In re HIV Antitrust Litigation

Background

The DPPs moved for preliminary approval of a class-action settlement with Gilead. The court had previously certified two DPP classes: the Truvada Class and the Atripla Class. The opinion states that there were approximately 76 Truvada Class Members and 53 Atripla Class Members.

Settlement Terms

The proposed settlement would create a gross settlement fund of $246,750,000 for the two classes. The proposed deductions included up to $82.25 million in attorneys’ fees, equal to 33 1/3% of the gross fund, and up to $4 million in expenses. After the requested fees and expenses, approximately $164 million would remain for distribution. The estimated average payment per class member was more than $2 million.

The net fund would be distributed under a Plan of Allocation. Members who submitted valid claims would receive pro rata payments based on the volume of Truvada, Atripla, and generic equivalents purchased, with different weights depending on the drugs purchased and whether they were brand-name or generic. The opinion states that none of the net fund would return to Gilead unless terms of a confidential agreement were triggered, including if the court awarded less than the requested fees and expenses.

Court’s Analysis

Under Federal Rule of Civil Procedure 23(e)(2), preliminary approval requires a court to determine that a proposed class settlement is fair, reasonable, and adequate. The court considered those factors and related factors recognized by the Ninth Circuit, including the strength of the case, the risks and costs of further litigation, the amount offered, the stage of the proceedings, and class counsel’s experience and views.

The court found that the factors favored preliminary approval. It noted that the settlement represented about 12% of the DPP classes’ estimated maximum damages of approximately $2.08 billion, and described that percentage as less than robust. The court nevertheless found the gross settlement fund significant and cited substantial litigation risks. Those risks included the complicated regulatory and patent issues, numerous expert witnesses, complex scientific and economic questions, the three-step rule-of-reason analysis for the antitrust claims, and the presence of multiple plaintiffs and defendants. The court also noted that indirect purchasers had proceeded to trial and lost.

Ruling and Required Changes

Judge Edward M. Chen granted the motion for preliminary approval and directed that the parties’ proposed preliminary-approval order be entered, subject to modifications.

The court required additional publication and digital notice because of the size of the settlement fund. It also required the DPPs to contact class members by phone and email as part of the reminder notice. The court did not require a second opportunity to opt out, finding that the class members were sophisticated entities, had previously received notice of class certification, and had experienced no material change in the information available to them that warranted another opt-out period.

The court did not require the notices’ first bolded sentence to state the average payout. It did require revised language alerting class members that Gilead had agreed to pay $246,750,000 into the settlement fund. The court set a hearing on final approval for January 18, 2024, at 1:30 p.m., and stated that the order disposed of Docket No. 2086.