throbber
Case: 24-8002 Document: 1-1 Page: 1 Date Filed: 02/07/2024
`
`
`
`United States Court of Appeals
`
`for the
`Third Circuit
`
`Case No. 24-
`
`
`
`IN RE INSULIN PRICING LITIGATION
`
`_____________________________
`
`ON PETITION FOR PERMISSION TO APPEAL FROM THE UNITED STATES
`DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY IN
`CASE NO. 2:17-CV-00699, HONORABLE BRIAN R. MARTINOTTI
`
`PETITION FOR PERMISSION TO APPEAL PURSUANT
`TO FED. R. CIV. P. 23(F) AND FED. R. APP. P. 5
`AND APPENDIX
`Volume 1 of 2 (Pages A1 to A123)
`
`
`
`STEVE W. BERMAN
`CRAIG R. SPIEGEL
`HAGENS BERMAN SOBOL
`SHAPIRO LLP
`1301 Second Avenue, Suite 2000
`Seattle, Washington 98101
`(206) 623-7292
`
`THOMAS M. SOBOL
`HANNAH W. BRENNAN
`HAGENS BERMAN SOBOL
`SHAPIRO LLP
`55 Cambridge Parkway, Suite 301
`Cambridge, Massachusetts 02142
`(617) 482-3700
`
`JAMES E. CECCHI
`DONALD A. ECKLUND
`JAMES A. O’BRIEN III
`CARELLA, BYRNE, CECCHI, BRODY
`& AGNELLO, P.C.
`Five Becker Farm Road
`Roseland, New Jersey 07068
`(973) 994-1700
`
`MARK T. VAZQUEZ
`HAGENS BERMAN SOBOL
`SHAPIRO LLP
`455 North Cityfront Plaza Drive,
`Suite 2410
`Chicago, Illinois 60611
`(708) 628-4949
`
`Attorneys for Plaintiffs and Interim Co-Lead Counsel for the Class
`
`(800) 4-APPEAL • (327358)
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case: 24-8002 Document: 1-1 Page: 2 Date Filed: 02/07/2024
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`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ........................................................................................ 1
`
`
`
`
`I.
`
`II. QUESTIONS PRESENTED ..................................................................... 5
`
`III. ARGUMENT ................................................................................................. 7
`
`A.
`
`B.
`
`The Rule 23(f) petition should be granted because
`the district court violated Hydrogen Peroxide when
`it failed to weigh competing expert testimony. .......................... 8
`
`The Rule 23(f) petition should be granted because
`the district court incorrectly ruled that, under state
`consumer protection law, each diabetic patient needs
`to explain why she could not have avoided or otherwise
`offset the defendants’ misconduct. .............................................. 14
`
`1.
`
`2.
`
`The district court erred—as a matter of
`law—by requiring class members to individually
`demonstrate that they could not have avoided or
`otherwise offset the effect of the defendants’
`unconscionable and unfair prices. .................................... 14
`
`The district court erred—as a matter of
`law—in finding preclusive variations between
`the state laws at issue. ........................................................ 20
`
`C.
`
`The Rule 23(f) petition should be granted because the
`district court incorrectly concluded the class members
`had not sustained an “ascertainable loss.” ................................ 23
`
`1.
`
`For an unconscionability violation of the
`NJCFA, an individual does not need to be
`“misled” to suffer an “ascertainable loss.” ...................... 23
`
`
`
`i
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`Case: 24-8002 Document: 1-1 Page: 3 Date Filed: 02/07/2024
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`2.
`
`The district court misunderstood the plaintiffs’
`claims as pursuing a “fraud-on-the-market” or
`“price inflation” theory. ....................................................... 26
`
`IV. CONCLUSION ........................................................................................... 29
`
`CERTIFICATE OF COMPLIANCE ................................................................ 30
`
`
`
`
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`
`ii
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`

