United States District Court, D. Massachusetts
In re: CELEXA AND LEXAPRO MARKETING AND SALES PRACTICES LITIGATION
MEMORANDUM & ORDER
NATHANIEL M. GORTON, District Judge.
On July 16, 2014, the Court held a final fairness hearing with respect to a proposed settlement agreement between defendants Forest Pharmaceuticals, Inc. and Forest Laboratories, Inc. (collectively, and for simplicity, "Forest") and a class of Missouri consumers and third-party providers who purchased or paid for branded anti-depressant drugs Celexa or Lexapro between 1998 and 2013 ("plaintiffs"). Plaintiffs allege that Forest violated the Missouri Merchandising Practices Act by misrepresenting and concealing material information in their marketing of Celexa and Lexapro to treat major depressive disorder in pediatric patients. The case is part of a nationwide multi-district litigation ("MDL") assigned to this Court for consolidated proceedings.
Plaintiffs and Forest have moved for the final approval of the proposed settlement, which would create a common fund of at least $7, 650, 000 and no more than $10, 350, 000 based upon the calculations of damages performed by experts retained by plaintiffs and Forest. Natalie Luster ("Luster" or "the objector"), the plaintiff in a parallel class action pending in a Missouri state court, contends that the common fund is inadequate because her expert has calculated damages that exceed the amounts calculated by experts retained by plaintiffs and Forest. She raised objections to the proposed settlement in writing and at the final fairness hearing.
Should the Court approve the agreement, class counsel for plaintiffs move for $2, 846, 250 in attorneys' fees, $325, 000 in expenses and $10, 000 in incentive awards for the two class representatives, Ruth Dunham and Tanya Shippy, to be paid out of the common fund. Defendants do not object. Luster, however, contends that the requested fees are excessive and moves for an award of 50% of the fees awarded to class counsel, $350, 000 in litigation expenses and her own incentive award of $10, 000.
The Court has considered the subject motions and supporting memoranda and finds that the proposed settlement agreement is fair, reasonable and adequate. It will approve the subject settlement, award the class representatives $10, 000 each in incentive awards and award class counsel the expenses requested and a modified amount of attorneys' fees based upon ultimate payments to class members. The Court will also award modest attorneys' fees to counsel for the objector.
I. Procedural History
The instant action ("the MDL Action") is one of several lawsuits transferred to this Court for coordinated pretrial proceedings pursuant to 28 U.S.C. § 1407. It was initially filed in the Eastern District of Missouri in 2009 by Angela Jaeckel. Tanya Shippy and Ruth Dunham were joined as plaintiffs in a Second Amended Complaint filed in May, 2013 and represent a class of consumers and third-party payors in Missouri who purchased Celexa and Lexapro for the treatment of pediatric major depressive disorder.
The Second Amended Complaint alleges, inter alia, that Forest violated the Missouri Merchandising Practices Act (MMPA), Mo. Rev. Stat. §§ 407.025 et seq., by misrepresenting and concealing material information about the efficacy of Celexa and Lexapro for treating pediatric depression. In January, 2014, the Court allowed plaintiffs' motion to certify a class of consumers and entities who paid for, purchased or prescribed Celexa or Lexapro in Missouri for use by a minor from July, 2001 (for Celexa) and from August, 2002 (for Lexapro) until the present.
Objector is the named plaintiff and class representative in a class action titled Luster v. Forest Pharmaceuticals, Inc., No. 0922-CC08347 (Mo. Cir. Ct. filed July 22, 2009), that is currently pending before the Circuit Court for the City of St. Louis, Missouri ("the Missouri Action"). She represents a certified class of citizens of Missouri who purchased Celexa for use by children and adolescents between 1998 and 2005 ("the Missouri Class"). In September, 2013, Objector moved to stay the MDL Action on federal abstention grounds. The Court denied that motion in the Order allowing the motion to certify a Missouri class. After multiple continuances, the case was tentatively scheduled to proceed to trial in March, 2014, although Luster had moved for a brief continuance. Forest filed a renewed motion for summary judgment under the MMPA in December, 2013 and a motion to decertify the Luster class in February, 2014. Those motions were pending before the Missouri state court, when the Missouri Action was stayed.
In March, 2014, the parties in the MDL Action informed the Court that they had reached a settlement agreement ("the MDL Settlement Agreement"). Prior to reaching that agreement, Forest also engaged in unsuccessful settlement negotiations with counsel for Luster.
