2004 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-8-2004

In Re: Warfarin

Precedential or Non-Precedential: Precedential

Docket No. 02-3603

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 02-3603, 02-3755, 02-3757 & 02-3758

 

IN RE: WARFARIN SODIUM ANTITRUST LITIGATION

SEYMOUR EAGEL, 

Appellant in No. 02-3603

WILLIE HUTCHINSON, JR.;

VINCENT PALAZZOLA;

ALEX GALPERIN;

SHIRLEY BRUCE;

MADISON W. O’KELLY, JR.;

GAREY L. MCCARTY,

Appellants in No. 02-3755

ALAN SHAPIRO,

Appellant in No. 02-3757

MARY CLEUSMAN, 

Appellant in No. 02-3758

 

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 98-md-1232)

District Judge: The Honorable Sue L. Robinson

 

Argued October 29, 2003

Before: SCIRICA, Chief Judge, FUENTES, and SMITH, 

Circuit Judges.
-2-

(Filed: December 8, 2004)

Paul D. Wexler (Argued)

Bragar Wexler Eagel & Morgenstern, LLP

885 Third Avenue, Suite 3040

New York, New York 10022

ATTORNEY FOR APPELLANT SEYMOUR EAGEL

Jeffrey S. Friedman

Silverman & McDonald

1010 North Bancroft Pkwy

Suite 22

Wilmington, DE 19085

Edward Cochran (Argued)

20030 Marchmont Road

Shaker Heights, OH 44122

Hilton F. Tomlinson

Pritchard, McCall & Jones, LLC

505 North 20th Street, Suite 800

Birmingham, AL 35203-2605

Paul Rothstein

626 N.E. 1st Street

Gainesville, FL 32601

N. Albert Bacharach, Jr.

115 NE 6th Avenue

Gainesville, FL 32601

Robert W. Bishop

Bishop & Associates

6520 Glenridge Park, Suite 6

Louisville, KY 40222

ATTORNEYS FOR APPELLANTS WILLIE HUTCHINSON,

JR., VINCENT PALAZZOLA; ALEX GALPERIN; SHIRLEY
-3-

BRUCE; MADISON W. O’KELLY, JR.; GAREY L.

MCCARTY

John J. Pentz (Argued)

2 Clock Tower Place

Suite 260G

Maynard, MA 01754

ATTORNEY FOR APPELLANT ALAN SHAPIRO

J. Arnold Fitzgerald

Andrew F. Tucker (Argued)

375 Second Avenue

Suite 2

Dayton, Tennessee 37321

Sidney Balick

Balick & Balick

711 King Street

Wilmington, DE 19801

ATTORNEYS FOR APPELLANT MARY CLEUSMAN

Bernard Persky (Argued)

Barbara J. Hart

Vaishali Shetty

Goodkind Labaton Rudoff & Sucharow LLP

100 Park Avenue, 12th Floor

New York, New York 10017

ATTORNEYS FOR APPELLEES JOHN KUSNERICK, ET

AL.; SARA ALTMAN; SAMUEL GORDON TISCHLER;

MARIE A. STECKEL; ROBERT BAREISS; JOHN CIVATTE,

JR.; MARY BANTEN; ARKANSAS CARPTENERS’

HEALTH & WELFARE FUND; OPERATING ENGINEERS

LOCAL 312 HEALTH & WELFARE FUND; UNITED FOOD

AND COMMERCIAL UNION AND EMPLOYERS MIDWEST

HEALTH BENEFITS FUND; UNITED WISCONSIN

SERVICES, INC., now known as COBALT CORPORATION;

LOUISIANA HEALTH SERVICE AND INDEMNITY
-4-

CORPORATION doing business as BLUE CROSS AND BLUE

SHIELD OF LOUISIANA

William R. Kane

Miller, Faucher and Cafferty

18th & Cherry Streets

One Logan Square, 17th Floor

Philadelphia, PA 19103

Alan H. Rolnick

Hanzman & Criden

220 Alhambra Circle, Suite 400

Commercebank Building 

Coral Gables, FL 33134

Marvin A. Miller

Miller, Faucher and Cafferty

30 North LaSalle Street

Suite 3200

Chicago, IL 60602

ATTORNEYS FOR APPELLEES JOHN KUSNERICK, ET

AL.; SARA ALTMAN; SAMUEL GORDON TISCHLER;

MARIE A. STECKEL; ARKANSAS CARPTENERS’ HEALTH

& WELFARE FUND; OPERATING ENGINEERS LOCAL 312

HEALTH & WELFARE FUND; UNITED FOOD AND

COMMERCIAL UNION AND EMPLOYERS MIDWEST

HEALTH BENEFITS FUND; UNITED WISCONSIN

SERVICES, INC., now known as COBALT CORPORATION;

LOUISIANA HEALTH SERVICE AND INDEMNITY

CORPORATION doing business as BLUE CROSS AND BLUE

SHIELD OF LOUISIANA

Pamela S. Tikellis

Chimicles & Tikellis

One Rodney Square

P.O. Box 1035, Suite 500

Wilmington, DE 19899

ATTORNEY FOR APPELLEES JOHN KUSNERICK, ET AL.;
-5-

SARA ALTMAN; SAMUEL GORDON TISCHLER; MARIE

A. STECKEL; ROBERT BAREISS; JOHN CIVATTE, JR.

MARY BANTEN.

Richard W. Cohen (Argued)

Lowey, Dannenberg, Bemporad & Selinger

One North Lexington Avenue

The Gateway

White Plains, NY 10601

ATTORNEY FOR APPELLEE UNITED WISCONSIN

SERVICES, INC., now known as COBALT CORPORATION

Donald J. Wolfe, Jr.

Potter, Anderson & Corroon

1313 North Market Street

6th Floor, P.O. Box 951

Wilmington, DE 19899

George D. Ruttinger (Argued)

Crowell & Moring

1001 Pennsylvania Avenue, N.W.

Washington, D.C. 20004-2505

ATTORNEYS FOR APPELLEE DUPONT

PHARMACEUTICAL COMPANY

 

 OPINION OF THE COURT

 

FUENTES, Circuit Judge.

This matter arises out of a consolidated class action suit

seeking injunctive and monetary relief in connection with the sale

of Coumadin, the brand name for the prescription drug warfarin

sodium manufactured and marketed by the DuPont
 

1

Formerly known as DuPont Merck Pharmaceutical Company (a

partnership between E.I. duPont de Nemours & Company and

Merck & Company). 

 

2

Fixed co-pay consumers refer to those insured consumers who

paid the same price for prescription drugs regardless of whether the

drugs were name-brand or generic. Out-of-pocket consumers

refers to individuals who paid different prices for prescription

drugs depending on whether they were name-brand or generic.

Third Party Payors refer to those entities providing prescription

drug coverage and/or paying or reimbursing part or all of the costs

of prescription drugs.

-6-

Pharmaceuticals Company (“DuPont”).1 Plaintiffs allege that

DuPont’s anticompetitive behavior and dissemination of false and

misleading information about a lower-priced, readily available

generic competitor caused them to purchase the higher-priced

Coumadin instead of the generic product. At issue in this appeal

is whether the District Court abused its discretion in approving a

$44.5 million nationwide settlement agreement between DuPont

and the fixed co-pay consumers and out-of-pocket consumers

(collectively, the “consumers”) and Third Party Payors (“TPPs”) of

Coumadin, and awarding $10 million in fees to class counsel.2

Several individual consumers and TPPs challenge the District

Court’s certification of the class and approval of the settlement.

For the reasons discussed below, we conclude that the District

Court did not abuse its discretion in certifying the class or in

approving the settlement, and accordingly we will affirm the

judgment of the District Court.

I. BACKGROUND

A. Factual History

Warfarin sodium is a prescription oral anticoagulant

medication sold in tablet form that is taken by more than 2 million

Americans to treat blood-clotting disorders. DuPont has been the

dominant manufacturer and supplier of warfarin sodium under the

brand name Coumadin, recording sales of approximately $550

million and $464 million, respectively, in 1998 and 1999.

