Court Opinion

ID: 4527827
Source: CourtListenerOpinion
Date Created: 2020-04-22 17:00:26.392307+00
Date Added: 2024-06-11T12:17:08.580141
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT

                        No. 19-1655

    In re: Lamictal Direct Purchaser Antitrust Litigation

                  GlaxoSmithKline, LLC
          d/b/a SmithKline Beecham Corporation;
             Teva Pharmaceuticals USA, Inc.;
           Teva Pharmaceuticals Industries Ltd.,

                                  Appellants

       Appeal from the United States District Court
               for the District of New Jersey
         (D.C. Civil Action No. 2-12-cv-00995)
       District Judge: Honorable William H. Walls

                  Argued March 9, 2020

  Before: AMBRO, KRAUSE, and PHIPPS, Circuit Judges

              (Opinion filed: April 22, 2020)

Daniel J. Boland
Lindsay D. Breedlove
Robin P. Sumner
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103

Joseph A. Fischetti
Gavin J. Rooney
Lowenstein Sandler LLP
One Lowenstein Drive
Roseland, NJ 07068

      Counsel for Appellant
      GlaxoSmithKline LLC

Devora W. Allon (Argued)
Jay P. Lefkowitz
Dmitriy Tishyevich
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022

Katherine M. Romano
Liza M. Walsh
Walsh Pizzi O’Reilly Falanga LLP
One Riverfront Plaza
1037 Raymond Boulevard, 6th Floor
Newark, NJ 07102

      Counsel for Appellants
      Teva Pharmaceuticals USA Inc.
      Teva Pharmaceutical Industries Ltd.

                              2
Elena K. Chan
Bruce E. Gerstein
Joseph Opper
Noah Silverman
Garwin Gerstein & Fisher LLP
Wall Street Plaza
88 Pine Street, 10th Floor
New York, NY 10036

Caitlin G. Coslett (Argued)
David F. Sorensen
Berger Montague
1818 Market Street, Suite 3600
Philadelphia, PA 19103

Matthew F. Gately
Peter S. Pearlman
Cohn Lifland Pearlman Herrmann & Knopf LLP
Park 80 West, Plaza One
250 Pehle Avenue, Suite 401
Saddle Brook, NJ 07663

Peter R. Kohn
Joseph T. Lukens
Faruqi & Faruqi LLP
1617 John F. Kennedy Boulevard, Suite 1550
Philadelphia, PA 19103

Stuart E. Des Roches
Chris Letter
Dan Chiorean
Odom & Des Roches LLC
650 Poydras Street, Suite 2020

                             3
New Orleans, LA 70130

Susan C. Segura
David C. Raphael, Jr.
Erin R. Leger
Smith Segura Raphael & Leger LLP
3600 Jackson Street, Suite 111
Alexandria, LA 71303

Russell Chorush
Allan Bullwinkel
Heim Payne & Chorush LLP
111 Bagby Street, Suite 2100
Houston, TX 77002

      Counsel for Appellees

Brian T. Burgess
Goodwin Procter
1900 N Street, N.W.
Washington, DC 20036

Christopher T. Holding
Goodwin Procter
100 North Avenue
Boston, MA 02210

      Counsel for Amicus Appellant
      Association for Accessible Medicines

                               4
                 OPINION OF THE COURT

AMBRO, Circuit Judge,

        This case is the latest in the years-long antitrust battle
over whether GlaxoSmithKline (“GSK”) and Teva
Pharmaceuticals (“Teva”) violated the antitrust laws through
their settlement agreement to end an unrelated patent dispute
over GSK’s brand drug Lamictal and Teva’s generic form
lamotrigine. We need not reach the antitrust issues here,
however, for we are concerned at present only with the District
Court’s class certification analysis, specifically whether
common issues pertaining to the class predominate over
individual issues.

