id. The

defendants kept records that easily allowed identification of the

lessees, but because there were no records of their household

members, the district court denied certification for lack of

ascertainability, finding that the class did not adequately define

“household member.” Id. at 169. Although the plaintiffs

asserted that they could identify household members with

public records and affidavits, the district court rejected that

method as insufficient to satisfy ascertainability. Id. at 160.

We reversed, concluding that the term “household member”

was not inherently vague, and that household members could

be ascertained through affidavits indicating their household

status. Id. at 171-72.

In City Select Auto Sales Inc. v. BMW of North America,

the plaintiffs proposed a class of car dealers who were wronged

by receiving unsolicited faxes from a credit agent. 867 F.3d

434, 437 (3d Cir. 2017). The district court ruled that the class

was not ascertainable because a database of all the car dealers

did not list who received the fax. Id. at 441. We remanded

because an “[a]ffidavit[], in combination with records or other

reliable and administratively feasible means, can meet the

ascertainability standard,” and the “only factual inquiry

required to determine class membership is whether a particular

dealership in the database received the BMW fax[.]” Id. at

441-42.

Most recently, in Hargrove v. Sleepy’s LLC, a case

under New Jersey labor laws, a mattress company required its

drivers to sign a contract stipulating that they would not carry

merchandise for other businesses while carrying Sleepy’s

products. 974 F.3d at 471. Despite that contract, Sleepy’s

characterized the drivers as independent contractors. Id. at

27

472. The plaintiffs brought an employee misclassification suit

and sought class certification as a class of delivery drivers who

performed deliveries for Sleepy’s on a full-time basis and who

drove at least one truck for Sleepy’s. Id. at 474. In support of

their motion for certification, they proposed using Sleepy’s

records to identify the members of the proposed class, but those

records contained gaps. Id. at 472-73. The plaintiffs argued

that they could nevertheless use testimony from drivers, in

combination with Sleepy’s records, to establish class

membership. Id. at 473. The district court denied class

certification, stating that, since Sleepy’s records did not show

which employees worked on a full-time basis, it was “unable

to determine if Sleepy’s was the only company [that] the

drivers worked for.” Id. at 475. Additionally, the district court

said that the plaintiffs could not show “which potential class

members were subject to improper deductions and which

potential class members worked over forty hours a week

without being paid over-time.” Id. We reversed, holding that

at the certification stage, the plaintiffs “do not have to prove ...

that each proposed class member was indeed a full-time driver,

but only that the members can be identified[,]” id. at 480, and

that the district court was “too exacting and essentially

demanded that [the] Appellants identify the class members at

the certification stage.” Id. at 470. We thus determined that

the plaintiffs had identified records that, in combination with

affidavits, established a reliable and administratively feasible

method for determining class membership. Id. at 480.

B. Ascertainability is a Key Requirement for

Class Actions

The Appellants ask us to reconsider our ascertainability

requirement. They claim that “[t]he majority of other courts of

28

appeals to have considered the question have rejected the

ascertainability requirement as an extratextual hurdle to class

certification that is inconsistent with the text and purpose of

Rule 23.” (Opening Br. at 55.) But even if we had authority

to overrule our existing precedent, which we do not, see In re

Krebs, 527 F.3d 82, 86 (3d Cir. 2008) (stating that a panel may

not overrule precedent on the basis that our sister circuits have

decided the issue contrary to that precedent or because we are

no longer persuaded by its reasoning), we would decline to do

so here.

“[T]he class-action device saves the resources of both

the courts and the parties by permitting an issue potentially

affecting every [class member] to be litigated in an economical

fashion under Rule 23.” Califano v. Yamasaki, 442 U.S. 682,

701 (1979). Yet when members of a Rule 23(b)(3) class cannot

be identified in an economical and administratively feasible

manner, the very purpose of the rule is thwarted.

Ascertainability serves several important objectives in

preserving those efficiencies:

First, it eliminates “serious administrative

burdens that are incongruous with the

efficiencies expected in a class action” by

insisting on the easy identification of class

members. Second, it protects absent class

members by facilitating the “best notice

practicable” under Rule 23(c)(2) in a Rule

23(b)(3) action. Third, it protects defendants by

ensuring that those persons who will be bound by

the final judgment are clearly identifiable.

