Invisalign maker to settle antitrust claims for $27.5M

The maker of Invisalign agreed to pay $27.5 million to resolve antitrust allegations by consumers who accused the company of conspiring with a rival to corner the clear dental aligner market.

"Antitrust cases are inherently risky and, while the plaintiffs believe their claims are sound, recovery is far from certain," Hagens Berman Sobol Shapiro LLP co-founder Steve W. Berman wrote in the settlement motion filed Thursday in federal court. 

The plaintiffs' attorneys seek up to $6.875 million in attorney fees to end more than three years of litigation. A preliminary approval hearing is set for Sept. 19 before U.S. District Judge Vince G. Chhabria in San Francisco. Snow v. Align Technology Inc., 3:21-cv-03269-VC (N.D. Cal., filed May 3, 2021). 

Align Technology, which created Invisalign in the late 1990s, denied any wrongdoing, arguing in court filings that the plaintiffs lacked standing because they had not proved imminent future harm. Today, the Arizona-based company is valued at $17.6 billion. 

According to the complaint, Align Technology began losing its market dominance around 2017 and pursued an anticompetitive scheme to maintain its position. Align Technology unilaterally terminated a longstanding and profitable agreement with its main competitor, 3Shape, so that its proprietary dental scanner could be used to order Invisalign, wrote Hagens Berman partner Rio S. Pierce. 

Pierce added that Align Technology entered into exclusive dealing contracts with two major dental service organizations that effectively prevented members from dealing with Align's competitors. 

"At approximately the same time, Align entered into a set of interlocking agreements in July 2016 with its strongest potential competitor, SmileDirectClub, that effectively allocated the aligner market between themselves," said Pierce. SmileDirectClub filed for bankruptcy last year. 

Align Technology is defended by several firms, including Manatt Phelps & Phillips LLP and Paul Hastings LLP. The firms did not respond to an inquiry for comment on the settlement.

Arguing in court filings the plaintiffs lack of standing on the issue of future harm, Paul Hasting partner Steven A. Marenberg wrote that each plaintiff already purchased an Invisalign treatment course, "which is a one-off, nonrecurring treatment." Marenberg insisted that Align Technology and SmileDirectClub never agreed to divide markets, pointing to a supply agreement between the two companies that allowed SmileDirectClub to work with third parties to sell its own aligners. 

In addition to establishing a $27.5 million non-reversionary fund, Align Technology offered each class member a $300 coupon for Invisalign treatment. "Even if only five percent of the settlement class takes advantage of these coupons, they would provide up to $21.8 million in further relief," Berman wrote in Thursday's filing. 

The attorney said the agreement resulted from contentious litigation, extensive discovery, and guidance by "one of the nation's most trusted mediators," Phillips ADR Services neutral Gregory P. Lindstrom.

"The plaintiffs believe their claims are meritorious, but the path forward is not without peril," said Berman.