On March 14, 2014, the Court entered an Order Granting Preliminary Approval of Settlement, Directing Notice to the Class, and Scheduling Fairness Hearing ("the Preliminary Order"). The Preliminary Order certified a class ("the MDL Settlement Class") comprised of
Individuals and entities, including third-party payors... of prescription medicine benefits (other than governmental entities), who purchased, paid for or made a reimbursement for branded Celexa for use by a Minor between January 1, 1998 and December 31, 2013, or who purchased, paid for or made a reimbursement for branded Lexapro for use by a Minor between August 1, 2002 and December 31, 2013, where ( i ) branded Celexa or Lexapro was prescribed to the Minor in Missouri; or ( ii ) the Individual or Minor was a domiciliary citizen of Missouri at the time of the prescription or payment; or ( iii ) for an Individual, payment for the prescription was made in Missouri. This class does not include those Individuals or Minors who are seeking personal injury claims arising out of their purchase or use of branded Celexa and/or Lexapro.
As part of the Preliminary Order, the Court stayed Luster's Missouri Action pursuant to its authority under the All Writs Act, 28 U.S.C. § 1651, to issue all writs necessary or appropriate in aid of its jurisdiction. In June, 2014, the Court denied a motion by Luster to intervene in the MDL Action but allowed her to obtain minimal discovery prior to the final fairness hearing. Luster filed her written objection on June 9, 2014.
The Preliminary Order approved the appointment of Epiq Class Action and Mass. Tort Solutions ("Epiq") as the Claims Administrator for the MDL Action. As of July 1, 2014, Epiq had mailed successfully the Third-Party Payor Claim Package to 97% of the entities identified as potential Third-Party Payor Class Members and published a Notice in six local Missouri newspapers with an estimated circulation of over 600, 000. It also 1) disseminated about 54 million internet-based and geographically-targeted "digital banner advertisements, " and 2) established a Class Action Information Website and a toll-free phone number for class members and others seeking information about the proposed settlement. As of July 1, 2014, Epiq had received 19 Consumer Claim Forms and 4 Third-Party Payor Forms.
On July 9, 2014, Forest and plaintiffs filed a joint motion for the final approval of class settlement and plaintiffs moved for attorneys' fees and incentive awards. On July 15, 2014, on the eve of the final fairness hearing, Luster filed her motion for attorneys' fees and incentive awards.
The Court held a final fairness hearing on July 16, 2014, at which plaintiffs, Forest and Luster proffered arguments with respect to the Proposed MDL Settlement and Luster presented testimony by her expert on damages, Dr. Rena Conti. The Court took the matter under advisement and now issues its rulings on the pending motions.
II. Joint Motion for Final Approval of Class Action Settlement
Plaintiffs and Forest move jointly for final approval of the proposed MDL Settlement Agreement. For the reasons that follow, the Court will allow the motion for final approval of the agreement over the objections of Luster.
A. Key Provisions of the Proposed Settlement Agreement
The Proposed MDL Settlement Agreement is described in full in the Order of Preliminary Approval (Docket No. 338) but the key provisions are summarized here.
First, defendants have already made an "initial payment" of $7, 650, 000 into the Common Fund. See Preliminary Order, Docket No. 338, ¶ 15. Any attorneys' fees, expenses incurred by class counsel and incentive awards for class representatives will be paid out of that initial payment, Id . ¶ 17, and Forest agrees not to oppose or support any objection to awards of reasonable attorneys' fees not to exceed 34% of the Common Fund and expenses not to exceed $325, 000. See Settlement Agreement and Release, § IX (Docket No. 337-1). The initial payment will also cover the costs of providing notice to potential class members and administrating the claims process. Preliminary Order, ¶ 17.
After deducting the maximum amounts recoverable as fees, expenses, incentive awards and costs, at least $4, 215, 000 of the initial payment will be distributed to class members. Id . ¶ 16. That amount will be distributed on a pro rata basis if the aggregated amount of all valid claims is less than $4, 215, 000. Id . ¶ 17. If, on the other hand, aggregated valid claims exceed $4, 215, 000, Forest will pay up to $2, 700, 000 into the Common Fund to cover additional valid claims. Id . ¶ 18. In the unlikely event that the aggregated valid claims, incentive awards, attorneys' fees and expenses exceed $10, 350, 000, awards to class members will be reduced pro rata. Id . ¶ 19.
The amount of each class member who submits a valid claim stands to recover depends on 1) whether the purchase or payment was for Celexa or Lexapro and 2) when the purchase or payment was made. Specifically, the MDL Settlement Agreement provides that class members submitting valid claims stand to receive:
a. 100% reimbursement for purchases/payments between January 1, 1998 ...