Marcus, 687 F.3d at 593 (internal citations omitted).

29

The ascertainability standard, including the

administrative feasibility principle it contains, is true to the

text, structure, and purpose of Rule 23. That is because, absent

some mechanism to establish whether the standards of Rule 23

are met, courts could not meaningfully apply the Rule. Since

“mere speculation is insufficient” to determine whether a

plaintiff has established the prerequisites of Rule 23(a), Hayes,

725 F.3d at 357 (quoting Marcus, 687 F.3d at 596–97), a closer

look at the alleged facts is necessary. What we call

“ascertainability” and “administrative feasibility” is merely the

way courts perform that role, a practice familiar under the civil

rules. Cf., e.g., Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557

(2007) (“The need at the pleading stage for allegations

plausibly suggesting (not merely consistent with) [conspiracy]

reflects the threshold requirement of Rule 8(a)(2) that the

‘plain statement’ possess enough heft to ‘sho[w] that the

pleader is entitled to relief.’”); Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (“As the Court held in Twombly, … the pleading

standard Rule 8 announces does not require ‘detailed factual

allegations,’ but it demands more than an unadorned, the-

defendant-unlawfully-harmed-me accusation.”) (citation

omitted). So a court necessarily considers whether the

proposed class is based on objective criteria, not speculation,

by looking at administratively feasible methods of defining the

class, consistent with the text of Rule 23.

We are not alone in holding that Rule 23(b)(3) has an

implicit requirement that class members be ascertainable.

Several of our sister circuits have followed our lead and apply

our ascertainability standard, or a standard that is substantively

30

the same. 9 And while it is true that our rule is not without

critics, 10 even in circuits that have rejected an ascertainability

9

See In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st

Cir. 2015) (“At the class certification stage, the court must be

satisfied that, prior to judgment, it will be possible to establish

a mechanism for distinguishing the injured from the uninjured

class members. The court may proceed with certification so

long as this mechanism will be ‘administratively feasible,’ see

Carrera, 727 F.3d at 307, and protective of defendants’

Seventh Amendment and due process rights[.]”); In re Initial

Pub. Offerings Sec. Litig., 471 F.3d 24, 44-45 (2d Cir. 2006)

(denying certification of a class for failure to satisfy Rule 23’s

predominance requirement because “ascertaining each

purchaser’s intent would require an individualized

determination”); EQT Prod. Co. v. Adair, 764 F.3d 347, 358

(4th Cir. 2014) (“We have repeatedly recognized that Rule 23

contains an implicit threshold requirement that the members of

a proposed class be ‘readily identifiable.’ Our sister circuits

have described this rule as an ‘ascertainability’ requirement.”)

(internal citations omitted); John v. Nat’l Sec. Fire and Cas.

Co., 501 F.3d 443, 445 (5th Cir. 2007) (“The existence of an

ascertainable class of persons to be represented by the

proposed class representative is an implied prerequisite of

Federal Rule of Civil Procedure 23.”).

10

See Cherry v. Dometic Corp., 986 F.3d 1296, 1304

(11th Cir. 2021) (“We hold that administrative feasibility is not

a requirement for certification under Rule 23. ... If a district

court researches Rule 23(b), and the action involves a proposed

Rule 23(b)(3) class, it may consider administrative feasibility

as part of the manageability criterion of Rule 23(b)(3)(D).”);

Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1124 n.4 (9th

31

requirement, some version of an administrative feasibility test

is applied, albeit under a different name. For instance, in

Cir. 2017) (noting that the Ninth Circuit has not adopted a

separate ascertainability requirement and “[i]nstead ...

