IMG_0295A question of numbers

Class actions can save courts and parties a lot of time and money. But what if the class includes just a few members? How much time and money will the class action device save then?

The Third Circuit grappled with that “numerosity” question in In re Modafinil Antitrust Litig., 837 F.3d 238 (3d Cir. 2016).

The answer it gave — that a class with 20+/- mostly big members may not pass the test — could reshape how courts handle antitrust cases worth billions of dollars.


The case arose out of “reverse-payment” pacts for Provigil, a Cephalon drug that helps people with narcolepsy stay awake.

After four drug makers disclosed plans to sell a generic version of Provigil, Cephalon had sued them for infringing its patents on delivery of modafinil, the agent in Provigil. Cephalon settled with all four, but instead of requiring the infringers to pay royalties to it, Cephalon agreed to pay each millions of dollars to them — if they delayed the launch of their generic modafinil. Hence the name “reverse-payment” or “pay-for-delay”.

A blur of lawsuits followed. They fell into two groups: direct and indirect. The direct-purchaser plaintiffs bought modafinil straight from at least one of the five makers — Cephalon and the four generic outfits. The others did their commerce through the first group, thus buying indirectly.


In re Modafinil Antitrust Litigation landed in the U.S. District Court for the Eastern District of Pennsylvania, which sits in Philadelphia. After more than $500 million in settlements with Cephalon and two of the generic manufacturers, U.S. District Judge Mitchell S. Goldberg certified the direct-purchaser class for treble damages under Rules 23(a) and 23(b)(3).

Regarding numerosity under Rule 23(a)(1), Judge Goldberg concluded that “[t]he complexity and extensive history of this case, the expansive discovery conducted, and the geographic dispersion of the parties all favor class treatment.” Although Rule 23(a)(1) requires proof that “the class is so numerous that joinder of all members is impracticable”, the court ruled that “geographic dispersion” of the about 20 class members among 13 states and Puerto Rico “would certainly present challenges” to coordinating “the litigation”. Judge Goldberg further found that class treatment would foster the “judicial economy” aspect of the numerosity test by avoiding new rounds of discovery, delay of trial on the merits, and duplicative lawsuits in other courts.

The court additionally held that the direct-purchaser plaintiffs had met their burden of showing the other requirements of Rule 23(a) — commonality, typicality, and superiority — and that common questions predominated over individuals ones, satisfying Rule 23(b)(3).

Appeal and reversal

The Third Circuit panel split 2-1 on the numerosity issue. Judges Smith and Jordan agreed that the district court had abused its discretion in concluding that plaintiffs had proved the impracticability of joining all class members. Judge Rendell begged to differ.

The dispute boiled down to two points: whether the late “stage of the proceedings” should count in favor of “judicial economy” and whether all class members could “practicably” join the lawsuit before Judge Goldberg in view of their size and savvy and the dollar value of their claims. As Judge Smith summed up:

The District Court abused its discretion in analyzing the two most important numerosity factors when it considered the late stage of the litigation as relevant to the judicial economy factor and failed to properly consider the ability and motivation of the plaintiffs to proceed as joined, as opposed to individual, parties. We therefore remand for the District Court to conduct a rigorous numerosity analysis for this class of twenty-two (or twenty-five) members. In conducting this rigorous analysis, factors that the District Court may consider include the financial resources of the class members, the geographic dispersion of the class members, the ability to identify future claimants, together with the fact that these claims are for damages, and not injunctive relief.

In re Modafinil, 837 F.3d at 259.

In Judge Rendell’s view, Judge Goldberg had simply pointed to the heavy burdens that would arise if class members joined the case as plaintiffs and focused on the practical problems of having plaintiffs from all over the country, some with claims worth far less than $1 million, try to work together.


The court remanded the case to Judge Goldberg, and he conducted a conference with counsel on December 7, 2016. The docket does not reflect any next steps the court contemplates before addressing the numerosity issue anew in light of the Third Circuit’s guidance.

The district court will likely find less judicial economy from proceeding on a class basis and will probably rule that most class members have enough incentive and resources to join as plaintiffs. Will the new balance still tip in favor of class treatment? If it does, will the court of appeals sustain that assessment?

If the decision goes the defendants’ way, it will transform litigation of price-fixing claims against pharmaceutical makers. No longer will wholesalers have the ability to benefit from class settlements as passive class members. (AmerisourceBergen, for example, reported that it received more than $250 million from “antitrust settlements” since 2014.) The wholesalers must either forego recoupment of billions of dollars in overcharges or bring claims against their suppliers.

*  *  *  *

I will look at the risks and rewards of drug wholesalers’ pursuing antitrust claims directly in future posts.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.