For the last several years, the life sciences industry has been fertile ground for class action and aggregate litigation. Developments in this area have driven several trends, including state consumer fraud claims, securities class actions, antitrust class actions, and aggregate litigation brought by private healthcare insurers and state attorneys general. These recent trends have been driven, in part, by legislative and doctrinal developments. For example, in 2005—based on legislative findings of abuse in class action practice in state courts—Congress enacted the Class Action Fairness Act (CAFA), permitting defendants to remove to federal court putative class actions that previously may have been subject to less stringent standards in state court. In Standard Fire Insurance Co. v. Knowles, the U.S. Supreme Court held that a plaintiff’s stipulation that he would not accept more than $5 million in damages could not be used to avoid CAFA’s amount in controversy requirement. In other words, a class representative may not agree to seek less money to try to keep a case in state court.
Recent U.S. Supreme Court decisions have also significantly shaped class action practice. The Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes established that claims for individual money damages may be certified under Federal Rule of Civil Procedure (FRCP) 23(b)(2) in only limited circumstances, and the Court’s decision also announced a more restrictive view of the meaning of a “common question” under FRCP 23(a). Most recently, in Comcast Corp. v. Behrend, the Court held that plaintiffs seeking class certification in antitrust cases must tie their theory of harm and damages to their liability theory, and, in appropriate circumstances, individual questions of damages can predominate over liability issues common to the class.
These developments have likely played a role in shaping the kinds of class actions that companies in the life sciences industry are seeing today. For example, personal injury class actions and other kinds of mass torts are now largely viewed as inappropriate for class treatment and often must confront motions to strike the class claims from the complaint at the outset of the case. Claims requiring plaintiffs to prove reliance on alleged conduct also face significant obstacles to class certification. After the Dukes decision, in particular, these obstacles seem to have resulted in an increase in consumer fraud actions brought by individuals, healthcare insurers, and state attorneys general. The recent developments also may explain the increase in proposed class actions in the securities and antitrust arenas.