addresse[s] the types of alleged definitional deficiencies other

courts have referred to as ‘ascertainability’ issues, through

analysis of Rule 23’s enumerated requirements”) (internal

citations omitted); Sandusky Wellness Center, LLC v. Medtox

Scientific, Inc., 821 F.3d 992, 996 (8th Cir. 2016) (declining to

adopt ascertainability as a separate, preliminary requirement

and instead “adher[ing] to a rigorous analysis of the Rule 23

requirements, which includes that a class ‘must be adequately

defined and clearly ascertainable’”); Mullins v. Direct Digital,

LLC, 795 F.3d 654, 663 (7th Cir. 2015) (rejecting the

administrative feasibility requirement from Carrera, stating

that the “concern about administrative inconvenience is better

addressed by the explicit requirements of Rule 23(b)(3), which

requires that the class device be ‘superior to other available

methods for fairly and efficiently adjudicating the

controversy.’ One relevant factor is ‘the likely difficulties in

managing a class action’”); Rikos v. Procter & Gamble Co.,

799 F.3d 497, 525 (6th Cir. 2015) (declining to adopt Carrera).

In Rikos, the Sixth Circuit expressly declined to follow our

decision in Carrera, but that court has previously endorsed an

administrative feasibility requirement. See Young v.

Nationwide Mut. Ins. Co., 693 F.3d 532, 537-38 (6th Cir. 2012)

(holding that “[b]efore a court may certify a class pursuant to

Rule 23, ‘the class definition must be sufficiently definite so

that it is administratively feasible for the court to determine

whether a particular individual is a member of the proposed

class’”).

32

Cherry v. Dometic Corp., the Eleventh Circuit stated that

“administrative feasibility has relevance for Rule 23(b)(3)

classes, in the light of the manageability criterion of Rule

23(b)(3)(D).” 11 986 F.3d 1296, 1303 (11th Cir. 2021). The

Ninth, Eighth, Seventh, and Sixth Circuits have all adopted a

similar approach. Instead of having a separate administrative

feasibility requirement, those courts often address

administrative concerns through a rigorous analysis of Rule

23’s “superiority” requirement. See supra n.10. We thus do

not agree that our ascertainability analysis is inconsistent with

the text and purpose of Rule 23.

C. The District Court’s Factual Findings are not

Clearly Erroneous

Turning back to this case, we next consider the

Appellants’ argument that their protean methodology satisfies

our criteria for administrative feasibility. They describe their

methodology as an “overalls, belt, and suspenders approach[,]”

that includes three layers of action to determine class

membership: (1) PBMs identify class members when

providing data (what the Appellants refer to as the “overalls”);

(2) data is batch-filtered and name matched using Ms. Craft’s

techniques to distinguish administrative intermediaries from

class members (the “belt”); and (3) if the batch-filtering and

name-matching results in two options, a single-question form

11

“Rule 23(b)(3)(D) instructs district courts, in deciding

whether ‘a class action [would be] superior to other available

methods for fairly and efficiently adjudicating the

controversy,’ to consider ‘the likely difficulties in managing a

class action.’” Cherry, 986 F.3d at 1303.

33

affidavit is sent to the two identified potential class members

to confirm which is the class member (the “suspenders”). The

Appellants claim that the District Court’s factual findings were

clearly erroneous because the Court misunderstood their

proposed methodology, overstated the prevalence of

intermediaries in the PBM data, and failed to consider the use

of affidavits as a means of identifying class members.

1. Ascertainability Issues are Pervasive

As a threshold matter, we must first decide whether the

prevalence of intermediaries in the PBM data poses an

ascertainability issue. The Appellants assert that “[o]nly a

small subset of the data could possibly present the potential

intermediary-confusion issue” identified by Mr. Dietz.

(Opening Br. at 17.) They argue that Mr. Dietz identified such

confusion “only when a self-funded [health] plan uses an

administrative intermediary[,]” but, they say, “fewer than 10%

of employers are both self-funded and potentially use an ASO

or [other] TPA[.]” (Opening Br. at 18.)

The Appellants arrive at that metric by first treating the

District Court’s findings, taken from the PBM Institute’s

survey data, as correct: that “between 38 and 55 percent of

employers’ contractual relationships with their PBM was

through a TPA” and that “approximately 88% of all

employment-based prescription drug plans are fully insured[,]”

leaving 12% as self-insured. Niaspan III, 555 F. Supp. 3d at

165. Then, assuming that the maximum 55% of the 12% of

self-insured health plans use a TPA or ASO, they argue that, at

most, only “6.6% of plans ... could potentially generate the

confusion Dietz identified[.]” (Opening Br. at 18.) But the

Appellants’ metric assumes precisely what they must prove –

34

that they can feasibly identify and filter out the fully insured

health plans, the TPAs, and the ASOs from this data. The

Appellants have made no showing that they can determine

where any given transaction falls within the various categories

of transactions. Abbvie aptly describes the problem with an

analogy: “It is as if someone has given the Court one hundred

$20 bills and promised that only about 10% are counterfeit. It

would be nice to spend $1,800 in real money, but the Court

must still determine whether each and every bill is genuine

before spending it.” (Answering Br. at 36-37.)

