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From Antitrust Law Daily, August 28, 2018

Settlement, fee award approved in Botox antitrust litigation

By Nicole D. Prysby, J.D.

A class action settlement valued at approximately $13.5 million and resolving antitrust claims against the manufacturer of the brand drug Botox for allegedly entering into an exclusive license agreement with the foreign manufacturer of a competing neurotoxin product in order to prevent the competitor’s impending entry into the U.S. market, was approved by a federal district court in Santa Ana, California. The court also approved the requested attorney fee award of $4,482,885 and litigation expenses of $1,101,193.10, in addition to incentive awards of $5,000 for the named plaintiffs who represented the class of more than 34,000 Botox purchasers. The claims administrator was to be reimbursed $63,903 (Tawfilis v. Allergan, Inc., August 27, 2018, Staton, J.).

Background. Adel Tawfilis—a licensed dentist, oral and maxillofacial surgeon, and principal of the Carmel Valley Center for Oral and Maxillofacial Surgery—filed a complaint against Allergan, Inc., a multinational pharmaceutical company that produces Botox. Tawfilis alleged that Allergan restrained competition and allocated markets for Botox by entering into an exclusive license agreement with foreign manufacturer Medytox in order to prevent the impending entry of Innotox (a competing neurotoxin product) into the U.S. market. In February 2018, the parties reached a preliminary settlement whereby Allergan agreed to pay $13.45 million into a settlement common fund to compensate class members who were allegedly overcharged for their Botox purchase. The class includes 34,471 members who purchased Botox during the period from April 1, 2015 through June 26, 2017. Class members will receive an average payment of $186.75. No objections were received to the settlement and there was one request for exclusion. The plaintiffs motioned for approval of the settlement and for an award of attorney fees, costs, and incentive fees.

Approval of settlement. The court approved the settlement, finding that the positive reactions, absence of any objections, and just a single request for exclusion in a class of nearly 35,000 demonstrated its reasonableness. The court held that the settlement is reasonable and fair and granted final approval.

Attorney fee, cost, incentive awards, and other expenses. The plaintiffs sought an attorney fee award of $4,482,885, which was 33.33 percent of the Settlement Fund. The court granted the request, finding the award to be reasonable. The usual benchmark in the Ninth Circuit is 25 percent, but an upward departure was justified based on the results achieved, the risk of litigation, the skill required and quality of work, and the contingent nature of the fee and the financial burden carried by the plaintiffs. The settlement represents approximately 8.36% of Allergan’s maximum potential liability. That result was especially impressive in the context of this case, which involved not only a complex, unsettled area of the law but also a relatively novel theory of unlawful market allocation through a pharmaceutical licensing agreement. Given the complexity of the case and the novel legal theory, the risks of litigation weigh in favor of an upward departure from the benchmark. The same is true of the skill and quality of the work, which included a number of depositions and expert reports and extensive motion practice. Class counsel took this case on a contingent basis, incurring a total of $1,165,096.10 in out of pocket expenses and billing nearly 8,600 collective hours, a factor which also weighs in favor of an upward departure. The court cross-checked the requested fee award with counsel’s lodestar calculation of $4,917,978.50 (8,600 hours at $650 and $825 per hour for lead counsel, $195-$600 for other attorneys and staff). The court found the rates to be reasonable in light of the expertise needed and complexity of the law. The hours spent were justified based on the level of discovery.

The court approved incentive awards of $5,000 for the named plaintiffs, given their involvement in the discovery process. The court also approved litigation expenses of $1,101,193.10 and reimbursement for the claims administrator of $63,903.

The case is No. 8:15-cv-00307-JLS-JCG.

Attorneys: Ralph B. Kalfayan (Krause Kalfayan Benink and Slavens LLP) for Adel Tawfilis. Alfred C. Pfeiffer, Jr. (Latham and Watkins LLP) and Bryan A. Merryman (White and Case LLP) for Allergan, Inc.

Companies: Allergan, Inc.

MainStory: TopStory Antitrust CaliforniaNews

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