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`Case: 24-8002 Document: 1-1 Page: 4 Date Filed: 02/07/2024
`
`TABLE OF AUTHORITIES
`
`CASES
`
` Page(s)
`
`Albaugh v. The Reserve,
`930 N.W.2d 676 (Iowa 2019) ................................................................ 22
`
`Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds,
`568 U.S. 455 (2013) ...................................................................... 4, 6, 15
`
`In the Matter of Apple Inc.,
`2014 WL 1330287 (FTC Mar. 25, 2014) .............................................. 15
`
`Arch Ins. Co. v. Precision Stone, Inc.,
`584 F.3d 33 (2d Cir. 2009) ................................................................... 19
`
`Atl. City Elec. Co. v. Gen. Elec. Co.,
`226 F. Supp. 59 (S.D.N.Y. 1964) .......................................................... 18
`
`Bosland v. Warnock Dodge, Inc.,
`197 N.J. 543 (2009) ........................................................................ 24, 25
`
`Cheramie Servs. v. Shell Deepwater Prod.,
`35 So. 3d 1053 (La. 2010) ..................................................................... 22
`
`In re Cmty. Bank of N. Va. Mortg. Lending Pracs. Litig.,
`795 F.3d 380 (3d Cir. 2015) ................................................................. 16
`
`D’Agostino v. Maldonado,
`216 N.J. 168 (2013) .............................................................................. 24
`
`In re EpiPen Litig.,
`2020 WL 1180550 (D. Kan. Mar. 10, 2020) ........................................ 20
`
`Forst v. Live Nation Ent. Inc.,
`2015 WL 858314 (D.N.J. Feb. 27, 2015) ............................................. 25
`
`
`
`iii
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`

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`Case: 24-8002 Document: 1-1 Page: 5 Date Filed: 02/07/2024
`
`FTC v. Amazon.com, Inc.,
`2016 WL 10654030 (W.D. Wash. July 22, 2016) ................................ 15
`
`FTC v. Direct Benefits Grp., LLC,
`2013 WL 3771322 (M.D. Fla. July 18, 2013) ...................................... 16
`
`FTC v. Elec. Payment Sols. of Am. Inc.,
`482 F. Supp. 3d 921 (D. Ariz. 2020) .................................................... 15
`
`FTC v. Neovi, Inc.,
`604 F.3d 1150 (9th Cir. 2010) .............................................................. 15
`
`Hanover Shoe, Inc. v. United Shoe Mach. Corp.,
`392 U.S. 481 (1968) .............................................................................. 18
`
`Harnish v. Widener Univ. Sch. of L.,
`833 F.3d 298 (3d Cir. 2016) ..................................................... 25, 26, 27
`
`Hawaii v. Standard Oil Co. of Cal.,
`405 U.S. 251 (1972) .......................................................................... 6, 17
`
`In re Hydrogen Peroxide Antitrust Litig.,
`552 F.3d 305 (3d Cir. 2008), as amended (Jan. 16, 2009) ........ 3, 5, 6, 8
`
`Kalow & Springut, LLP v. Commence Corp.,
`2012 WL 6093876 (D.N.J. Dec. 7, 2012) ............................................. 15
`
`Laudato v. EQT Corp.,
`23 F.4th 256 (3d Cir. 2022) ............................................................ 5, 7, 8
`
`In re Lidoderm Antitrust Litig.,
`2017 WL 679367 (N.D. Cal. Feb. 21, 2017) ......................................... 17
`
`Luskin’s, Inc. v. Consumer Prot. Div.,
`726 A.2d 702 (Md. 1999) ...................................................................... 23
`
`MacDonald v. Cashcall, Inc.,
`333 F.R.D. 331 (D.N.J. 2019) ............................................................... 25
`
`
`
`iv
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`Case: 24-8002 Document: 1-1 Page: 6 Date Filed: 02/07/2024
`
`In re Nexium Antitrust Litig.,
`777 F.3d 9 (1st Cir. 2015) .................................................................... 17
`
`In Re Pharm. Indus.Average Wholesale Price Litig.,
`582 F.3d 156 (1st Cir. 2009) .................................................................. 2
`
`Pollard v. AEG Live, LLC,
`2014 WL 4637017 (D.N.J. Sept. 16, 2014) .......................................... 28
`
`Smajlaj v. Campbell Soup Co.,
`782 F. Supp. 2d 84 (D.N.J. 2011) .................................................. 25, 26
`
`In re Solodyn (Minocycline Hydrochloride) Antitrust Litig.,
`2017 WL 4621777 (D. Mass. Oct. 16, 2017) ........................................ 17
`
`Southern Pac. Co. v. Darnell-Taenzer Lumber Co.,
`245 U.S. 531 (1918) ........................................................................ 18, 19
`
`Sullivan v. DB Invs., Inc.,
`667 F.3d 273 (3d Cir. 2011) ....................................................... 4, 15, 20
`
`In re Syngenta AG MIR 162 Corn Litig.,
`2016 WL 5371856 (D. Kan. Sept. 26, 2016) ........................................ 19
`
`In re Thalomid & Revlimid Antitrust Litig.,
`2018 WL 6573118 (D.N.J. Oct. 30, 2018) ............................................ 17
`
`In re Valsartan, Losartan, & Irbesartan Prod. Liab. Litig.,
`2023 WL 1818922 (D.N.J. Feb. 8, 2023) ............................................. 21
`
`
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`v
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`Case: 24-8002 Document: 1-1 Page: 7 Date Filed: 02/07/2024
`
`I.
`
`INTRODUCTION
`
`People living with diabetes ask this Court to review a district
`
`court’s decision to effectively terminate the claims of several million
`
`diabetics harmed by the defendants’ insulin price manipulation. Eli
`
`Lilly, Novo Nordisk, and Sanofi know that the list prices they set will be
`
`mechanistically used to calculate the point-of-sale costs to insulin
`
`consumers.1 Nevertheless, they posted exorbitant list prices for
`
`consumers that bore no relation to the net prices insurers pay. As a
`
`result, diabetic patients make payments for insulin that far exceed the
`
`true market price. To right this wrong, patients brought class claims
`
`under state consumer protection laws that prohibit unfair and
`
`unconscionable conduct. Through serious misinterpretation of this
`
`
`1 Insulin manufacturers publish for each insulin product a single
`“list” price (either wholesale acquisition cost, WAC, and/or average
`wholesale price, AWP) used nationwide. For insured patients, when the
`drug is dispensed at the pharmacy (the point-of-sale), contracts with the
`pharmacy, health plan, and benefits manager all use the published
`“list” price as an input to calculate the total amount charged, including
`the patient percentage cost-share or deductible amount. For uninsured
`patients, the pharmacy uses the same published “list” price to calculate
`the usual and customary (U&C) charge. Thus, when “list” prices
`increase, so do the cash or cost-share charges to the patient. Class Cert.
`Br. at 18-24 (Dkt.# 575).
`
`
`
`1
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`