The District Court found that the prevalence of

intermediaries is a significant problem, especially since the

same players in this industry may be end-payors, fully insured

health plans, or merely administrators in any given transaction,

and the PBM data does not indicate which role they are

playing. That finding is not clearly erroneous.

2. The Appellants Forfeited their

Affidavits Argument

The Appellants fault the District Court for failing to

consider the use of affidavits to resolve ambiguities when two

entities are identified as potential end-payors using Ms. Craft’s

methodology. They claim that they raised this issue in their

Renewed Motion for Class Certification, but that is plainly

incorrect. No discussion about the use of affidavits appears

until a footnote in their Reply Brief in Support of Class

Certification, where they wrote “Plaintiffs also intend to use

affidavits to ensure, at a minimum, that [end-payors] are in fact

self-insured and not government-funded payors.” (J.A. at 997

n.9.) Even then, their passing remark was made in the context

of a discussion of a different class-exclusion category, i.e., the

35

one for federal or state government entities, not the one for the

fully insured health plans, which is the subject of this appeal.

The Appellants did mention the use of affidavits in

regard to the fully insured health plan exclusion in a different

filing in the District Court, their Reply to Defendant’s

Response to Plaintiff’s Expert Reply Report. There, they

asserted that, “to the extent necessary, affidavits, can identify

class members at a later stage.” (J.A. at 1074.) They claim

that was enough to preserve their present argument for appeal

because Abbvie could have responded to the use of affidavits

in its “responsive briefing[.]” (Reply Br. at 22.) Leaving aside

the fact that they made their argument in a reply brief, and no

further “responsive briefing” was in order, the Appellants

never explained how the use of affidavits would work, and

their experts never discussed any specifics on how they would

be used.

Arguments raised for the first time before a district court

in a reply brief are deemed forfeited. See Jaludi v. Citigroup,

933 F.3d 246, 256 n.11 (3d. Cir. 2019) (“Because Citigroup

failed to invoke the provision until its reply brief in the District

Court, we deem this argument [forfeited].”). The Appellants’

tardy and fleeting references to the use of affidavits to resolve

ambiguities were insufficient to preserve the matter for appeal.

“To preserve a matter for appellate review, a party ‘must

unequivocally put its position before the trial court at a point

and in a manner that permits the court to consider its merits.’”

Garza v. Citigroup Inc., 881 F.3d 277, 284 (3d Cir. 2018)

(citation omitted). “It is well established that arguments not

raised before the District Court are [forfeited] on appeal.”

DirecTV, Inc. v. Seijas, 508 F.3d 123, 125 n.1 (3d Cir. 2007).

And that must be particularly so when the argument is not

36

about a purely legal question but about the sufficiency of

evidence one has produced.

The Appellants cite Hargrove to argue that, because

Abbvie had the opportunity to file additional briefing on the

issue of affidavits, the argument should be deemed preserved. 12

But Hargrove involved a different issue on appeal. In that

case, the appellants argued in their opening brief, albeit in a

footnote, that the district court erred by applying the wrong

standard of review to their renewed motion for class

certification. Hargrove, 974 F.3d at 475 n.5. The district court

there also expressly discussed and ruled on that issue. Id.; cf.

Lark v. Sec’y Pa. Dep’t of Corr., 645 F.3d 596, 607-08 (3d Cir.

2011) (noting that “the crucial question regarding [forfeiture]”

is whether the proceeding “put the [d]istrict [c]ourt on notice

of the legal argument”). Accordingly, we chose to address the

issue. Hargrove, 974 F.3d at 476-77. Here, by contrast, the

District Court did not address the hidden issue in its opinion on

class certification. The Appellants nonetheless contend that

the District Court was on notice of their argument because they

mentioned the use of affidavits elsewhere, specifically in their

Reply to Defendant’s Response to Plaintiff’s Expert Reply

Report.

