Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

ORDER GRANTING AMENDED MOTION TO SUBSTITUTE CLASS REPRESENTATIVES AND FOR CERTIFICATION OF NEW YORK AND ARIZONA CLASSES, AND (2) GRANTING IN PART AND DENYING IN PART MOTION FOR APPROVAL OF NOTICE PROVIDER AND CLASS NOTICE PROGRAM by Judge Yvonne Gonzalez Rogers granting [386-2] Amended Motion to Certify Class; granting in part and denying in part 377 Motion for Approval of the Notice Provider and for Approval of the class notice program.

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8 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CHRISTOPHER CORCORAN, ET AL., Case No. 15-cv-03504-YGR Plaintiffs, ORDER (1) GRANTING AMENDED MOTION 8 TO SUBSTITUTE CLASS REPRESENTATIVES v. AND FOR CERTIFICATION OF NEW YORK 9 AND ARIZONA CLASSES, AND (2) GRANTING 10 CVS HEALTH, ET AL., IN PART AND DENYING IN PART MOTION FOR APPROVAL OF NOTICE PROVIDER AND Defendants. CLASS NOTICE PROGRAM 11 Re: Dkt. Nos. 376, 377, 386-2 12 Northern District of California United States District Court Plaintiffs bring this putative class action against defendants alleging that they knowingly 13 overcharged millions of insured patients by submitting falsely inflated drug prices to pharmacy 14 benefit managers ("PBMs") and third-party payor insurance providers ("TPPs"), which resulted in 15 higher copayment obligations for plaintiffs. Specifically, plaintiffs raise claims under the laws of 16 eleven states: (i) each state's statutory laws proscribing unfair and deceptive acts and practices 17 ("UDAP"); and common law claims for (ii) fraud, (iii) negligent misrepresentation, and (iv) unjust 18 enrichment. 19 Now before the Court are the following motions: First, plaintiffs move to substitute class 20 representatives and for certification of New York and Arizona classes based on these two 21 substituted class representatives.1 Second, plaintiffs move for approval of the notice provider, 22 Angeion Group LLC, and for approval of the class notice program. 23 Having carefully reviewed the pleadings, the papers submitted on each motion, the parties' 24 oral arguments at the hearing held on November 12, 2019, and for the reasons set forth more fully 25 26 27 1 As discussed herein, plaintiffs amended their original motion by leave of the Court. (See 28 Dkt. Nos. 376 (original motion), 386-2 (amended motion), 389 (Order granting leave to file amended motion).) 8 1 below, the Court ORDERS as follows: The Court GRANTS plaintiffs' amended motion to substitute 2 class representatives and for certification of New York and Arizona classes. The Court GRANTS 3 IN PART and DENIES IN PART plaintiffs' motion for approval of the notice provide and class notice 4 program. 5 I. RELEVANT BACKGROUND 6 The facts of the case are well known to the parties and counsel of record. The background 7 relevant to the instant motion is summarized as follows. 8 On September 5, 2017, the Court granted in part plaintiffs' prior motion for class 9 certification, granted in part defendants' motion to exclude certain opinions by an expert witness, 10 and granted defendants' motion for summary judgment. Corcoran v. CVS Health, 15-cv-03504- 11 YGR, Dkt. No. 327, 2017 WL 3873709, at *20-21 (N.D. Cal. Sept. 5, 2017) ("September 2017 12 Order"). The Court denied in part the motion for class certification based on the representatives of Northern District of California United States District Court 13 the proposed New York and Arizona classes failing to meet the requirements of Rule 23(a)— 14 specifically, typicality and adequacy. Id. at *6, 21. The Court concluded that the proposed class 15 representatives did not have any qualifying transactions, and thus, denied without prejudice 16 plaintiffs' motion to certify a New York and Arizona class. Id. 17 On June 12, 2019, the Ninth Circuit issued a memorandum decision reversing and 18 remanding the September 2017 Order. Corcoran v. CVS Health Corporation, 779 F. App'x. 431 19 (9th Cir. 2019). Specifically, the Ninth Circuit reversed the Court's holdings that certain materials 20 and issues failed to create a triable issue, id. at 433-34, with respect to narrowing the classes on 21 typicality grounds, id. at 434, and in striking plaintiffs' expert witness' testimony. Id. at 434-35. 22 On August 23, 2019, the Court issued an order complying with the Ninth Circuit's 23 mandate by denying the motion to strike plaintiffs' expert witness, and denying defendants' 24 motion for summary judgment, and by certifying the following class without limitation: 25 All CVS customers in California, Florida, Illinois, and Massachusetts, who, between November 2008 and July 31, 2015 26 (the "Class Period"), (1) purchased one or more generic prescription drugs that were offered through CVS's Health Savings Pass ("HSP") 27 program at the time of the purchase; (2) were insured for the purchase(s) through a third-party payor plan administered by one of 28 the following pharmacy benefit managers: Caremark/PCS, Express 2 8 Scripts, Medco, MedImpact, or Optum/Prescription Solutions (prior 1 to January 29, 2015); and (3) paid CVS an out-of-pocket payment for the purchase greater than the HSP price for the prescription. 2 Corcoran v. CVS Health, 15-cv-03504-YGR, Dkt. No. 371, 2019 WL 3987671, at *1 (N.D. Cal. 3 Aug. 23, 2019) ("August 2019 Order"). 