Duane Morris Takeaway:This week's episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and senior associate Daniel Selznick with their discussion of a key ruling issued by a Pennsylvania federal judge regarding intervenors to a $275 million settlement resolving pharmaceutical price-fixing claims.
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Episode Transcript
Jerry Maatman: Thank you for being here again, loyal blog listeners and readers, for our weekly podcast series entitled The Class Action Weekly Wire. I'm Jerry Maatman, a partner at Duane Morris, and joining me today is senior associate Dan Selznick. Thanks so much for being on the podcast, Dan.
Daniel Selznick: Great to be here, Jerry. Thanks for having me.
Jerry: Today, our topic is discussing a ruling from the Eastern District of Pennsylvania called In Re Generic Pharmaceutical Pricing Antitrust Litigation. That's a mouthful, but it involved a situation where 40 state attorneys general were blocked from intervening in a $275 million generic drug price-fixing antitrust settlement. Dan, what's the hubbub about with respect to this case?
Dan: Yeah, so this is part of a massive multidistrict litigation involving allegations that Sandoz and other pharmaceutical companies conspired to fix prices on generic drugs. This $275 million settlement would resolve claims brought by consumers, insurers, and other so-called "end payers," and it's actually the largest settlement so far for any defendant in this MDL.
Jerry: Why was it that the state attorneys general were attempting to intervene in the settlement?
Dan: So, the states, which are collectively referred to as the "Movant States," filed a motion to intervene because they were concerned the settlement might interfere with their own lawsuits against Sandoz that had been remanded to the District of Connecticut. They claimed they had a sovereign and statutory interest in ensuring a fair recovery for consumers in their states.
Jerry: So, the concern was the federal settlement approved by the Eastern District of Pennsylvania might impair or cut off their rights to pursue state-related claims?
Dan: Exactly, so they argued that the scope of the release in the federal settlement could overlap with or even undermine what they're trying to recover in their own suits. But the states weren't asserting any new claims in this case, they were just asking to intervene so they could protect what they saw as their interests.
Jerry: But the end result was the Federal District Court in the Eastern District of Pennsylvania said no – what was the reasoning behind that answer to the states' request?
Dan: Sure, so the court was following a recommendation by the special master in the case, and ruled that the states did not have Article III standing to intervene. And essentially, the court agreed that the states' interest here was nominal, and it didn't rise to the level of a concrete, sovereign interest required for standing.
Jerry: When you say nominal, from a legal sense, what does that mean in terms of standing?
Dan: In legal terms, a nominal interest means the party, in this case the states, is not asserting a direct legal claim or injury. The court held that because the states weren't asserting their own affirmative claims and were instead trying to weigh in on claims resolved between private plaintiffs and Sandoz, the states were more like bystanders. So, the court made it clear that the real parties in interest are the individual consumers, or the end payers, and the states weren't acting in their sovereign authority, which is key when trying to establish standing under a parens patriae theory.
Jerry: But isn't it true that states have that statutory authority to protect consumers and to recover damages on their behalf? Doesn't that matter in terms of a standing analysis?
Dan: Right, so that's a big part of the states' argument, and they were pointing to their parens patriae authority under state law to say, "We're not just speaking for private citizens – we, the states, have an independent role." But the court said that was not enough, because the states weren't bringing their own claims here, and all of their actions were pending elsewhere. In this MDL, they were just objecting to the settlement and trying to ensure it did not impact their separate litigation. The court concluded that this indirect interest was not sufficient to establish standing to intervene.
Jerry: So that's no standing, no intervention under Rule 24(a). What about permissive intervention under Rule 24(b)? Did the states try that gambit?
Dan: Right, so that's a good question. You know, under Rule 24(b), the court has more flexibility. But even there, the special master concluded, and the court agreed, that letting the states in at this stage would risk delaying or prejudicing the rights of existing parties. And notably, the states didn't push back on that conclusion, so the court denied permissive intervention under 24(b) as well.
Jerry: I thought the ruling was interesting insofar as the states were not allowed to intervene, but were not totally silenced. The court still let them leave to file an amicus brief. Is that something that you see very often?
Dan: You know, it's hard to say. I mean, in this case, the court said that the states' objections could still be considered, but only as amici curiae. So, the court made a point to say it would give those objections the same weight it would have if the states had been permitted to intervene. But the key difference with this is that because the states don't have formal party status, they can't appeal the final ruling unless they can establish standing.
Jerry: I thought another interesting dynamic to the decision was the role of Florida, and what it did, in a unique way as compared to the other states. Could you explain that for our listeners?
Dan: Sure, and yeah, it is interesting. So, Florida actually was not part of the group trying to intervene, and instead it asked to file an amicus brief supporting the settlement. So, contrary to what the other states were doing, and the court granted that request. So, you know, you've got states on both sides of this issue, which highlights how divided even the public enforcers can be when it comes to evaluating the fairness of a settlement.
Jerry: In terms of the financial side of the equation, how are the costs for the intervention motions being split?
Dan: So, my understanding is that the court is treating this as a shared cost among the parties involved in the motion, and I think the special master fees for the motion will be 50% covered by the states, so the movants, and then the other 50% will be split between Sandoz and the end-payer plaintiffs, each having 25%.
Jerry: That's quite interesting. Well, thanks, Dan, for lending your thought leadership here in this complicated arena in the Eastern District of Pennsylvania. I think the big takeaway here seems to be, as it is in many federal-related class action situations, that real standing is the key to opening the courthouse door and being able to intervene and having a clear legal interest in an Article III sense trumps everything else. So, thanks so much for being here, Dan, and for your insights and for explaining this ruling to our readers. And thanks, listeners, for tuning in.
Dan: Of course, thanks, Jerry, for having me on the podcast, and again, thanks to the listeners for being here.
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