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`Case: 24-8002 Document: 1-1 Page: 8 Date Filed: 02/07/2024
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`Court’s and the states’ laws, the district court denied class certification
`
`in one of the country’s most important public health matters.
`
`Since this case was filed, insulin prices have elicited universal
`
`condemnation. Two presidential administrations and two bipartisan
`
`Congressional commissions have denounced defendants’ gouging of
`
`insulin users. Even the defendants have acknowledged their bloated list
`
`prices used for point-of-sale transactions—while later kicking back huge
`
`off-invoice rebates to insurers—forced patients to overpay.
`
`No case presents a more heartland opportunity to use state
`
`consumer protection laws and Rule 23 to compensate for unconscionable
`
`acts. Indeed, years ago, similar drug list price abuse led to numerous
`
`class certifications, settlements, and a trial under states laws in In Re
`
`Pharmaceutical Industry Average Wholesale Price Litigation.2 This
`
`action allowed millions of patients to recover for analogous overcharges
`
`on scores of drugs. Yet, here, the court’s denial of class certification
`
`
`2 582 F.3d 156 (1st Cir. 2009).
`
`
`
`2
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`

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`Case: 24-8002 Document: 1-1 Page: 9 Date Filed: 02/07/2024
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`threatens the unconscionability claims of millions of patients. Plaintiffs
`
`ask this Court to grant Rule 23(f) review to cure the following mistakes.
`
`First, the district court ignored Hydrogen Peroxide’s directive that
`
`Rule 23’s “rigorous analysis” requires the district court to evaluate the
`
`evidence on both sides of the case.3 In its predominance analysis, the
`
`district court adopted the unsupported opinions of Dr. Baker
`
`(defendants’ expert), without addressing even one counterpoint of Dr.
`
`Rosenthal (plaintiffs’ expert). The court not only misapplied Hydrogen
`
`Peroxide but inverted it, ignoring all of plaintiffs’ expert testimony and
`
`crediting as a matter-of-fact defendants’ expert. This divergence from
`
`Hydrogen Peroxide cannot stand.
`
`Second, the district court erred by denying certification based on
`
`hypothetical actions the defendants claim diabetics should have taken
`
`to avoid defendants’ prices. The district court blamed the victims,
`
`requiring patients to explain why they had not sought charity, sussed
`
`out coupons, obtained insurance (or better insurance or even a new job
`
`
`3 In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 323-25 (3d
`Cir. 2008), as amended (Jan. 16, 2009).
`
`
`
`3
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`

