Court: District Court, D. New Jersey; September 30, 2015; Federal District Court
Defendant's Motion to Exclude Plaintiffs’ Class Experts was addressed, alongside Plaintiffs’ Motion for Class Certification. Following a Daubert hearing from September 9-11, 2015, the Court determined that Plaintiffs’ expert, Professor Einer Elhauge, is reliable and therefore cannot be excluded. The Court also found that Plaintiffs provided sufficient common proof for their antitrust claims, leading to the certification of the proposed class.
The case centers on Sanofi Pasteur Inc.’s bundling practices concerning pediatric vaccines, specifically its monopoly on the MCV4 vaccine, Menactra. Sanofi held a dominant position in multiple pediatric vaccine markets, including DTaP, IPV, and HIB vaccines. Notably, when Novartis planned to introduce a competing MCV4 vaccine, Sanofi responded by bundling Menactra with its other vaccines and implementing a loyalty discount to maintain pricing levels, disadvantaging customers who did not purchase a specified volume of vaccines.
The proposed class consists of all entities purchasing Menactra directly from Sanofi or its affiliates between March 1, 2010, and the cessation of Sanofi’s alleged illegal conduct, excluding governmental entities and specific purchasers. Plaintiffs include three pediatric practices aiming to represent physician buying groups that purchase and distribute vaccines.
The procedural history indicates the case was filed on December 9, 2011, with subsequent filings, including a counterclaim by Sanofi for Sherman Act violations, which was partially dismissed by Judge Linares.
The request for interlocutory appeal regarding Judge Linares' dismissal of Sanofi's counterclaim was denied, and the parties engaged in discovery for class certification. Plaintiffs filed their motion for class certification on December 15, 2014, to which Sanofi responded by seeking to exclude the Plaintiffs' expert, Professor Einer Elhauge, on February 13, 2015. Daubert hearings for Elhauge's reports took place from September 9 to 11, 2015.
Professor Elhauge, an antitrust expert from Harvard Law School, provided reports addressing five key issues. He identified four relevant vaccine markets—DTaP, IPV, HIB, and MCV4—where Sanofi held significant monopoly power, with market shares ranging from 55% to 90% during the relevant period. Elhauge argued that a discount bundle introduced by Sanofi had no procompetitive effects, instead resulting in higher prices for disloyal customers and was implemented only after the anticipated entry of Menveo into the market.
Moreover, he indicated that the bundling strategy effectively divided the MCV4 market into Sanofi-loyal and disloyal customers, supported by various forms of evidence, including economic literature and internal documents from Sanofi and Novartis. The analysis revealed that competing for Sanofi-loyal customers required Novartis to price below cost, indicating the anticompetitive nature of the loyalty discounts. Elhauge's regression analysis suggested that, absent the bundle, Menveo's market share among restrained buyers would have significantly increased. The bundling strategy allowed Sanofi and Novartis to avoid price competition, resulting in inflated prices across the market.
Elhauge asserts that a market division between Sanofi and Novartis led to inflated prices for the entire class by discouraging competition and stabilizing price equilibrium, which would otherwise have decreased prices. He identifies three factors that typically would lower prices: the transition from monopoly to duopoly, reduced marginal costs, and diminished market demand, yet prices increased instead. Employing a differentiated Bertrand competition model, Elhauge argues that the market's characteristics—differentiated products, price-setting competition, and lack of capacity constraints—support the conclusion that competition would have prevailed absent the alleged conduct. His model predicts but-for prices of $64.58 for Menactra and $50.64 for Menveo. Elhauge concludes that most class members paid inflated prices due to a rigid pricing structure for Menactra, with only one of 26,000 members receiving any individualized discount, which still resulted in overcharges. Any rare pricing deviations would remain consistent regardless of the bundle's presence.