12

The Appellants are confused about who had the

burden here. It was not Abbvie’s obligation to seek permission

to address the Appellants’ tardy argument. The Appellants

could have raised their argument in a timely fashion but did

not. Having failed to bring the issue up when they should have,

they can hardly fault Abbvie for focusing its advocacy on

arguments that were properly before the District Court.

37

Their argument is unpersuasive. That they said

something about affidavits in another reply brief on a different

motion is of no moment. Even if we thought that, in this

heavily papered case, with many issues and stretching over

many years, there was some excuse for not properly bringing

the affidavits issue to the fore in the class certification briefing,

the Appellants still brought it up only in a reply filing dealing

with a different dispute. Again, arguments raised for the first

time in a reply brief are forfeited, Jaludi, 933 F.3d at 256 n.11,

because the district court must have a fair opportunity to

consider the arguments before we do, Garza, 881 F.3d at 284.

The Appellants did not adequately present their argument

about the use of affidavits to the District Court, and we will not

consider it now.

3. The District Court’s Factual Findings

Concerning PBM Identification Are

Not Clearly Erroneous

The Appellants argue that PBM data is readily

accessible, that PBMs can identify end-payors for every

Niaspan purchase, and that this data set meets the

ascertainability standard that we set forth in Byrd and

Hargrove. The District Court, however, rejected the notion

that PBMs can identify end-payors, Niaspan III, 555 F. Supp.

3d at 166-67, and, again, that finding is not clearly erroneous.

As mentioned earlier, the Court found that PBMs cannot

identify class members because their data does not show

whether, in any given transaction, an entity is an end-payor, a

fully insured health plan, or an administrative intermediary. Id.

That conclusion has ample support in the record. Ms. Craft

admitted that the PBM standardized data contains “code

38

numbers,” not “names or descriptions,” (J.A. at 1001), and that

it “is not designed to identify the [administrative]

relationships[,]” (J.A. at 859). Unfortunately, that candor was

paired with some confusion about identifying fully insured

plans based on the nature of the plan. Id. She asserted that “if

it’s an HMO … we know categorically … it’s a fully funded

plan[,]” (J.A. at 857), but she later had to correct that assertion

with the caveat that it would be a “fully funded plan, except in

those cases typically involving [a sponsor] that is ‘renting’ the

HMO network[,]” (J.A. at 970).

The Appellants nevertheless assert that, “like the lessees

in Byrd whose names were listed on the defendants’ rental

records[,] … the class members are identified by the PBM

records.” (Opening Br. at 32 (citation omitted).) Not so. The

defendants in Byrd kept detailed records that easily allowed

identification of a lessee on the face of each record. Byrd, 784

F.3d at 169. Again, the PBM data contains code numbers, not

names or descriptions of entities, and those numbers are not

designed to indicate the relationships between parties. The

Appellants provided no evidence on how those numbers could

be used to accurately identify class members, and Ms. Craft

acknowledged that we don’t “know categorically” if an HMO

is a fully insured health plan because there is an exception

when sponsors rent the HMO network, so it cannot be said that

class members can be identified based on the nature of the plan.

(J.A. at 857.) Given the remaining ambiguity in the data, it was

not clearly erroneous for the District Court to conclude that

PBMs cannot adequately identify the end-payors.

39

4. The District Court Properly Concluded

That the Appellants’ Data Matching

Technique is Unreliable

The Appellants also claim that they can use automated

data matching to identify class members by identifying

administrator transactions and then identifying the

administrator’s end-payor client. The District Court found

that, on the contrary, the Appellants “have not shown they can

identify, without individualized inquiry, the [end-payor] class

members in Ms. Craft’s examples, let alone the millions of

transactions at issue in this case.” Niaspan III, 555 F. Supp. 3d

at 168. Ms. Craft submitted twenty-two examples that the

District Court considered and rejected as “ad hoc.” Id. at 167

n.8. In those examples, Ms. Craft relied on “what she ‘would

normally expect to see’” and “what ‘typically appears’ in a

particular situation,” but she was only able to affirm that

certain codes “indicate[] a self-funded plan[.]” Id. When

Abbvie examined her methodology in four of the examples, it

discovered that she was wrong in half of them; she had listed

two entities as fully insured health plan sponsors, but public

documents showed that they were in fact self-insured sponsors.