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`Case: 24-8002 Document: 1-1 Page: 10 Date Filed: 02/07/2024
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`to access a different plan). The Supreme Court and this Circuit direct
`
`that the Rule 23(b)(3) analysis focus on whether defendants’ conduct
`
`was common to all class members, not whether each plaintiff has a
`
`colorable claim on the merits.4 Courts across the country uniformly hold
`
`that merely speculating about the possibility of impractical and
`
`unreasonable mitigation measures does not bar recovery for unfair and
`
`unconscionable practices.5 The district court’s ruling on this score also
`
`violates long-standing Supreme Court precedent clarifying that injury
`
`occurs at purchase and potential downstream offsets are irrelevant as a
`
`matter of law.
`
`Third, the district court erred in ruling that the class has not
`
`suffered an ascertainable loss under the New Jersey Consumer Fraud
`
`Act (NJCFA). An ascertainable loss is one that is “quantifiable.” But
`
`simple math demonstrates plaintiffs’ overpayment. The district court
`
`confused this case—one where the defendants directly impose a real
`
`
`4 See Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S.
`455, 459 (2013); Sullivan v. DB Invs., Inc., 667 F.3d 273, 299 (3d Cir.
`2011).
`
`5 See infra n.33.
`
`
`
`4
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`

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`Case: 24-8002 Document: 1-1 Page: 11 Date Filed: 02/07/2024
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`overcharge—with fraud-on-the-market cases—where the defendant’s
`
`actions generally affect a hypothetical market price. This mistake led
`
`the district court to believe plaintiffs lacked a remedy under the NJCFA
`
`and must be cured.
`
`This is a textbook case of why Rule 23(f) was adopted. It meets all
`
`this Circuit’s standards for granting review: (1) the decision effectively
`
`terminates one of the most important public health and public interest
`
`cases in the country, (2) violates this Court’s directive in Hydrogen
`
`Peroxide, and (3) will facilitate clarification of the application of unfair
`
`and unconscionable practices law in class actions.6 This Court should
`
`exercise its “very broad discretion” in “using a more liberal standard”
`
`for 23(f) petitions and grant this petition.7
`
`II. QUESTIONS PRESENTED
`
`1.
`
`In Hydrogen Peroxide, this Court ruled that where parties
`
`present competing expert evidence on questions relevant to the Rule 23
`
`analysis, district courts must consider and weigh both experts’
`
`
`6 Laudato v. EQT Corp., 23 F.4th 256, 260 (3d Cir. 2022).
`
`7 Id.
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`
`
`5
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`Case: 24-8002 Document: 1-1 Page: 12 Date Filed: 02/07/2024
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`opinions.8 Here, the district court adopted, wholesale, the opinions of
`
`Dr. Baker (defendants’ expert), without addressing any of Dr.
`
`Rosenthal’s (plaintiffs’ expert) counterpoints. Was the district court’s
`
`failure to consider the plaintiffs’ competing expert testimony an error of
`
`law?
`
`2.
`
`The Supreme Court has ruled (1) “Rule 23(b)(3) requires a
`
`showing that questions common to the class predominate, not that those
`
`questions will be answered, on the merits, in favor of the class”9; and (2)
`
`injury occurs the moment a purchaser incurs an overcharge, whether or
`
`not that injury is later offset.10 Here, the district court ruled, on the
`
`merits, that all class members must prove that they could not have
`
`obtained insurance, rebates, or other financial assistance to avoid or
`
`
`8 552 F.3d at 323-25.
`
`9 Amgen, 568 U.S. at 459.
`
`10 Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 262 n.14 (1972)
`(“damages are established by the amount of the overcharge . . . [and]
`courts will not go beyond the fact of this injury to determine whether
`the victim of the overcharge has partially recouped its loss in some
`other way”).
`
`
`
`6
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`