In contrast, David Kaplan, representing the Defendant, challenges Elhauge's conclusions, arguing that Novartis was not entirely foreclosed from competition and that Elhauge’s analysis of Menveo’s market share under the bundle shows only a negligible effect. Kaplan contends that customer preference for Sanofi could explain the observed market share and that the statistical significance of share regression results diminishes under certain conditions. He critiques Elhauge’s differentiated Bertrand model as inappropriate, claiming it misrepresents real-world pricing dynamics by assuming a one-time game without coordination, suggesting instead that a coordinated pricing strategy is more plausible in this context.
Professor Elhauge's analysis of vaccine pricing failed to consider government purchases through the Vaccines for Children (VFC) program, which represented about 50% of the MCV4 market. These government prices were transparent and established at the lowest actual sale price. Additionally, Mr. Kaplan contends that Elhauge's model was uncalibrated and based on incorrect cost data. Kaplan also disputes the assumption that any overcharge would uniformly affect all class members, pointing out that Sanofi and Novartis applied real-world discounts.
In the legal context, courts must evaluate expert testimony critical to class certification through a two-step analysis when challenged for reliability. The first step examines if the challenges pertain to aspects of the expert testimony relevant to Rule 23. The second step assesses the admissibility of the opinion under Federal Rule of Evidence 702 and the Daubert standard. The court acts as a gatekeeper, ensuring the testimony has a reliable foundation and is relevant. Key considerations include the expert's qualifications, the reliability of their testimony, and its helpfulness to the trier of fact. Proponents of expert testimony must demonstrate these criteria by a preponderance of the evidence. The reliability assessment involves examining the methodology, peer review status, error rates, standards, general acceptance, and the expert's qualifications. Each component of the expert’s analysis must be reliable, but proponents are not required to prove the correctness of their experts' conclusions, only their reliability.
Defendant contends that Professor Elhauge’s opinion should be excluded as unreliable based on his methodologies and their application. However, the Court finds that the issues raised pertain more to the weight of the evidence rather than its admissibility. There are no significant methodological flaws or lack of factual basis warranting exclusion. Professor Elhauge, a highly qualified expert in antitrust law and health policy, is the Petrie Professor of Law at Harvard Law School, with extensive publications and courtroom experience, including testimony before the U.S. Senate. His qualifications are undisputed.
Defendant challenges the reliability of three conclusions drawn by Professor Elhauge regarding the effects of Sanofi’s bundle: (1) that the bundle divided the market, (2) that this division inflated prices, and (3) whether the injury was uniformly felt or disproportionately affected certain customers. In addressing the first conclusion, Professor Elhauge asserts that the bundle indeed divided the MCV4 market into loyal and disloyal customers, supported by internal documents from Sanofi and Novartis, economic literature, and data analysis. The evidence includes internal communications indicating the market division and the penalties for not purchasing from the bundle. Defendant does not effectively contest the validity of this evidence, which is consistent with the approach of their own expert, who acknowledges the reasonableness of relying on such real-world evidence. This documentation substantiates Professor Elhauge’s opinion that the market was influenced by the bundle as both Sanofi and Novartis recognized.
Professor Elhauge's theory, derived from his previous academic work, suggests that bundled loyalty discounts can lead to market division and increased prices. The defendant contests this theory, stating it lacks broader acceptance among economists and empirical testing. However, notable economists, including former FTC directors Salinger and Farrell, have acknowledged Elhauge's theories, indicating they are not fringe concepts, despite the literature being in an early stage and lacking empirical validation due to unavailable sensitive data.
Elhauge supports his theory with data analysis, revealing that only 6% of customers under the Menactra Bundle purchased Menveo, compared to 33% of those not on the bundle, suggesting market division. The defendant argues that Novartis's acquisition of any Sanofi-loyal customers undermines this conclusion, but the court disagrees, noting that the bundled system was designed to limit competition while allowing slight customer acquisition.
Additionally, Elhauge calculated that to compete against the bundle, Novartis would need to price below cost, specifically $9.15, based on penalties associated with the bundled vaccines, which were significantly lower than Sanofi's marginal costs. Compliance with the bundle was high at 98.9%. The defendant claims Novartis could have priced lower to gain more customers, but this argument does not affect the admissibility of Elhauge's opinion. Overall, while the economic literature does not independently validate Elhauge's theories, it serves as supporting evidence for his conclusions regarding market division and price inflation.