Although DuPont’s Coumadin patent expired in 1962, Coumadin
 

3When seeking approval from the FDA to market generic drugs,

drug manufacturers typically submit detailed information regarding

the equivalence of the generic version and the previously approved

brand name version. Bioequivalence is established by showing that

the generic drug delivers to the body the same amount of active

ingredient at the same rate and extent as its brand name

counterpart. Once bioequivalence is established, and after the FDA

approves the manufacturing controls and labeling of the generic

substitute, the FDA grants approval for release of the generic drug

to the market.

-7-

remained the only warfarin sodium product available until July

1997, when a generic version of warfarin sodium was released onto

the market following approval by the U.S. Food and Drug

Administration (“FDA”). Class action plaintiffs have alleged that

DuPont, in response to the competition from lower-priced generic

warfarin sodium, disseminated false and misleading information to

consumers, TPPs, and others about the safety and equivalence of

generic warfarin sodium. As a result, plaintiffs allege that

DuPont’s campaign of misrepresentations and omissions caused

consumers and TPPs to buy higher-priced, brand name Coumadin

instead of the lower-priced generic warfarin sodium. 

DuPont’s alleged violations are said to have begun when

Barr Laboratories, Inc. (“Barr”) filed a petition with the FDA in

May 1995 seeking approval to manufacture and distribute a generic

warfarin sodium product. In response to Barr’s petition, DuPont

filed a petition for stay with the FDA in October 1996 requesting

that the FDA adopt stricter bioequivalence standards and postpone

approval for all generic warfarin sodium products. The FDA denied

DuPont’s petition, however, on the grounds that the methods in

place for determining bioequivalence were sufficient. At the same

time, DuPont filed a petition with the U.S. Pharmacopeial

Convention, Inc. (“USP”) requesting the adoption of Coumadin’s

content uniformity specifications as the industry standard for

warfarin sodium drugs. The USP rejected this petition.

In March 1997, the FDA approved a generic warfarin

sodium, finding that it was the bioequivalent and therapeutic

equivalent to Coumadin.3 The generic product was released to the
 

4

“NTI drugs,” or Narrow Therapeutic Index drugs, are used for

treating severe,life-threatening diseases where a patient’s tolerance

to the drugs are so narrow that too small a dose can be useless and

too large a dose can be dangerous to the patient’s health. Warfarin

sodium is designated by the FDA as an NTI drug.

-8-

market on July 26, 1997 at prices substantially lower than

Coumadin. Plaintiffs allege that DuPont, in the period before and

after Barr’s introduction of generic warfarin sodium, published

false and misleading statements concerning the bioequivalence,

therapeutic safety, and efficacy of generic warfarin sodium. For

instance, DuPont allegedly issued a variety of false and misleading

communications to convince health care professionals, government

agencies, and the public that Coumadin was safer and more

effective than Barr’s generic warfarin sodium product. In addition,

DuPont allegedly revised its promotional computer software system

designed for health care practitioners monitoring patients using

Coumadin to include warnings about switching to generic

substitutes, and created a slide presentation for health care

professionals claiming that the generic drug may not be the

equivalent to Coumadin. 

DuPont also allegedly ran a publicity campaign claiming

that Coumadin had tighter than USP content uniformity standards.

DuPont issued a press release, which stated that patients should

receive additional blood tests if switched to generic warfarin

sodium and accused Barr of focusing on producing a cheaper

product to save money while DuPont focused on patient safety and

education. Furthermore, DuPont allegedly created an organization

named the Health Alliance for NTI Patient Safety for the purpose

of lobbying state legislatures, formularies, and pharmacy boards to

exclude NTI drugs from state generic substitution laws.4 

Plaintiffs assert that the misrepresentations led consumers,

TPPs, and others to believe that Coumadin was superior to the

generic equivalents, caused millions of prescriptions to be filled

with Coumadin that could have been filled with less expensive

generic drugs, and allowed DuPont to maintain supracompetetive

prices for Coumadin. As evidence that DuPont’s

misrepresentations and conduct had an anticompetitive effect,
-9-

plaintiffs cited evidence of the weak market penetration of generic

warfarin sodium as compared to Coumadin. Generally, about 40-

70% of prescriptions for drugs available from multiple sources are

filled with less expensive generic products within one year of

generic availability. However, more than 75% of prescriptions for

sodium warfarin were still filled with Coumadin a year after Barr

introduced its generic version, and DuPont continued to maintain

a 67% market share up until the date the complaints in this matter

were filed.

B. Procedural History

Beginning in 1997, class action complaints were filed in

several federal district courts and were consolidated for pretrial

proceedings by the Judicial Panel on Multidistrict Litigation

(“MDL panel”) before the U.S. District Court for the District of

Delaware. The class actions sought treble damages and injunctive

relief under federal antitrust laws on behalf of a nationwide class

of consumer and TPP purchasers of Coumadin who paid all or part

of the purchase price. In an order dated December 7, 1998, the

District Court dismissed the claims on the grounds that consumer

plaintiffs, as indirect purchasers of Coumadin, lacked standing to

seek injunctive relief and treble damages under the Sherman Act.

See In re: Warfarin Sodium Antitrust Litig., C.A. No. MDL 98-

1232-SLR, 1998 WL 883469 (D. Del. Dec 7, 1998). This Court

reversed the District Court’s decision with respect to injunctive

relief, finding that consumer plaintiffs did have standing under

federal antitrust laws. See In re Warfarin Sodium Antitrust Litig.,

214 F.3d 395 (3d Cir. 2000). 

Following our decision,several additional class actions were

filed in Delaware District Court as well as other federal courts by

TPP plaintiffs and a state medicaid agency and were transferred to

the Delaware District Court as tag-along actions pursuant to the

order of the MDL panel. After discussions among counsel, the

parties negotiated and drafted a pretrial case management order

(“CMO”), which the District Court entered on February 22, 2001.

The CMO established a plaintiffs’ Executive Committee,

established procedures for conducting settlement discussions, and

specified when and how to file a consolidated class action

complaint.
 

5

15 U.S.C. § 26 states in pertinent part: “Any person, firm,

corporation, or association shall be entitled to sue for and have

injunctive relief, in any court of the United States having

jurisdiction over the parties, against threatened loss or damage by

a violation of the antitrust laws, including sections 13, 14, 18, and

19 of this title, when and under the same conditions and principles

as injunctive relief against threatened conduct that will cause loss

or damage is granted by courts of equity, under the rules governing

such proceedings, and upon the execution of proper bond against

damages for an injunction improvidently granted and a showing

that the danger of irreparable loss or damage is immediate, a

preliminary injunction may issue . . . .”

 

6

15 U.S.C. § 2 states: “Every person who shall monopolize, or

attempt to monopolize, or combine or conspire with any other

person or persons, to monopolize any part of the trade or commerce

among the several States, or with foreign nations, shall be deemed

guilty of a felony, and, on conviction thereof, shall be punished by

fine not exceeding $100,000,000 if a corporation, or, if any other

person, $1,000,000, or by imprisonment not exceeding 10 years, or

by both said punishments, in the discretion of the court.”

 

7

15 U.S.C. § 15 states in pertinent part: “[A]ny person who shall

be injured in his business or property by reason of anything

forbidden in the antitrust laws may sue therefor in any district court

of the United States in the district in which the defendant resides

or is found or has an agent, without respect to the amount in

-10-

A consolidated class action complaint was filed in the

District Court on March 30, 2001 by consumers and TPPs on

behalf of all similarly situated U.S. consumers who purchased

Coumadin at supracompetitive prices and all similarly situated U.S.

TPPs who paid for the fulfillment of Coumadin prescriptions for

their members or their insureds at supracompetitive prices

beginning in July 1997. Plaintiffs sought an injunction and other

equitable relief under § 16 of the Clayton Act, 15 U.S.C. § 26,5 to

remedy DuPont’s violation of the federal antitrustlaws, particularly

§ 2 of the Sherman Act, 15 U.S.C. § 2.

