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From Antitrust Law Daily, February 4, 2015

Egg donor class partially certified in price fixing case

By Greg Hammond, J.D.

A class of women who sold human egg donor services to Society for Assisted Reproductive Technology (SART) and/or American Society for Reproductive Medicine (ASRM) member clinics was partially certified by the federal district court in San Francisco for the purpose of determining whether SART’s and ASRM’s guidelines, restricting “appropriate” compensation to $5,000 or $10,000, constitutes a horizontal price fixing agreement in violation of the Sherman Act (Kamakahi v. American Society for Reproductive Medicine, February 2, 2015, Spero, J.).

Background. ASRM is an organization that is “devoted to advancing knowledge and expertise in reproductive medicine.” Its affiliated society, SART, is a primary organization of professionals that are dedicated to the practice of assisted reproductive technologies in the United States. Plaintiffs Lindsay Kamakahi and Justine Levy donated eggs at SART member clinics and received compensation. They filed a putative class action against SART and ASRM, alleging that the guidelines—which limited “appropriate” compensation—constitutes an unlawful horizontal price fixing agreement, in violation of the Sherman Act, and that the limits caused artificially low levels of compensation for the plaintiffs and other egg donors. They seek treble damages, costs, attorney fees, and an injunction barring further use of the price guidelines. The plaintiffs and defendants both moved to exclude the other side’s expert reports, and the plaintiffs moved for class certification.

Expert reports. The court first considered the plaintiffs’ motion to exclude the defendants’ report submitted by Dr. Insoo Hyun, Ph.D., a bioethicist. The report discussed principles of medical ethics and presented justifications for the Guidelines based on those principles. While the plaintiffs were correct in pointing out that Hyun’s report mostly addressed merits issues not relevant to class certification, the court found that it was still relevant. Specifically, Hyun discussed how certain location- or patient-specific circumstances, or broader circumstances, might affect a physician’s determination of reasonable compensation, which could support a conclusion that physicians’ ethical judgment influence compensation levels in ways that may not be responsive to market forces, and could vary among different doctors. This testimony, in turn, is relevant to whether damages and impact can be shown through class wide proof. Because Hyun was deemed qualified and he employed reliable methods, the plaintiffs’ motion to exclude his report was denied.

The defendants’ motion to exclude three reports by the plaintiffs’ expert economist, Dr. Hal Singer, was granted. The court determined that whether class members were actually damaged is a merits question, and Singer’s report failed to show that such a method existed. Specifically, the plaintiffs were able to identify only three agencies that signed an agreement to adhere to the Maximum Price Rules as set forth in ASRM’s guidelines. However the regressions for the three agencies produced significantly different conclusions concerning the impact on the guidelines. Furthermore, neither the plaintiffs nor Singer explained the variation between the agencies, or how the disparate results could be applied to other agencies or clinics. Because Singer’s analysis did not reliably support his conclusion that impact or damages are subject to class wide proof, his reports were deemed irrelevant to the issue of class certification.

Certification. In considering whether the plaintiffs satisfied the requirements of Federal Rule of Civil Procedure 23(a) and 23(b), the court first found that the class was sufficiently numerous or that joinder would be impracticable, because the plaintiffs asserted a proposed class of “thousands of women” dispersed throughout the United States. The court also determined that whether the guidelines violate the antitrust laws is a question common to all class members and susceptible to resolution by common proof. Similarly, the typicality requirement was satisfied, as the court found that the action is based on conduct that is not unique to the named plaintiffs. Because there was no evidence that any class members had a conflict of interest that would render the named plaintiffs inadequate to represent the interests of the class with regard to whether the guidelines violate the Sherman Act, and because the defendants did not challenged the adequacy of class counsel, the adequacy requirement was also met.

The proposed class also was found to be ascertainable, despite the defendants’ arguments to the contrary. The court determined that form contracts and lists of agencies available to the defendants are similar to the type of employment records that are routinely used to support class certification in wage-and-hour cases. Finally, the court concluded that common questions predominate with regard to whether the guidelines violate the Sherman Act, but not with regard to damages and antitrust impact. It reasoned that because Singer’s reports were excluded, the plaintiffs failed to show their ability to prove damages on a class wide basis. Nevertheless, the court decided to certify the class to determine whether the guidelines violate the Sherman Act, and that the issue of damages should be bifurcated.

Consequently, the court certified the following class for the purpose of determining whether the defendants’ compensation guidelines violate the Sherman Act:

“All women who sold human egg donor services for the purpose of supplying human eggs to be used for assisted fertility and reproductive purposes (‘AR Eggs’) within the United States and its territories at any time during the time period from April 12, 2007 to the present (the ‘Class Period’) to or through:

  1. any clinic that was, at the time of the donation, a member of Society for Assisted Reproductive Technology (‘SART’) and thereby agreed to follow the Maximum Price Rules (as that term is defined in Plaintiffs’ Consolidated Amended Complaint) set forth by SART and the American Society for Reproductive Medicine (‘ASRM’); and/or

  2. any AR Egg Agency that was, at the time of the donation, agreeing to follow the Maximum Price Rules.”

The method of adjudicating damages and injury-in-fact will be determined if the plaintiffs successfully demonstrate a Sherman Act violation.

The case number is 11-cv-01781-JCS.

Attorneys: Bryan L. Clobes (Cafferty Clobes Meriwether & Sprengel LLP) for Lindsay Kamakahi. Megan Dixon (Hogan Lovells US LLP) for American Society for Reproductive Medicine and Society for Assisted Reproductive Technology.

Companies: American Society for Reproductive Medicine; Society for Assisted Reproductive Technology

MainStory: TopStory Antitrust CaliforniaNews

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