4 Recognizing that the September 2017 Order had denied plaintiffs' motion to certify a New 5 York and Arizona class without prejudice, the Court permitted plaintiffs a limited period to 6 identify an appropriate representative for each class and permitted the parties to engage in 7 appropriate discovery and motion practice on the proposed class representatives. Id. at *2. The 8 Court also noted in the August 2019 Order that: 9 [D]uring the case management conference on August 19, 2019, 10 defendant indicated that the Court had not addressed certain elements of class certification in the September 2017 order. In the 11 September 2017 order, the Court explained that it did not address certain of defendant's arguments because, either it had previously 12 rejected them and so, for the same reasons, did so again (see Dkt. Northern District of California United States District Court No. 327 at 7 n.4, 8), or the arguments were mooted by the Court's 13 decisions elsewhere within the September 2017 order (see id. at 10- 11). 14 Id. at *1 n.1.2 15 Plaintiffs so moved to certify New York and Arizona classes, identifying Joseph Luzier 16 and Aaron Allen as class representatives for the New York class, and Darlene McAfee as the class 17 representative for the Arizona class. Plaintiffs further moved for approval of the notice provider, 18 class notice program, and forms of notice. For the good cause shown in plaintiffs' administrative 19 motion, the Court permitted plaintiffs to substitute Allen and Luzier, the initially proposed New 20 York class substitutes, with Stephen Sullivan. 21 Having identified McAfee for the Arizona class and Sullivan for the New York class, 22 plaintiffs now seek to certify two additional state classes composed of individuals from New York 23 and Arizona who "have filled prescriptions for generic drugs at CVS pharmacies using coverage 24 provided by their [TPP] plans." (Dkt. No. 101, Third Amended Complaint ("TAC") ¶ 10.) 25 26 2 The Court included this footnote because, at the August 19, 2019 hearing held prior to 27 the August 2019 Order, defendants specifically asked about briefing additional issues including certain issues that defendants believed the court had not reached, including "commonality, 28 predominance, superiority, manageability, issues that [the Court] had not ruled upon;" the Court responded that "[t]hose issues are denied." (Dkt. No. 373 at 10.) 3 8 II. LEGAL FRAMEWORK 1 A. Motion for Class Certification 2 Under Federal Rule of Civil Procedure 23(a), a court may certify a class only where "(1) 3 the class is so numerous that joinder of all members is impracticable; (2) there are questions of law 4 or fact common to the class; (3) the claims or defenses of the representative parties are typical of 5 the claims or defenses of the class; and (4) the representative parties will fairly and adequately 6 protect the interests of the class." Fed. R. Civ. P. 23(a). Courts refer to these four requirements as 7 "numerosity, commonality, typicality[,] and adequacy of representation." Mazza v. Am. Honda 8 Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). 9 Once the threshold requirements of Rule 23(a) are met, plaintiffs must then show "through 10 evidentiary proof" that a class is appropriate for certification under one of the provisions in Rule 11 23(b). Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). 12 Northern District of California "[A] court's class-certification analysis must be 'rigorous' and may 'entail some overlap United States District Court 13 with the merits of the plaintiff's underlying claim.'" Amgen, Inc. v. Conn. Ret. Plans & Trust 14 Funds, 568 U.S. 455, 456-66 (2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 15 (2011)); see also Mazza, 666 F.3d at 588. The Court considers the merits to the extent they 16 overlap with the Rule 23 requirements. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 (9th 17 Cir. 2011). The Court must resolve factual disputes as "necessary to determine whether there was 18 a common pattern and practice that could affect the class as a whole." Id. (emphasis in original). 19 "When resolving such factual disputes in the context of a motion for class certification, district 20 courts must consider 'the persuasiveness of the evidence presented.'" Aburto v. Verizon Cal., Inc., 21 No. 11-CV-03683, 2012 WL 10381, at *2 (C.D. Cal. Jan. 3, 2012) (quoting Ellis, 657 F.3d at 22 982), abrogated on other grounds as recognized by Shiferaw v. Sunrise Sen. Living Mgmt., Inc., 23 No. 13-CV-2171, 2014 WL 12585796, at *24 n.16 (C.D. Cal. June 11, 2014). "A party seeking 24 class certification must affirmatively demonstrate [its] compliance with the Rule." Dukes, 564 25 U.S. at 350. Ultimately, the Court exercises its discretion to determine whether a class should be 26 certified. Califano v. Yamasaki, 442 U.S. 682, 703 (1979). 27 28 4 8 B. Motion for Approval of Class Notice Provider and Class Notice Program 1 "For any class certified under Rule 23(b)(3) . . . the court must direct to class members the 2 best notice that is practicable under the circumstances, including individual notice to all members 3 who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). "The notice may be 4 by one or more of the following: United States mail, electronic means, or other appropriate 5 means." Id. The notice "must clearly and concisely state in plain, easily understood language": 6 (i) the nature of the action; (ii) the definition of the class certified; 7 (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance through an attorney if the member so 8 desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time and manner for requesting 9 exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 10 Id. 11 III. MOTION FOR CLASS CERTIFICATION 