6

 On behalf of all TPPs,

plaintiffs sought treble damages pursuant to § 4 of the Clayton Act,

15 U.S.C. § 15.7 Plaintiffs also alleged violations of the Delaware
controversy, and shall recover threefold the damages by him

sustained, and the cost of suit, including a reasonable attorney's fee

. . . .”

 

8Ariz. Rev. Stat. § 44-1401, et seq.; Cal. Bus.& Prof. Code

§ 17200 et seq.; D.C. Code Ann. § 28-4502, et seq.; Fla. Stat. ch.

401; Kan. Stat. Ann. § 50-101, et seq.; Ky. Rev. Stat. Ann.

§ 367.110-310, et seq.; La. Rev. Stat. Ann. § 51:137, et seq.; Me.

Rev. Stat. Ann. tit. 10, § 1101, et seq.; Mass. Ann. Laws, ch. 93A,

et seq.; Mich. Comp. Laws § 445.771, et seq.; Minn. Stat.

§ 325D.49, et seq.; N.J. Stat. Ann. § 56:9-1, et seq.; N.M. Stat.

Ann. § 57-1-1, et seq.; N.Y. Gen. Bus. Law § 340, et seq.; N.C.

Gen. Stat. § 75-1, et seq.; N.D. Cent. Code § 51-08.1-0, et seq.;

S.D. Codified Laws § 37-1, et seq.; Tenn. Code Ann. § 47-25-101,

et seq.; W. Va. Code § 47-18-1, et seq.; Wis. Stat. § 133.01, et seq.

-11-

Consumer Fraud Act, 6 Del.C. § 2513; the consumer fraud and

deceptive acts and practices statutes of all fifty states and the

District of Columbia; and the antitrust statutes8 of the “indirect

purchaser” states. Finally, plaintiffs alleged tortious interference

with TPPs’ contracts with health benefit plan members and

pharmacies relating to the substitution of generic warfarin sodium

and alleged unjust enrichment under the laws of all fifty states and

the District of Columbia. The state actions that are still pending

are included in the proposed settlement.

C. Settlement Negotiations and Agreement

Pursuant to the CMO, co-chairs of the Executive Committee

had primary responsibility for submitting motions to the District

Court, engaging in discovery, conducting negotiations with

DuPont, and acting as the spokesperson for the plaintiffs at pretrial

conferences. Any settlement discussions had to be attended by at

least one of the co-chairs, one consumer representative, and one

TPP representative, and no settlement offer could be made or

accepted without the prior consent of all consumer and TPP

representatives on the committee. 

Settlement negotiations in the federal actions began in

March 2000 and continued through the next year. The parties

reached an oral agreement on the basic terms of the proposed
-12-

settlement on April 19, 2001, executed a memorandum of

understanding on May 14, 2001, and entered into a Stipulation of

Settlement and Compromise on July 26, 2001.

Under the proposed settlement, DuPont would pay, for

settlement purposes only, $44.5 million to settle the claims of the

following proposed class:

All consumers or Third Party Payors in the

United States who purchased and/or paid all

or part of the purchase price of Coumadin

dispensed pursuant to prescriptions in the

United States during the period March 1,

1997 through and including August 1, 2001

(“Class Period”). Excluded from the Class

are Defendant and any of its officers and

directors and any governmental entity.

“Third Party Payor” shall mean any nongovernmental entity that is (i) a party to a

contract, issuer of a policy, or sponsor of a

plan, which contract, policy or plan provides

prescription drug coverage to natural persons,

and is also (ii) at risk, pursuant to such

contract, policy or plan, to provide

prescription drug benefits or to pay or

reimburse all or part of the cost of

prescription drugs dispensed to natural

persons covered by such contract policy or

plan. 

Upon final approval of the settlement, all pending actions against

DuPont arising from its alleged unlawful marketing and sale of

Coumadin, i.e., both federal MDL proceedings and related state

actions, would be dismissed. DuPont has already paid the $44.5

million into an escrow account which is earning interest for the

benefit of the class.

Under the allocation and distribution plan, the Net

Settlement Fund (“NSF”) is to be distributed to class members who
 

9The NSF is to be calculated as follows: $44.5 million plus

accrued interest, less court-awarded attorneys’ fees, costs and

expenses, less costs of notice to class members, less costs of

administering the fund, and less taxes.

-13-

filed a proof of claim on or before April 30, 2002.9 The recognized

loss for each class member will be total payments made for

Coumadin (less the amounts received for reimbursements,

discounts, or rebates) multiplied by 15%. Eighteen percent of the

NSF is to be set aside for a “Preferential Fund” out of which the

recognized losses of consumers will be paid first. If the recognized

losses of consumer claimants are fully satisfied from the

Preferential Fund, the unexpended portion will be added to the

NSF for payment of the recognized losses of the TPPs. If instead

consumer losses are not fully satisfied, the unsatisfied amounts will

be paid out of the remainder of the NSF on a pro-rata basis with

TPP claimants.

On August 1, 2001, the District Court granted preliminary

approval of the settlement and conditionally certified the settlement

class. The order approved the plan for providing notice to class

members about the settlement terms. In addition, the District Court

required any class member who wanted to opt-out of the class, or

who wished to object to the proposed settlement but not opt-out of

the class, to do so by December 17, 2001.

D. Notice to Class Members and Response to

Proposed Settlement

Plaintiffs contracted with Complete Claim Solutions, Inc.

(“CCS”), a nationally recognized settlement administrator, to

prepare and implement a notice program. CCS published notices

targeted at both TPP and consumer class-members; set up a callcenter to receive telephone inquiries; prepared, printed, and

distributed notice packets for consumers and TPPs who responded

to the notice; and designed and developed a website for class

members to review and access information about the settlement.

Summary notice of the proposed settlement was published over a

period of three months beginning in August 2001 in selected

publications across the country including USA Today, USA

Weekend, and Parade Magazine, as well as Modern Maturity and
-14-

Readers Digest, in an effort to reach users of Coumadin who are

generally over the age of 50. The publications had a combined

circulation of approximately 115 million people. The notice was

also published in National Underwriter and Benefits and

Compensation Solutions. 

The summary notice informed class members that a

settlement on behalf of the class had been proposed. To make a

claim, consumers were required to submit a form, available on the

website set up by CCS, containing certain identifying information

and proof concerning their use of Coumadin. By January 2002,

there had been over 89,000 telephone inquiries made, over 41,803

visits to the websites and 15,127 forms viewed and/or downloaded.

An additional 7,273 requests for printed notice packets were

received via email. Through June 3, 2002, the administrator had

mailed claim forms to 90,926 potential consumer class members

and received and processed 48,305 consumer claims and 1,055 TPP

claims.

The claims submitted by consumer class members who filed

proof of claim on or before the April 30, 2002 deadline totaled $4.3

million (well within the 18% set aside for them in the Preferential

Fund). Attorneys’ fees and expenses were awarded to counsel for

the consumers and the TPPs in the aggregate amount of $10.8

million. Approximately $2.2 was spent on notice and

administration. This left $27.2 million in the fund for

compensation of TPPs. In addition, by the December 17, 2001 optout and objection deadline, a total of 136 consumers and 10 TPPs

had opted out of the proposed settlement while 11 individual

consumers and consumer groups and two TPPs had filed

objections.

Oral arguments by plaintiffs’ and objectors’ counsel were

presented at a fairness hearing held on January 23, 2002. On

August 30, 2002, the District Court issued an extensive and

detailed Memorandum Opinion and Order (“Final Approval

Order”) certifying the settlement class, approving the settlement,

and dismissing the contentions made by the objectors. Nine of the

consumer objectors now appeal the Final Approval Order.

Cleusman, Shapiro, and Eagel filed individual appeals, while

Hutchinson, Palazzola, Galperin, Bruce, O’Kelley, and McCarthy
-15-

(collectively, “Hutchinson”) filed a joint appeal.

II. DISCUSSION

We review the decision of the District Court to certify the

class and approve the settlement under an abuse of discretion

standard. See In re Cendant Corp. Litig., 264 F.3d 201, 231 (3d

Cir. 2001) (“Cendant”); In re Prudential Ins. Co. of Am. Sales

Practices Litig., 148 F.3d 283, 299 (3d Cir. 1998) (“Prudential”).

