The Third Circuit recently affirmed the denial of class certification to end-payor health plans that alleged that the defendant’s “pay-for-delay” settlement of patent infringement litigation inflated prices on a prescription drug.  In doing so, the court reaffirmed that named plaintiffs must present an administratively feasible mechanism to ascertain whether putative class members fall within the proposed class definition and thus took sides in a growing circuit split on that issue.  See In re Niaspan Antitrust Litig., — F.4th –, 2023 WL 3243532 (3d Cir. 2023).

In the case, the plaintiffs defined an end-payor class to exclude “fully insured” health plans that contracted with third parties to reimburse the plans’ drug purchase payments and therefore were not end-payors themselves.  The plaintiffs proposed to exclude those plans using anonymized claims processing data, but those data identified only the original payor, not whether a third party later reimbursed that payor by contract.  Because the data could not feasibly identify and exclude “fully insured” health plans, the court denied class certification.

On appeal, the plaintiffs launched a full-throated attack on the Third Circuit’s ascertainability requirement, arguing that most other circuits do not require a showing of ascertainability because it is “inconsistent with the text and purpose of Rule 23.”  The Third Circuit disagreed.  Ascertainability, the court held, advanced the purpose of Rule 23 because it promoted efficient adjudication of common claims without individualized inquiry into class membership.  Moreover, ascertainably served absent class members’ interest in receiving adequate notice of class proceedings and protected defendants’ due process rights by identifying the parties bound by a final class judgment.  

The Third Circuit also explained that it was not an outlier among its sister circuits.  The panel observed that the First, Fourth, and Fifth Circuits also treat ascertainability as an implied prerequisite to class certification.  Moreover, the panel argued that although the Second, Sixth, Seventh, Eighth, Ninth, and Eleventh Circuits have not applied ascertainability as a formal, independent requirement of Rule 23, each of those circuits require named plaintiffs to offer “administratively feasible” means of determining class membership to satisfy other elements of Rule 23, including Rule 23(b)(3)’s predominance and superiority requirements.   The court’s reasoning in Niaspan thus not only confirms that ascertainability challenges remain viable in the Third Circuit, but it also provides a roadmap for defendants to frame class membership arguments under other elements of a Rule 23 analysis, even in circuits that do not apply a stand-alone ascertainability requirement.

Photo of Brandon Gould Brandon Gould

Brandon Gould is special counsel in the firm’s Washington DC office, practicing in the antitrust, class action, and litigation practice groups. He also maintains an active pro bono immigration practice that includes both direct representation of asylum seekers and immigration policy litigation informed…

Brandon Gould is special counsel in the firm’s Washington DC office, practicing in the antitrust, class action, and litigation practice groups. He also maintains an active pro bono immigration practice that includes both direct representation of asylum seekers and immigration policy litigation informed by quantitative data analyses.