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`Case: 24-8002 Document: 1-1 Page: 13 Date Filed: 02/07/2024
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`otherwise offset unconscionable and unfair prices. Are those rulings
`
`errors of law?
`
`3.
`
`The New Jersey Supreme Court has held that when a
`
`plaintiff overpays due to an unconscionable practice, the plaintiff has
`
`suffered an “ascertainable loss” under the NJCFA. The plaintiffs allege
`
`they overpaid when they purchased insulin based on the drugs’ list
`
`prices, which plaintiffs allege defendants inflated as part of an unlawful
`
`scheme. Did the district court err in finding that plaintiffs had not
`
`suffered an ascertainable loss?
`
`III. ARGUMENT
`
`“Contrary to the more limited approaches some other circuits
`
`utilize, this Court exercises our very broad discretion using a more
`
`liberal standard” for 23(f) petitions.11 This Court has “identified several
`
`circumstances in which appellate review is appropriate.”12 Those
`
`circumstances include (i) when denial of certification effectively
`
`terminates the litigation because the value of each plaintiff’s claim is
`
`
`11 Laudato, 23 F.4th at 260 (internal quotation marks omitted).
`
`12 Id. (internal quotation marks omitted).
`
`
`
`7
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`Case: 24-8002 Document: 1-1 Page: 14 Date Filed: 02/07/2024
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`outweighed by the costs of stand-alone litigation; (ii) when the district
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`court’s class certification determination was erroneous; and (iii) when
`
`the appeal might facilitate development of the law on class
`
`certification.13
`
`A. The Rule 23(f) petition should be granted because the
`district court violated Hydrogen Peroxide when it failed to
`weigh competing expert testimony.
`
`The district court’s Rule 23(b)(3) analysis disregards Third Circuit
`
`precedent. By adopting—without any analysis—defense expert’s
`
`opinions on the types of evidence that will be necessary to prove injury
`
`and damages, the district court violated this Court’s directive in
`
`Hydrogen Peroxide to weigh competing expert testimony.
`
`Hydrogen Peroxide is clear: “Resolving expert disputes in order to
`
`determine whether a class certification requirement has been met is
`
`always a task for the court.”14 Hydrogen Peroxide clarified that where
`
`parties present competing expert evidence bearing on Rule 23(b)(3)’s
`
`predominance inquiry, the district court must grapple with both
`
`13 Id.
`
`
`
`14 Hydrogen Peroxide, 552 F.3d at 324.
`
`
`
`8
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`Case: 24-8002 Document: 1-1 Page: 15 Date Filed: 02/07/2024
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`expert’s opinions. In short, the court must weigh in how the battle of
`
`experts may play out before a jury where the conflict bears on a class
`
`certification requirement.
`
`Here, defendants’ expert, Dr. Lawrence Baker, argued that many
`
`diabetics bear the blame for their own high insulin costs due to their
`
`choice of insurance plan.15 Dr. Baker speculated that class members
`
`struggling to afford insulin16 could have “change[d] jobs, insurance
`
`plans, or insurers.”17 Yet, conspicuously, he offered no example of
`
`someone who could reasonably have done so, nor any evidence as to the
`
`plausibility of his hypotheticals.
`
`15 A222.
`
`
`
`16 See, e.g., Class Cert. Br. at 30-32 (Dkt.# 575) (citing Novo, Sanofi,
`and Lilly documents where the companies acknowledge their high
`prices are causing patients to ration their insulin, leading to
`amputations, blindness, and even death); Pls. Complaint ¶¶ 308-309
`(Dkt.# 411) (“Multiple plaintiffs state that they keep the heat low—even
`in the dead of winter—so they can afford insulin. Parents of children
`with diabetes describe the anguish of not being able to afford pre-
`kindergarten and other educational services for their children due to
`their insulin costs.”).
`
`17 A222 (citing Defs.’ Response Br. (citing Baker Rpt. ¶ 102)).
`
`
`
`9
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`Plaintiffs’ expert, Dr. Meredith Rosenthal, rebutted this claim,
`
`explaining how the American healthcare system—wherein people
`
`receive insurance through their employers and, regardless, must pick
`
`insurance to fit the entire family’s needs—precludes consumers from
`
`shopping for a plan based solely on insulin prices.18 Consequently,
`
`plaintiffs can prove through common evidence that consumers lack a
`
`reasonable way to avoid overcharges by simply “switching insurance.”
`
`Dr. Baker also speculated that patients should have searched
`
`harder for charities or other programs covering insulin costs.19 Again,
`
`he could not cite to one individual who could have secured such
`
`charitable assistance. More importantly, Dr. Rosenthal researched the
`
`programs Dr. Baker highlighted and showed that, by their own terms,
`
`these programs were unavailable to all but a de minimis number of
`
`class members.20 Put another way, common evidence rebuts the notion
`
`
`18 See Pls.’ Class Cert. Reply at 5 n.10 (Dkt.# 577) (citing Rosenthal
`Rebuttal Rpt. ¶¶ 10-11).
`
`19 A162 n.24, A187.
`
`20 See A458-A460 (Rosenthal Rebuttal Rpt. ¶¶ 15-18).
`
`
`
`10
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`Case: 24-8002 Document: 1-1 Page: 17 Date Filed: 02/07/2024
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`that class members could reasonably mitigate their losses through
`
`charity.
`
`Dr. Baker also argued that not all uninsured class members paid
`
`for their insulin based on the defendants’ list prices because not all
`
`pharmacy prices are tied to defendants’ list prices.21 Again, Dr.
`
`Rosenthal mathematically rebutted this point using a statistical
`
`analysis to show the near-perfect relationship between the list prices
`
`defendants set and the point-of-sale prices uninsured consumers pay.22
`
`Nor was Dr. Rosenthal’s testimony the only expert evidence offered on
`
`this point. Another plaintiffs’ expert, Matthew Wine, explained that all
`
`pharmacies set their cash prices using the manufacturer’s list prices.23
`
`And as the district court acknowledged in its ascertainability analysis
`
`(but curiously not its predominance analysis), the plaintiffs gathered
`
`
`21 Baker Rpt. ¶¶ 148-159 (Dkt.# 576-2).
`
`22 See A193.
`
`23 See Pls.’ Class Cert. Br. at 18-21 (Dkt.# 575).
`
`
`
`11
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`Case: 24-8002 Document: 1-1 Page: 18 Date Filed: 02/07/2024
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`declarations from the country’s largest pharmacy chains corroborating
`
`this fact.24
`
`Lastly, Dr. Baker posits that many plaintiffs may have indirectly
`
`benefited from the rebates the defendants paid to pharmacy benefit
`
`managers (PBMs).25 He speculates that rebates might trickle down to
`
`consumers through eventual lower premiums. But, yet again, he could
`
`not show this to be true for any class member. And as Dr. Rosenthal
`
`counters, defendants’ rebates to PBMs and insurers do not mitigate the
`
`harms of high insulin list prices to consumers because, absent
`
`defendants’ misconduct, premiums would have remained the same.26
`
`The proposed class, in brief, derives no offsetting benefits from the
`
`alleged unlawful scheme.
`
`Hydrogen Peroxide requires the district court to contend with Dr.
`
`Rosenthal’s testimony. Yet, in its 54-page predominance analysis, the
`
`district court does not address a single counter-opinion of Dr.
`
`24 A163-A164.
`
`
`
`25 A131-A132, A223-A224.
`
`26 A496-A500 (Rosenthal Rebuttal Rpt. ¶¶ 75-80).
`
`
`
`12
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`