An abuse of discretion may be found where 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

Gen. Motors Corp. Pick-Up Truck Fuel Tanks Prod. Liab. Litig. 55

F.3d 768, 783 (3d Cir. 1995) (“General Motors”). We have

jurisdiction over this appeal under 28 U.S.C. § 1291.

A. Class Certification

To be certified, a class must satisfy the four threshold

requirements of Federal Rule of Civil Procedure 23(a): (1)

numerosity (a “class [so large] that joinder of all members is

impracticable”); (2) commonality (“questions of law or fact

common to the class”); (3) typicality (named parties’ claims or

defenses “are typical . . . of the class”); and (4) adequacy of

representation (representatives “will fairly and adequately protect

the interests of the class”). See also Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 613 (1997). In addition to the threshold

requirements of Rule 23(a), parties seeking class certification must

show that the action is maintainable under Rule 23(b)(1), (2), or

(3). Rule 23(b)(3), the provision at issue in this case, provides for

so-called “opt-out” class actions suits. See Amchem, 521 U.S. at

615. Under Rule 23(b)(3), two additional requirements must be

met in order for a class to be certified: (1) common questions must

“predominate over any questions affecting only individual

members” (the “predominance requirement”), and (2) class

resolution must be “superior to other available methods for the fair

and efficient adjudication of the controversy” (the “superiority

requirement”). 

Appellants allege several errors in the District Court’s

certification decision. First, Appellants argue that the Rule 23(a)

commonality and Rule 23(b)(3) predominance requirements were
 

10We do not understand Appellants as challenging the District

Court’s findings that the class satisfied Rule 23(a)’s numerosity

requirement. 

-16-

not satisfied in this case because of variations in the claims and

injuries of the plaintiffs, specifically between and among the

consumers and TPPs, as well as differences in the laws of the 50

states which form the basis of several of the class’ claims.

Appellants also argue that the certified class does not satisfy the

Rule 23(a) requirement of adequacy of representation because of

the existence of intra-class conflicts of interest, which rendered

class counsel unable to represent the interests of a single class.

After reviewing Appellants’ arguments, and for the reasons

discussed below, we find that the District Court did not abuse its

discretion in certifying a single nationwide class of consumers and

TPPs.10

1. Commonality and Predominance

Rule 23(a)(2)’s commonality element requires that the

proposed class members share at least one question of fact or law

in common with each other. See Baby Neal ex. rel. Kanter v.

Casey, 43 F.3d 48, 56 (3d Cir. 1994). Rule 23(b)(3)’s

predominance element in turn requires that common issues

predominate over issues affecting only individual class members.

See Fed. R. Civ. P. 23(b)(3). We have previously noted that the

Rule 23(b)(3) predominance requirement, which is far more

demanding, incorporates the Rule 23(a) commonality requirement.

See In re LifeUSA Holding, Inc., 242 F.3d 136, 144 (3d Cir. 2001);

see also Amchem, 521 U.S. at 623-24. Accordingly, we analyze

the two factors together, with particular focus on the predominance

requirement. See In re LifeUSA Holding, Inc., 242 F.3d at 144.

The District Court found that common questions of law and fact

arose from plaintiffs’ complaint, and that such common questions

predominated over any issues affecting only individual class

members. We agree.

As the Supreme Court noted in Amchem, “[p]redominance

is a test readily met in certain cases alleging consumer [] fraud or

violations of the antitrust laws.” Amchem, 521 U.S. at 625. This

case falls squarely into that category: plaintiffs have alleged that
 

11As the District Court noted, in order to prove a violation of § 2

of the Sherman Act, plaintiffs must establish that DuPont possessed

monopoly power in the warfarin sodium market and that it willfully

acquired or maintained that power as distinguished from achieving

growth or development as a consequence of a superior product,

business acumen, or historic accident. See United States v.

Grinnell Corp., 384 U.S. 563, 570-71 (1966). To prove a violation

of the Delaware Consumer Fraud statute, plaintiffs must show that

DuPont committed fraud or misrepresentation in connection with

the sale of Coumadin; no proof of individual reliance on the fraud

or misrepresentation is required. See Delaware Consumer Fraud

Statute, 6 Del. C. § 2513; see also S&R Assoc., LP v. Shell Oil

Co., 725 A.2d 431, 440 (Del. Super. Ct. 1998). 

-17-

DuPont engaged in a broad-based campaign, in violation of federal

and state consumer fraud and antitrust laws, to deceive consumers,

TPPs, health care professionals, and regulatory bodies into

believing that generic warfarin sodium was not an equivalent

alternative to Coumadin. These allegations naturally raise several

questions of law and fact common to the entire class and which

predominate over any issues related to individual class members,

including the unlawfulness of DuPont’s conduct under federal

antitrust laws as well as state law, the causal linkage between

DuPont’s conduct and the injury suffered by the class members,

and the nature of the relief to which class members are entitled.

Moreover, proof of liability for DuPont’s conduct under § 2

of the Sherman Act and the Delaware Consumer Fraud statute

depends on evidence which is common to the class members, such

as evidence that DuPont made misrepresentations about Coumadin

and generic warfarin sodium permitting DuPont to monopolize the

market for warfarin sodium and charge supracompetitive prices for

Coumadin, while discouraging class members to purchase the

lower-priced generic competitor.11 In other words, while liability

depends on the conduct of DuPont, and whether it conducted a

nationwide campaign of misrepresentation and deception, it does

not depend on the conduct of individual class members. See In re

Flat Glass Antitrust Litig., 191 F.R.D. 472, 483-84 (W.D. Pa. 1999)

(noting that the predominance test is met in an antitrust case

because “consideration of the conspiracy issue would, of necessity,
-18-

focus on defendants’ conduct, not the individual conduct of the

putative class members”). Similarly, proof of liability does not

depend on evidence that DuPont made deceptive communications

to individual class members or of class members’ reliance on those

communications; to the contrary, DuPont’s alleged deceptive

conduct arose from a broad-based, national campaign conducted by

and directed from corporate headquarters, and individual reliance

on the misrepresentations was irrelevant to liability. See In re

LifeUSA Holding, Inc., 242 F.3d at 144-46 (vacating class

certification in part because plaintiffs’ claims of deceptive

insurance sales practices arose from individual and

nonstandardized presentations by numerous independent agents).

Finally, the fact that plaintiffs allege purely an economic injury as

a result of DuPont’s conduct (i.e., overpayment for warfarin

sodium), and not any physical injury, further supports a finding of

commonality and predominance because there are little or no

individual proof problems in this case otherwise commonly

associated with physical injury claims. See Prudential, 148 F.3d at

315 (noting that “the complexity of a case alleging physical injury

as a result of asbestos exposure differs greatly from a case alleging

economic injury as a result of deceptive sales practices”).

Appellants raise several objections to the District Court’s

finding that the certified class satisfies the commonality and

predominance requirements. We consider each in turn. 

First, several Appellants argue that the District Court erred

when it certified a single nationwide class of plaintiffs because

variations in and inconsistencies between the state consumer fraud

and antitrust laws of the fifty states defeat the commonality and

predominance requirements of Rule 23. Appellants rely principally

on the Seventh Circuit’s decision in In re Bridgestone/Firestone

Inc., 288 F.3d 1012 (7th Cir. 2002) (“Bridgestone”), a case

involving the certification of a nationwide class alleging tort claims

arising under the laws of all fifty states. However, Bridgestone is

distinguishable from the instant matter because that case concerned

certification of a class for purposes of litigation, not a class solely

for purposes of settlement, which is at issue in this case. 288 F.3d

at 1018.

