Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Settlement agreement with Invisalign® orthodontic aligner maker given preliminary approval, (May 29, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Compensation to class members is all cash; previous agreement, which was disapproved by the judge, included a coupon program to which the judge objected.

A federal district court judge in San Francisco has preliminarily approved a mediated settlement of the antitrust case against dental aligner maker Align Technology Inc. Two previous settlement agreements were denied preliminary approval; this one, detailed in the plaintiffs’ motion for preliminary approval, addressed all of the judge's concerns regarding the prior agreements (Snow v. Align Technology, Inc., No. 3:21-cv-03269-VC (N.D. Cal. May 28, 2025)).

Background. There were many drawbacks to the metal dental braces that had long been used to straighten patients' teeth, so for a significant majority of teeth correction patients, orthodontists have transitioned to clear plastic dental aligners instead. The technology for these aligners entails the orthodontist making a scan of the patient's mouth using an intraoral scanner device; from that scan the aligner manufacturer will make an aligner which, if properly formed, will fit the individual patient's situation. As the teeth positions progress towards the desired alignment, the patient is fitted with a revised aligner manufactured from a new scan.

One player in the clear plastic dental aligners market has been Align Technology Inc. (ATI), which has its Invisalign® system that entails a proprietary scanner (iTero®). In 2021, some individuals filed a putative class action lawsuit against ATI, alleging that ATI effectively tied its aligner manufacturing service to the use of its iTero® scanner. The operative complaint named SmileDirectClub, LLC (SDC) as a non-party agent/co-conspirator, a teledentistry competitor of ATI that sold the clear aligners directly to consumers; ATI allegedly had an allocation agreement with SDC that extended ATI's dominance of the clear aligner market by giving favorable treatment to SDC. In September 2023, SDC filed for bankruptcy, and halted operations in December 2023.

During the course of the litigation, the parties reached a negotiated settlement through the facilitation of a mediator. The plaintiff parties filed an unopposed motion for preliminary approval of the settlement on August 29, 2024. This motion was denied by the judge on September 18, 2024 for failure to address certain issues. A renewed motion for preliminary approval was filed on October 28, 2024; this renewed motion was denied on February 27, 2025. Following addition mediated negotiations, an agreement addressing the judge's objections was reached, and another motion for preliminary approval was filed with the court on April 24, 2025; this motion was accompanied by a proposed order, which the judge signed on May 28, 2025.

The settlement-relief to plaintiff class. The settlement per the revised and preliminarily approved agreement establishes a settlement fund in the amount of $31,750,000 in cash. The previous agreement entailed a settlement fund of $27,500,000, with an additional coupon giving class members free or reduced prices for ATI products and/or services. In disapproving the previous proposed settlement, the judge noted that it entailed "a coupon program that will direct still more customers to the monopolist. It’s not clear that such a settlement would ever be appropriate in an antitrust class action against a monopolist." Moreover, it was understood that the mediator had been prepared to propose a non-coupon cash settlement amount of $29-$30 million, to which the plaintiffs would have agreed. The settlement fund as preliminarily approved by the judge was thus greater than what the plaintiffs has been prepared to accept a few months earlier.

The settlement-administration. Administration of the settlement is complicated by "uncertainty about the accuracy of the class members' contact information," notably regarding whether the potential class members listed in SDC's records actually purchased a product or service made or provided by ATI. The order approved by the judge names Epiq, LLC as Claims Administrator, and directs it send e-mails and postcards with specified notice packet to the e-mail addresses provided by the SDC bankruptcy estate, as well as setting up a settlement website on the Internet; the settlement administrator will also send out news releases. Class members can also qualify for relief by filing a claim.

Hagens Berman Sobol Shapiro LLP was appointed counsel to the settlement class; they indicated that they would request attorney fees in the amount of 25 percent of the settlement fund. This 25 percent figure is the initial benchmark applied in the Ninth Circuit, which more often than not is adjusted upward. Service awards for the lead plaintiffs will also be requested; the lead plaintiffs have all put in substantial time and effort towards prosecuting the case, and the service awards to be requested are within range of service awards for similarly situated named plaintiffs.

The Case is No. 3:21-cv-03269-VC.

Judge: Chhabria, V.

Attorneys: Steve W. Berman (Hagens Berman Sobol Shapiro LLP) for Misty Snow. David Reichenberg (Manatt Phelps & Phillips LLP) for Align Technology, Inc.

Companies: Align Technology, Inc.

Cases: Antitrust CaliforniaNews