12 Northern District of California Due to the procedural posture of this case, only the typicality and adequacy factors are at United States District Court 13 issue in whether to certify a New York class and Arizona class. See September 2017 Order at *9- 14 10; August 2019 Order at *1. The Court also considers superiority arguments under subsection 15 (b)(3) raised by defendants in certifying two additional classes, in addition to the four already 16 certified by the August 2019 Order.3 17 A. Typicality 18 The typicality requirement is satisfied where "the claims or defenses of the representative 19 parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). "The test of 20 typicality is whether other members have the same or similar injury, whether the action is based 21 on conduct which is not unique to the named plaintiffs, and whether other class members have 22 been injured by the same course of conduct." Hanon v. Dataproducts Corp., 976 F.2d 497, 508 23 (9th Cir. 1992) (internal quotation marks omitted); see also Just Film, Inc. v. Buono, 847 F.3d 24 25 3 26 The parties have filed administrative motions seeking to file under seal sensitive medical and personal information of class representatives and class members in support of their briefing. 27 (See Dkt. Nos. 375 (plaintiffs' administrative motion to seal documents in support of the motion), 394 (defendants' motion to seal documents in support of the opposition to the motion), 396 28 (plaintiffs' administrative motion to seal documents in support of the reply).) For the good cause shown therein, the Court GRANTS these three administrative motions to file under seal. 5 8 1 1108, 1116 (9th Cir. 2017). The typicality requirement is "permissive, such that representative 2 claims are typical if they are reasonably coextensive with those of absent class members; they 3 need not be substantially identical." Buono, 847 F.3d at 1116 (internal quotation marks omitted). 4 "A court should not certify a class if 'there is a danger that absent class members will suffer if 5 their representative is preoccupied with defenses unique to it.'" Id. (quoting Hanon, 976 F.2d at 6 508). 7 Here, both McAfee and Sullivan have claims that are typical of their respective classes. 8 McAfee and Sullivan have produced documents establishing that they purchased the allegedly 9 overcharged generic prescriptions from defendants when they used their respective insurance. 10 Moreover, defendants' own transaction data confirms that one of the Class PBMs adjudicated a 11 transaction in the class period. In other words, both substitute representatives have apparent 12 qualifying transactions. Northern District of California United States District Court 13 Defendants, however, assert that Sullivan is atypical for reasons specific to him, and that 14 both Sullivan and McAfee are subject to unique defenses that render them atypical and lacking a 15 qualifying transaction. With respect to Sullivan, defendants aver that: (1) his wife picked up and 16 purchased his prescription and that he is therefore atypical under New York state law; and (2) per 17 his own deposition testimony, he did not use a class qualifying PBM. Finally, defendants also 18 argue that neither McAfee and Sullivan are typical because they are subjected to an atypical 19 defense: the statute of limitations.4 20 First, the fact that Sullivan's wife picked up and purchased his prescription does not render 21 him atypical under New York state law. As an initial matter, Sullivan testified that he himself 22 picked up some of his prescriptions during the class period. (See Dkt. No. 397-5, Ex. E (Sullivan 23 Deposition) at 128:9-15).) Even assuming that Sullivan's wife picked up and purchased all of his 24 prescriptions, such a fact has no relevance or bearing on Sullivan's claim, especially where it was 25 Sullivan himself who paid the insurance premiums, it was his insurance policy that Caremark 26 accessed in the adjudication process, and it was Sullivan himself who was ultimately overcharged. 27 4 28 Defendants do not raise any other specific arguments as to the typicality requirement for McAfee. 6 8 1 "The gravamen of plaintiffs' theory. . . [is] inflated copays" based on defendants' "representations 2 made to the PBMs and TPPs rather than to plaintiffs directly." Corcoran v. CVS Health, 15-cv- 3 3504-YGR, Dkt. No. 249, 2017 WL 1065135, at *6 n.9 (N.D. Cal. Mar. 21, 2017). As the Ninth 4 Circuit similarly recognized, "[i]t is enough for plaintiffs to show. . . higher copayments." 5 Corcoran, 779 F. App'x. at 433. 6 Defendants' cited New York state authority do not persuade because the theories of those 7 cases are based on alleged oral misrepresentations directly to class members. Instead, where a 8 plaintiff's theory of liability is not premised on oral communications to which class members were 9 exposed, the misrepresentations and omissions are "applied to all class members by virtue of their 10 purchasing the product[.]" Tait v. BSH Home Appliances Corp., 289 F.R.D. 466, 476 (C.D. Cal. 11 2012) (discussing analogous circumstances and state statute). Thus, the Court rejects that 12 Sullivan's wife's purchasing of his prescription medicine renders him atypical.5 Northern District of California United States District Court 13 With respect to the second argument, despite Sullivan's testimony indicating that Cigna 14 was the drug prescription plan that he had utilized during this period, Sullivan did, in fact, use a 15 qualifying PBM—Caremark. Ample evidence in the record demonstrates that Caremark was the 16 PBM for Sullivan's transactions. At most, inconsistencies exist that may bear on credibility. 