Professor Elhauge's opinion identifies a 'dead zone' in competition that limits customer increases for Novartis, which is challenged by the defendant referencing Eisai Inc. v. Sanofi-Aventis U.S. LLC. In Eisai, the court rejected a similar 'dead zone' theory, focusing on whether additional exclusionary effects beyond pricing were present, and ruled in favor of Sanofi-Aventis, stating that Eisai could reduce the dead zone through price adjustments. Unlike Eisai, the current case involves bundling different products across various markets rather than volumetric discounts. Elhauge's findings suggest that even if Novartis priced its vaccine at cost, the dead zone would persist for most Sanofi-loyal customers, contrasting with Eisai where a threshold of product purchase influenced the dead zone's applicability.
Additionally, Elhauge conducted a share regression that indicated a 4.1% correlation between purchases of Sanofi pediatrics and Menactra, suggesting a link influenced by Sanofi's bundling strategy. The defendant disputes this regression's reliability, citing omitted variables like customer preference for reconstitution or the Sanofi brand. However, Elhauge's rationale for omitting these variables is deemed reliable, as their exclusion does not invalidate the regression's admissibility. The absence of these variables is unlikely to skew results against the defendant, as preferences regarding reconstitution would actually lead to a conservative estimate of the correlation, not an inflated one.
Brand preference does not invalidate the admissibility of Professor Elhauge's regressions. He tested the connection between Sanofi pediatrics and Menactra purchasing among non-Sanofi loyal customers and found no link, supported by internal documents from Sanofi and Novartis that also do not indicate a brand-preference connection. The Court will not exclude the regressions for lacking additional variables.
Defendant's argument regarding the absence of a tipping point is misplaced; Professor Elhauge's analysis does not require Novartis to increase market share or express a desire to compete. Rather, his theory posits that Novartis could not avoid competition unless the market was artificially divided into loyal and disloyal segments. The notion of a 'tipping point' is based on the difficulty of overcoming the bundle without significant discounts, which the Court finds does not necessitate further analysis.
Additionally, the challenge regarding a low r² value is insufficient for exclusion. A low r² indicates that multiple factors may influence consumer choice, but it does not invalidate the regression itself. The importance of r² is minimal in classical regression modeling, and Professor Elhauge focused on the effect of the Sanofi bundle rather than identifying all potential consumer motivations.
Finally, alterations to regression inputs proposed by Mr. Kaplan do not undermine Professor Elhauge's credibility. Removing specific customers resulted in no significant correlation, but such selective adjustments do not inherently indicate unreliability without justification. The Court references prior cases where similar manipulations were criticized for being unreliable.
Removal of nine random customers does not significantly alter the outcomes of Professor Elhauge’s regression analysis, which includes diverse customers like GPOs, large hospitals, and individual doctors. Mr. Kaplan's assertion that a reduced sample size eliminates statistical significance is expected; smaller samples often yield such results but do not undermine the reliability of the complete regression. Consequently, Professor Elhauge’s share regressions are deemed reliable, supporting the conclusion that the MCV4 market was divided by the bundle.
Furthermore, Professor Elhauge testified that prices in the MCV4 market were inflated due to market division from the bundle, supported by three types of evidence: internal documents, economic literature, and a differentiated Bertrand competition model. Internal documents indicate that the bundle increased switching costs and prevented price erosion, with Sanofi acknowledging this effect. The defendant does not effectively challenge this evidence.
Professor Elhauge also argues that economic principles indicate prices should decrease with the change from monopoly to duopoly and decreasing marginal costs and demand; however, prices rose contrary to this expectation. The defendant disputes price increases by citing greater discounts from Sanofi after Novartis entered the market, but list price increases led to higher net prices. Additionally, the defendant's claim that sales and costs increased post-entry does not negate Professor Elhauge’s conclusions, as these increases occurred well after the entry analysis period. The Court finds Professor Elhauge's reliance on economic principles valid, rejecting the defendant's arguments to exclude his opinion regarding price behavior in this market.