The difference is key. In certification of litigation classes
-19-

for claims arising under the laws of the fifty states, we have

previously noted that the district court must determine whether

variations in state laws present the types of insuperable obstacles

which render class action litigation unmanageable. See Prudential,

148 F.3d at 315; see also In re Sch. Asbestos Litig., 789 F.2d 996,

1010 (3d Cir. 1986). Thus, for instance, we have stated that a

district court should examine whether varying state laws can be

grouped by shared elements and applied as a unit in such a way that

the litigation class is manageable. Prudential,148 F.3d at 315; In

re Sch. Asbestos Litig., 789 F.2d at 1010. However, when dealing

with variations in state laws, the same concerns with regards to

case manageability that arise with litigation classes are not present

with settlement classes, and thus those variations are irrelevant to

certification of a settlement class. See Amchem, 521 U.S. at 620

(in a settlement-only class certification, “a district court need not

inquire whether the case, if tried, would present intractable

management problems . . . for the proposal is that there be no

trial”).

Nonetheless, we recognize that problems beyond those of

just manageability may exist when a district court is asked to

certify a single nationwide class action suit, even for settlement

purposes, when claims arise under the substantive laws of the fifty

states. Although there may be situations where variations in state

laws are so significant so as to defeat commonality and

predominance even in a settlement class certification, this is not

such a case. We agree with the District Court that the fact that

there may be variations in the rights and remedies available to

injured class members under the various laws of the fifty states in

this matter does not defeat commonality and predominance. In

Prudential, we noted that a “finding of commonality does not

require that all class members share identical claims,” 148 F.3d at

310, and we rejected an objector’s contention that predominance

was defeated because claims were subject to the laws of fifty states,

id. at 315. Moreover, recent decisions elsewhere have certified

nationwide or multistate classes under state laws in actions alleging

overpayment for brand-name prescription drugs. See In re

Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369 (D.D.C.

2002); In re Synthroid Mktg. Litig., 188 F.R.D. 295 (N.D. Ill.

1999). In certifying a nationwide settlement class, the District
 

12We also note that it appears to be an unsettled question of law

as to whether Tennessee’s antitrust statutes, the Tennessee

Consumer Protection Act (“TCPA”) and the Trade Practices Act

(“TPA”), cover only violations occurring in intrastate commerce or

extend to cover violations occurring in interstate commerce as well.

See FTC v. Mylan Labs., Inc., 62 F. Supp. 2d 25, 51 (D.D.C. 1999)

(“When the challenged conduct occurs before the products arrive

in Tennessee, the conduct is considered interstate in nature and the

TPA and TCPA should not apply.”); see also Richardson v.

Aventis, Civil Action No. 02-4586 (Tenn. Ch. Ct, Rutherford Co.,

May 20, 2003) (holding that the TPA was intended to apply to

predominantly intrastate commerce within Tennessee and is thus

“not applicable to . . . an interstate . . . price-fixing conspiracy”).

-20-

Court was well within its discretion in determining that variations

between the laws of different states were insufficient to defeat the

requirements of Rule 23.

Turning to the next argument, several Appellants object to

the certification of a single, nationwide class because certain class

members may be eligible for treble damages or punitive damages

under their state antitrust laws, while other class members, such as

those from Tennessee, may be eligible for “full consideration”

damages. Under a “full consideration” statute, a consumer can

recover the full purchase price paid, as opposed to receiving

reimbursement of only the overcharges. As we explained above,

however, we cannot say that the District Court abused its discretion

in finding that such variations in state law rights and remedies were

insufficient to defeat commonality and predominance.12 In any

event, we agree with the District Court that any material variations

could be considered in the context of calculating damages as well

as in assessing the fairness of the settlement.

Appellant Hutchinson argues that the District Court erred in

when it certified a single class including both fixed co-pay

consumers and out-of-pocket consumers. According to

Hutchinson, because fixed co-pay consumers suffered no injury or

did not suffer the same injury as out-of-pocket consumers whose

economic loss varied with the conduct of DuPont, the District

Court should either have excluded fixed co-pay consumers from
-21-

the class or otherwise created a separate sub-class for them. We

disagree. As the District Court noted, fixed co-pay consumers did

possess viable equitable and common law claims for unjust

enrichment as well as claims for injunctive relief against DuPont.

Fixed co-pay consumers therefore suffered a cognizable injury as

a result of DuPont’s allegedly unlawful conduct and posed the

same risk to DuPont as did out-of-pocket consumers. Thus, the

District Court did not err when it included fixed co-pay consumers

with out-of-pocket consumers in the same class.

Finally, several Appellants object to the inclusion of TPPs

in the certified class on the grounds that TPPs did not have

standing to assert antitrust claims, or in the alternative that their

claims were not as strong as those of the consumer plaintiffs.

Despite Appellants’ objections, we find no error in the inclusion of

TPPs in the certified class. Notably, TPPs, like individual

consumers, suffered direct economic harm when, as a result of

DuPont’s alleged misrepresentations, they paid supracompetitive

prices for Coumadin instead of purchasing lower-priced generic

warfarin sodium. Thus, this case is distinguishable from other

product liability class actions, such as Steamfitters Local Union

No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912 (3d Cir.

1999) (“Steamfitters”), and a decision of the Southern District of

New York in In re Rezulin Products Liability Litigation, 171 F.

Supp. 2d 299 (S.D.N.Y. 2001) (“Rezulin”), which were cited by

Appellants. See also Allegheny Gen. Hosp. v. Philip Morris, Inc.,

228 F.3d 429 (3d Cir. 2000). 

These cases, as with other similar product liability cases,

involved class action claims by consumers who had suffered

physical injuries from defective products, which in turn resulted in

increased medical costs of covered insureds and increased

payments by TPPs. The injuries suffered by TPPs in those cases,

unlike the direct and independent harm suffered by TPPs in this

matter, were derivative of and dependent on the harm suffered by

consumers. Moreover, we note that the Second Circuit, in

reversing the district court’s decision in Rezulin, recently held that

when insurance companies “allege an injury directly to themselves”

and “the damages–the excess money plaintiffs paid defendants for

the Rezulin that they claim they would not have purchased but for

Defendant’s fraud–were in no way derivative of damages to a
-22-

third-party,” the insurance companies have standing to directly sue

defendants. See Desiano v. Warner-Lambert Co., 326 F.3d 339,

349 (2d Cir. 2003) (recognizing the right of health benefit

providers to recover from drug companies the amounts that were

overpaid due to illegal or deceptive marketing practices).

Therefore, Appellants’ suggestion that TPPs should have been

excluded from the class or categorized in a separate subclass is

without merit, as it well recognized that a purchaser in a market

where competition has been wrongfully restrained has suffered an

antitrust injury, and in this case, TPPs are such purchasers.

Moreover, it should be noted that because TPPs have litigable

claims against DuPont as injured purchasers, their inclusion was a

necessary condition for DuPont to enter into a settlement.

Accordingly, the inclusion of TPPs in the settlement created a

much larger settlement fund available to satisfy the claims of

consumer class members. If TPPs had not been included in the

settlement with DuPont, they could have held back and sued

consumers in subrogation, thereby doubling the detriment to

consumers resulting from the exclusion of TPPs. See In re

Synthroid Mktg. Litig., 264 F.3d 712, 717 (7th Cir. 2001).

2. Typicality

The DistrictCourt found that the proposed class satisfied the

requirements of Rule 23(a)(3), which requires that the claims of the

named class representatives be “typical of the claims . . . of the

class.” Fed. R. Civ. P. 23(a)(3). The typicality requirement “is

designed to align the interests of the class and the class

representatives so that the latter will work to benefit the entire class

through the pursuit of their own goals.” Id. However, typicality,

as with commonality, does not require “that all putative class

members share identical claims.” Id.

We find no error in the District Court’s determination.

Notably, the claims of the representative plaintiffs arise from the

same alleged wrongful conduct on the part of DuPont, specifically

the alleged misrepresentation and deception regarding the

equivalence of generic warfarin sodium and Coumadin. The

claims also arise from the same general legal theories. As the

District Court noted, the one obvious difference among the various

class members is that some are consumers and some are TPPs.
-23-

However, the named class representatives include members from

each group. Accordingly, the District Court did not abuse its

discretion in finding that Rule 23’s typicality requirement was

satisfied.

3. Adequacy of Representation

Rule 23 also requires that the representative class members

“fairly and adequately protect the interests of the class.” See Fed.