17 Generally, "credibility issues will defeat typicality only where those credibility problems are 18 directly relevant to the issues in the case, and are so sharp as to jeopardize the interests of absent 19 class members." In re Myford Touch Cons. Litig., No. 13-cv-3072-EMC, 2016 WL 7734558, at 20 *11 (N.D. Cal. Sept. 14, 2016) (internal quotation marks omitted). Where statements are not so 21 sharp as to affect the typicality or adequacy analyses, such statements can be and are certainly 22 relevant for any cross-examination at trial. See Moore v. Int'l Cosmetics and Perfumes, Inc., No. 23 ED CV 14-1179, 2016 WL 7644849, at *18 (C.D. Cal. Mar. 27, 2016) ("These statements, while 24 certainly fodder for cross-examination at trial, are not so contradictory as to raise alarming 25 5 26 As discussed at the oral argument on November 12, 2019, the potential class members are those who purchased prescription medication during the class period, many of whom may be 27 sick and may need or rely on third party assistance to procure their prescription medication. The fact that a class representative or class member is sick and needs assistance and relies on their 28 spouse or partner to pick up prescriptions is not a factor that would lead the Court to deny class certification in this circumstance. 7 8 1 credibility issues at this stage of the proceedings."). Here, the inconsistencies provide ground for 2 cross-examination, but do not warrant a finding of atypicality. 3 With respect to the last issue, some courts find that a class representative lacks typicality 4 where only the class representative is uniquely subjected to a statute of limitations defense. See 5 Schofield v. Delta Air Lines, Inc., No. 18-cv-00382-EMC, 2019 WL 955288, at *3 (N.D. Cal. Feb. 6 27, 2019) ("In this case, there is a question of whether Plaintiff is barred by the statute of 7 limitations. Some courts have recognized that there may be an issue of typicality where a party 8 must defend against a statute of limitations defense.") (collecting cases); Vizzi v. Mitsubishi 9 Motors N. Am., Inc., No. SACV 08-00650-JVS (RNBx), 2010 WL 11515266, at *2 (C.D. Cal. 10 Feb. 22, 2010) ("Other district courts have rejected class certification on the grounds that the class 11 representative's claims fail to meet the typicality requirement due to a potential statute of 12 limitations defense.") (collecting cases). However, courts find the typicality requirement satisfied Northern District of California United States District Court 13 where the defense of the statute of limitations is applicable to both the class representative and 14 class members. See Schofield, 2019 WL 955288 at *4 ("[I]n this case, all class members, 15 including the named class representative, will likely face the same challenge with respect to a 16 statute of limitations defense. . . . In this case, it is alleged that Defendant's conduct at issue was 17 uniform, and hence whether Defendant procured consumer reports and when members should 18 have learned of the report is likely to turn on common evidence or patterns of evidence. For this 19 reason, [class representative] faces the same challenges as the class members and is therefore 20 typical."); W. States Wholesale, Inc. v. Synthetic Indus., Inc., 206 F.R.D. 271, 276-77 (C.D. Cal. 21 2002) ("Similarly in this case, the statute of limitations defense is not unique to [class 22 representative]. Other class members may also be subject to a statute of limitations given the fact 23 that [class representative] challenges advertisements dating back to 1983 and. . . shorter statute of 24 limitations could be applicable to other class member's claims than is applicable to [class 25 representative's] claim."); Beck-Ellman v. Kaz USA, Inc., 283 F.R.D. 558, 566 (S.D. Cal. 2012) 26 (substantively similar). 27 Here, while defendants aver that both McAfee and Sullivan are subjected to the relevant 28 statute of limitations, defendants make no actual showing that McAfee and Sullivan are uniquely 8 8 1 subjected to the statute of limitations. The Class Period runs from November 2008 to July 31, 2 2015. As discussed below, given the lengthy class period, other class members in the New York 3 and Arizona classes are very likely to be subjected to the same statute of limitations defense as 4 both McAfee and Sullivan. That is all that is required to satisfy the typicality requirement. See 5 Fitzhenry-Russel v. Dr. Pepper Snapple Group, Inc., 326 F.R.D. 592, 608 (N.D. Cal. 2018) ("To 6 be typical, a class representative need not prove that she is immune from any possible defense. . . . 7 Instead, she must establish that she is not subject to a defense that is not typical of the defenses 8 which may be raised against other members of the proposed class." (internal quotation marks 9 omitted)). 