PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 21-2895
_____________
IN RE: NIASPAN ANTITRUST LITIGATION
A.G.C. Building Trades Welfare Plan;
City of Providence, Rhode Island;
Electrical Workers 242 and 294 Health & Welfare Fund;
International Union of Operating Engineers Local 49 Health
and Welfare Fund; International Union of Operating
Engineers Local 132 Health and Welfare Fund;
New England Electrical Workers Benefits Fund;
Painters District Council No. 30 Health & Welfare Fund;
United Food & Commercial Workers Local 1776 &
Participating Employers Health and Welfare Fund; Miles
Wallis; Carol Prasse,
Appellants
_______________
On Appeal from the United States District Court
For the Eastern District of Pennsylvania
(D.C. No. 2-13-md-02460)
District Judge: Honorable Timothy J. Savage
_______________
Argued
September 6, 2022
Before: JORDAN, HARDIMAN and MATEY, Circuit
Judges
(Filed: April 24, 2023)
_______________
Justin N. Boley
Tyler J. Story
Kenneth A. Wexler
Wexler Boley & Elgersma
311 South Wacker Drive – Ste. 5450
Chicago, IL 60606
Richard M. Brunell
Steve D. Shadowen
Hilliard & Shadowen
1135 West 6th Street – Ste. 125
Austin, TX 78703
Michael M. Buchman
Motley Rice
777 Third Avenue – 27th Fl.
New York, NY 10017
Ruthanne M. Deutsch
Hyland Hunt [ARGUED]
Alexandra P. Mansbach
Deutsch Hunt
300 New Jersey Avenue, NW – Ste. 900
Washington, DC 20001
2
Marvin A. Miller
Miller Law
145 South Wells Street – 18th Fl.
Chicago, IL 60606
Jeffrey L. Kodroff
John A. Macoretta
Spector Roseman & Kodroff
2001 Market Street – Ste. 3420
Philadelphia, PA 19103
Sharon K. Robertson
Cohen Milstein
88 Pine Street – 14th Fl.
New York, NY 10005
Counsel for Appellant
Elaine J. Goldenberg [ARGUED]
Sarah Weiner
Munger Tolles & Olson
601 Massachusetts Avenue, NW – Ste. 500e
Washington, DC 20001
Paul H. Saint-Antoine
John S. Yi
Faegre Drinker Biddle & Reath
One Logan Square – Ste. 2000
Philadelphia, PA 19103
3
Stuart N. Senator
Jeffrey Y. Wu
Munger Tolles & Olson
350 S. Grand Avenue – 50th Fl.
Los Angeles, CA 90071
Counsel for Appellees Abbott Laboratories,
Abbott Respiratory LLC and Abbvie Inc.
Devora W. Allon
Kirkland & Ellis
601 Lexington Avenue
New York, NY 10022
Alexandra I. Russell
Kirkland & Ellis
1301 Pennsylvania Avenue, NW
Washington, DC 20004
Counsel for Appellees Barr Pharmaceuticals LLC,
Duramed Pharmaceuticals Sales Corp., Teva
Pharmaceutical Industries Ltd. Teva
Pharmaceuticals USA Inc., Teva Women’s Health
Inc. f/k/a Duramed Pharmaceuticals, Inc.
Matthew J. Perez
DiCello Levitt
485 Lexington Avenue – 10th Fl.
New York, NY 10017
4
Gary I. Smith, Jr.
Hausfield
325 Chestnut Street – Ste. 900
Philadelphia, PA 19106
Counsel for Amicus Committee to Support
the Antitrust Laws
Cory L. Andrews
John M. Masslon, II
Washington Legal Foundation
2009 Massachusetts Avenue, NW
Washington, DC 20036
Counsel for Amicus Washington Legal Foundation
Randy Stutz
10418 Ewell Avenue
Kensington, MD 20895
Counsel for Amicus American Antitrust Institute
Adam G. Unikowsky
Jenner & Block
1099 New York Avenue, NS – Ste. 900
Washington DC 20001
Counsel for Amicus Chamber of Commerce of
The United States of America
_______________
OPINION OF THE COURT
_______________
5
JORDAN, Circuit Judge.
The Appellants, a group consisting primarily of union
health and welfare insurance plans, claim that Abbvie, Inc., the
manufacturer of the drug Niaspan, paid off a potential
manufacturer of a generic version of the drug to delay the
generic’s launch. This putative class action was brought to
recover damages based on the allegedly inflated prices charged
by Abbvie in violation of state antitrust and consumer
protection laws, and this appeal concerns the District Court’s
denial of the motion for class certification. For reasons more
fully discussed herein, the District Court held that the class was
not ascertainable. In re Niaspan Antitrust Litig., 555 F. Supp.
3d 155, 169 (E.D.P.A. 2021) (“Niaspan III”). The Appellants
now propose to shore up their methodology for demonstrating
ascertainability, but because their new suggestion was not
properly put before the District Court, the argument is
forfeited, and we will not consider its merits. The Appellants
additionally challenge the District Court’s factual findings and
the legal standard the Court applied. As we explain, however,
neither were in error. In their final bid to preserve their case,
the Appellants ask us to reconsider our ascertainability
requirement in its entirety, claiming it is inconsistent with
Federal Rule of Civil Procedure 23. We are not at liberty to do
so and, instead, reiterate our precedent. Accordingly, we will
affirm.
6
I. BACKGROUND
A. Factual Background
1. The Functioning of the Prescription
Drug Market
When consumers with health insurance enter a
pharmacy to pick up their prescription drugs, they typically pay
only a fraction or none of the cost of their medication. Instead,
their prescription drug plan pays most, or all, of the drugs’ cost.
The sponsors of these plans are often called “end-payors” or
“indirect purchasers” of the drugs because they do not purchase
the products directly, as consumers do, but nevertheless pay a
portion or all of the drugs’ price.
Not all end-payors are health plan sponsors, and not all
health plan sponsors are end-payors. The identity of the end-
payor is based on the structure of each particular prescription
drug plan. The sponsor of such plans is usually an employer
or union, and they may organize their health plans as being
fully insured, self-insured, or a hybrid of the two. In a self-
insured health plan, the plan pays for its beneficiaries’
prescription drugs using funds provided by the sponsor and by
its beneficiaries. Because a self-insured plan sponsor bears the
financial risk for the health benefits of its participants, it is an
end-payor of prescription drugs. Conversely, in a fully insured
plan, the plan sponsor pays premiums to a health insurer, and
that insurer bears the financial responsibility for the payments
of prescription drugs, making it, rather than the plan sponsor,
the end-payor.
7
Before a pharmacy fills a prescription for a patient with
a prescription drug plan, it must determine who the end-payor
is and how the payment obligation will be met (i.e., how much
will be paid by the consumer and how much will be paid by the
end-payor). This process, known as “claims adjudication,”
allows consumers to pay only a comparatively small portion,
or none, of a prescription drug’s cost, rather than paying the
entire cost up front and then seeking reimbursement from an
insurer. A small number of companies, called Pharmacy
Benefit Managers (“PBM”), facilitate the claims adjudication
process about fifteen million times a day. The PBM industry
is highly concentrated, with the seven largest PBMs processing
over 90 percent of the annual U.S. prescription drug volume
from 2016 through 2018.
Claims adjudication is made possible through the real-
time exchange of data identifying end-payors. The electronic
system that facilitates this exchange of information was
developed by the National Council for Prescription Drug
Programs (the “NCPDP”). Since 2003, federal regulations
have required the use of the NCPDP Telecommunications
Standards for electronic submission and processing of drug
prescriptions. See Health Insurance Reform: Standards for
Electronic Transactions, 65 Fed. Reg. 50,312, 50,368 (Aug. 17,
2000) (to be codified at 45 C.F.R. pts. 160 and 162). Under
those standards, various reference numbers like Bank
Identification Numbers, Processor Control Numbers, Plan ID
Numbers, and Group Identification Numbers are used to ensure
that each claim is properly routed. The reference numbers tell
the electronic routing system where to direct the claim so that
it can be adjudicated and paid to the pharmacy, ultimately
generating a fixed payment liability between the PBM and the
8
end-payor on whose behalf the funds are transferred to the
pharmacy.
