## Facts

- Consumer plaintiffs, largely Medicare Part B beneficiaries, alleged they overpaid co-payments for Zoladex because reimbursement was tied to reported average wholesale prices that were allegedly inflated.
- The alleged pricing spread benefited providers, while patients’ percentage-based co-payments were calculated using the inflated prices.
- An expert damages estimate for patient overcharges exceeded $31 million.
- The AstraZeneca consumer subclass and AstraZeneca agreed to a $24 million settlement addressing Zoladex co-payment overcharges.
- The parties anticipated significant non-claiming because many class members were elderly, deceased, or difficult to locate.
- The settlement provided enhanced payments to certain claimants, including up to treble estimated damages for those with the strongest claims.
- Unclaimed funds up to $10 million were designated for cy pres distribution to charities related to the class’s interests.
- The district court approved the settlement; one named class representative objected and appealed.

## Issues

1. Whether the settlement was unfair under Rule 23(e) because it included a cy pres distribution of up to $10 million rather than further direct distributions to class members.
2. Whether the settlement’s damages methodology and allocation (including multiple-of-damages payments and differential treatment based on claim strength) rendered it not fair, reasonable, and adequate.
3. Whether an objection that attorneys’ fees were improperly negotiated alongside the settlement was preserved for appeal and, if so, required disapproval.
4. Whether objections that the settlement approval expanded the class without sufficient definition under Rule 23(c)(1)(B), and without proper reappointment of class counsel under Rule 23(g), could be raised for the first time on appeal.

## Decision

- The First Circuit affirmed the settlement approval order.
- The court applied abuse-of-discretion review and deferred to the district court’s management and familiarity with the MDL.
- The cy pres component was upheld as a reasonable response to expected under-claiming after enhanced direct payments to claimants.
- The damages calculation and distribution approach was held within a reasonable range given litigation risks and practical constraints.
- The attorneys’ fee negotiation objection was treated as waived because it was not timely raised before final approval.
- The Rule 23(c)(1)(B) and Rule 23(g) objections were treated as waived and, in any event, were not shown to undermine adequate class definition or representation when the record was read as a whole.

## Legal Principles

- Class action settlement approval under Rule 23(e) is reviewed for abuse of discretion, with substantial deference to a district court’s judgment in complex MDL proceedings.
- Cy pres distributions may be permitted when further direct distributions are impracticable or inefficient, and the cy pres recipients reasonably relate to class interests, particularly where the settlement prioritizes direct compensation to identifiable claiming class members.
- A settlement may remain fair, reasonable, and adequate even if the total fund is less than estimated damages, where the record supports litigation risk, uncertainty, and a rational allocation method.
- Objections to settlement procedures and Rule 23 requirements generally must be raised in the district court; issues raised for the first time on appeal are typically waived absent exceptional circumstances.

## Conclusion

The First Circuit upheld approval of the AstraZeneca consumer subclass settlement, concluding the district court acted within its discretion under Rule 23(e), that the cy pres mechanism was justified by expected non-claiming and administrative limits after enhanced direct payouts, and that several procedural and fee-related objections were waived or unsupported by the record.


In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24 (1st Cir. 2009)