The Differentiated Bertrand Competition Model, employed by Professor Elhauge, is used to determine the hypothetical prices for Menveo and Menactra without the influence of bundling. This model incorporates marginal cost data and customer preferences to find a price equilibrium where neither firm has an incentive to change prices. Elhauge justifies the use of this model based on the differentiated nature of the market, the price competition characteristic of Bertrand competition, and the non-cooperative interactions typical in such markets, making collusion difficult. The defendant contends that the differentiated Bertrand model is inappropriate for judicial analysis, but the Court refutes this claim, referencing precedents where similar models were accepted for defining markets and measuring impacts, such as in United States v. H. R Block, Inc. and In re Cathode Ray Tube Antitrust Litigation. The Court also notes that while some cited cases deemed the Bertrand model inadmissible, they did not reject it solely on that basis, highlighting issues like insufficient sample sizes. The distinction between Bertrand and Cournot models is clarified: Bertrand is focused on price competition while Cournot pertains to quantity competition, with both being recognized methods in antitrust damage calculations.
Professor Elhauge utilizes a vast dataset in his analysis, distinguishing his approach from the Court's previous ruling in Concord Boat Corp. v. Brunswick Corp., which excluded a simulation based on the assumption of overcharging when a firm's market share exceeded 50%. Elhauge's differentiated Bertrand model, widely accepted in non-judicial settings such as those used by the Department of Justice and the Federal Trade Commission for merger analysis, is deemed a reliable framework for simulating competitive pressures, even though the context differs from a merger. The Court does not find the differentiated Bertrand model categorically unreliable, given its judicial acceptance and frequent use in estimating prices in hypothetical competitive scenarios.
The defendant suggests alternative modeling approaches, including yardstick, coordinated interaction, and Cournot models, but the plaintiffs argue that a reliable model does not necessitate the exclusion of all other models. They assert that Elhauge's model is the most fitting. The admissibility standard emphasizes reliability rather than superiority, as established in prior case law. Elhauge provides justification for not using the proposed alternative models, noting the absence of a comparable market for the yardstick approach and the speculative nature of the coordinated interaction model. He also states that coordination was not feasible in the market under examination. The discussion addresses that while the Cournot model is mentioned, it does not effectively counter Elhauge's conclusions.
Competition in the vaccine market is better represented by Cournot competition based on quantity rather than Bertrand competition based on price. The use of Cournot or Bertrand models can significantly impact the analysis, as demonstrated in Heary Bros. Lightning Prot. Co. v. Lightning Prot. Inst., where a Cournot model was excluded due to clear price-based competition. However, in this case, the differentiated Bertrand model is deemed appropriate. Professor Elhauge supports this by showing that all modeled market share changes fall within the agreed production capacities of Novartis, with no production limitations indicated in relevant documents. Economists typically assume sellers of differentiated products engage in Bertrand competition.
The defendant contests the validity of the differentiated Bertrand model, arguing it inaccurately assumes firms do not adjust prices based on future interactions, characterizing it as a "one-shot game." They claim that the market, being a duopoly, involves coordination rather than competition, with firms often aligning on list prices and having incentives to avoid price wars. Despite these concerns, the model's single-period assumption does not render it invalid, as one-shot game oligopoly models provide useful predictions about real-world market behaviors. Professor Elhauge posits that in this opaque pricing environment, firms are unable to coordinate prices, supporting the continued relevance of the differentiated Bertrand model in this context.
Documents and testimony indicate that Sanofi's pricing strategy is intentionally complex, making it difficult for competitors to replicate. The differentiation between Menactra and Menveo further complicates potential coordination among parties, as Professor Elhauge and others argue that differentiated products reduce the likelihood of collusion. Competitive interaction in such markets is typically non-cooperative due to product differentiation, which hinders the formation of collusive agreements without clear customer allocation.