R. Civ. P. 23(a)(4). We have previously noted that the adequacy

inquiry under Rule 23 “has two components designed to ensure that

absentees’ interests are fully pursued.” See Georgine v. Amchem

Prods., Inc., 83 F.3d 610, 630 (3d Cir. 1996), aff’d, Amchem, 521

U.S. at 591. First, the adequacy inquiry “tests the qualifications of

the counsel to represent the class.” Prudential, 148 F.3d at 313

(internal citations omitted). Second, it seeks “to uncover conflicts

of interest between named parties and the class they seek to

represent.” See id. Several Appellants argue that the interests of

TPPs, fixed co-pay consumers, and out-of-pocket consumers were

in conflict, and accordingly class counsel was not in a position to

adequately represent the class in settlement negotiations.

Appellants therefore contend that the District Court should have,

at a minimum, certified separate subclasses for consumers and

TPPs, or otherwise not certified the class.

Admittedly, as the District Court noted, class counsel could

have more skillfully defined the class to recognize the differences

between the various groups included within the class. However,

we reject Appellants’ contention that the interests of the class

members were in conflict in such a way that the District Court

abused its discretion in certifying a single class including several

types of injured plaintiffs. As the District Court found, the named

parties, who included consumers and TPPs, as well as consumers

from the indirect purchaser states, all shared the same goal of

establishing the liability of DuPont, suffered the same injury

resulting from the overpayment for warfarin sodium, and sought

essentially the same damages by way of compensation for

overpayment. More importantly, contrary to Appellants’

suggestion, the inclusion of fixed co-pay consumers and TPPs

neither prejudiced out-of-pocket consumers nor reduced their

settlement fund recovery. All class members had the opportunity
 

13Recognized Loss” refers to total payments made for Coumadin

(less the amounts received for reimbursements, discounts, or

rebates) multiplied by fifteen percent.

 

14Although we find that the District Court was not required to

certify subclasses in this matter, we pause to note that subclasses

might nonetheless have been usefully employed in this case, and

may be so employed in future cases, even in the absence of

conflicts, to forestall the particular kind of challenge to

certification presented here. Of course, the decision whether to use

subclasses is to be made on a case by case basis by the District

Court, a determination which we review for an abuse of discretion.

-24-

to recover 100% of their “Recognized Loss,”13 and recovery did not

change depending on the number of people in the class, thereby

creating the problem of “splitting the settlement.” Although some

courts have created subclasses of class action plaintiffs where there

are conflicts of interest among class members, see, e.g., Davis v.

Weir, 497 F.2d 139, 147 (5th Cir. 1974) (noting that subclasses are

generally utilized to eliminate antagonistic interests within a class);

Am. Fin. Sys., Inc. v. Harlow, 65 F.R.D. 94 (D. Md. 1974)

(encouraging combination of subclasses into one class where

interests of class are not antagonistic), we do not believe that this

was required in this case. Appellants have only asserted, rather

than established, an inherent conflict among consumers and

between consumers and TPPs.14 

Moreover, we agree with the District Court that any

potential for conflicts of interest between and among consumers

and TPPs that may have arisen prior to and during the settlement

negotiations were adequately represented by the presence of

separate counsel for consumers and TPPs. The existence of

separate counsel, as well as the operation of the Executive

Committee, provided adequate “structural protectionsto assure that

differently situated plaintiffs negotiate for their own unique

interests.” Georgine, 83 F.3d at 631 (finding inadequate

representation of different groups of plaintiffs where no such

structural protections existed); see also Amchem, 521 U.S. at 627-
 

15Appellant Shapiro also contests the District Court’s fee award

on the grounds that it exacerbated the intraclass conflict between

consumers and TPPs. The District Court set aside 22.5% of the

total $44 million settlement fund to cover attorneys fees to be

divided according to the discretion of the co-chairs of the

Executive Committee. The District Court dismissed objections

lodged against the award as unpersuasive, explaining that the

distribution of an attorney fee award among counsel is and should

be a “private matter” for the attorneys to resolve amongst

themselves. See Spicer v. Chi. Bd. Operations Exch., 844 F. Supp.

1226, 1256 (N.D. Ill. 1993); Newberg, Attorney Fee Awards § 2.16

(1986). Shapiro renews his arguments here, essentially asserting

that consumer counsel would have had an incentive to win a larger

settlement for their clients if their share of the fees were directly

linked to their clients’ recovery. Because we find that the class was

properly certified, and the Executive Committee structure

adequately represented the interests of all class members in the

settlement negotiations, we see no reason to treat TPP and

consumer counsel as antagonistic constituencies within the

settlement class and deviate from the accepted practice of allowing

counsel to apportion fees amongst themselves. See Prudential, 148

F.3d at 329 n.96 (“[T]he court need not undertake the difficult task

of assessing counsels’ relative contributions.”). Furthermore, as

the District Court noted, not only is there no reason to presume that

TPP and consumer counsel will collect fees in proportion to the

amount of recovery for their respective clients, but the fund is not

allocated between TPPs and consumers in such a way that would

make such a division even possible. 

-25-

28.15 Accordingly, we find that the District Court did not abuse its

discretion in finding that the class satisfied the adequacy of

representation requirement of Rule 23.

4. Superiority Requirement

Rule 23(b)(3) requires that “a class action [be] superior to

other available methods for the fair and efficient adjudication of

the controversy.” Fed. R. Civ. P. 23(b)(3). The Rule sets out
 

16Rule 23(b)(3) lists the following factors for consideration by

the courts: 

(A) the interest of members of the class in

individually controlling the prosecution or defense of

separate actions; (B) the extent and nature of any

litigation concerning the controversy already

commenced by or against members of the class; (C)

the desirability or undesirability of concentrating the

litigation of the claims in the particular forum; (D)

the difficulties likely to be encountered in the

management of a class action.

-26-

several factors relevant to the superiority inquiry.16 The superiority

requirement “asks the court to balance, in terms of fairness and

efficiency, the merits of a class action against those of alternative

available methods of adjudication.” Prudential, 148 F.3d at 316

(internal citations and quotations omitted). The District Court

found that the class satisfied the superiority requirements of Rule

23(b)(3), and we find no error in this determination.

Notably, there are a potentially large number of class

members in this matter, including some 2 million consumers and

potentially thousands of TPPs. However, individual consumer

class members have little interest in “individually controlling the

prosecution or defense of separate actions,” Fed. R. Civ. P.

23(b)(3)(A), because each consumer has a very small claim in

relation to the cost of prosecuting a lawsuit. Thus, from the

consumers’ standpoint, a class action facilitates spreading of the

litigation costs among the numerous injured parties and encourages

private enforcement of the statutes. See General Motors, 55 F.3d

at 784. As the District Court noted, this is less true for TPP

members of the class, some of whom have significant individual

claims. However, the TPPs had the option to opt-out of the

proposed settlement if it was in their interest to bring their claims

separately. 

Moreover, there were a relatively small number of

individual lawsuits pending against DuPont in this matter, which

indicated to the District Court that there was a lack of interest in
-27-

individual prosecution of claims. See Prudential, 148 F.3d at 316;

see also Fed. R. Civ. P. 23(b)(3)(B). Finally, the District Court

found that it was desirable to concentrate litigation in Delaware,

where DuPont had its principal place of business and where several

initial class action lawsuits had been filed. See Prudential, 148

F.3d at 316; see also Fed. R. Civ. P. 23(b)(3)(C).

B. Fairness of the Class Action Settlement

A class action may not be settled under Rule 23(e) without

a determination by the district court that the proposed settlement is

“fair, reasonable and adequate.” General Motors, 55 F.3d at 785

(citations and quotations omitted); see also Fed. R. Civ. P.

23(e)(1)(A). We have on several occasions stressed the importance

of Rule 23(e), noting that “the district court acts as a fiduciary who

must serve as a guardian of the rights of absent class members.”

