Justia Class Action Opinion Summaries

Investors in a major drug-development company alleged that the company and two of its officers misled them about the integrity of the company’s overseas supply chain for long-tailed macaques, which are essential for its business. After China halted exports of these monkeys due to the COVID-19 pandemic, the company shifted to suppliers in Cambodia and Vietnam, some of which were later implicated in a federal investigation into illegal wildlife trafficking. Despite public signs of the investigation and seizures of shipments, the company’s CEO assured investors that its supply chain was unaffected by the federal indictment of certain suppliers, and that the indicted supplier was not one of its own. However, evidence suggested that the company was, in fact, sourcing macaques from entities targeted by the investigation, either directly or through intermediaries.The United States District Court for the District of Massachusetts dismissed the investors’ class action complaint, finding that the plaintiffs failed to allege any false or misleading statements or scienter (intent or recklessness), and therefore did not reach the issue of loss causation. The court also dismissed the derivative claim against the individual officers.The United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The appellate court held that the investors plausibly alleged that the company and its CEO knowingly or recklessly misled investors in November 2022 by assuring them that the company’s supply chain was not implicated in the federal investigation, when in fact it was. The court found these statements actionable, but agreed with the lower court that other statements about “non-preferred vendors” were not independently misleading. The First Circuit reversed the district court’s dismissal as to the November 2022 statements and remanded for further proceedings, including consideration of loss causation. Each party was ordered to bear its own costs on appeal. View "State Teachers Retirement System of Ohio v. Charles River Laboratories International, Inc." on Justia Law

Two individuals who frequently rented hotel rooms on the Las Vegas Strip brought a class action lawsuit, alleging that several major hotel operators and related entities caused them to pay artificially high prices for hotel rooms. The plaintiffs claimed that these hotels each entered into agreements to license revenue-management software from a single provider, Cendyn, whose products generated pricing recommendations based on proprietary algorithms. The software did not require hotels to follow its recommendations, nor did it share confidential information among the hotels. Plaintiffs alleged that, after the hotels adopted this software, room prices increased.The United States District Court for the District of Nevada reviewed the complaint, which asserted two claims under Section 1 of the Sherman Act. The first claim alleged a “hub-and-spoke” conspiracy among the hotels to adopt and follow the software’s pricing recommendations, but the district court dismissed this claim for failure to plausibly allege an agreement among the hotels. The plaintiffs later abandoned their appeal of this claim. The second claim alleged that the aggregate effect of the individual licensing agreements between each hotel and Cendyn resulted in anticompetitive effects, specifically higher prices. The district court dismissed this claim as well, finding that the plaintiffs failed to allege a restraint of trade in the relevant market.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The Ninth Circuit held that the plaintiffs failed to state a claim under Section 1 of the Sherman Act because the independent decisions by competing hotels to license the same pricing software, without an agreement among them or a restraint imposed by the software provider, did not constitute a restraint of trade. The court concluded that neither the terms nor the operation of the licensing agreements imposed anticompetitive restraints in the market for hotel-room rentals on the Las Vegas Strip. View "Gibson v. Cendyn Group, LLC" on Justia Law

Between 2017 and 2020, a major energy company and its senior executives allegedly orchestrated a large-scale bribery scheme, funneling approximately $60 million to key Ohio political figures and regulators through a network of shell companies and political action committees. In exchange, the company secured favorable legislation (Ohio House Bill 6), which provided substantial financial benefits, including a $2 billion bailout for its nuclear power plants. The scheme was concealed from shareholders and the public, with the company issuing public statements and regulatory filings that failed to disclose the true nature and risks of its political activities. When the bribery was exposed in 2020, the company’s stock and debt securities plummeted, resulting in significant losses for investors.After the scheme was revealed, investors filed multiple class actions in the United States District Court for the Southern District of Ohio, which were consolidated. The plaintiffs alleged violations of the Securities Exchange Act of 1934, specifically section 10(b) and SEC Rule 10b-5, claiming that the company and its executives made material misstatements and omissions that artificially inflated the value of its securities. The district court denied motions to dismiss and later certified a class of investors, holding that the plaintiffs were entitled to a presumption of reliance under Affiliated Ute Citizens of Utah v. United States, and that their damages methodology satisfied the predominance requirement for class certification.On interlocutory appeal, the United States Court of Appeals for the Sixth Circuit reviewed the class certification order. The court held that the district court erred in applying the Affiliated Ute presumption of reliance because the case was primarily based on misrepresentations, not omissions. The Sixth Circuit established a framework for distinguishing between omission- and misrepresentation-based cases and clarified that the Affiliated Ute presumption applies only if a case is primarily based on omissions. The court also found that the district court failed to conduct the required “rigorous analysis” of the plaintiffs’ damages methodology under Comcast Corp. v. Behrend. The Sixth Circuit vacated the class certification order to the extent it relied on the Affiliated Ute presumption and remanded for further proceedings consistent with its opinion. View "Owens v. FirstEnergy Corp." on Justia Law