10 With regard to the Arizona class, "[a] limitations period is tolled. . . if the defendant has 11 wrongfully concealed facts giving rise to the cause of action in such a manner as to prevent a 12 plaintiff from reasonably discovering a claim exists within the limitations period." Kisner v. Northern District of California United States District Court 13 Broome, No. 1 CA-CV 16-0502, 2017 WL 6462245, at *5 (Ariz. Ct. App. Dec. 19, 2017) (internal 14 quotation marks omitted). Here, McAfee's claims are reasonably coextensive with those of the 15 absent class members. A class representative's claims do not need to be identical to the claims of 16 class members—only reasonably coextensive. Although McAfee has some unique employment 17 history in the health care industry 40 to 50 years prior to the commencement of this litigation, the 18 Court cannot conclude that she is atypical where other class members will be subjected to the 19 statute of limitations defense. This is so where the statute of limitations defense revolves around 20 the reasonable person test and concerns whether the class and McAfee should have been on notice 21 based on external public events occurring in February 2010, June 2010, and August 2014. 22 With regard to the New York class, each breach is a separate instance commencing a new 23 statute of limitations period. See Fed. Hous. Fin. Agency for Fed. Home Loan Mortg. Corp. v. 24 Morgan Stanley ABS Capital I Inc., 59 Misc. 3d 754, 778, 73 N.Y.S. 3d 374, 393 (N.Y. Sup. Ct. 25 2018) ("As the Court of Appeals has explained, where a contract provides for a continuing 26 obligation, the statute of limitations 'run[s] separately for the damages occasioned each time a 27 breach of the obligation. . . occur[s].'" (quoting Bulova Watch Co. v. Celotext Corp., 389 N.E.2d 28 130, 130 (N.Y. 1979)). Here, the relevant agreements impose a continuing duty not to charge 9 8 1 insured customers more than the HSP price. Even omitting all of Sullivan's claims that 2 defendants contend are time barred, Sullivan has at least one viable claim that commenced in 3 February 2015 that is not subject to the defense of the statute of limitations. The Court need not 4 delve further than this at the class certification stage, especially where the statute of limitations 5 defense is not a defense that will be uniquely asserted against Sullivan.6 Thus, because Sullivan 6 has at least one qualifying transaction, and the statute of limitations defense will otherwise be 7 asserted against both Sullivan and other class members, Sullivan's claim is typical of other 8 members of the New York class. 9 To the extent that defendants are requesting that the Court delve into the merits of the 10 statute of limitations and resolve factual determinations beyond the above analysis, "[t]he statute 11 of limitations is a merits determination often not suitable for resolution at the class certification 12 stage." Beck-Ellman, 283 F.R.D. at 566. See also Kisner, 2017 WL 6462245 at *5 ("[T]he Northern District of California United States District Court 13 question of when a limitations period begins to run typically is for the trier of fact to decide. . . 14 and we will defer to the factfinder's findings unless they are clearly erroneous or unsupported by 15 any credible evidence[.]"). There are several outstanding factual questions that remain for the trier 16 of fact, as "the evidence proffered by defendants does not sufficiently demonstrate that potential 17 class members, even those who were members of HSP, knew of the allegedly deceptive practices." 18 September 2017 Order at *7. The Court therefore declines to rule at this juncture on the merits of 19 any statute of limitations defense. 20 Accordingly, the Court concludes that both McAfee and Sullivan satisfy the typicality 21 requirement for purposes of Rule 23. 22 B. Adequacy 23 The adequacy requirement is satisfied where "the representative parties will fairly and 24 adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). A determination of 25 26 6 The Court explicitly notes that it makes no further determination as to the applicability 27 of the equitable tolling doctrine or the fraudulent concealment doctrine as to the statute of 28 limitations for claims brought by the New York class. 10 8 1 adequacy involves a two-part inquiry: "(1) do the named plaintiffs and their counsel have any 2 conflicts of interest with other class members and (2) will the named plaintiffs and their counsel 3 prosecute the action vigorously on behalf of the class?" Hanlon v. Chrysler Corp., 150 F.3d 1011, 4 1020 (9th Cir. 1998); see also Ellis, 657 F.3d at 985. In this determination, courts have reviewed 5 numerous factors, including "the qualifications of counsel for the representatives, an absence of 6 antagonism, a sharing of interests between representatives and absentees, and the unlikelihood that 7 the suit is collusive." Brown v. Ticor Title Ins., 982 F.2d 386, 390 (9th Cir. 1992). 8 Here, defendants do not challenge the adequacy of McAfee as the proposed class 9 representative for the Arizona class. Nor could they, as, based on the briefing and declarations, 10 McAfee has actively and vigorously participated in the litigation by familiarizing herself with the 11 basic facts and claims at issue, searching for responsive information, providing written discovery 12 responses, producing documents, and making herself available for deposition by defendants' Northern District of California United States District Court 13 counsel on shortened time. Accordingly, as the Court already found that Class Counsel have no 14 conflicts of interest, and there are no other apparent conflicts from McAfee serving as the class 15 representative for the Arizona class, the Court concludes that McAfee is an adequate 16 representative for the Arizona class under Fed. R. Civ. P. 23(a)(4). 