        Though judges must conduct a “rigorous analysis” of
the facts, evidence, and arguments submitted at the class
certification stage, the District Court certified this class without
undertaking the analysis needed by failing to resolve key
factual disputes, assess competing evidence, and weigh
conflicting expert testimony, all of which bear heavily on
satisfaction of the predominance requirement. Moreover, the
Court confused injury with damages, despite our precedent
distinguishing the two and applying a different predominance
standard to each. In this context, we cannot determine whether
common issues predominate, and thus we vacate and remand
for a redo.

I.     FACTUAL AND PROCEDURAL BACKGROUND
       GSK is a pharmaceutical manufacturer that holds the
patent to an anti-epilepsy drug called Lamictal. It began selling

                                 5
Lamictal in 1994, and its patent was set to expire in early 2009.
A patent generally excludes all other competitors from
producing a drug with the same active ingredient until patent
expiration. See King Drug Co. of Florence, Inc. v. Smithkline
Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015).

       Teva is a drug maker that manufactures a generic
version of Lamictal called lamotrigine. Importantly, it sought
to begin marketing lamotrigine before GSK’s patent on
Lamictal expired.

        Congress provided a pathway for Teva to do so through
the Hatch-Waxman Act of 1984. 1 The Act permits a generic
drug manufacturer seeking Food and Drug Administration
(“FDA”) approval to submit an Abbreviated New Drug
Application (“ANDA”) that relies on the brand drug’s safety
and efficacy studies submitted as part of that drug’s New Drug
Application. 21 U.S.C. § 355(j). Of several bases for filing an
ANDA, one is known as a “paragraph IV” certification, in
which the would-be generic manufacturer certifies that any
patent protecting the brand drug is either invalid or would not
be infringed by the new generic. Id. § 355(j)(2)(A)(vii). The
Act encourages generic manufacturers to enter the market by
granting the first generic to file an ANDA with paragraph IV
certification (the “first filer”) a 180-day exclusivity period
during which only that generic, along with the brand drug, may
be marketed. See id. § 355(j)(5)(B)(iii)–(iv). This exclusivity
period is immensely profitable for the generic because it
effectively grants the first filer a temporary monopoly over the
generic market. See FTC v. Actavis, Inc., 570 U.S. 136, 144
(2013). Because generics can rely on the safety and efficacy
studies of the brand drug, they need not engage in their own
1
 The Act is officially referred to as the Drug Price Competition
and Patent Term Restoration Act of 1984, Pub. L. No. 98–417,
98 Stat. 1585.

                               6
lengthy and expensive clinical trials, and so they are priced
below that of the brand. See id. at 142.

        When a generic certifies on its ANDA that the brand’s
patent is invalid or will not be infringed by the generic, that
certification “automatically counts as patent infringement,”
Actavis, 570 U.S. at 143, and often “provok[es] litigation” from
the brand. In re Modafinil Antitrust Litig., 837 F.3d 238, 244
(3d Cir. 2016), as amended (Sept. 29, 2016) (citation omitted).
If so, FDA approval of the generic is withheld for 30 months
or until resolution of the litigation, whichever comes first. 21
U.S.C. § 355(j)(5)(B)(iii); see also King Drug Co., 791 F.3d at
396 n.9.

        In April 2002, Teva filed the relevant paragraph IV
ANDAs, and GSK followed suit by suing for patent
infringement. See King Drug Co., 791 F.3d at 397 (reciting the
history of this litigation). But after Teva received a favorable
ruling in a bench trial with respect to one of the infringement
claims in 2005, the parties settled. As part of the settlement,
Teva would begin selling lamotrigine on July 22, 2008, six
months before it could have had GSK won the lawsuit, but later
than it could have had it succeeded in litigation. In exchange,
GSK promised not to launch its own generic version of
Lamictal, known as an “authorized generic” (“AG”).