A group of institutional investors brought a class action lawsuit against a pharmaceutical company and several of its officers, alleging violations of federal securities laws after the company’s share price dropped significantly following the rejection of a takeover bid and subsequent negative financial disclosures. One large investor, Sculptor, intended to pursue its own individual lawsuit rather than participate in the class action. The District Court certified the class and issued a notice specifying the procedure and deadline for class members to opt out. Although Sculptor intended to opt out, its counsel failed to submit the required exclusion request by the deadline. Both Sculptor and the company proceeded for years as if Sculptor had opted out, litigating the individual action and treating Sculptor as an opt-out plaintiff.The United States District Court for the District of New Jersey later approved a class settlement, which prompted the discovery that Sculptor had never formally opted out. Sculptor then sought to be excluded from the class after the deadline, arguing that its conduct showed a reasonable intent to opt out, that its failure was due to excusable neglect, and that the class notice was inadequate. The District Court rejected these arguments, finding that only compliance with the court’s specified opt-out procedure sufficed, that Sculptor’s neglect was not excusable under the relevant legal standard, and that the notice met due process requirements.The United States Court of Appeals for the Third Circuit affirmed the District Court’s judgment. The Third Circuit held that a class member must follow the opt-out procedures established by the district court under Rule 23; a mere “reasonable indication” of intent to opt out is insufficient. The court also found no abuse of discretion in denying Sculptor’s late opt-out request and concluded that the class notice satisfied due process. View "Perrigo Institutional Investor Group v. Papa" on Justia Law

A group of federally funded health centers and clinics serving low-income populations alleged that several major drug manufacturers conspired to restrict drug discounts offered through the federal Section 340B Drug Discount Program. The plaintiffs claimed that, beginning in 2020, the manufacturers coordinated efforts to limit the availability of discounted diabetes medications at contract pharmacies, resulting in significant financial losses for safety-net providers. The manufacturers, who are direct competitors in the diabetes drug market, allegedly implemented similar policies within a short timeframe, each restricting or eliminating the discounts in ways that had a comparable anticompetitive effect.After the plaintiffs filed a class action complaint, the United States District Court for the Western District of New York dismissed their first amended complaint and denied leave to file a second amended complaint. The district court concluded that the plaintiffs failed to allege sufficient parallel conduct or factual circumstances suggesting a conspiracy, and thus found the proposed amendments futile.The United States Court of Appeals for the Second Circuit reviewed the case and applied a de novo standard to both the dismissal and the denial of leave to amend. The Second Circuit held that the plaintiffs’ proposed second amended complaint alleged enough facts to plausibly infer a horizontal price-fixing conspiracy under Section 1 of the Sherman Act. The court found that the complaint sufficiently pled both parallel conduct and “plus factors” such as a common motive to conspire, actions against individual economic self-interest, and a high level of interfirm communications. The court also determined that Supreme Court precedents cited by the defendants did not bar the plaintiffs’ claims. Accordingly, the Second Circuit vacated the district court’s judgment and remanded the case with instructions to allow the plaintiffs to file their second amended complaint. View "Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC" on Justia Law

A group of industrial and commercial purchasers of natural gas in Wisconsin alleged that several gas companies participated in a conspiracy to fix natural gas prices between 2000 and 2002. The plaintiffs claimed that the defendants engaged in practices such as wash trading, churning, and false reporting to manipulate published price indices, which in turn affected the prices paid by purchasers in Wisconsin. The plaintiffs sought remedies under Wisconsin antitrust law, including both a “full consideration” refund of payments made under contracts tainted by the conspiracy and treble damages.The litigation was initially consolidated with similar cases from other states in multidistrict proceedings in the District of Nevada, where class certification was denied. After the Ninth Circuit vacated that denial and remanded, the Wisconsin case was returned to the United States District Court for the Western District of Wisconsin. There, the plaintiffs renewed their motion for class certification under Federal Rule of Civil Procedure 23(b)(3), relying on expert testimony to show that the alleged price-fixing had a common impact on all class members. The defendants countered with their own experts, arguing that the natural gas market’s complexity and variations in contract terms precluded common proof of impact. The district court certified the class, finding that common questions predominated, but did not fully resolve the disputes between the parties’ experts.The United States Court of Appeals for the Seventh Circuit reviewed the class certification order. The court held that, under recent Supreme Court and Seventh Circuit precedent, the district court was required to engage in a more rigorous analysis of the conflicting expert evidence regarding antitrust impact and the existence of a national market. The Seventh Circuit vacated the class certification and remanded the case for further proceedings, instructing the district court to make factual findings on these expert disputes before deciding whether class certification is appropriate. View "Arandell Corporation v. Xcel Energy Inc." on Justia Law