As a result of this virtually instantaneous process
facilitated by PBMs, a pharmacy can immediately know what
amount to charge a patient. In short, “PBMs serve as
intermediaries between prescription-drug plans and the
pharmacies that beneficiaries use.” Rutledge v. Pharm. Care
Mgmt. Ass’n, 141 S. Ct. 474, 478 (2020). When a consumer,
as a direct purchaser of a drug and the beneficiary of a
prescription-drug plan, has a prescription filled, “the pharmacy
checks with a PBM to determine that person’s coverage and
copayment information. After the beneficiary leaves with his
or her prescription, the PBM reimburses the pharmacy for the
prescription, less the amount of the beneficiary’s copayment.
The prescription-drug plan, in turn, reimburses the PBM.” Id.
The PBM data captures only the identity of the entity
responsible for paying it. While health plan sponsors may
contract directly with a PBM to administer their prescription
drug benefits, there are plan sponsors that elect to contract with
yet another intermediary, called a third-party administrator
(“TPA”), to work on their behalf with PBMs. A TPA helps the
sponsor manage their group plan benefits and assists with the
claims adjudication and reimbursement process. A TPA may
be an insurance company or a company dedicated to providing
only TPA services. When an insurer provides TPA services to
another entity but does not provide a fully insured health plan,
it is said to be providing an administrative-services-only plan
and is called an “ASO” in that relationship. A TPA is never an
end-payor because, even though it initially pays for the plan
beneficiaries’ prescriptions, it is later reimbursed. When a
9
sponsor elects to contract with a TPA, the PBM has no
relationship with the end-payor.
2. Niaspan and the Proposed Class
Abbvie Inc. markets and sells Niaspan, a brand-name
prescription drug used to treat lipid disorders, such as high
cholesterol. The active ingredient in Niaspan is niacin, or
vitamin B3, which has been sold as a dietary supplement in the
United States since the early 20th century. In re Niaspan
Antitrust Litig., 42 F. Supp. 3d 735, 742 (E.D. Pa. 2014)
(“Niaspan I”). Niacin, however, has several side effects,
including potential liver toxicity when consumed at high
levels. Id. In the early 1990s, Kos Pharmaceuticals (“Kos”),
later acquired by Abbvie, developed and patented a
therapeutically effective time-released version of niacin, which
does not cause some of the side effects previously associated
with the vitamin, and it marketed the drug using the trademark
Niaspan. Niaspan has been sold by Abbvie – and its
predecessors – since 1997.
In 2001, Barr Pharmaceuticals (“Barr”), later acquired
by Teva Pharmaceutical Industries Ltd., filed an Abbreviated
New Drug Application (“ANDA”) with the Food and Drug
Administration (“FDA”), seeking authorization to manufacture
and sell a generic equivalent of Niaspan. The ANDA process
provides for streamlined FDA approval of generic drugs and,
as part of that process, Barr filed certifications with the FDA
stating that it did not infringe any of the patents on Niaspan or
that those patents were invalid or unenforceable. Kos, before
its acquisition by Abbvie, responded by filing a patent
infringement lawsuit against Barr in 2002. Because Barr was
the first ANDA filer, it would have had, if successful in
10
clearing certain legal and administrative hurdles, a 180-day
period of “exclusive” marketing rights for a Niaspan-
equivalent generic drug. Id. But that period would have been
exclusive only with respect to other ANDA applicants; it
would not have prevented Kos from marketing its own brand-
generic version of that drug. Id. at 471. When a brand-name
drug manufacturer takes such a step, it is said to sell an
“authorized generic.” Id. “Launch of an [authorized generic]
allows the brand-name drug manufacturer to recover some of
the sales and profits it would otherwise lose when an ANDA
applicant begins to market and sell a generic version of that
manufacturer’s brand-name drug.” Id.
Kos began manufacturing an authorized generic so that
it could compete with Barr in the event Barr succeeded in
launching a generic version of Niaspan. Id. at 743. “By the
end of the first quarter of 2005, Kos had accumulated more
than $1.3 million in inventory in anticipation of launching an
[authorized generic].” Id. But the authorized generic was
never sold, and the merits of the patent infringement lawsuit
were never decided, because the parties entered into a
settlement agreement in 2005. Id. That settlement led to this
lawsuit.
Direct-purchaser plaintiffs and end-payor plaintiffs
filed separate suits in 2013. Both suits alleged that the
settlement agreement constituted an unlawful “reverse
payment” settlement. A “reverse payment” settlement, also
known as a “pay-for-delay” settlement, occurs when a brand-
name drug manufacturer brings a patent infringement action
against a generic drug manufacturer but then, in some fashion,
compensates the generic drug manufacturer for agreeing to
delay entering the market with a competing version of the
11
brand-name drug. Such agreements are called “reverse
payment” settlements because “the patentee ... pay[s] the
alleged infringer, rather than the other way around[.]” FTC v.
Actavis, Inc., 570 U.S. 136, 141 (2013).
According to the end-payor plaintiffs in the present suit
– now the Appellants – the reverse-payment settlement
between Kos and Barr violated state antitrust and consumer
protection laws. 1 They claim that Kos paid Barr to delay the
launch of its generic competitor to Niaspan until 2012, thereby
forcing the Appellants to pay hundreds of millions of dollars in
inflated prices due to Kos’s extended monopoly in the market
for Niaspan. Specifically, they assert that Kos agreed to pay
Barr a royalty on all sales of Niaspan along with a lump-sum
payment to compensate Barr for its investment in developing
its generic and for delaying its market entry. Niaspan I, 42 F.
Supp. 3d at 744. In support of their allegations, the Appellants
point to public filings Barr made in 2007 and 2008, in which it
claimed to have received $45 million in payments from Kos
for the 2006 calendar year, $37 million for the 2007 calendar
year, and that it expected to receive a similar amount of
revenue for the 2008 calendar year. Id. at 745.
The Appellants claim that, as a result of the alleged
reverse-payment settlement, putative class members “were
1
The Appellants evidently are relying on alleged
violations of state laws rather than violations of the Sherman
Antitrust Act because indirect purchasers, which the
Appellants are, have no claim for damages under federal
antitrust law. Ill. Brick Co. v. Illinois., 431 U.S. 720, 729
(1977).
12
denied the opportunity to purchase generic Niaspan before
[2013], and were further denied the benefit of the price
competition that would have ensued in a competitive
environment where Kos launched an authorized generic
Niaspan to compete with Barr[.]” (J.A. at 5.) They claim that
this anticompetitive settlement cost them more than $320
million in overcharges, and they sought certification of a class
of end-payors who either purchased, paid for, or provided
reimbursements for the purchase price of Niaspan or its generic
version in various states from 2007 to 2018.
The proposed class excluded six types of entities:
(1) Defendants and their subsidiaries, or
affiliates;
(2) All federal or state government entities other
than cities, towns or municipalities with self-
funded prescription drug plans;
(3) All entities that, after September 20, 2013,
paid and/or provided reimbursement for branded
Niaspan and did not pay and/or provide
reimbursement for generic Niaspan;
(4) All entities who [sic] purchased Niaspan for
purposes of resale or directly from defendants or
their affiliates;
(5) Fully insured health plans (i.e., plans that
purchased insurance from another third party
payor covering 100% of the Plan’s
reimbursement obligations to its members); and
13
(6) Pharmacy Benefit Managers.
(J.A. at 74.) (alteration in original). Only the fifth exclusion –
for fully insured health plans – is relevant in this appeal.
3. The Battle of the Experts
In seeking class certification, the Appellants argued that
they could successfully identify and exclude fully insured
health plans (which, by definition, are not end-payors) from the
putative class because they could determine whether a plan is
fully insured or self-insured based upon the records of PBMs.