        AGs are generics launched by the brand manufacturer
itself (or an authorized third-party distributor) via the brand’s
drug application rather than by a separate manufacturer via an
ANDA. See FTC, Authorized Generic Drugs: Short–Term
Effects and Long-Term Impact 1, 12 (2011),
http://www.ftc.gov/os/2011/08/2011genericdrugreport.pdf.
Had the parties not settled and had Teva succeeded in the
patent litigation, it would have been entitled to the 180-day
exclusivity period as the generic first filer. But GSK
nonetheless could have launched an AG to compete with

                               7
Teva’s generic drug, as an AG is submitted as part of the
brand’s own drug application. King Drug Co., 791 F.3d at
395–96. If the brand manufacturer, however, agrees not to
launch an AG, the potential antitrust concern is the agreement
will reduce competition, thereby keeping prices higher for
longer and harming consumer welfare. See id. at 404–05.
        That brings us to the issue in this case. After GSK and
Teva settled the patent litigation, plaintiffs—companies that
directly purchased brand Lamictal from GSK or lamotrigine
from Teva (“Direct Purchasers”)—filed suit, claiming the
settlement violated the antitrust laws as an impermissible
“reverse payment agreement” whereby GSK “paid” Teva to
stay out of the market by promising not to launch an AG. 2
They argue that but for the alleged reverse payment, Teva
would have launched lamotrigine sooner and GSK would have
launched an AG the very day Teva entered the market. As a
result, they contend they paid more for the drugs than they
would have otherwise. Their theory of liability, at least with
respect to those entities that purchased lamotrigine from Teva
during the six-month period, is premised on the principle that,
on average, the price of a generic is lower when there are two
generics rather than just one.

       GSK and Teva contend that even though GSK was
precluded by the settlement from launching an AG, it still
competed with Teva on price during the exclusivity period

2
  We previously reversed the grant of GSK and Teva’s motion
to dismiss in King Drug Co., holding the “no-AG agreement
falls under Actavis’s rule because it may represent an unusual,
unexplained reverse transfer of considerable value from the
patentee to the alleged infringer and may therefore give rise to
the inference that it is a payment to eliminate the risk of
competition.” 791 F.3d at 394.

                               8
through its so-called Contracting Strategy. GSK claims that it
had long been concerned about the effectiveness of launching
an AG because doctors seemed more reluctant to switch
patients from one epilepsy drug to another, meaning that those
who started patients on brand Lamictal would be less inclined
to switch them to a lower-priced generic once one launched.
Thus GSK planned to take advantage of this nuance in the anti-
epilepsy drug market and compete aggressively with Teva on
price by contracting with targeted pharmacies to offer them
significant discounts and rebates if they agreed to sell brand
Lamictal instead of Teva’s generic version. Further, and
critical to their defense, GSK and Teva assert that the latter
learned about this strategy before it began selling lamotrigine,
and thus it preemptively lowered its lamotrigine prices in order
to compete. As a result, GSK and Teva argue that some Direct
Purchasers never paid more for lamotrigine than they would
have absent the settlement.

       The Direct Purchasers moved to certify a class of all
companies that purchased Lamictal directly from GSK or
generic lamotrigine from Teva. That noted, GSK and Teva
challenge only certification as to the members who purchased
generic lamotrigine from Teva (hence any reference to the
Direct Purchasers that follows is limited to those Direct
Purchasers). The District Court certified the class; at issue is
whether this holds up.

       GSK and Teva brought this timely interlocutory appeal.

II.    JURISDICTION AND STANDARD OF REVIEW
       The District Court had jurisdiction under 28 U.S.C.
§§ 1331 and 1337. We granted GSK and Teva’s petition for
leave to appeal under Federal Rule of Civil Procedure 23(f),
and so have appellate jurisdiction under 28 U.S.C. § 1292(e).

                               9
       We review a class certification order for abuse of
discretion, which occurs if a district court’s decision rests on 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. 2009), as
amended (Jan. 16, 2009) (citation omitted). “[W]hether an
incorrect legal standard has been used is an issue of law to be
reviewed de novo.” Id. (alteration in original) (citation
omitted). A District Court “errs as a matter of law when it fails
to resolve a genuine legal or factual dispute relevant to
determining the requirements” of Rule 23. Id. at 320.