Analysis by Professor Elhauge reveals that firms rarely coordinated on actual prices, distinguishing this from list prices. The lack of product homogeneity and price transparency undermines the potential for coordinated effects, either tacit or express, as competitors lack routine access to essential transaction information, a point supported by multiple legal precedents.
The debate between parties centers on factual interpretations. Professor Elhauge asserts that the market is characterized by competition rather than coordination, backed by relevant documents and data, while the defendant contests this but fails to disprove the reliability of Elhauge’s assertions.
Additionally, the defendant critiques Elhauge for not calibrating his Bertrand model to real-world prices, suggesting that the model's results reflect simulation defects rather than actual price inflation caused by Sanofi’s bundling practices. In response, Elhauge clarifies that he utilized real-world data for calibration, including buyer responses and market demand curves in unaffected sections, and argues that calibrating based on private MCV4 prices would be flawed due to their contamination by anti-competitive effects.
Lastly, the defendant raises concerns regarding the VFC floor—the federal government's price benchmark for purchasing vaccines, which is set to the lowest private price. Since VFC accounts for a significant portion of vaccine sales, there is a perceived disincentive for Novartis to compete vigorously, fearing that lower competition would reduce the VFC floor and impact profits.
The VFC floor may facilitate pricing coordination between Novartis and Sanofi due to its transparency, as noted by Professor Elhauge and Mr. Kaplan. Elhauge asserts that the VFC floor is flexible, adjusting downward in response to private competition, which complicates Kaplan's theory that prices would stabilize at the VFC floor. Elhauge counters that significant price discrimination in the market makes this stabilization unlikely, and competition may be jeopardized if firms attempt to price below the VFC floor for increased market share. The potential for product differentiation further complicates price coordination, as it could create imbalances favoring one vaccine over another. While the debate over the pricing dynamics is acknowledged, it does not undermine the reliability of Elhauge’s model.
Additionally, Elhauge's assumption that total demand for the MCV4 vaccine would rise with lower prices is defended by his calculation of demand elasticity, which the defendant fails to convincingly challenge. The defendant's critique of Elhauge's cost data, derived from 2011-2012 for a 2010 analysis, is noted, but the court finds that the later inputs remain admissible and sufficient for the case. Elhauge’s approach to applying an overcharge across the entire class is supported by evidence of a consistent pricing structure from Sanofi, contradicting the defendant’s claim of anticipated price discrimination.
Only one of the 26,000 class members consistently received an individualized discount on all purchases; however, even this member was overcharged according to Elhauge's analysis. Elhauge's assessment is based on a stable price structure maintained by Sanofi over the years, which supports his assumption of widespread price variability. Rare exceptions for price matching cited by the defendant account for less than one-tenth of a percent of sales, with the bundled pricing being the primary control method. Elhauge's reasoning for an across-the-board price variation is deemed sound, and opposing views regarding its weight do not affect its admissibility.
The court addresses the reliability and relevance of Elhauge’s testimony, affirming its importance to key issues such as price impact, causation, and damages for class certification. Consequently, the defendant's motion to exclude Elhauge’s reports is denied.
Regarding class certification, the plaintiffs must satisfy the four prerequisites of Federal Rule of Civil Procedure 23(a): numerosity, commonality, typicality, and adequacy of representation. Additionally, under Rule 23(b)(3), they must demonstrate that common legal or factual questions predominate and that a class action is the most effective means of resolving the dispute. These criteria are crucial for the court's assessment of the plaintiffs' motion for class certification.
A plaintiff must provide evidentiary proof to demonstrate compliance with Rule 23’s requirements for class certification, as established in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Bekrend, necessitating a rigorous analysis of each requirement by the court. This analysis may touch on the merits of the underlying claim but only as it pertains to the Rule 23 prerequisites. In the context of antitrust bundling claims under Section 2 of the Sherman Act, plaintiffs must show both monopoly power and willful acquisition or maintenance of that power. Such claims require evidence of exclusionary conduct that harms competition, not just competitors, with the focus on whether practices significantly restrict market access for rivals.