But the PBM data captures only the identity of the entity
directly paying the PBM. It does not identify whether that
entity is participating in the process as a fully insured health
plan sponsor, a self-funded health plan sponsor, an insurer, or
a TPA. Over the course of this litigation, the Appellants
adopted shifting methodologies for determining what role an
entity had in the payment process as a means for excluding
fully insured health plans from the class. Indeed, the
Appellants’ methodology changed each time Abbvie tested its
reliability. 2
2
Abbvie is not the only Appellee. In full, that list
includes Abbott Laboratories, Abbott Respiratory LLC, Barr
Pharmaceuticals LLC, Duramed Pharmaceuticals Sales Corp.,
Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals
USA Inc., and Teva Women’s Health Inc. f/k/a Duramed
Pharmaceuticals, Inc. For ease of reference, however, we refer
to the Appellees collectively and in the singular as “Abbvie.”
14
In support of their claim that fully insured health plans
can be identified from the PBMs’ records and so excluded from
the class in an administratively feasible manner, the Appellants
presented several declarations from Ms. Laura Craft, a data
analytics expert and the president of OnPoint Analytics, Inc.
In her first declaration, dated October 19, 2018, Ms. Craft
stated that she could apply the fully insured health plan
exclusion and compile a list of class members from PBM
records. She said, “OnPoint would be able to merge the data
from various sources, identify and eliminate data errors,
transform the data to standardize fields, eliminate duplicates,
and compile a list reflecting the identities of the class members
contained in the data.” (J.A. at 704.) She also asserted that
this process is “manageable and can be carried out
programmatically[,]” and that OnPoint has “extensive
experience applying these types of exclusions to
pharmaceutical data.” (J.A. at 703-04.) She did not, however,
divulge the specifics of how she would apply the exclusion.
When Abbvie deposed Ms. Craft and asked her how she
would identify and exclude fully insured health plans, she
stated that a Form 5500, “a form ... filed by the IRS and used
by the Department of Labor to track and monitor on an annual
basis which health plans are fully insured[,]” is “the standard
tool for identifying fully insured health plans, and it is routinely
used whenever that process is undertaken.” (J.A. at 376.)
Abbvie, however, identified inconsistencies on the Form 5500
of one of the named plaintiffs as an example of the difficulties
in identifying and excluding fully insured health plans using
Form 5500 filings. Given those inconsistencies, the District
Court rejected that proposed ascertainability methodology.
15
Ms. Craft accordingly abandoned that approach.
Instead, she claimed in her August 25, 2020, supplemental
declaration that, because NCPDP standards require “complete
electronic transaction routing information[,]” for the claims
adjudication process, “fully-insured health plans do not have
to be ‘identified’ and ‘removed’ from the data provided by
PBMs – the PBM data will reflect the fact that the third-party
insurance provider is the payor.” (J.A. at 263-64.) In other
words, she claimed that the PBM data fields would directly
identify class members because the routing information would
“identify the entity that issued the coverage and will be paying
for the prescription, rather than the employer or plan that
sponsored it.” (J.A. at 264.)
In response, Abbvie submitted a supplemental report by
its own expert, Mr. Donald Dietz, a licensed pharmacist in
Pennsylvania and co-founder of Pharmacy Healthcare
Solutions, LLC, a business consulting organization that advises
retail pharmacies, managed care plans, PBMs, pharmaceutical
manufacturers, and software engineers on strategic business
and marketing issues. Mr. Dietz stated that “the NCPDP data
fields [Ms. Craft] references do not contain the necessary
information to identify the relevant proposed [end-payor] Class
Member, and specifically, do not distinguish between different
types of entities that may be involved in a given transaction.” 3
(J.A. at 458.) He explained that, although the NCPDP data
fields can be used to identify who the PBM billed, it would
remain unclear whether the billed entity qualifies for inclusion
3
Some documents in the record refer to “end-payors”
as “third-party payors” or “TPPs.” For simplicity, we only
use the term “end-payors.”
16
in the class, due to the complex contractual relationships that
can exist among the parties involved in each transaction.
For instance, Mr. Dietz explained, many health plan
sponsors contract with an intermediary – a TPA – to help them
process their group health plan benefits. Additionally, many
insurers provide TPA services in an ASO capacity. According
to Mr. Dietz, it is unclear from the face of the PBM data
whether an entity is a member of the proposed class because,
as both self-insured and fully insured health plans may use an
intermediary, “it may be difficult to recognize what role the
intermediary is playing for a given transaction from PBM data
alone.” (J.A. at 459.) For example, a self-insured health plan
sponsor may contract with an insurer operating in an ASO
capacity, who in turn subcontracts with a PBM. In that
situation, “[i]t is necessary to determine the role the insurance
company is playing, [that is, whether it is] acting as the insurer,
and thus is a potential [end-payor] Class Member, versus
simply acting as an ASO, in which case it is not a Class
Member.” (J.A. at 460.) But Mr. Dietz stated that this
determination “cannot be done with the available data.” (J.A.
at 460.)
Ms. Craft later admitted in a deposition that PBM data
“is not designed to identify the ASO or TPA relationships.”
(J.A. at 859.) In that same deposition, she also asserted, for the
first time, that the fully insured health plan exclusion can be
applied based on “the nature of the plan.” (J.A. at 857.) On
that point, she stated that, “if it’s an HMO,” a Health
Maintenance Organization, “we know categorically that we
must be looking at a fully insured plan[.]” (J.A. at 857.)
Abbvie countered that “Ms. Craft is wrong: in reality an HMO
plan can be either self-funded or fully insured.” (J.A. at 85.)
17
Ms. Craft then submitted a deposition errata, eliminating the
word “categorically” and changing her testimony to: “if it’s an
HMO, it’s a fully funded plan, except in those cases typically
involving a very large employer that is ‘renting’ the HMO
network[.]” (J.A. at 970.)
Ms. Craft also responded to Mr. Dietz’s supplemental
expert report in a reply report. She listed instances in which
she purported to identify plans as fully insured based on data
in the “Account” and “Carrier” fields of the PBM data.
Abbvie, however, presented public documents showing that for
two of the four examples examined by the Court, 4 Mitre
Corporation and Target, Ms. Craft was incorrect because those
two plans were self-insured. (See J.A. at 1038) (“Plan benefits
are self-insured by The MITRE Corporation, which is
responsible for their payment.”); (see also J.A. at 1051)
(“[Target] retain[s] a substantial portion of the risk related to
4
Ms. Craft included a total of twenty-two examples in
her reply report, but the District Court only credited four of
the examples because:
Ms. Craft [did] not provide a systematic method
for identifying mere intermediaries, which are
not class members, in any of her examples.
Instead, for each example in which she purported
to identify a mere intermediary in the PBM data
… Ms. Craft relied on what she “would normally
expect to see” in a particular situation … . The
Court concludes that such an ad hoc approach for
identifying and excluding non-class members
falls far short of a reliable and administratively
feasible mechanism.
Niaspan III, 555 F. Supp. 3d at 167 n.8.
18
... medical and dental claims.”). In those two examples, Kaiser
Colorado and Kaiser California North were listed in the
“Carrier” field and Mitre Corporation and Target in the
“Account” field, respectively. Abbvie stated that, based on the
public documents it presented, Kaiser was acting as an ASO in
both instances and not as an end-payor despite what Ms. Craft
had said.
The Appellants argued in response that the identified
errors were “legally irrelevant” because, at the class
certification stage, they needed only to show that potential
class members can be identified, not the actual identity of all
class members. (J.A. at 1074.) They claimed to have met their
burden because “the only two potential class members for these
particular transactions are reflected in the data[.]” (J.A. at
1075-76.) From this, the Appellants asserted that the specific
class member “can be verified” from the two potential class
members “through affidavits[,]” but the Appellants did not
explain what the affidavits would ask or how they would be
corroborated. (J.A. at 1076.)
B. Procedural Background
Stepping back to the beginning of this litigation, the first
of seventeen putative class-action lawsuits against Abbvie was
filed in April 2013 in the United States District Court for the
Eastern District of Pennsylvania. 5 Niaspan I, 42 F. Supp. 3d
5
Sixteen of those lawsuits were filed in the United
States District Court for the Eastern District of Pennsylvania
and one was filed in the United States District Court for the
District of Rhode Island. Niaspan I, 42 F. Supp. 3d at 745, n.5.