Id. at 167. The District Court saw that error as “support[ing]

the conclusion that identifying class members will require

‘individualized fact-finding.’” Id. (citation omitted). And the

error was especially damning for the Appellants’ methodology

because “fully insured plans are extremely common and [the

Appellants] expect PBM data to include ‘approximately 20

million class transactions,’ [so] it is insufficient for [the

Appellants] to narrow the identification of ‘potential class

members’ to one of two entities[.]” Id. at 168 (citation

omitted).

40

The Appellants argue that the District Court’s

conclusion that those two examples rendered the entire method

unreliable is clearly erroneous because Ms. Craft reviewed

transactions from 2012 and the public documents from 2017

do not discuss the drug plan funding five or more years earlier

when the transaction at issue took place. The District Court,

however, noted that the 2017 documentation “is relevant to

whether [the entity] was [an end-payor] during the class

period,” because the class period didn’t end until 2018. Id. at

167 n.9. Certainly, whether that entity was a fully insured or

self-insured health plan sponsor during the class period is

relevant, and the Appellants did not provide any 2012

documentation to support their argument.

Yet they protest that, by requiring them “to disprove

[Abbvie’s] hypothetical extrapolations ex ante[,]” the District

Court essentially demanded that they identify class members at

the certification stage. (Opening Br. at 43.) Once again, we

disagree. Although they are correct that they “do not have to

prove at [the certification] stage that each proposed class

member was indeed a [class member],” Hargrove, 974 F.3d at

480, they still must prove that they can identify class members

“without extensive and individualized fact-finding or ‘mini-

trials,’” Marcus, 687 F.3d at 593. The District Court’s

conclusion that they failed to do that is not, on this record,

clearly erroneous.

The Court relied heavily on Vista Healthplan, Inc. v.

Cephalon, Inc., in deciding that extensive and individualized

fact-finding or mini-trials would be necessary to identify class

members. No. 06-1833, 2015 WL 3623005 (E.D. Pa. June 10,

2015); see Niaspan III, 555 F. Supp. 3d at 165-66. In that case,

a group of end-payors alleged that the defendants engaged in

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an anticompetitive reverse-payment settlement. Vista

Healthplan, 2015 WL 3623005 at *2. The class contained

eight categories of exclusions, including an exclusion for fully

insured health plans. Id. at *4, 9. The only evidence presented

to determine class membership was the consumer history

records of one named plaintiff that listed the various

prescriptions that the named plaintiff had filled and the out-of-

pocket expenses and amount covered by the plaintiff’s

insurance plan, along with a chart that identified claims made

and patients by number rather than name. Id. at *9. The

plaintiffs, however, did not show that those numbers could

identify class members, and they provided no evidence that

consumer history records were kept for all patients. Id. at *9-

10. The district court in Vista noted that, “[u]ntil proceeding

through each transaction and resolving factual disputes about

who ‘bears the burden’ of the price in that transaction, the

[c]ourt cannot say who is a member of the class, that is, who

has paid or reimbursed a portion of the purchase price.” Id. at

*8 (citation omitted). The court held that the proposed class

was not ascertainable because resolving those factual disputes

would “require[] ‘consideration of the individual contractual

relationships underlying each transaction.’” Id. at *12 (citation

omitted).

The District Court here had the same concern –

namely, that it would have to examine the underlying

contractual relationships of each transaction to distinguish

between class members and mere intermediaries. Even if the

Appellants could narrow the inquiry down to two possible

candidates for class membership, the proper class member

could not be identified without analyzing the contractual

relationships behind each transaction. Given the record before

the Court, it was not an error, let alone a clear error, to conclude

42

that Ms. Craft’s data matching technique could not adequately

determine class membership.

The Appellants direct us to decisions from outside our

Circuit in which district courts approved certification based on

the same methodology involving PBM data provided by the

same expert, Ms. Craft. They claim that, based on those cases,

the District Court here clearly erred in denying certification.