Before class certification, plaintiffs must meet the requirements of Federal Rule of Civil Procedure 23(a) and (b), which include numerosity, commonality, typicality, adequacy, predominance, and superiority. Numerosity is satisfied with approximately 26,000 class members, surpassing the threshold where traditional joinder becomes unmanageable. Commonality is also established through numerous shared legal and factual issues, including allegations against Sanofi regarding its monopoly power and the impact on market prices. Typicality ensures alignment between the interests of the class and its representatives, fostering a unified pursuit of class goals.
Named plaintiffs’ claims are considered typical if they stem from the same alleged wrongful conduct and are based on the same general legal theories, even if not identical. In this case, all claims arise from the same alleged unlawful conduct, with each representative asserting they, like all class members, paid inflated prices for Menactra and seek recovery for overcharges.
To meet the adequacy requirement, named plaintiffs must have both the ability and incentive to vigorously represent the class's claims without conflicts between their interests and those of the class. The defendant challenges the selection of named plaintiffs, arguing a potential conflict due to varying extents of overcharging among class members. However, such differences do not constitute a fundamental conflict sufficient to undermine adequacy.
The standard for measuring damages in price enhancement cases is based on overcharges, and all named plaintiffs share the common goal of proving the existence of an antitrust violation that led to inflated prices. The court has consistently ruled that hypothetical conflicts, which may not materialize, do not prevent class certification. Thus, the interests of class members remain aligned, and varying preferences for damages theories do not create conflicts that would affect adequacy.
Predominance of common questions of fact and law is established in this case, as the significant issues primarily concern the conduct of the Defendant, Sanofi, rather than the individual plaintiffs. Central to the litigation is the allegation that Sanofi's enforcement of the Menactra bundle violated antitrust laws. Plaintiffs present common evidence to demonstrate three key points: (1) Sanofi's monopoly power in the relevant markets, (2) willful maintenance of that monopoly power through bundling, and (3) the foreclosure of Novartis from a significant portion of the MCV4 market.
Monopoly power is defined as the ability to control prices or exclude competition, typically established through dominant market share. Evidence indicating Sanofi's market share of 55%-90% in markets such as MCV4, DTaP, IPV, and HIB is presented as common data among the class.
Regarding the willful maintenance of monopoly power, it is asserted that a monopolist may maintain its power through means other than competition on merit. The inquiry focuses on whether Sanofi attempted to suppress competition through exclusionary practices. Evidence includes internal documents from Sanofi, demonstrating intent to leverage its product line to hinder competition and impose loyalty requirements to Menactra. This proof is deemed common to all plaintiffs, indicating a collective basis for the claims of willful maintenance of monopoly power.
Novartis experienced significant foreclosure from the MCV4 market primarily due to Sanofi's bundling strategies. Evidence supporting this includes internal records from both companies indicating that Sanofi's bundling effectively insulated Menactra from competition. A Novartis executive confirmed that the company could not compete against this bundling, even offering Menveo for free would not suffice. Professor Elhauge's analysis further substantiated these claims, suggesting that a new competitor would need to price below cost to attract Sanofi-loyal customers. His data indicated that Menveo's market share would be substantially higher without Sanofi's bundle, estimating a 62% increase conservatively, and a threefold increase under less conservative assumptions.
Defendant's argument for demonstrating complete foreclosure is countered by legal precedents indicating that only 40-50% market restriction is necessary to establish foreclosure. The issue of market restriction has been established in earlier proceedings, and it is not contingent on total foreclosure but rather on whether the challenged practices severely limit market competition. Furthermore, evidence of foreclosure is applicable to the class as a whole, with anticompetitive harm arising from significant market share restrictions.
Plaintiffs also presented classwide evidence of common impact, demonstrating antitrust injury through overcharges experienced by class members. The definition of antitrust impact focuses on whether class members sustained losses from anticompetitive conduct, with evidence showing that direct purchasers can establish injury by proving they paid inflated prices. The presence of occasional outliers does not undermine the predominance of these common issues related to antitrust impact.