19
at 745. The Judicial Panel on Multidistrict Litigation
transferred eight of the cases to a judge of that Court, who
issued an order: “(1) direct[ing] ... the eight transferred actions
be coordinated for pretrial purposes with nine tag-along actions
…; and (2) consolidat[ing] all pending End-Payor Actions for
pretrial purposes and all pending Direct-Purchaser Actions for
pretrial purposes.” Id. The three direct-purchaser plaintiff
actions and fourteen end-payor plaintiff actions were
consolidated into two separate class actions, respectively, and
both sets of plaintiffs filed consolidated amended class action
complaints in January 2014. 6 Id.; see also Practice and
Procedure Order Upon Transfer Pursuant to 28 U.S.C. §
1407(a), In re Niaspan Antitrust Litig., No. 13-MD-2460 (E.D.
Pa. Dec. 23, 2013), D.I. 37.
After several years of discovery, the end-payor
plaintiffs – again, the current Appellants – filed a motion for
class certification under Rule 23(b)(3). They proposed a broad
class, including both consumers and end-payors, with ten
exclusions, one of which was the fully insured health plan
exclusion discussed above, and they alleged violations of fifty-
three state laws across twenty-six jurisdictions. The District
Court denied class certification on several grounds, including
the Appellants’ failure to establish ascertainability. In re
Niaspan Antitrust Litig., 464 F. Supp. 3d 678, 725 (E.D. Pa.
2020) (“Niaspan II”). The denial was without prejudice to the
Appellants giving their motion another try on modified
6
The direct-purchaser plaintiffs allege that the reverse
payment settlement violates the Sherman Antitrust Act. In re
Niaspan Antitrust Litig., 397 F. Supp. 3d 668, 674 (E.D. Pa.
2019). That class action was certified in 2019. Id. at 691.
20
grounds. Id. With respect to ascertainability, the District Court
determined that “[the end-payor plaintiffs] have failed to carry
their burden of showing a reliable and administratively feasible
mechanism for identifying class members by a preponderance
of the evidence.” Id. at 701.
In response, those plaintiffs filed a renewed motion for
class certification with a significantly narrowed class
definition. Niaspan III, 555 F. Supp. 3d at 159. They removed
consumers from the class definition, reduced the number of
exclusions from ten to six, and invoked twenty-three, as
opposed to fifty-three, state laws. Id. at 160.
The District Court again denied class certification. It
concluded that the plaintiffs “ha[d] not presented an
administratively feasible mechanism to distinguish between
class members and mere intermediaries such as fully insured
plans.” Id. at 169. At the outset, the Court noted that the issue
Mr. Dietz raised in his November 6, 2020, supplemental report
– “that [end-payor plaintiffs] failed to present an
administratively feasible methodology ‘for determining whom
the ultimate payor was’ in transactions involving fully insured
plans, or other intermediaries, such as TPAs or ASOs” – is not
de minimis. 7 Id. at 165. Relying on survey results from the
7
The Appellants have argued that the District Court was
somehow suggesting that an administratively feasible method
must be one in which fact-finding to discover class members is
so data-driven that individualized inquiry approaches what
could be called a “de minimis” level. (See Opening Br. at 40.)
That is not a fair interpretation of the Court’s words. Read in
context, it is apparent that the District Court was, with
understatement, pointing out that the plaintiffs’ proposed
21
PBM Institute, a membership organization that helps
healthcare purchasers maximize the value of their drug benefit
plans, the District Court concluded, based on expert testimony
from both sides, that “between 38 and 55 percent of employers’
contractual relationships with their PBM was through a TPA”
and that “approximately 88% of all employment-based
prescription drug plans are fully insured.” Id. (internal
quotation marks omitted). It also gave little credence to Ms.
Craft’s declarations because she “adopt[ed] a methodology that
change[d] as [the] defendants test[ed] its reliability and, in the
end, fail[ed] to accomplish what [wa]s required.” Id. at 169.
Specifically, the Court noted “that fully insured plans [we]re
included in Ms. Craft’s examples, and they cannot be class
members.” Id. at 167. The Court held that, “[g]iven that fully
insured plans are extremely common” and that the PBM data
may include “‘approximately 20 million class transactions,’ it
is insufficient for the [End-Payor Plaintiffs] to narrow the
identification of ‘potential class members’ to one of two
entities as in the examples selected by Ms. Craft.” Id. at 168.
In sum, the end-payor plaintiffs failed to persuade the
District Court that they could “identify, without individualized
inquiry, the … class members in Ms. Craft’s examples, let
alone [in] the millions of transactions at issue in this case.” Id.
As the use of affidavits was not put squarely before the Court,
it was not obligated to consider whether they constituted an
administratively feasible mechanism to distinguish between
class members and intermediaries.
methodology would leave an enormous amount of
individualized fact-finding to be done.
22
The end-payor plaintiffs became the Appellants when,
pursuant to Federal Rule of Civil Procedure 23(f), they were
granted leave to appeal the denial of class certification.
II. DISCUSSION 8
The Appellants argue that their proposed methodology
for ascertaining class membership satisfies our criteria for
administrative feasibility. They claim that the District Court’s
factual findings on the prevalence of intermediaries, the
Court’s understanding of their methodology, and the Court’s
failure to consider the potential use of affidavits in identifying
class members are all clearly erroneous. The Appellants also
argue that the District Court applied the wrong ascertainability
standard. Alternatively, they argue that, “[i]f ascertainability
means that a class cannot be certified here, then [we] should
reconsider whether [our] ‘implicit’ ascertainability
requirement is consistent with Rule 23.” (Opening Br. at 55.)
We address each of those arguments, though not in that order.
8
The District Court had jurisdiction pursuant to 28
U.S.C. § 1332(d). We exercise jurisdiction under 28 U.S.C.
§ 1292(e) and Federal Rule of Civil Procedure 23(f). “We
review a class certification order for abuse of discretion, which
occurs if the district court’s decision rests upon a clearly
erroneous finding of fact, an errant conclusion of law or an
improper application of law to fact.” In re Hydrogen Peroxide
Antitrust Litig., 552 F.3d 305, 312 (3d Cir. 2008) (internal
quotation marks omitted).
23
A. The Rule 23 Legal Framework
Our precedent requires that, in a class action under Rule
23(b)(3), “class [members] … be ‘currently and readily
ascertainable based on objective criteria.’” Hargrove v.
Sleepy’s LLC, 974 F.3d 467, 477 (3d Cir. 2020). To satisfy
that requirement, “[p]laintiffs must show that ‘(1) the class is
defined with reference to objective criteria; and (2) there is a
reliable and administratively feasible mechanism for
determining whether putative class members fall within the
class definition.’” Id. at 469-70 (citation omitted). A plaintiff
must propose a classification method with evidentiary support
to meet the ascertainability requirement, and “trial courts ‘must
engage in a rigorous analysis and find each of Rule 23[]’s
requirements met by a preponderance of the evidence before
granting certification. They must do so even if it involves
judging credibility, weighing evidence, or deciding issues that
overlap with the merits of a plaintiff’s claims.” Harnish v.
Widener Univ. Sch. of Law, 833 F.3d 298, 304 (3d Cir. 2016)
(citation omitted) (alteration in original). If a district court
harbors uncertainty about whether the plaintiff has satisfied the
requirements of Rule 23, class certification should be denied.
Mielo v. Steak ‘n Shake Operations, Inc., 897 F.3d 467, 483
(3d Cir. 2018). But that “does not mean that a plaintiff must
be able to identify all class members at class certification –
instead, a plaintiff need only show that ‘class members can be
identified.’” Byrd v. Aaron’s Inc., 784 F.3d 154, 163 (3d. Cir.
2015) (emphasis removed).
We have discussed the ascertainability requirement in
several cases. We first addressed it in Marcus v. BMW of North
America, LLC, where the plaintiffs proposed a class of New
Jersey owners and lessees of BMW vehicles equipped with
24
“run-flat tires ... [that] ha[d] gone flat and been replaced[.]”