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`Case: 24-8002 Document: 1-1 Page: 19 Date Filed: 02/07/2024
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`Rosenthal.27 Instead, the district court’s predominance analysis adopts
`
`Dr. Baker’s opinions wholesale.28 This is striking given the Court’s
`
`extensive Daubert analysis, in which the Court concludes that Dr.
`
`Rosenthal testimony on these issues was admissible. Such unreasoned
`
`acceptance of the defendants’ expert evidence—and complete disregard
`
`of the plaintiffs’— violates the law of this Circuit as articulated in
`
`Hydrogen Peroxide.
`
`
`
`
`
`
`27 In its predominance analysis, the district court references Dr.
`Rosenthal’s opinions only three times: (1) in a summary of the common
`evidence the plaintiffs contend they will use, A193-A194; (2) explaining
`Dr. Rosenthal’s assignment, A198; and (3) to claim that Dr. Rosenthal
`conceded that some proposed class members benefit from rebates—
`when, in reality, the deposition testimony states that non-class
`members can benefit from rebates. A223-A224.
`
`28 See A214, A227, A242.
`
`
`
`13
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`Case: 24-8002 Document: 1-1 Page: 20 Date Filed: 02/07/2024
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`B. The Rule 23(f) petition should be granted because the
`district court incorrectly ruled that, under state consumer
`protection law, each diabetic patient needs to explain why
`she could not have avoided or otherwise offset the
`defendants’ misconduct.
`
`1.
`
`The district court erred—as a matter of law—by
`requiring class members to individually demonstrate
`that they could not have avoided or otherwise offset
`the effect of the defendants’ unconscionable and
`unfair prices.
`
`The district court erred when it focused on hypothetical actions
`
`patients could have taken before or after purchasing insulin rather than
`
`the common question at the heart of this litigation: did the defendants
`
`set unconscionable and unfair prices that the class paid? This error was
`
`a legal one: (1) no law requires the plaintiffs to avoid unfair prices for a
`
`necessary consumer purchase; and (2) long-standing Supreme Court
`
`case law prohibits courts from considering what steps consumers could
`
`have later taken to offset their damages.
`
`First, by focusing on what class members might have done to
`
`avoid the defendants’ harm,29 the decision violates the Supreme Court’s
`
`directive that courts determine whether “questions common to the class
`
`29 See A214-A216.
`
`
`
`
`
`14
`
`