17 Defendants do oppose the adequacy of Sullivan as the proposed class representative for the 18 New York class. Defendants advance three grounds: (1) unlike the other class representatives in 19 the case, Sullivan did not read the key allegations in the complaint; (2) Sullivan's explanation of 20 his understanding of the litigation was deficient; and (3) Sullivan's reliance on his wife renders 21 him an inadequate class representative as she gathered and produced his documents, attended his 22 deposition, attempted to answer a question on one occasion at the deposition, and was consulted 23 by Sullivan when defense counsel asked him an important question. 24 Defendants do not persuade. Defendants' first and second arguments are essentially that 25 Sullivan does not have a sufficient threshold of knowledge required to qualify as a class 26 representative. Defendants identify several exchanges where Sullivan was unfamiliar with certain 27 allegations, evidence, or general knowledge of the case to argue that he is "startingly unfamiliar" 28 with the facts of the case. (See Dkt. No. 395-18, Ex. Q (Sullivan Deposition) at 50:3-8, 50:9-14, 11 8 1 50:15-18, 50:25-51:11, 165:22-25,166:17-21, 167:6-9, 168:20-21, 169:4-15, 169:16-170:7, 2 170:13-174:9.) In response, plaintiffs focus on other responses from Sullivan in his deposition 3 demonstrating that he has at least a familiar understanding of the basic elements of the claim. (See 4 Dkt. No. 397-5, Ex. E (Sullivan Deposition) at 25:13-17, 31:10-14, 50:3-13, 52:3-15, 77:10-16.) 5 "The threshold of knowledge required to qualify a class representative" is not 6 high. Moeller v. Taco Bell Corp., 220 F.R.D. 604, 611 (N.D. Cal. 2004). Rule 23 requires only 7 that the class representative "be familiar with the basic elements of [the] claim" and "will be 8 deemed inadequate only if [they are] 'startlingly unfamiliar' with the case." Id. While Sullivan's 9 responses indicate that he is not particularly well versed in the nuances of this case, a review of the 10 deposition transcript does not show him to be "startingly unfamiliar" such that he is an inadequate 11 class representative. On balance, Sullivan's responses show he is familiar with the basic elements 12 of the claim, despite being unable to answer defendants' counsel's questions regarding the Northern District of California United States District Court 13 intricacies and specifics of the case and claim. This is especially so where the Court has 14 previously recognized that "the copayment adjudication process from the perspective of the 15 consumer is opaque[.]" September 2017 Order at *7. 16 Defendants' third argument likewise does not persuade. Sullivan himself participated in a 17 four-and-a-half-hour deposition, and provided responses in a manner generally indicating a basic 18 familiarity with the claims in this case. That Sullivan's wife assisted him in the preparation of his 19 deposition, or that she had more general familiarity with the case has limited bearing on whether 20 Sullivan himself would prosecute this action vigorously on behalf of the class. Moreover, as 21 discussed at the November 12, 2019 oral argument, the Court is reluctant to disadvantage a 22 proposed class representative who relies on general assistance from his partner or spouse due to 23 individual medical constraints. This is especially so where the gravamen of the litigation concerns 24 the overpayment of prescription drugs, and other class members are likely similarly situated in 25 relying on partners or spouses for such similar assistance. 26 Beyond these arguments, defendants do not point to any other conflicts for Sullivan, nor do 27 they advance any arguments demonstrating any conflicts as to Class Counsel or Sullivan. 28 Accordingly, the Court finds that Sullivan is also an adequate class representative under Fed. R. 12 8 1 Civ. P. 23(a)(4). 2 C. Superiority 3 To make a determination, the Court considers the following four non-exhaustive factors: 4 (1) the interests of members of the class in individually controlling the prosecution or defense of 5 separate actions; (2) the extent and nature of any litigation concerning the controversy already 6 commenced by or against the members of the class; (3) the desirability of concentrating the 7 litigation of the claims in the particular forum; and (4) the difficulties likely to be encountered in 8 the management of a class action. Fed. R. Civ. P. 23(b)(3)(A)–(D). "Where classwide litigation of 9 common issues will reduce litigation costs and promote greater efficiency, a class action may be 10 superior to other methods of litigation." Valentino v. Carter-Wallace, Inc., 97 F.3d. 1227, 1234 11 (9th Cir. 1996). 12 Defendants aver that certification of six classes—up from four classes—would be Northern District of California United States District Court 13 unmanageable, and that the Court should therefore decline to certify under the Fed. R. Civ. P. 14 23(b)(3) factors. Specifically, defendants assert that the fourth factor, "the likely difficulties in 15 managing a class action," so strongly weighs against class certification that it should tip the 16 balance against certifying both Arizona and New York classes. In support, defendants also 17 identify a statement from the September 2017 Order, "the Court's limitation of each state class 18 only to the PBMs that adjudicated the named representative's claims and finding that the Arizona 19 and New York classes lack a typical representative further reduces the complexity of any potential 20 trial," to argue that the inclusion of another one or two classes would complicate the trial in this 21 matter. September 2017 Order, at *9. Moreover, defendants highlight plaintiffs' proposed jury 22 instructions submitted in 2017 and aver that both Arizona and New York state law are insufficient 23 because they miscite or incorrectly summarize the law of the jurisdiction. 