687 F.3d 583, 592 (3d Cir. 2012). “The proposed class raise[d]
serious ascertainability issues” because the tires were
manufactured in Germany by a different company, and BMW
did not have records showing which vehicles were fitted with
the “run-flat” tires. Id. at 593. Additionally, dealerships
selling BMW vehicles regularly replaced the tires at
customers’ requests. Id. at 593-94. Compounding those
issues, the plaintiffs lacked a methodology for identifying,
consistent with the class definition, the owners and lessees of
BMW vehicles whose “run-flat tires” had gone flat and been
replaced. Id. at 594. Because the answers to those questions
were left to the “potential class members’ say so[,]” we
remanded to the district court to “resolve the critical issue of
whether the defendants’ records can ascertain class members
and, if not, whether there is a reliable, administratively feasible
alternative.” Id.
In Hayes v. Wal-Mart Stores, Inc., a putative class of
customers who purchased items with extended warranties
attempted to certify a class that included customers who
purchased a “Service Plan to cover as-is products.” 725 F.3d
349, 353 (3d Cir. 2013). The class excluded any customer
whose “as-is product was covered by a full manufacturer’s
warranty, was a last-one item [i.e., an item that is brand-new
but the store wishes to clear out] … who obtained service on
their product, and … who ha[d] been previously reimbursed
for the cost of the Service Plan.” Id. That class definition
required separate factual inquiries into: “(1) whether a
[customer] purchased a Service Plan for an as-is item, (2)
whether the as-is item was a ‘last one’ item or otherwise came
with a full manufacturer’s warranty, and (3) whether the
member nonetheless received service on the as-is item or a
25
refund of the cost of the Service Plan.” Id. at 356. On the then-
existing record, the plaintiffs could not satisfy that burden. Id.
We remanded so they could attempt to demonstrate a reliable
and administratively feasible method for ascertaining the class.
Id. We cautioned, however, that “class certification will
founder if the only proof of class membership is the say-so of
putative class members or if ascertaining the class requires
extensive and individualized fact-finding.” Id.
In Carrera v. Bayer Corp., the district court certified a
“class of consumers who purchased Bayer’s One-A-Day
WeightSmart diet supplement in Florida.” 727 F.3d 300, 303
(3d Cir. 2013). The defendants were the supplement
manufacturers, and they did not have access to any retail
records that could establish who purchased their products
during the defined class period. Id. at 304. The plaintiffs’
proposed methodology involved using “retailer records of
online sales and sales made with store loyalty or rewards
cards,” along with affidavits attesting purchases of the diet
supplements. Id. But the plaintiffs provided no evidence that
any purchasers, let alone the entire class, could be identified
using the proposed retail records. There was no evidence that
retailers even had records during the relevant period, and there
was no method to determine whether the affidavits would be
reliable. Id. at 309-11. We rejected the plaintiffs’ proposal and
remanded the case so that they could conduct further, limited
discovery on whether there was a reliable and administratively
feasible means of determining class membership. Id. at 312.
Next, in Byrd v. Aaron’s Inc., the plaintiffs alleged that
their leased computers contained spyware. 784 F.3d at 160.
The proposed class included lessees and purchasers of the
computers as well as members of their households who were
26
supposedly monitored through the spyware. Id. The
defendants kept records that easily allowed identification of the
lessees, but because there were no records of their household
members, the district court denied certification for lack of
ascertainability, finding that the class did not adequately define
“household member.” Id. at 169. Although the plaintiffs
asserted that they could identify household members with
public records and affidavits, the district court rejected that
method as insufficient to satisfy ascertainability. Id. at 160.
We reversed, concluding that the term “household member”
was not inherently vague, and that household members could
be ascertained through affidavits indicating their household
status. Id. at 171-72.
In City Select Auto Sales Inc. v. BMW of North America,
the plaintiffs proposed a class of car dealers who were wronged
by receiving unsolicited faxes from a credit agent. 867 F.3d
434, 437 (3d Cir. 2017). The district court ruled that the class
was not ascertainable because a database of all the car dealers
did not list who received the fax. Id. at 441. We remanded
because an “[a]ffidavit[], in combination with records or other
reliable and administratively feasible means, can meet the
ascertainability standard,” and the “only factual inquiry
required to determine class membership is whether a particular
dealership in the database received the BMW fax[.]” Id. at
441-42.
Most recently, in Hargrove v. Sleepy’s LLC, a case
under New Jersey labor laws, a mattress company required its
drivers to sign a contract stipulating that they would not carry
merchandise for other businesses while carrying Sleepy’s
products. 974 F.3d at 471. Despite that contract, Sleepy’s
characterized the drivers as independent contractors. Id. at
27
472. The plaintiffs brought an employee misclassification suit
and sought class certification as a class of delivery drivers who
performed deliveries for Sleepy’s on a full-time basis and who
drove at least one truck for Sleepy’s. Id. at 474. In support of
their motion for certification, they proposed using Sleepy’s
records to identify the members of the proposed class, but those
records contained gaps. Id. at 472-73. The plaintiffs argued
that they could nevertheless use testimony from drivers, in
combination with Sleepy’s records, to establish class
membership. Id. at 473. The district court denied class
certification, stating that, since Sleepy’s records did not show
which employees worked on a full-time basis, it was “unable
to determine if Sleepy’s was the only company [that] the
drivers worked for.” Id. at 475. Additionally, the district court
said that the plaintiffs could not show “which potential class
members were subject to improper deductions and which
potential class members worked over forty hours a week
without being paid over-time.” Id. We reversed, holding that
at the certification stage, the plaintiffs “do not have to prove ...
that each proposed class member was indeed a full-time driver,
but only that the members can be identified[,]” id. at 480, and
that the district court was “too exacting and essentially
demanded that [the] Appellants identify the class members at
the certification stage.” Id. at 470. We thus determined that
the plaintiffs had identified records that, in combination with
affidavits, established a reliable and administratively feasible
method for determining class membership. Id. at 480.
B. Ascertainability is a Key Requirement for
Class Actions
The Appellants ask us to reconsider our ascertainability
requirement. They claim that “[t]he majority of other courts of
28
appeals to have considered the question have rejected the
ascertainability requirement as an extratextual hurdle to class
certification that is inconsistent with the text and purpose of
Rule 23.” (Opening Br. at 55.) But even if we had authority
to overrule our existing precedent, which we do not, see In re
Krebs, 527 F.3d 82, 86 (3d Cir. 2008) (stating that a panel may
not overrule precedent on the basis that our sister circuits have
decided the issue contrary to that precedent or because we are
no longer persuaded by its reasoning), we would decline to do
so here.
“[T]he class-action device saves the resources of both
the courts and the parties by permitting an issue potentially
affecting every [class member] to be litigated in an economical
fashion under Rule 23.” Califano v. Yamasaki, 442 U.S. 682,
701 (1979). Yet when members of a Rule 23(b)(3) class cannot
be identified in an economical and administratively feasible
manner, the very purpose of the rule is thwarted.
Ascertainability serves several important objectives in
preserving those efficiencies:
First, it eliminates “serious administrative
burdens that are incongruous with the
efficiencies expected in a class action” by
insisting on the easy identification of class
members. Second, it protects absent class
members by facilitating the “best notice
practicable” under Rule 23(c)(2) in a Rule
23(b)(3) action. Third, it protects defendants by
ensuring that those persons who will be bound by
the final judgment are clearly identifiable.
Marcus, 687 F.3d at 593 (internal citations omitted).