`

`Case: 24-8002 Document: 1-1 Page: 21 Date Filed: 02/07/2024
`
`predominate, not that those questions will be answered, on the merits,
`
`in favor of the class.”30 Put differently, the “focus is on whether the
`
`defendant’s conduct was common as to all of the class members, not on
`
`whether each plaintiff has a ‘colorable’ claim.”31 “Merits questions may
`
`be considered to the extent—but only to the extent—that they are
`
`relevant to determining whether the Rule 23 prerequisites for class
`
`certification are satisfied.”32 Indeed, courts have found, on the merits,
`
`that requiring a consumer to search for rebates or other forms of
`
`mitigation after the fact is unreasonable.33 So here, a reasonable jury
`
`
`30 Amgen, 568 U.S. at 459.
`
`31 Sullivan, 667 F.3d at 299; see also Kalow & Springut, LLP v.
`Commence Corp., 2012 WL 6093876, at *4 (D.N.J. Dec. 7, 2012) (“Not
`only is the same legal issue presented (i.e., is Commence Corporation
`liable under the NJCFA?), common issues of fact will also predominate
`because this suit focuses on ‘the defendant’s conduct’” (quoting Sullivan,
`667 F.3d at 299)).
`
`32 Amgen, 568 U.S. at 466.
`
`33 See, e.g., FTC v. Neovi, Inc., 604 F.3d 1150, 1158 (9th Cir. 2010);
`accord FTC v. Elec. Payment Sols. of Am. Inc., 482 F. Supp. 3d 921, 931
`(D. Ariz. 2020) (“‘obtaining reimbursement require[s] a substantial
`investment of time, trouble, aggravation, and money’” (alteration in
`original)); FTC v. Amazon.com, Inc., 2016 WL 10654030, at *10 (W.D.
`Wash. July 22, 2016) (“customers could [not] reasonably avoid their
`injury by seeking a refund”); In the Matter of Apple Inc., 2014 WL
`
`
`
`
`15
`
`

`

`Case: 24-8002 Document: 1-1 Page: 22 Date Filed: 02/07/2024
`
`can find—uniformly for all class members—that defendants cannot
`
`sidestep liability by requiring class members to avoid the unlawful
`
`conduct by jumping through hoops defendants set up.34
`
`The district court nonetheless violated Amgen, holding that, as a
`
`matter of law, each class member must prove that they could not have
`
`avoided the defendant unfair list prices via insurance switches,
`
`insurance purchases, or charitable programs. Indeed, the court’s ruling
`
`on the merits that each class member must prove these negative facts
`
`precludes a reasonable jury from finding that it is unconscionable and
`
`unfair for the defendants to devise a complex scheme that causes class
`
`members to pay exorbitant prices. Such an unprecedented merits
`
`
`1330287, at *25 (FTC Mar. 25, 2014) (companies “cannot impose on
`consumers the responsibility for ferreting out material aspects of
`payment systems”); FTC v. Direct Benefits Grp., LLC, 2013 WL
`3771322, at *14 (M.D. Fla. July 18, 2013) (“refunds from Defendants
`do[] not render the injury avoidable”).
`
`34 The defendants also have not shown that any class member was
`eligible for a patient assistance program or coupon she did not use. See
`In re Cmty. Bank of N. Va. Mortg. Lending Pracs. Litig., 795 F.3d 380,
`397 (3d Cir. 2015) (“Because PNC relies solely on speculation, it has not
`demonstrated that the District Court abused its discretion in ruling for
`the Plaintiffs on this [certification] issue.”).
`
`
`
`16
`
`

