Patterson Cos. Settles Investor Price-Fix Case for $63 Million

Patterson Cos. will pay $63 million to end securities fraud litigation over its alleged role in a price-fixing scheme involving the country’s top dental supply wholesalers, according to a federal court filing in Minneapolis.

The investors leading the lawsuit sought preliminary approval Thursday for the proposed deal, which would resolve class action claims facing Patterson and its former chief executive in the U.S. District Court for the District of Minnesota, where Judge Michael J. Davis is presiding over the case.

The agreement also provides for attorneys’ fees totaling up to one-third of the settlement, or around $21 million, along with $2 million in expenses.

The “extraordinary recovery,” reflecting one of “the top-ten largest securities class action settlements ever in the District of Minnesota,” was reached after years of litigation and multiple all-day mediation sessions involving “intensive back-and-forth negotiations,” the approval motion says.

The suit, filed in 2019, accused Patterson and certain executives of concealing a conspiracy among the top three U.S. dental supply distributors to inflate prices by, among other things, boycotting small dental practices that banded together to increase their purchasing power.

The alleged scheme led to a tangle of litigation, including antitrust and investor suits involving Patterson and the other two companies, Henry Schein Inc. and Benco Dental Supply Co. The related cases include an antitrust lawsuit against Schein that went to the U.S. Supreme Court twice.

Davis let the Patterson shareholder suit advance in September 2019—though he dismissed all of the company’s executives from the case except its ex-CEO—and certified the suit as a class action a year later.

In their motion Thursday, the investors insist they’re confident in their claims. But they settled with an eye toward the costs and risks associated with taking the case to trial and beyond, and out of respect for the formidable defenses advanced by Patterson, according to the filing.

They also docketed a copy of the agreement itself, which includes recitals by the company stating that it continues to deny “each and all of the claims and contentions alleged or that could have been alleged,” as well as “any and all allegations of fault, liability, wrongdoing, or damages whatsoever.”

“Defendants are entering into this stipulation solely to eliminate the expense, distraction and inherent uncertainty of taking this matter to trial,” the settlement says.

Saxena White PA and Robbins Geller Rudman & Dowd LLP are co-lead class counsel for the investors, who are also represented by Reinhardt Wendorf & Blanchfield; Robins Kaplan LLP; and Klausner, Kaufman, Jensen & Levinson. Patterson and its ex-CEO are represented by Taft Stettinius & Hollister LLP.

The case is Plymouth Cty. Ret. Sys. v. Patterson Cos., D. Minn., No. 18-cv-871, motion for preliminary settlement approval filed 10/14/21.