29
The ascertainability standard, including the
administrative feasibility principle it contains, is true to the
text, structure, and purpose of Rule 23. That is because, absent
some mechanism to establish whether the standards of Rule 23
are met, courts could not meaningfully apply the Rule. Since
“mere speculation is insufficient” to determine whether a
plaintiff has established the prerequisites of Rule 23(a), Hayes,
725 F.3d at 357 (quoting Marcus, 687 F.3d at 596–97), a closer
look at the alleged facts is necessary. What we call
“ascertainability” and “administrative feasibility” is merely the
way courts perform that role, a practice familiar under the civil
rules. Cf., e.g., Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
(2007) (“The need at the pleading stage for allegations
plausibly suggesting (not merely consistent with) [conspiracy]
reflects the threshold requirement of Rule 8(a)(2) that the
‘plain statement’ possess enough heft to ‘sho[w] that the
pleader is entitled to relief.’”); Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (“As the Court held in Twombly, … the pleading
standard Rule 8 announces does not require ‘detailed factual
allegations,’ but it demands more than an unadorned, the-
defendant-unlawfully-harmed-me accusation.”) (citation
omitted). So a court necessarily considers whether the
proposed class is based on objective criteria, not speculation,
by looking at administratively feasible methods of defining the
class, consistent with the text of Rule 23.
We are not alone in holding that Rule 23(b)(3) has an
implicit requirement that class members be ascertainable.
Several of our sister circuits have followed our lead and apply
our ascertainability standard, or a standard that is substantively
30
the same. 9 And while it is true that our rule is not without
critics, 10 even in circuits that have rejected an ascertainability
9
See In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st
Cir. 2015) (“At the class certification stage, the court must be
satisfied that, prior to judgment, it will be possible to establish
a mechanism for distinguishing the injured from the uninjured
class members. The court may proceed with certification so
long as this mechanism will be ‘administratively feasible,’ see
Carrera, 727 F.3d at 307, and protective of defendants’
Seventh Amendment and due process rights[.]”); In re Initial
Pub. Offerings Sec. Litig., 471 F.3d 24, 44-45 (2d Cir. 2006)
(denying certification of a class for failure to satisfy Rule 23’s
predominance requirement because “ascertaining each
purchaser’s intent would require an individualized
determination”); EQT Prod. Co. v. Adair, 764 F.3d 347, 358
(4th Cir. 2014) (“We have repeatedly recognized that Rule 23
contains an implicit threshold requirement that the members of
a proposed class be ‘readily identifiable.’ Our sister circuits
have described this rule as an ‘ascertainability’ requirement.”)
(internal citations omitted); John v. Nat’l Sec. Fire and Cas.
Co., 501 F.3d 443, 445 (5th Cir. 2007) (“The existence of an
ascertainable class of persons to be represented by the
proposed class representative is an implied prerequisite of
Federal Rule of Civil Procedure 23.”).
10
See Cherry v. Dometic Corp., 986 F.3d 1296, 1304
(11th Cir. 2021) (“We hold that administrative feasibility is not
a requirement for certification under Rule 23. ... If a district
court researches Rule 23(b), and the action involves a proposed
Rule 23(b)(3) class, it may consider administrative feasibility
as part of the manageability criterion of Rule 23(b)(3)(D).”);
Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1124 n.4 (9th
31
requirement, some version of an administrative feasibility test
is applied, albeit under a different name. For instance, in
Cir. 2017) (noting that the Ninth Circuit has not adopted a
separate ascertainability requirement and “[i]nstead ...
addresse[s] the types of alleged definitional deficiencies other
courts have referred to as ‘ascertainability’ issues, through
analysis of Rule 23’s enumerated requirements”) (internal
citations omitted); Sandusky Wellness Center, LLC v. Medtox
Scientific, Inc., 821 F.3d 992, 996 (8th Cir. 2016) (declining to
adopt ascertainability as a separate, preliminary requirement
and instead “adher[ing] to a rigorous analysis of the Rule 23
requirements, which includes that a class ‘must be adequately
defined and clearly ascertainable’”); Mullins v. Direct Digital,
LLC, 795 F.3d 654, 663 (7th Cir. 2015) (rejecting the
administrative feasibility requirement from Carrera, stating
that the “concern about administrative inconvenience is better
addressed by the explicit requirements of Rule 23(b)(3), which
requires that the class device be ‘superior to other available
methods for fairly and efficiently adjudicating the
controversy.’ One relevant factor is ‘the likely difficulties in
managing a class action’”); Rikos v. Procter & Gamble Co.,
799 F.3d 497, 525 (6th Cir. 2015) (declining to adopt Carrera).
In Rikos, the Sixth Circuit expressly declined to follow our
decision in Carrera, but that court has previously endorsed an
administrative feasibility requirement. See Young v.
Nationwide Mut. Ins. Co., 693 F.3d 532, 537-38 (6th Cir. 2012)
(holding that “[b]efore a court may certify a class pursuant to
Rule 23, ‘the class definition must be sufficiently definite so
that it is administratively feasible for the court to determine
whether a particular individual is a member of the proposed
class’”).
32
Cherry v. Dometic Corp., the Eleventh Circuit stated that
“administrative feasibility has relevance for Rule 23(b)(3)
classes, in the light of the manageability criterion of Rule
23(b)(3)(D).” 11 986 F.3d 1296, 1303 (11th Cir. 2021). The
Ninth, Eighth, Seventh, and Sixth Circuits have all adopted a
similar approach. Instead of having a separate administrative
feasibility requirement, those courts often address
administrative concerns through a rigorous analysis of Rule
23’s “superiority” requirement. See supra n.10. We thus do
not agree that our ascertainability analysis is inconsistent with
the text and purpose of Rule 23.
C. The District Court’s Factual Findings are not
Clearly Erroneous
Turning back to this case, we next consider the
Appellants’ argument that their protean methodology satisfies
our criteria for administrative feasibility. They describe their
methodology as an “overalls, belt, and suspenders approach[,]”
that includes three layers of action to determine class
membership: (1) PBMs identify class members when
providing data (what the Appellants refer to as the “overalls”);
(2) data is batch-filtered and name matched using Ms. Craft’s
techniques to distinguish administrative intermediaries from
class members (the “belt”); and (3) if the batch-filtering and
name-matching results in two options, a single-question form
11
“Rule 23(b)(3)(D) instructs district courts, in deciding
whether ‘a class action [would be] superior to other available
methods for fairly and efficiently adjudicating the
controversy,’ to consider ‘the likely difficulties in managing a
class action.’” Cherry, 986 F.3d at 1303.
33
affidavit is sent to the two identified potential class members
to confirm which is the class member (the “suspenders”). The
Appellants claim that the District Court’s factual findings were
clearly erroneous because the Court misunderstood their
proposed methodology, overstated the prevalence of
intermediaries in the PBM data, and failed to consider the use
of affidavits as a means of identifying class members.
1. Ascertainability Issues are Pervasive
As a threshold matter, we must first decide whether the
prevalence of intermediaries in the PBM data poses an
ascertainability issue. The Appellants assert that “[o]nly a
small subset of the data could possibly present the potential
intermediary-confusion issue” identified by Mr. Dietz.
(Opening Br. at 17.) They argue that Mr. Dietz identified such
confusion “only when a self-funded [health] plan uses an
administrative intermediary[,]” but, they say, “fewer than 10%
of employers are both self-funded and potentially use an ASO
or [other] TPA[.]” (Opening Br. at 18.)
The Appellants arrive at that metric by first treating the
District Court’s findings, taken from the PBM Institute’s
survey data, as correct: that “between 38 and 55 percent of
employers’ contractual relationships with their PBM was
through a TPA” and that “approximately 88% of all
employment-based prescription drug plans are fully insured[,]”
leaving 12% as self-insured. Niaspan III, 555 F. Supp. 3d at
165. Then, assuming that the maximum 55% of the 12% of
self-insured health plans use a TPA or ASO, they argue that, at
most, only “6.6% of plans ... could potentially generate the
confusion Dietz identified[.]” (Opening Br. at 18.) But the
Appellants’ metric assumes precisely what they must prove –
34
that they can feasibly identify and filter out the fully insured
health plans, the TPAs, and the ASOs from this data. The
Appellants have made no showing that they can determine
where any given transaction falls within the various categories
of transactions. Abbvie aptly describes the problem with an
analogy: “It is as if someone has given the Court one hundred
$20 bills and promised that only about 10% are counterfeit. It
would be nice to spend $1,800 in real money, but the Court
must still determine whether each and every bill is genuine
before spending it.” (Answering Br. at 36-37.)