III.   DISCUSSION

       A.     The Analysis Required to Certify a Class

              1.     The Basics

       Federal Rules of Civil Procedure 23(a) and (b) set the
requirements for class certification. Rule 23(a) requires that
       (1) the class must be so numerous that joinder of
       all members is impracticable (numerosity); (2)
       there must be questions of law or fact common
       to the class (commonality); (3) the claims or
       defenses of the representative parties must be
       typical of the claims or defenses of the class
       (typicality); and (4) the named plaintiffs must
       fairly and adequately protect the interests of the
       class (adequacy of representation, or simply
       adequacy).

Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 590–91 (3d Cir.
2012) (citation and internal quotation marks omitted). Rule
23(b)(3), as relevant here, “requires that (i) common questions
of law or fact predominate (predominance), and (ii) the class

                               10
action is the superior method for adjudication (superiority).”
Id. (citation omitted).

       GSK and Teva challenge only the District Court’s
predominance finding. Stated more expansively, a plaintiff
“must ‘demonstrate that the element of [the legal claim] is
capable of proof at trial through evidence that is common to
the class rather than individual to its members.’” Marcus, 687
F.3d at 600 (alteration in original) (quoting Hydrogen
Peroxide, 552 F.3d at 311). “Because the nature of the
evidence that will suffice to resolve a question determines
whether the question is common or individual, a district court
must formulate some prediction as to how specific issues will
play out in order to determine whether common or individual
issues predominate in a given case.” Id. (citation omitted). “If
proof of the essential elements of the cause of action requires
individual treatment, then class certification is unsuitable.”
Hydrogen Peroxide, 552 F.3d at 311 (citation omitted).

        To determine whether the putative class has satisfied
predominance (indeed, all applicable Rule 23 requirements),
the District Court must conduct a “rigorous analysis” of the
evidence and arguments presented. Id. at 309 (quoting Gen.
Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982)). That
involves three key aspects. First, the court must “find[]” that
the requirements of Rule 23 are met and any “[f]actual
determinations supporting Rule 23 findings must be made by a
preponderance of the evidence.” Id. at 307. Second, “the court
must resolve all factual or legal disputes relevant to class
certification, even if they overlap with the merits.” Id; see also
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011)
(“That [overlap] cannot be helped.”); Marcus, 687 F.3d at 591
(“Rule 23 gives no license to shy away from making factual
findings that are necessary to determine whether the Rule’s
requirements have been met.”). Third, the court must consider
“all relevant evidence and arguments,” including “expert

                               11
testimony, whether offered by a party seeking class
certification or by a party opposing it.” Hydrogen Peroxide,
552 F.3d at 307. If, after all that, the Court is convinced by a
preponderance of the evidence that the plaintiffs’ claims are
capable of common proof at trial, then the predominance
requirement is satisfied.
              2.      The Predominance Inquiry Here
       The Direct Purchasers contend that they need not prove
antitrust injury at this stage, but rather it suffices if they show
only that injury is capable of common proof at trial. True
enough. See Hydrogen Peroxide, 552 F.3d at 311–12. But
they go further and say that our case is controlled by a comment
in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016), that
suggests an even lower standard for predominance whereby
that criterion is satisfied unless no reasonable juror could
believe the common proof at trial.
        In Tyson Foods, the Supreme Court was reviewing a
motion to decertify a class brought under the Fair Labor
Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201 et seq., after
a jury had already rendered a verdict in favor of the plaintiff
class. In considering whether representative evidence was
sufficient to satisfy the predominance requirement, the Court
wrote that “[t]he District Court could have denied class
certification on this ground only if it concluded that no
reasonable juror could have believed that the employees spent
roughly equal time donning and doffing” their protective gear.
Tyson Foods, 136 S. Ct. at 1049 (emphasis added). According
to the Direct Purchasers, this means that so long as their
evidence of class-wide antitrust injury could sustain a jury
finding, they meet the predominance requirement.