General Motors, 55 F.3d at 785 (citations and quotations omitted);

see also Amchem, 521 U.S. at 623 (noting that the Rule 23(e)

inquiry “protects unnamed class members from unjust or unfair

settlements affecting their rights when the representatives become

fainthearted before the action is adjudicated or are able to secure

satisfaction of their individual claims by a compromise”) (citations

omitted). However, in cases such as this, where settlement

negotiations precede class certification, and approvalfor settlement

and certification are sought simultaneously, we require district

courts to be even “more scrupulous than usual” when examining

the fairness of the proposed settlement. See General Motors, 55

F.3d at 805. This heightened standard is intended to ensure that

class counsel has engaged in sustained advocacy throughout the

course of the proceedings, particularly in settlement negotiations,

and has protected the interests of all class members. See

Prudential, 148 F.3d at 317. 

This Court has identified nine factors to be considered when

determining whether a proposed class action settlement is fair,

reasonable and adequate. See Girsh v. Jepson, 521 F.2d 153, 157

(3d Cir. 1975). These factors are:

(1) The complexity, expense, and likely duration of the

litigation; (2) the reaction of the class to the settlement; (3)

the stage of the proceedings and the amount of discovery

completed; (4) the risks of establishing liability; (5) the risks
-28-

of establishing damages; (6) the risks of maintaining the

class action through the trial; (7) the ability of the

defendants to withstand a greater judgment; (8) the range of

reasonableness of the settlement fund in light of the best

possible recovery; and (9) the range of reasonableness of the

settlement fund to a possible recovery in light of all the

attendant risks of litigation.

Girsh, 521 F.2d at 156-57. The “decision of whether to approve a

proposed settlement of a class action is left to the sound discretion

of the district court,” and we accord great deference to the district

court’s factual findings. Girsh, 521 F.2d at 156. Additionally,

there is an overriding public interest in settling class action

litigation, and it should therefore be encouraged. See General

Motors, 55 F.3d at 784 (“the law favors settlement, particularly in

class actions and other complex cases where substantial judicial

resources can be conserved by avoiding formal litigation”); In re

Sch. Asbestos Litig., 921 F.2d at 1333 (noting that the court

encourages settlement of complex litigation “that otherwise could

linger for years”).

Before turning to the District Court’s application of the

Girsh factors, we resolve a challenge raised by Appellants as to

whether the proposed settlement is entitled to a presumption of

fairness. We have previously directed a district court to apply an

initial presumption of fairness when reviewing a proposed

settlement where: “(1) the settlement negotiations occurred at

arm’s length; (2) there was sufficient discovery; (3) the proponents

of the settlement are experienced in similar litigation; and (4) only

a small fraction of the class objected.” Cendant, 264 F.3d at 232

n.18. Based on the record before it, the District Court determined

that the presumption of fairness properly attached because the

settlement resulted from intense arms-length negotiations between

experienced counsel, came after over three years of active litigation

and discovery, and was objected to by only a small fraction of the

purported class. Several Appellants argue that even if the four

factors were met, the District Court was still not entitled to apply

a presumption of fairness because the settlement negotiations

preceded the actual certification of the class, and thus the District

Court could not assure itself that the negotiations proceeded at

arm’s length or that class counsel vigorously protected the class’
-29-

interests. We disagree. As discussed above, we have satisfied

ourselves that the Rule 23(e) adequacy of representation

requirement was met such that the consumer and TPP plaintiffs,

their respective counsel, as well as the structure of the Executive

Committee protected the class’ interests during the settlement

negotiations. Accordingly, we see no reason in this case to depart

from the presumption of fairness that attached to the proposed

settlement given that the District Court found that the four factors

were met. 

We now turn to the Girsh factors, keeping in mind the

heightened standard we use when reviewing the fairness of a

settlement that results from negotiations that preceded formal class

certification, as well as the initial presumption of fairness that the

District Court found attached to the proposed settlement. For the

reasons discussed below, we conclude that the District Court did

not abuse its discretion in determining that the settlement was fair.

1. Complexity, Expense, and Likely Duration of

Litigation

The first factor “captures the probable costs, in both time

and money, of continued litigation.” Cendant, 264 F.3d at 233

(citation omitted). We agree with the District Court’s conclusion

that this factor favors settlement because continuing litigation

through trial would have required additional discovery, extensive

pretrial motions addressing complex factual and legal questions,

and ultimately a complicated, lengthy trial. Moreover, it was

inevitable that post-trial motions and appeals would not only

further prolong the litigation but also reduce the value of any

recovery to the class. In a class action of this magnitude, which

seeks to provide recovery for Coumadin consumers and TPPs

nationwide, the time and expense leading up to trial would have

been significant. See Prudential, 148 F.3d at 318. 

2. The Reaction of the Class to the Settlement

The second Girsh factor “attempts to gauge whether

members of the class support the settlement.” Prudential, 148 F.3d

at 318. We agree with the District Court that this factor also

supports the proposed settlement. After preliminary approval of

the settlement, individual notice was mailed to over 12,000
-30-

potential TPP class members, and summary notice was published

in newspapers and magazines likely to be read by potential class

members and which had a combined circulation of 115 million. Of

the 1.8 million potential class members, 136 consumers and ten

TPP claimants opted out of the settlement, and 11 consumers or

groups of consumers and two TPP claimants objected to the

proposed settlement. As of June 3, 2002, 48,305 consumer and

1,055 TPP claims had been received and processed by the

administrator. The District Court concluded that the insignificant

number of objections filed weighed in favor of approving the

settlement. Although we have previously noted that the district

court should be “cautious about inferring support from a small

number of objectors in a sophisticated settlement,” General Motors,

55 F.3d at 812 (citations omitted), we agree with the District Court

that the small number of TPP objectors is particularly telling as

they are sophisticated businesses with very large potential claims.

In addressing this second Girsh factor, we consider a related

argument raised by one of the Appellants. Hutchinson argues that

the lack of consumer objectors resulted from inadequate notice to

the consumers, as compared to the notice provided to TPPs. Rule

23(c)(2) specifies that all members of the class should receive “the

best notice practicable under the circumstances, including

individual notice to all members who can be identified through

reasonable effort.” The District Court determined that this

requirement was satisfied by publishing summary notice in

publications likely to be read by consumer claimants along with a

call-center and a website with information and downloadable

forms. Hutchinson, however, argues that notice to consumer

plaintiffs was inadequate in this case as compared to other large

class action suits where individual direct mailing was used. See,

e.g., In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D.

369, 381 (D.D.C. 2002); Cendant, 264 F.3d at 226; In re Synthroid

Mktg. Litig., 264 F.3d at 716. 

However, even in the absence of any individual notice via

direct mail in this matter, we are satisfied that the District Court

acted within its discretion in determining that “reasonable effort”

was made here to provide “the best notice practicable under the

circumstances.” See Fed. R. Civ. P. 23(c)(2). In particular, we note

that neither the plaintiffs nor DuPont had access to the names and
-31-

addresses of the multitude of people nationwide who purchased

Coumadin because the identity of pharmaceutical purchasers is

confidential information that cannot be disclosed without patient

consent. In addition, we note that consumers in this case who

contacted the administrator or visited the website could request a

copy of the notice by direct mail. 

3. Stage of Proceedings and Amount of

Discovery Completed

The third Girsh factor “captures the degree of case

development that class counsel [had] accomplished prior to

settlement. Through this lens, courts can determine whether

counsel had an adequate appreciation of the merits of the case

before negotiating.” Cendant, 264 F.3d at 235 (quoting General

Motors, 55 F.3d at 813). As the District Court found, this litigation

had been pursued by class counsel on several fronts for over three

years before negotiation of the settlement. Prior to consolidation

by the order of the MDL panel, four separate federal actions had

been filed by consumer plaintiffs, and consumers and TPPs

pursued state actions in Illinois, California, Tennessee, New York,

Alabama, and Wisconsin. The settlement agreement was reached

after a year of negotiations which included consultations with

experts. Contrary to Hutchinson’s assertion that the District Court

had virtually nothing to aid its evaluation of the settlement terms,

three years of litigation and discovery resulted in hundreds of

thousands of documents produced by defendant, numerous

depositions, and consultations with experts with which the District

Court was familiar. Based on the type and amount of discovery

undertaken by the parties, the District Court concluded that class

counsel adequately appreciated the merits of the case before

negotiating, and we agree that this factor strongly favors approval

of the settlement. See Prudential, 148 F.3d at 319.