The District Court found that the prevalence of
intermediaries is a significant problem, especially since the
same players in this industry may be end-payors, fully insured
health plans, or merely administrators in any given transaction,
and the PBM data does not indicate which role they are
playing. That finding is not clearly erroneous.
2. The Appellants Forfeited their
Affidavits Argument
The Appellants fault the District Court for failing to
consider the use of affidavits to resolve ambiguities when two
entities are identified as potential end-payors using Ms. Craft’s
methodology. They claim that they raised this issue in their
Renewed Motion for Class Certification, but that is plainly
incorrect. No discussion about the use of affidavits appears
until a footnote in their Reply Brief in Support of Class
Certification, where they wrote “Plaintiffs also intend to use
affidavits to ensure, at a minimum, that [end-payors] are in fact
self-insured and not government-funded payors.” (J.A. at 997
n.9.) Even then, their passing remark was made in the context
of a discussion of a different class-exclusion category, i.e., the
35
one for federal or state government entities, not the one for the
fully insured health plans, which is the subject of this appeal.
The Appellants did mention the use of affidavits in
regard to the fully insured health plan exclusion in a different
filing in the District Court, their Reply to Defendant’s
Response to Plaintiff’s Expert Reply Report. There, they
asserted that, “to the extent necessary, affidavits, can identify
class members at a later stage.” (J.A. at 1074.) They claim
that was enough to preserve their present argument for appeal
because Abbvie could have responded to the use of affidavits
in its “responsive briefing[.]” (Reply Br. at 22.) Leaving aside
the fact that they made their argument in a reply brief, and no
further “responsive briefing” was in order, the Appellants
never explained how the use of affidavits would work, and
their experts never discussed any specifics on how they would
be used.
Arguments raised for the first time before a district court
in a reply brief are deemed forfeited. See Jaludi v. Citigroup,
933 F.3d 246, 256 n.11 (3d. Cir. 2019) (“Because Citigroup
failed to invoke the provision until its reply brief in the District
Court, we deem this argument [forfeited].”). The Appellants’
tardy and fleeting references to the use of affidavits to resolve
ambiguities were insufficient to preserve the matter for appeal.
“To preserve a matter for appellate review, a party ‘must
unequivocally put its position before the trial court at a point
and in a manner that permits the court to consider its merits.’”
Garza v. Citigroup Inc., 881 F.3d 277, 284 (3d Cir. 2018)
(citation omitted). “It is well established that arguments not
raised before the District Court are [forfeited] on appeal.”
DirecTV, Inc. v. Seijas, 508 F.3d 123, 125 n.1 (3d Cir. 2007).
And that must be particularly so when the argument is not
36
about a purely legal question but about the sufficiency of
evidence one has produced.
The Appellants cite Hargrove to argue that, because
Abbvie had the opportunity to file additional briefing on the
issue of affidavits, the argument should be deemed preserved. 12
But Hargrove involved a different issue on appeal. In that
case, the appellants argued in their opening brief, albeit in a
footnote, that the district court erred by applying the wrong
standard of review to their renewed motion for class
certification. Hargrove, 974 F.3d at 475 n.5. The district court
there also expressly discussed and ruled on that issue. Id.; cf.
Lark v. Sec’y Pa. Dep’t of Corr., 645 F.3d 596, 607-08 (3d Cir.
2011) (noting that “the crucial question regarding [forfeiture]”
is whether the proceeding “put the [d]istrict [c]ourt on notice
of the legal argument”). Accordingly, we chose to address the
issue. Hargrove, 974 F.3d at 476-77. Here, by contrast, the
District Court did not address the hidden issue in its opinion on
class certification. The Appellants nonetheless contend that
the District Court was on notice of their argument because they
mentioned the use of affidavits elsewhere, specifically in their
Reply to Defendant’s Response to Plaintiff’s Expert Reply
Report.
12
The Appellants are confused about who had the
burden here. It was not Abbvie’s obligation to seek permission
to address the Appellants’ tardy argument. The Appellants
could have raised their argument in a timely fashion but did
not. Having failed to bring the issue up when they should have,
they can hardly fault Abbvie for focusing its advocacy on
arguments that were properly before the District Court.
37
Their argument is unpersuasive. That they said
something about affidavits in another reply brief on a different
motion is of no moment. Even if we thought that, in this
heavily papered case, with many issues and stretching over
many years, there was some excuse for not properly bringing
the affidavits issue to the fore in the class certification briefing,
the Appellants still brought it up only in a reply filing dealing
with a different dispute. Again, arguments raised for the first
time in a reply brief are forfeited, Jaludi, 933 F.3d at 256 n.11,
because the district court must have a fair opportunity to
consider the arguments before we do, Garza, 881 F.3d at 284.
The Appellants did not adequately present their argument
about the use of affidavits to the District Court, and we will not
consider it now.
3. The District Court’s Factual Findings
Concerning PBM Identification Are
Not Clearly Erroneous
The Appellants argue that PBM data is readily
accessible, that PBMs can identify end-payors for every
Niaspan purchase, and that this data set meets the
ascertainability standard that we set forth in Byrd and
Hargrove. The District Court, however, rejected the notion
that PBMs can identify end-payors, Niaspan III, 555 F. Supp.
3d at 166-67, and, again, that finding is not clearly erroneous.
As mentioned earlier, the Court found that PBMs cannot
identify class members because their data does not show
whether, in any given transaction, an entity is an end-payor, a
fully insured health plan, or an administrative intermediary. Id.
That conclusion has ample support in the record. Ms. Craft
admitted that the PBM standardized data contains “code
38
numbers,” not “names or descriptions,” (J.A. at 1001), and that
it “is not designed to identify the [administrative]
relationships[,]” (J.A. at 859). Unfortunately, that candor was
paired with some confusion about identifying fully insured
plans based on the nature of the plan. Id. She asserted that “if
it’s an HMO … we know categorically … it’s a fully funded
plan[,]” (J.A. at 857), but she later had to correct that assertion
with the caveat that it would be a “fully funded plan, except in
those cases typically involving [a sponsor] that is ‘renting’ the
HMO network[,]” (J.A. at 970).
The Appellants nevertheless assert that, “like the lessees
in Byrd whose names were listed on the defendants’ rental
records[,] … the class members are identified by the PBM
records.” (Opening Br. at 32 (citation omitted).) Not so. The
defendants in Byrd kept detailed records that easily allowed
identification of a lessee on the face of each record. Byrd, 784
F.3d at 169. Again, the PBM data contains code numbers, not
names or descriptions of entities, and those numbers are not
designed to indicate the relationships between parties. The
Appellants provided no evidence on how those numbers could
be used to accurately identify class members, and Ms. Craft
acknowledged that we don’t “know categorically” if an HMO
is a fully insured health plan because there is an exception
when sponsors rent the HMO network, so it cannot be said that
class members can be identified based on the nature of the plan.
(J.A. at 857.) Given the remaining ambiguity in the data, it was
not clearly erroneous for the District Court to conclude that
PBMs cannot adequately identify the end-payors.
39
4. The District Court Properly Concluded
That the Appellants’ Data Matching
Technique is Unreliable
The Appellants also claim that they can use automated
data matching to identify class members by identifying
administrator transactions and then identifying the
administrator’s end-payor client. The District Court found
that, on the contrary, the Appellants “have not shown they can
identify, without individualized inquiry, the [end-payor] class
members in Ms. Craft’s examples, let alone the millions of
transactions at issue in this case.” Niaspan III, 555 F. Supp. 3d
at 168. Ms. Craft submitted twenty-two examples that the
District Court considered and rejected as “ad hoc.” Id. at 167
n.8. In those examples, Ms. Craft relied on “what she ‘would
normally expect to see’” and “what ‘typically appears’ in a
particular situation,” but she was only able to affirm that
certain codes “indicate[] a self-funded plan[.]” Id. When
Abbvie examined her methodology in four of the examples, it
discovered that she was wrong in half of them; she had listed
two entities as fully insured health plan sponsors, but public
documents showed that they were in fact self-insured sponsors.