      But contrary to the Direct Purchasers’ assertion, Tyson
Foods does not control our case, and its no-reasonable-juror

                                12
statement certainly does not overturn our longstanding rule
announced in Hydrogen Peroxide, and reiterated in many a
case, that a putative class must demonstrate that its claims are
capable of common proof at trial by a preponderance of the
evidence. See, e.g., Modafinil, 837 F.3d at 248–49; Marcus,
687 F.3d at 591; In re K-Dur Antitrust Litig., 686 F.3d 197,
219–20 (3d Cir. 2012) (subsequent history omitted). First,
Tyson Foods was discussing representative evidence in the
FLSA context, a unique labor situation in which, often due to
inadequate record keeping, “a representative sample [of
employees] may be the only feasible way to establish liability.”
Tyson Foods, 136 S. Ct. at 1040; see also Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 685–88 (1946). In those
cases, the accuracy and representativeness of the sample is
critical, for each class member must be able to rely on that
evidence in his own trial to prove liability under the FLSA.
Tyson Foods, 136 S. Ct. at 1048. Indeed, the only two Courts
of Appeals to pick up on this language did so in that context.
See Senne v. Kan. City Royals Baseball Corp., 934 F.3d 918,
940–41 (9th Cir. 2019) (holding in an FLSA case that the “no
reasonable juror” standard applies to admissible expert
testimony at the class certification stage); Monroe v. FTS USA,
LLC, 860 F.3d 389, 400 (6th Cir. 2017) (suggesting in an FLSA
case, albeit in dicta, that Tyson Foods’s “no reasonable juror”
comment “concerned how district courts should assess the
representativeness of an expert’s statistical average for class
certification purposes”). Second, the Court in Tyson Foods
was asked to decertify a class after the jury had rendered a
verdict in favor of the plaintiff class, but, finding the jury could
reasonably have relied on the representative evidence, it
declined to do so. 136 S. Ct. at 1047–48. Here, by contrast,
the District Court reviewed the class certification motion on a
blank slate.
      Our non-FLSA class certification decisions that post-
date Tyson Foods have reiterated that district courts are

                                13
required, per Hydrogen Peroxide, to resolve factual
determinations by a preponderance of the evidence at the class
certification stage. 3 See, e.g., Ferreras v. Am. Airlines, Inc.,
946 F.3d 178, 183 (3d Cir. 2019) ; Mielo v. Steak 'n Shake
Operations, Inc., 897 F.3d 467, 483–84 (3d Cir. 2018);
Harnish v. Widener Univ. Sch. of Law, 833 F.3d 298, 304 (3d
Cir. 2016). We hold that our standard—plaintiffs must prove
their claim is capable of common proof by a predominance of
the evidence—continues to apply to class certification
determinations outside of the FLSA context.

        With that in mind, we turn to the Direct Purchasers’
claim. The injury element is at issue here. Recall that their
theory of liability is that they suffered an antitrust injury
because but for the reverse-settlement agreement, each would
have paid less for lamotrigine than it actually did. This requires
the Direct Purchasers to prove by a preponderance of the
evidence that they could establish, through common proof at
trial, facts supporting an antitrust injury, namely: 1) GSK
would have launched an AG but for the reverse-settlement; and
2) as a result, all class members would have paid less for
lamotrigine in this but-for world. If each individual class
member could rely on this same proof to prove the elements of
its claim, then the injury is capable of common proof at trial.

              3.    Whether the Direct Purchasers’ Claims
              Are Capable of Common Proof
        GSK and Teva opposed certification, arguing before the
District Court that the Direct Purchasers were unable to show
that injury is capable of common proof at trial because their
proof impermissibly relies on averages, which, in a market

3
  We recognize that whether the Tyson Foods no-reasonable-
juror standard should control was not squarely presented in
those cases.

                               14
characterized by individual negotiations and a discounted-
brand competition strategy, masks the fact that many—up to
one-third of the entire class—likely paid no more, or even less,
for lamotrigine than they would have if GSK had launched an
AG. Because each class member could not rely on the same
common evidence to show injury, individual issues
predominate; hence they contend the District Court erred by
accepting the Direct Purchasers’ expert testimony that relied
on these averages without conducting a rigorous analysis of the
competing expert reports and resolving the competing factual
disputes on which the reports rely.