`

`Case: 24-8002 Document: 1-1 Page: 23 Date Filed: 02/07/2024
`
`ruling, if allowed to stand, would preclude the possibility of class
`
`certification in any case alleging unconscionable and unfair pricing for
`
`drugs.
`
`Second, by focusing on the downstream impact of the defendants’
`
`rebates to PBMs, the court violated the well-accepted principle that
`
`“injury occurs the moment the purchaser incurs an overcharge, whether
`
`or not that injury is later offset.”35 Although this rule most often arises
`
`in the antitrust context, the logic applies just as much to consumer
`
`
`35 In re Nexium Antitrust Litig., 777 F.3d 9, 27 (1st Cir. 2015); see
`also Hawaii, 405 U.S. at 262 n.14 (1972) (“damages are established by
`the amount of the overcharge . . . [and] courts will not go beyond the
`fact of this injury to determine whether the victim of the overcharge has
`partially recouped its loss in some other way”); In re Thalomid &
`Revlimid Antitrust Litig., 2018 WL 6573118, at *14 (D.N.J. Oct. 30,
`2018) (“any amounts that such Plan Sponsors received . . . in the form of
`rebates is irrelevant to the question of impact”); In re Solodyn
`(Minocycline Hydrochloride) Antitrust Litig., 2017 WL 4621777, at *15
`(D. Mass. Oct. 16, 2017) (“[E]ven if putative class members were
`reimbursed for overcharges through insurance plans or coupons, they
`still experienced antitrust injury in the form of an overcharge . . . .”); In
`re Lidoderm Antitrust Litig., 2017 WL 679367, at *21 (N.D. Cal. Feb.
`21, 2017) (“[A] person suffers a cognizable injury . . . the moment he
`pays an antitrust overcharge, even if the anticompetitive conduct at
`issue also results in offsetting benefits.”).
`
`
`
`17
`
`

`

`Case: 24-8002 Document: 1-1 Page: 24 Date Filed: 02/07/2024
`
`fraud cases: “[a]s long as the seller continues to charge the illegal price,
`
`he takes from the buyer more than the law allows.”36
`
`The district court held that the possibility later rebates to PBMs—
`
`rebates that occurred months after the consumers’ purchases—would
`
`trickle down to the patients in the form of future lower premiums,
`
`offsetting their damages, created an individualized issue that precludes
`
`class certification.37 This holding violates long-standing and
`
`unequivocal Supreme Court precedent on damage offsets. For example,
`
`in Southern Pacific Co. v. Darnell-Taenzer Lumber Co., the Supreme
`
`Court examined whether a defendant could reduce a plaintiff’s damages
`
`when “the plaintiffs were able to pass on the [overcharge].”38 To that
`
`question, the Court responded, “[t]he answer is not difficult”: “[t]he
`
`
`36 Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 489
`(1968); see also Atl. City Elec. Co. v. Gen. Elec. Co., 226 F. Supp. 59, 64–
`65 (S.D.N.Y. 1964) (the law “prevents attributing ‘remote consequences’
`to a defendant” and “a defendant will be held liable to a plaintiff which
`it causes to suffer a proximate loss; otherwise a defendant could escape
`civil liability altogether”).
`
`37 A214 (holding that “[i]ndividualized inquiries will also be required
`to determine whether and how putative class members benefited from
`the rebates” to pharmacy benefit managers).
`
`38 245 U.S. 531, 533 (1918).
`
`
`
`18
`
`

`

`Case: 24-8002 Document: 1-1 Page: 25 Date Filed: 02/07/2024
`
`general tendency of the law, in regard to damages at least, is not to go
`
`beyond the first step.”39 Because a plaintiff’s injury and, therefore,
`
`damages “claim accrue[s] at once in the theory of the law,” the Court
`
`“does not inquire into later events.”40 Here, the law precludes
`
`defendants’ argument that their rebates later offset plaintiffs’ damages
`
`and creates individualized issues.
`
`In any event, as plaintiffs argued in the district court,41
`
`defendants must prove that passed-through rebate

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