Id. at 167. The District Court saw that error as “support[ing]
the conclusion that identifying class members will require
‘individualized fact-finding.’” Id. (citation omitted). And the
error was especially damning for the Appellants’ methodology
because “fully insured plans are extremely common and [the
Appellants] expect PBM data to include ‘approximately 20
million class transactions,’ [so] it is insufficient for [the
Appellants] to narrow the identification of ‘potential class
members’ to one of two entities[.]” Id. at 168 (citation
omitted).
40
The Appellants argue that the District Court’s
conclusion that those two examples rendered the entire method
unreliable is clearly erroneous because Ms. Craft reviewed
transactions from 2012 and the public documents from 2017
do not discuss the drug plan funding five or more years earlier
when the transaction at issue took place. The District Court,
however, noted that the 2017 documentation “is relevant to
whether [the entity] was [an end-payor] during the class
period,” because the class period didn’t end until 2018. Id. at
167 n.9. Certainly, whether that entity was a fully insured or
self-insured health plan sponsor during the class period is
relevant, and the Appellants did not provide any 2012
documentation to support their argument.
Yet they protest that, by requiring them “to disprove
[Abbvie’s] hypothetical extrapolations ex ante[,]” the District
Court essentially demanded that they identify class members at
the certification stage. (Opening Br. at 43.) Once again, we
disagree. Although they are correct that they “do not have to
prove at [the certification] stage that each proposed class
member was indeed a [class member],” Hargrove, 974 F.3d at
480, they still must prove that they can identify class members
“without extensive and individualized fact-finding or ‘mini-
trials,’” Marcus, 687 F.3d at 593. The District Court’s
conclusion that they failed to do that is not, on this record,
clearly erroneous.
The Court relied heavily on Vista Healthplan, Inc. v.
Cephalon, Inc., in deciding that extensive and individualized
fact-finding or mini-trials would be necessary to identify class
members. No. 06-1833, 2015 WL 3623005 (E.D. Pa. June 10,
2015); see Niaspan III, 555 F. Supp. 3d at 165-66. In that case,
a group of end-payors alleged that the defendants engaged in
41
an anticompetitive reverse-payment settlement. Vista
Healthplan, 2015 WL 3623005 at *2. The class contained
eight categories of exclusions, including an exclusion for fully
insured health plans. Id. at *4, 9. The only evidence presented
to determine class membership was the consumer history
records of one named plaintiff that listed the various
prescriptions that the named plaintiff had filled and the out-of-
pocket expenses and amount covered by the plaintiff’s
insurance plan, along with a chart that identified claims made
and patients by number rather than name. Id. at *9. The
plaintiffs, however, did not show that those numbers could
identify class members, and they provided no evidence that
consumer history records were kept for all patients. Id. at *9-
10. The district court in Vista noted that, “[u]ntil proceeding
through each transaction and resolving factual disputes about
who ‘bears the burden’ of the price in that transaction, the
[c]ourt cannot say who is a member of the class, that is, who
has paid or reimbursed a portion of the purchase price.” Id. at
*8 (citation omitted). The court held that the proposed class
was not ascertainable because resolving those factual disputes
would “require[] ‘consideration of the individual contractual
relationships underlying each transaction.’” Id. at *12 (citation
omitted).
The District Court here had the same concern –
namely, that it would have to examine the underlying
contractual relationships of each transaction to distinguish
between class members and mere intermediaries. Even if the
Appellants could narrow the inquiry down to two possible
candidates for class membership, the proper class member
could not be identified without analyzing the contractual
relationships behind each transaction. Given the record before
the Court, it was not an error, let alone a clear error, to conclude
42
that Ms. Craft’s data matching technique could not adequately
determine class membership.
The Appellants direct us to decisions from outside our
Circuit in which district courts approved certification based on
the same methodology involving PBM data provided by the
same expert, Ms. Craft. They claim that, based on those cases,
the District Court here clearly erred in denying certification.
See, e.g., In re Namenda Indirect Purchaser Antitrust Litig.,
338 F.R.D. 527, 548-50 (S.D.N.Y. 2021) (finding that Ms.
Craft’s methodology along with PBM data “can be used to
identify the ultimate payor of the claim”); In re Ranbaxy
Generic Drug Application Antitrust Litig., 338 F.R.D. 294, 308
(D. Mass. 2021) (finding that Ms. Craft’s methodology
sufficiently explained how “multiple data fields … can be used
jointly to identify efficiently … non-class members”); In re
Loestrin 24 FE Antitrust Litig., 410 F. Supp. 3d 352, 399-401
(D.R.I. 2019) (noting that the “Court is confident” that Ms.
Craft’s methodology in combination with PBM data can show
whether a group plan is fully insured or self-insured). But the
District Court here considered those thoughtful opinions and
still was not persuaded that PBM data alone can readily
identify fully insured health plans, as “evidence presented in
this case is to the contrary.” Niaspan III, 555 F. Supp. 3d at
168. Declining to follow non-binding decisions from other
district courts, especially when the record developed in those
cases is unknown, does not constitute clear error.
Taking another tack, the Appellants say that the
“[D]istrict [C]ourt’s failure to hold the evidentiary hearing
requested by End-Payor Plaintiffs … contributed to the
[C]ourt’s cursory and erroneous conclusion at odds with every
other district court to have considered the materially same
43
methodology and class definition.” (Opening Br. at 47.) They
claim that the District Court’s “divergent result here followed
a minimal process that contrasts with the extensive review
conducted by other courts, including multiday evidentiary
hearings that allowed them to fully understand the database
techniques.” (Opening Br. at 47.)
District court judges are accorded “considerable
discretion to limit both discovery and the extent of [a] hearing
on Rule 23 requirements.” In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d 305, 324 (3d Cir. 2008) (citation omitted).
When they were before the District Court in this case, the
Appellants were given three days of argument on their first
class-certification motion, and the District Court considered
four declarations from three different experts, as well as
voluminous briefing, before writing a 70-page opinion
deciding the motion. The Court also considered additional
briefing in the Appellant’s Renewed Motion for Certification,
and it requested additional briefing from the Appellants after
Abbvie pointed out errors in Ms. Craft’s analysis. Given the
extensive investment of time and effort by the Court in
considering the Appellants’ multiple submissions and
arguments, and further given the Appellants’ failure to identify
what more they would have shown, we can hardly say that the
District Court abused its “considerable discretion” in declining
to hold another hearing. 13 Id.
13
The Appellants raise two additional arguments, but
both are without merit and warrant only brief discussion. First,
they argue that the District Court “erred by adopting a bright
line rule... that any potential individualized inquiry defeats
class certification.” (Opening Br. at 26.) But that is a
mischaracterization of the Court’s opinion, as it concluded that
44
the “[Appellants] have not persuaded the Court that
distinguishing between class members and mere
intermediaries, which are excluded from the class, will not
‘require[] consideration of the individual contractual
relationships underlying each transaction.’” Niaspan III, 555
F. Supp. 3d at 166 (quoting Vista Healthplan, Inc. v. Cephalon,
Inc., No. 06-1833, 2015 WL 3623005, at *12 (E.D. Pa. June
10, 2015). The District Court reasonably concluded that, given
the “millions of transactions at issue in this case,” id. at 168,
Appellants’ methodology could not “systematically” enforce
the class exclusion for fully insured plans without requiring an
administratively infeasible degree of individualized inquiry, id.
at 169. See City Select, 867 F.3d at 442 (suggesting that
“individualized fact-finding” is permissible only when
administratively feasible).
Second, the Appellants argue that the District Court
improperly “demanded a ‘de minimis’ or less level of over-
inclusiveness.” (Opening Br. at 27.) As already noted, see
supra n.7, that argument too mischaracterizes the Court’s
opinion. The Court stated that “the issue of whether the [End-
Payor Plaintiffs] have presented a sufficient methodology for
distinguishing between class members and mere
intermediaries, such as fully insured plans and TPAs, is not de
minimis.” Niaspan III, 555 F. Supp. 3d at 165. That statement
was not a legal conclusion. It was rather an understated way
of noting how dramatically the Appellants had downplayed the
problem being discussed.
45
III. Conclusion
For the foregoing reasons, we will affirm the District
Court’s order denying class certification.
46