        We agree that a more rigorous analysis is needed. The
District Court refused to “address the multi-leveled
microeconomic analysis of what each Defendant would or
would not have possibly done in the but-for world, and instead
focuse[d] on whether the presence of the Contracting Strategy
raises individualized issues that defeat predominance.” In re
Lamictal Indirect Purchaser & Antitrust Consumer Litig., No.
12-CV-00995, 2018 WL 6567709, at *6 (D.N.J. Dec. 12,
2018). Without that inquiry, it is impossible to determine
whether the Contracting Strategy raised individualized issues.

        The Direct Purchasers’ expert, Dr. Russell Lamb,
opined that evidence common to the proposed class as a whole
“demonstrates that the prices paid by all or nearly all proposed
Class members for lamotrigine tablets were impacted
(artificially inflated) by the allegedly illegal agreement
between GSK and Teva,” and thus the class was “injured by
the Defendants’ alleged[ly] anticompetitive conduct.” J.A.
487–88. This “common evidence” includes: (1) economic
literature showing that, on average, prices of generics are lower
as more enter the market; (2) Teva’s own general pricing
forecast tending to discount a generic by 50% without
competition, but by 65% when facing an additional competitor;
and (3) transaction-level sales data showing that the average

                               15
actual price paid was consistent with these predictions. Lamb
also created a model purporting to show the price each
purchaser would have paid absent the settlement, and he
opined that the prices would have been lower both had GSK
just launched an AG 4 and had it launched an AG along with
the Contracting Strategy. But, as GSK and Teva accurately
point out, that model still relies on an average hypothetical
price, which again fails to account for individual negotiations
or the effect of GSK’s Contracting Strategy on each Direct
Purchaser.

        GSK and Teva’s expert, Dr. James Hughes, countered
that it is “not possible, absent individualized inquiry, to
determine whether any particular member of the proposed
[c]lass suffered injury in the form of higher prices as a result
of the alleged anticompetitive conduct.” J.A. 265–66. He
rebutted many of Dr. Lamb’s findings, primarily criticizing the
use of averages—contending that Lamb committed
“meaningful error” when he assumed an aggregate “actual”
price that he applied to all class-members, which failed to
acknowledge that purchasers paid “dramatically different
prices,” dropped charge-backs and discounts, and ignored low
“outlier” prices. Further, Dr. Hughes criticized Dr. Lamb’s
reliance on general forecasting documents using average
prices, rather than lamotrigine-specific prices. Hughes created
his own model, using lamotrigine-specific prices from Teva
company documents, to show that, when accounting for Teva’s
preemptive response to the Contracting Strategy, the price of

4
  While the parties dispute whether GSK would have used both
strategies—launching an AG and engaging in the Contracting
Strategy—simultaneously, Lamb conducted a “sensitivity
analysis” as part of his model purporting to show that, either
way, the price of lamotrigine would have been lower absent the
settlement agreement.

                              16
lamotrigine was likely lower for some purchasers than it would
have been had GSK launched an AG. Based on this, Hughes
found that 25 of the 33 generic-only purchasers likely paid the
same or lower prices in the actual world under the Contracting
Strategy than they would have paid had GSK launched an AG.
In effect, the amount each purchaser would have paid absent
the settlement required an individual analysis because Teva did
not respond to the Contracting Strategy uniformly.