Defendants' attempts to address individual class member claims through rebuttal do not overshadow the predominance of common issues in this case. The possibility of including individuals who were not harmed by the defendant's actions does not prevent class certification. Plaintiffs aim to demonstrate a classwide antitrust impact stemming from a bundled pricing strategy that artificially inflated prices, affecting nearly all class members. This two-step approach, involving economic modeling and a study of pricing structures, is a recognized method in antitrust cases for establishing widespread harm.
Plaintiffs contend that the Sanofi bundle suppressed competition by dividing the market into loyal and non-loyal customers, which discouraged competitive pricing among rivals. This division allowed Sanofi and Novartis to maintain significant pricing gaps. Evidence includes a report indicating that bundled discounts significantly impacted pricing strategies, confirming Sanofi's intent to limit price competition.
Plaintiffs also propose a common method to calculate the alleged overcharge, utilizing a differentiated Bertrand competition model to simulate a hypothetical market without the anticompetitive conduct. This model predicts that prices would have been approximately 32% lower absent the bundle. The evidence presented supports the claim that the overcharge affected nearly all class members, as Sanofi's pricing structure showed minimal variance to deter customer switching and to penalize disloyalty.
List prices were integral to Sanofi's pricing strategy, with all pricing linked to these list prices, typically as a percentage discount. Professor Elhauge concluded that Sanofi would likely lower its net prices in response to the entry of Menveo by reducing its list price while keeping the discount structure unchanged. The pricing dynamics would remain consistent in a hypothetical scenario without the competitive entry. Over 99.56% of class members experienced overcharges, providing sufficient evidence for classwide claims.
Regarding damages, the plaintiffs have a viable method for class-wide damage calculations, as antitrust damages need not be precise when the difficulty arises from the defendant's wrongful conduct. A reasonable estimate suffices, preventing wrongdoers from profiting from their actions. Elhauge's differentiated Bertrand model indicated overcharges of 32% on Menactra and 36% on Menveo. Dr. Leitzinger calculated aggregate damages by applying these percentages to total sales from March 2010 through November 2013, which is adequate at this stage.
The class action method must be superior to other adjudication methods, particularly in expensive antitrust cases where collective action is often necessary to pursue claims effectively. Sanofi's suggestion of a bellwether trial as a superior approach is challenged, as it relies on personal injury case precedents that are not applicable in this context. The argument lacks merit since bundling cases is established in the Third Circuit, and many class members would likely forgo claims without class certification. The court aims to avoid establishing a convention that would necessitate lead cases for all civil antitrust matters.
The court finds that a bellwether approach is not conducive to judicial efficiency or justice, ruling in favor of a class action as the superior method. The motion to exclude Professor Elhauge’s testimony is denied, while the motion to certify the class is granted. Dr. Leitzinger's report, which relies on Elhauge’s analysis, does not independently establish causation or price impact. Despite the defendant's claims of "junk science," Mr. Kaplan refrained from labeling Elhauge’s opinions as such. Elhauge's market definitions remain undisputed, although one was excluded in a separate appeal. He provides a valid analysis of vaccine sales and the reconstitution process, stating that perfect proof is unnecessary for reliability. The defendant's argument regarding a slight market share shift is dismissed, emphasizing that the alleged anti-competitive conduct is central to the plaintiffs' case. While VFC purchases are excluded from the class, their influence is acknowledged. The court considers whether Sanofi and Novartis's pricing strategies were affected by alleged anti-competitive behavior. Elhauge’s methodology regarding cost determination is deemed reliable despite the defendant's challenges. Class Counsel's qualifications are affirmed, and the nature of the alleged injury revolves around price overcharges due to non-competitive market conditions. Disagreements about potential coordination or competition between Sanofi and Novartis are recognized, but both sides present classwide evidence, rendering this dispute irrelevant for class certification.