24 Although the August 19, 2019 Order limited consideration to the typicality and adequacy 25 requirements of any substituted class representatives for the Arizona and New York classes, the 26 Court permitted arguments at the oral argument on November 12, 2019 as to the manageability 27 28 13 8 1 because of the concerns raised by the parties' briefing.7 2 The Court recognizes that this case will indeed become more complex by the addition of 3 two more state classes. However, such complexity can be managed. Counsel for both parties 4 confirmed at the oral argument that similar evidence will be presented across the classes, and that 5 many elements and instructions overlap across the state classes. Though distinctions and nuances 6 in both the law and facts in the state classes exist, including meaningful differences in the terms of 7 the relevant agreements, the Court finds that such differences are manageable. 8 Many of defendants' remaining arguments center on the notion that the proposed jury 9 instructions do not properly or precisely match the appropriate state law. Yet, defendants could 10 not substantively identify any differences so significant that could not otherwise be managed. As 11 the Court noted in its prior order, "plaintiffs have sufficiently demonstrated how jury instructions 12 and a verdict form may be structured to account for statewide classes in light of the fact that many Northern District of California United States District Court 13 of the state-law claims raise common issues," and that "[w]hile further modifications may be 14 necessary, the showing suffices." September 2017 Order at *9. Nothing in defendants' briefing 15 or in defendants' arguments made at the oral argument alter the Court's prior conclusion as it 16 relates to the addition of two state classes. 17 Therefore, the Court finds that the addition of one or two more classes does not impact the 18 Court's prior superiority analysis. Accordingly, in light of the Court's holdings that both McAfee 19 and Sullivan satisfy the typicality and adequacy requirements of Rule 23(a), and that the class 20 action continues to satisfy the superiority analysis of Rule 23(b), the Court GRANTS plaintiffs' 21 motion to substitute class representatives and certify New York and Arizona classes. 22 IV. MOTION FOR APPROVAL OF CLASS NOTICE PROVIDER AND CLASS NOTICE PROGRAM 23 Plaintiffs move for approval of the class notice provider, Angeion Group LLC, and for 24 25 7 26 The Court informed the parties via email that it was receptive to manageability arguments on November 8, 2019. The Court instructed that, to the extent the parties wished to 27 utilize PowerPoint format for their presentation as to manageability, the parties were required to exchange such forms to the opposing party by close of business on Monday, November 11, 2019. 28 Both parties complied with the Court's instruction, and brought a copy of their PowerPoint for the Court at the oral argument on November 12, 2019. 14 8 1 approval of the class notice program. Plaintiffs request notice to class members be provided by 2 text messaging, email, or United States Postal Service mail. Plaintiffs also request approval of the 3 proposed forms to be sent to class members and to be included on the class website. (See Dkt. 4 Nos. 377-4 (short-form notice), 377-5 (long-form or website notice), 377-6 (text message notice 5 form).) 6 Defendants do not oppose approval of Angeion Group LLC as the class notice provider, 7 but oppose notice to class members through any means other than United States Postal Service 8 mail. Based on this opposition, the parties dispute who should bear the costs of the class notice 9 program. Defendants also propose minor modifications to the proposed notice forms.8 10 Having reviewed the parties' briefings, plaintiffs' declarations regarding the selection 11 process for a notice provider in this matter and regarding Angeion Group LLC's experience and 12 qualifications, and in light of defendants' non-opposition, the Court APPROVES Angeion Group Northern District of California United States District Court 13 LLC as the notice provider. Thus, the Court GRANTS the motion for approval of class notice 14 provider and class notice program on this basis. 15 Following oral argument on November 12, 2019, the parties submitted a joint status report 16 regarding plaintiffs' motion to approve the class notice program and forms of notice. (Dkt. No. 17 403.) The parties indicate that they have now reached agreement on the proposed notice program, 18 which will consist of (a) emailing the short-form notice to all class members whose email 19 addresses defendants have provided or Angeion Group LLC has located, and (b) sending via 20 United States Postal Service mail the short-form notice to all class members for whom there are no 21 email addresses or for whom an email address resulted in a bounce-back message. Plaintiffs have 22 further withdrawn their proposal for notice to class members via text messaging, and the parties 23 agree that plaintiffs will pay all costs of the notice program. 