Epic Games, Inc. filed an antitrust lawsuit against Google after Google removed Epic's Fortnite video game from the Google Play Store for noncompliance with its terms of service. Epic had embedded secret code into Fortnite’s software to bypass Google’s required payment-processing systems, which charged a 30% commission on in-app purchases. The jury found that Epic had proven the relevant product markets for Android app distribution and Android in-app billing services and that Google violated both federal and California antitrust laws by willfully acquiring or maintaining monopoly power in those markets, unreasonably restraining trade, and unlawfully tying the use of the Play Store to Google Play Billing.The United States District Court for the Northern District of California entered a three-year injunction against Google, prohibiting it from providing certain benefits to app distributors, developers, OEMs, or carriers in exchange for advantaging the Play Store. The injunction also required Google to allow developers to provide users with information about and access to alternative app billing, pricing, and distribution channels. Google appealed the liability verdict and the injunction.The United States Court of Appeals for the Ninth Circuit affirmed the jury’s verdict and upheld the district court’s injunction. The court rejected Google’s claim that a decision in Apple’s favor in a similar lawsuit precluded Epic from defining the market differently in this case. The court held that the district court did not abuse its discretion in proceeding with a jury trial on Epic’s equitable claims and Google’s damages counterclaims. The court also found that the injunction was supported by the jury’s verdict and the district court’s own findings, and that the district court had broad discretion to craft the antitrust injunction. View "EPIC GAMES, INC. V. GOOGLE LLC" on Justia Law

Plaintiffs filed a class action lawsuit in state court against Defendants, alleging violations of state securities laws. Defendants removed the case to federal court under the Securities Litigation Uniform Standards Act (SLUSA), arguing that the case involved covered securities. Plaintiffs amended their complaint to exclude any claims related to covered securities, leading the district court to remand the case to state court. After three years of state court litigation, Defendants removed the case again, citing an expert report that allegedly identified covered securities. The district court remanded the case again and awarded Plaintiffs $63,007.50 in attorneys' fees.The United States District Court for the District of South Carolina initially denied Plaintiffs' motion to remand but later granted it after Plaintiffs amended their complaint. The court found that the amended complaint excluded any claims related to covered securities, thus SLUSA did not apply, and no federal question remained. After Defendants removed the case a second time, the district court remanded it again and awarded attorneys' fees, finding the second removal lacked a reasonable basis.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's award of attorneys' fees. The court held that the second removal was improper because the amended complaint explicitly excluded claims related to covered securities, and thus SLUSA did not apply. Additionally, the court found that the removal was objectively unreasonable, as the district court had already addressed the issues in its first remand order. The Fourth Circuit also denied Plaintiffs' request for additional attorneys' fees for defending the appeal, stating that 28 U.S.C. § 1447(c) does not authorize fee awards on appeal. View "Black v. Mantei & Associates, Ltd." on Justia Law

Lackie Drug Store, Inc. filed a putative class action against OptumRx, Inc. and other pharmacy benefit managers (PBMs), alleging violations of several Arkansas statutes due to the PBMs' failure to disclose, update, and notify pharmacies of changes to their Maximum Allowable Cost (MAC) lists. Lackie claimed this resulted in under-reimbursement for prescriptions. The case was initially filed in Arkansas state court and later removed to federal court. Lackie amended its complaint to include five claims, and OptumRx moved to dismiss the complaint on various grounds, including failure to state a claim and failure to exhaust administrative remedies.The United States District Court for the Eastern District of Arkansas dismissed two of Lackie's claims but retained three. The court also denied OptumRx's motion to dismiss based on the argument that Lackie failed to comply with pre-dispute procedures outlined in the Network Agreement. OptumRx later filed an answer and participated in discovery. After Lackie amended its complaint again, adding two new claims and tailoring the class definition to OptumRx, OptumRx moved to compel arbitration based on the Provider Manual's arbitration clause.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that OptumRx waived its right to compel arbitration for the original three claims by substantially invoking the litigation machinery before asserting its arbitration right. However, the court found that OptumRx did not waive its right to compel arbitration for the two new claims added in the amended complaint. The court also held that the district court erred in addressing the arbitrability of the new claims because the Provider Manual included a delegation clause requiring an arbitrator to decide arbitrability issues.The Eighth Circuit affirmed the district court's decision in part, reversed it in part, and remanded the case with instructions to grant OptumRx's motion to compel arbitration for the two new claims. View "Lackie Drug Store, Inc. v. OptumRx, Inc." on Justia Law

A class member objected to the district court's award of attorney's fees in a class action antitrust litigation involving broiler chicken producers. The district court had awarded attorney's fees based on a hypothetical ex ante market for legal services, considering the risk of nonpayment and the normal rate of compensation at the litigation's outset. The objector argued that the district court included skewed fee awards in its calculation.Previously, the United States District Court for the Northern District of Illinois had awarded attorney's fees, but the objector, John Andren, successfully argued on appeal that the court erred by discounting certain auction bids and excluding fee awards from the Ninth Circuit. The Seventh Circuit remanded the case, instructing the district court to reconsider these factors. On remand, the district court awarded a new fee, excluding certain bids and Ninth Circuit awards, and giving significant weight to a specific fee agreement from a comparable case.The United States Court of Appeals for the Seventh Circuit reviewed the district court's revised fee award. The court found that the district court did not abuse its discretion in excluding certain bids and Ninth Circuit awards but erred in relying on a skewed sample of ex post awards. The Seventh Circuit adjusted the fee award by removing non-representative data points, resulting in a revised award of 26.6% of the net common fund. The court affirmed the district court's fee award as modified and remanded the case for further proceedings. View "Andren v End User Consumer Plaintiff Class" on Justia Law