4. & 5. Risks of Establishing Liability and Damages

These factors survey the potential risks and rewards of

proceeding to litigation in order to weigh the likelihood of success

against the benefits of an immediate settlement. Cendant, 264 F.3d

at 237-39; Prudential, 148 F.3d at 319. After evaluating several

possible bars to plaintiffs’ success at trial, the District Court
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concluded that on balance, the fourth and fifth Girsh factors

favored settlement. We discern no error in that determination.

6. Risks of Maintaining Class Action Status

Through Trial

Because “the prospects for obtaining certification have a

great impact on the range of recovery one can expect to reap from

the [class] action,” General Motors, 55 F.3d at 817, this factor

measures the likelihood of obtaining and keeping a class

certification if the action were to proceed to trial. A district court

retains the authority to decertify or modify a class at any time

during the litigation if it proves to be unmanageable. Prudential,

148 F.3d at 321. Although Appellants’ concerns about the

manageability of a multistate class of consumers and TPPs, as we

discussed above, did not pose a problem for the certification of a

settlement class, there is a significant risk that such a class would

create intractable management problems if it were to become a

litigation class, and therefore be decertified. See In re LifeUSA

Holding, Inc., 242 F.3d at 147; Georgine, 83 F.3d at 630. We

agree with the District Court that the significant risk that the class

would be decertified if litigation proceeded weighs in favor of

settlement. 

7. Ability to Withstand Greater Judgment

The seventh Girsh factor considers “whether the defendants

could withstand a judgment for an amount significantly greater

than the [s]ettlement.” Cendant, 264 F.3d at 240. The District

Court found that this factor neither favored nor disfavored

settlement because of a lack of evidence in the record about

DuPont’s ability to pay or whether such a consideration factored

into the settlement negotiations. Appellants Cleusman and

Hutchinson contend that the District Court should have inquired

into DuPont’s ability to pay a higher settlement amount in

determining whether the settlement was adequate. Although the

plaintiffs do not dispute that DuPont’s total resources far exceed

the settlement amount, the fact that DuPont could afford to pay

more does not mean that it is obligated to pay any more than what

the consumer and TPP class members are entitled to under the

theories of liability that existed at the time the settlement was

reached. Here, the District Court concluded that DuPont’s ability
 

17Dr. French’s model assumed that, absent DuPont’s alleged

illegal acts, DuPont’s share of the market would have fallen from

100% to 50% from July 1997 to September 1999, that generic

warfarin sodium would have cost 25% less than Coumadin, and

that DuPont would have charged 2.5% less for Coumadin due to

competition from the generic product. Dr. French’s floor of $7.1

million resulted from his estimation that DuPont would have

vigorously challenged the basis for plaintiffs’ damages at trial.

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to pay a higher amount was irrelevant to determining the fairness

of the settlement. We see no error here.

8. & 9. The Range of Reasonableness of

Settlement in Light of Best Possible

Recovery and All Attendant Risks of

Litigation

The last two Girsh factors evaluate whether the settlement

represents a good value for a weak case or a poor value for a strong

case. The factors test two sides of the same coin: reasonableness

in light of the best possible recovery and reasonableness in light of

the risks the parties would face if the case went to trial. Prudential,

148 F.3d at 322. In order to assess the reasonableness of a

settlement in cases seeking primarily monetary relief, “the present

value of the damages plaintiffs would likely recover if successful,

appropriately discounted for the risk of not prevailing, should be

compared with the amount of the proposed settlement.” Id. (citing

General Motors, 55 F.3d at 806).

Plaintiff’s expert, Dr. French, estimated recoverable

damages to be as low as $7.1 million and as high as $133.8 million.

The District Court described the methodology utilized by Dr.

French to arrive at those figures and concluded his estimate was

reasonable.17 Appellant Hutchinson now claims, without the

support of expert evaluation, citation, or discovery, that maximum

damages in this case should have been estimated at $400 million

since DuPont made $1.6 billion in sales between 1997 and 1999,

and there was a 25% difference in cost between generic warfarin

sodium and Coumadin. The District Court, after reviewing the

expert report and supporting materials, concluded that Dr. French’s
 

18Although it is not determinative here, it is also worth noting

that while Hutchinson claims the settlement fund amount is too

small, every consumer who filed a claim on or before April 30,

2002, will receive 100% of their Recognized Loss. 

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estimate of the range of possible damages was reasonable if the

case were to go to trial.

Based on the $400 million figure, Hutchinson argues that

consumers only received 11% of total economic damages, well

below the 30%-70% damages recovered in similar pharmaceutical

industry class actions. According to Dr. French’s figures, however,

the $44.5 million settlement fund is approximately 33% of

available damages and well within a reasonable settlement range

when compared with recovery percentages in other class actions.

See Cendant, 264 F.3d at 241 (approving settlement for 36%-37%

recovery and noting that typical recoveries in securities class

actions range from 1.6% to 14%).18 We find no error in the District

Court’s analysis and hold that these two factors also favor

settlement. 

On balance, and in light of the presumption of fairness that

attaches to the settlement, we find that the District Court

adequately addressed the Girsh factors, properly discharged its

fiduciary duty to absent class members, and did not abuse its

discretion in finding the settlement to be fair and reasonable.

C. Plan of Allocation

Several Appellants object to the proposed allocation of

settlement funds under the Plan of Allocation. These arguments

overlap substantially with those made with respect to class

certification, but to the extent that they were not addressed in our

discussion above in Part A, we address them here. These

additional arguments can be characterized into two groups, those

objecting to the inclusion of TPPs in the Plan of Allocation and

those objecting to the inclusion of fixed co-pay consumers in the

Plan of Allocation.

With regards to the first contention, several Appellants

argue, despite the fact that the District Court noted the priority

being given to individual consumers in the structure of the
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settlement, that the settlement is unfairly skewed in favor of TPPs.

Although TPPs are certainly receiving a larger percentage of the

fund than are consumers, this does not translate into an unfair

allocation. As the District Court noted, TPPs paid 67% of

Coumadin costs, while consumers paid for 27%, so TPPs actually

bear the greater share of damages. Moreover, the District Court

stated that the settlement does not favor TPPs. Rather, it is

structured to protect consumers and to create an incentive for them

to submit claims. The settlement allows individual consumers

preferential access to the first 18% of the Net Settlement Fund to

satisfy consumer claims before TPP claimants can recover at all,

and if consumer claims exceed that amount, the remainder of the

82% of the NSF is shared between TPPs and consumers on a pro

rata basis. Because of this favorable allocation, based on the

number of consumer claims the Settlement Administrator has

received, all consumers who have filed claims can expect to receive

100% of their Recognized Loss, while TPP’s will receive only

approximately 35.6% of their Recognized Loss. Moreover, we

note that had the TPPs or a subclass of consumers not been

included in the settlement distribution, the settlement amount

would have presumably been significantly smaller as DuPont

would still have been vulnerable to claims from excluded

purchasers. Consequently, we agree with the District Court that the

inclusion of TPPs in the Plan of Allocation was not unfair to

individual consumers.

As for the second contention, several Appellants object to

the inclusion of fixed co-pay consumers as equal sharers in the

proceeds of settlement. However, by participating in the

settlement, all class members, including consumers with fixed copays, are releasing equitable and common-law claims for unjust

enrichment seeking disgorgement of profits from wrongdoers, and

claims for injunctive relief. Although fixed co-pay consumers have

not suffered monetary damages, it is appropriate that they receive

consideration for the release of the claims they have against

DuPont. Because the Plan of Allocation was agreed to by

consumer and TPP class representatives after extensive, armslength negotiations, and because all consumers who filed claims

are likely to receive 100% of their Recognized Losses, the District

Court was persuaded that fixed co-pay consumers be allowed to
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share equally in the distribution of the settlement fund. We find no

error in this determination.

III. CONCLUSION

Because the class satisfies the requirements of Federal Rule

of Civil Procedure 23 and the settlement is fair to the class, we will

affirm the decision of the District Court.