24 8 25 Defendants administratively move for leave to file a surreply to address arguments raised by plaintiffs in their reply. (See Dkt. No. 398 (motion for leave to file a surreply).) Plaintiffs 26 oppose defendants' administrative motion, and further request permission to file under seal confidential information including proprietary business information relating to Angeion Group, 27 LLC submitted in connection with their opposition to defendants' motion for leave to file a surreply. (See Dkt. No. 399.) Having reviewed and considered both the parties' filings, the Court 28 GRANTS defendants' motion for leave to file a surreply, and plaintiffs' motion to file under seal information submitted with plaintiffs' response to defendants' motion for leave to file a surreply. 15 8 1 Having considered the parties' revised proposed notice program, the Court agrees that the 2 parties' proposed notice program is the "best notice that is practicable under the circumstances." 3 The Court is satisfied with the representations made regarding Angeion Group LLC's methods for 4 ascertaining email addresses from existing information in the possession of defendants. Rule 23 5 further contemplates and permits electronic notice to class members in certain situations. See Fed. 6 R. Civ. P. 23(c)(2)(B). The Court finds, in light of the representations made by the parties, that 7 this is a situation that permits electronic notification via email, in addition to notice via United 8 States Postal Service. Thus, the Court APPROVES the parties' revised proposed class notice 9 program, and GRANTS the motion for approval of class notice provider and class notice program 10 as to notification via email and United States Postal Service mail. Because plaintiffs have 11 withdrawn their request for notice via text messaging, the Court DENIES the motion as moot. 12 Finally, the parties' joint status report notes that the parties are revising the proposed short- Northern District of California United States District Court 13 form and long-form notices to incorporate the Court's comments at the November 12, 2019 14 hearing. The parties agree to submit the revised forms following the issuance of this Order. The 15 Court therefore DENIES the motion as to the proposed form notices. The parties may seek 16 approval on an expedited basis of the revised form notices on or before December 2, 2019. 17 V. CONCLUSION 18 For the foregoing reasons, the Court ORDERS as follows: The Court GRANTS plaintiffs' 19 motion to substitute class representatives and CERTIFIES Arizona and New York classes. The 20 Court AMENDS the class definition to state as follows: 21 All CVS customers in California, Florida, Illinois, Massachusetts, New York, and Arizona, who, between November 2008 and July 31, 22 2015 (the "Class Period"), (1) purchased one or more generic prescription drugs that were offered through CVS's Health Savings 23 Pass ("HSP") program at the time of the purchase; (2) were insured for the purchase(s) through a third-party payor plan administered by 24 one of the following pharmacy benefit managers: Caremark/PCS, Express Scripts, Medco, MedImpact, or Optum/Prescription 25 Solutions (prior to January 29, 2015); and (3) paid CVS an out-of- pocket payment for the purchase greater than the HSP price for the 26 prescription 27 The Court GRANTS IN PART and DENIES IN PART plaintiffs' motion for approval of the 28 notice provider and for approval of the class notice program. The Court further ORDERS with 16 8 1 respect to the motion for approval of the notice provider and for approval of the class notice 2 program as follows: 3 1. For the purpose of providing notice to class members, defendants are authorized to 4 disclose, and hereby is ordered to disclose, to Angeion Group, LLC ("Angeion"): 5 (a) the name; (b) the last known mailing address; and (c) email address for 6 defendants' customers associated with the purchases at the pharmacies identified by 7 plaintiffs' expert report attached to plaintiffs' amended motion for class 8 certification (June 6, 2017). (Dkt. No. 274.) The disclosure to Angeion shall 9 occur: 10 a. Within two business days of the entry of this Order, for individuals 11 associated with the purchases occurring at CVS pharmacies in California, 12 Florida, Illinois, and Massachusetts identified by plaintiffs' expert report; or Northern District of California United States District Court 13 b. Within two business days of the entry of any order certifying a class or 14 classes for Arizona and New York, for individuals associated with the 15 purchases occurring at defendants' pharmacies in Arizona or New York 16 identified by plaintiffs' expert report. 17 2. This Order authorizes defendants to disclose the information identified in 18 Paragraph 1 of this section in the Order pursuant to the regulations of the Health 19 Insurance Portability and Accountability Act of 1996. See 45 C.F.R. § 20 164.512(e)(1)(i). 21 3. The parties to this action and Angeion are expressly prohibited from using or 22 disclosing the contact information obtained pursuant to this Order for any purpose 23 other than providing notice to proposed class members in this action. See 45 24 C.F.R. § 164.512(e)(1)(v)(A). 25 4. Angeion is further ordered to destroy contact information received in connection 26 with this Order within 10 business days following the conclusion of this action. 27 See 45 C.F.R. § 164.512(e)(1)(v)(B). 28 5. The parties shall file revised proposed short-form and long-form notices 17 8 1 incorporating the Court's comments at the November 12, 2019 hearing on or before 2 December 2, 2019. 3 This Order terminates Docket Numbers 375, 376, 377, 386-2, 394, 396, 398, and 399. 4 IT IS SO ORDERED. 5 6 Dated: November 22, 2019 7 YVONNE GONZALEZ ROGERS 8 United States District Judge 9 10 11 12 Northern District of California United States District Court 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18