       Here, the District Court abused its discretion when it
assumed, absent a rigorous analysis, that averages are
acceptable. As is clear from the dueling expert reports, the
acceptability of averages depends largely on the answer to
several factual predicates, most importantly: 1) whether the
market is characterized by individual negotiations; 2) whether
Teva preemptively lowered its pricing in response to the
Contracting Strategy; and 3) whether and to what extent GSK,
absent the settlement agreement, would or could have pursued
both the Contracting Strategy and an AG. The Court did not
resolve these factual disputes, which would have required it to
weigh the competing evidence and make a prediction as to how
they would play out at trial. Further, much of each expert’s
analysis turned on his sources of evidence for pricing and
discounting data, many of which were in tension. It was up to
the District Court to scrutinize the evidence to determine what
was credible and could be used in the expert analysis.
       This lack of analysis perhaps was due to the Court’s
assumption that antitrust injury here occurred “at the moment
the price of generic lamotrigine was artificially inflated by the
no-AG agreement, even if GSK’s Contracting Strategy later on
possibly eroded some or all of the inflated price.” Lamictal,
2018 WL 6567709, at *6. But that assumption misunderstood
GSK and Teva’s argument—the prices were never inflated to
begin with because Teva preemptively lowered its prices
before launching; thus some Direct Purchasers never suffered

                               17
an overcharge. But the District Court cannot simply make that
assumption—rather, whether Teva preemptively lowered its
prices is a factual matter hotly contested by the parties. And
the Court was required to resolve that dispute by a
preponderance of the evidence.

       Thus, contrary to the District Court’s belief, addressing
the micro-level analysis here, even though it touches on the
merits, was necessary in order to determine whether the Direct
Purchasers, in light of the competing expert reports and
evidence, could show that common issues predominated by a
preponderance of the evidence. While averages may be
acceptable where they do not mask individualized injury, see
Gates v. Rohm & Haas Co., 655 F.3d 255, 266 (3d Cir. 2011),
we cannot determine whether that occurred here because of the
lack of analysis. Accordingly, we vacate and remand for the
District Court to analyze the evidence and arguments
submitted as part of class certification.

       B.     Injury and Damages

        To compound matters, the District Court appears to
have treated the parties’ arguments as a dispute about damages,
rather than antitrust injury, reasoning that “[t]he use of
averages to develop the aggregate amount of damages does not
suggest [the Direct Purchasers] will be unable to ensure
recovery is only for injured parties.” Lamictal, 2018 WL
6567709, at *6 (alteration in original) (emphases added)
(citation omitted). That was amiss, as averages here were used
to show injury—i.e., the Direct Purchasers were overcharged
for lamotrigine because of the reverse-settlement—in addition
to damages.

      We have consistently distinguished injury from
damages. See, e.g., Newton v. Merrill Lynch, Pierce, Fenner
& Smith, Inc., 259 F.3d 154, 188 (3d Cir. 2001), as amended

                              18
(Oct. 16, 2001) (“Proof of injury (whether or not an injury
occurred at all) must be distinguished from calculation of
damages (which determines the actual value of the injury).”).
This is significant, as we apply a more lenient predominance
standard for damages than for injury. While every plaintiff
must be able to show antitrust injury through evidence that is
common to the class, see Hydrogen Peroxide, 552 F.3d at 311,
damages need not be “susceptible of measurement across the
entire class for purposes of Rule 23(b)(3),” Modafinil, 837 F.3d
at 260 (citation omitted). Accord Tyson Foods, 136 S. Ct. at
1045 (“When one or more of the central issues in the action . .
. can be said to predominate, the action may be considered
proper under Rule 23(b)(3) even though other important
matters will have to be tried separately, such as damages . . . .”)
(citation and internal quotation marks omitted). This merging
of differing standards led the District Court to apply our more
permissive damages standard to the class certification
question, reasoning “that some generic purchasers were injured
more or less strongly than others is not only permitted, but is a
reason for why averages are appropriate in the damages
calculation.” Lamictal, 2018 WL 6567709, at *7 (footnote
omitted). This misreading also calls for a remand.

IV.    CONCLUSION

        Because the District Court did not conduct a rigorous
analysis of the competing expert reports that rely on competing
evidence and assume competing facts, we are unable in the first
instance to determine whether the Direct Purchasers have met
the predominance requirement by a preponderance of the
evidence. Also, the Court incorrectly conflated injury with
damages in its analysis. We therefore vacate the class
certification order and remand for the District Court to conduct
the required analysis.

                                19