See, e.g., In re Namenda Indirect Purchaser Antitrust Litig.,

338 F.R.D. 527, 548-50 (S.D.N.Y. 2021) (finding that Ms.

Craft’s methodology along with PBM data “can be used to

identify the ultimate payor of the claim”); In re Ranbaxy

Generic Drug Application Antitrust Litig., 338 F.R.D. 294, 308

(D. Mass. 2021) (finding that Ms. Craft’s methodology

sufficiently explained how “multiple data fields … can be used

jointly to identify efficiently … non-class members”); In re

Loestrin 24 FE Antitrust Litig., 410 F. Supp. 3d 352, 399-401

(D.R.I. 2019) (noting that the “Court is confident” that Ms.

Craft’s methodology in combination with PBM data can show

whether a group plan is fully insured or self-insured). But the

District Court here considered those thoughtful opinions and

still was not persuaded that PBM data alone can readily

identify fully insured health plans, as “evidence presented in

this case is to the contrary.” Niaspan III, 555 F. Supp. 3d at

168. Declining to follow non-binding decisions from other

district courts, especially when the record developed in those

cases is unknown, does not constitute clear error.

Taking another tack, the Appellants say that the

“[D]istrict [C]ourt’s failure to hold the evidentiary hearing

requested by End-Payor Plaintiffs … contributed to the

[C]ourt’s cursory and erroneous conclusion at odds with every

other district court to have considered the materially same

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methodology and class definition.” (Opening Br. at 47.) They

claim that the District Court’s “divergent result here followed

a minimal process that contrasts with the extensive review

conducted by other courts, including multiday evidentiary

hearings that allowed them to fully understand the database

techniques.” (Opening Br. at 47.)

District court judges are accorded “considerable

discretion to limit both discovery and the extent of [a] hearing

on Rule 23 requirements.” In re Hydrogen Peroxide Antitrust

Litig., 552 F.3d 305, 324 (3d Cir. 2008) (citation omitted).

When they were before the District Court in this case, the

Appellants were given three days of argument on their first

class-certification motion, and the District Court considered

four declarations from three different experts, as well as

voluminous briefing, before writing a 70-page opinion

deciding the motion. The Court also considered additional

briefing in the Appellant’s Renewed Motion for Certification,

and it requested additional briefing from the Appellants after

Abbvie pointed out errors in Ms. Craft’s analysis. Given the

extensive investment of time and effort by the Court in

considering the Appellants’ multiple submissions and

arguments, and further given the Appellants’ failure to identify

what more they would have shown, we can hardly say that the

District Court abused its “considerable discretion” in declining

to hold another hearing. 13 Id.

13

The Appellants raise two additional arguments, but

both are without merit and warrant only brief discussion. First,

they argue that the District Court “erred by adopting a bright

line rule... that any potential individualized inquiry defeats

class certification.” (Opening Br. at 26.) But that is a

mischaracterization of the Court’s opinion, as it concluded that

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the “[Appellants] have not persuaded the Court that

distinguishing between class members and mere

intermediaries, which are excluded from the class, will not

‘require[] consideration of the individual contractual

relationships underlying each transaction.’” Niaspan III, 555

F. Supp. 3d at 166 (quoting Vista Healthplan, Inc. v. Cephalon,

Inc., No. 06-1833, 2015 WL 3623005, at *12 (E.D. Pa. June

10, 2015). The District Court reasonably concluded that, given

the “millions of transactions at issue in this case,” id. at 168,

Appellants’ methodology could not “systematically” enforce

the class exclusion for fully insured plans without requiring an

administratively infeasible degree of individualized inquiry, id.

at 169. See City Select, 867 F.3d at 442 (suggesting that

“individualized fact-finding” is permissible only when

administratively feasible).

Second, the Appellants argue that the District Court

improperly “demanded a ‘de minimis’ or less level of over-

inclusiveness.” (Opening Br. at 27.) As already noted, see

supra n.7, that argument too mischaracterizes the Court’s

opinion. The Court stated that “the issue of whether the [End-

Payor Plaintiffs] have presented a sufficient methodology for

distinguishing between class members and mere

intermediaries, such as fully insured plans and TPAs, is not de

minimis.” Niaspan III, 555 F. Supp. 3d at 165. That statement

was not a legal conclusion. It was rather an understated way

of noting how dramatically the Appellants had downplayed the

problem being discussed.

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III. Conclusion

For the foregoing reasons, we will affirm the District

Court’s order denying class certification.

46