By Mike Scarcella

Feb 28 (Reuters) - A U.S. judge has declined to approve a $27.5 million class action settlement in a consumer lawsuit accusing Align Technology, maker of Invisalign clear teeth aligners, of entering a conspiracy that drove up a rival’s prices.

In a ruling on Thursday, U.S. District Judge Vince Chhabria in San Francisco said a provision of the settlement providing coupons for consumers to buy Invisalign products would only strengthen its position as an alleged monopolist.

“It’s not clear that such a settlement would ever be appropriate in an antitrust class action against a monopolist,” the judge wrote.

The consumer lawsuit alleged Align conspired with rival SmileDirectClub to not enter the direct-to-consumer market for teeth aligners, allowing SmileDirectClub to charge artificially higher prices.

Align and lawyers for the estimated 1.4 million class members — consumers who purchased aligners from SmileDirectClub — did not immediately respond to requests for comment. Align has denied any wrongdoing, and SmileDirectClub was not a defendant.

SmileDirectClub shut down in December 2023, after filing for U.S. bankruptcy protection.

Chhabria’s ruling was the second time he has denied a proposed settlement in the lawsuit, filed in 2021. He said the two sides can try again to persuade him to approve an alternative settlement.

The judge said in Thursday’s order that he was concerned about a component of the agreement that would give class members a $300 coupon for Invisalign treatment and $50 in coupons for one of the company’s teeth retainers.

“The defendant in this antitrust case is a monopolist,” Chhabria wrote. “The proposed settlement includes a coupon program that will direct still more customers to the monopolist.”

Lawyers for the plaintiffs have defended the coupon provision. Align told the court this month that the coupons would “likely have a negligible impact” on the company’s sales and will not harm competition in the aligner industry.

Chhabria set an April 18 hearing to discuss the status of the case.

The case is Snow v Align Technology Inc, U.S. District Court, Northern District of California, No. 3:21-cv-03269-VC.

For plaintiffs: Steve Berman and Rio Pierce of Hagens Berman Sobol Shapiro

For Align: Karma Giulianelli and Mark Levine of Bartlit Beck, and James Pearl and Thomas Counts of Paul Hastings

Read more:

Invisalign maker reaches $27.5 million settlement of consumer antitrust lawsuit

(Reporting by Mike Scarcella)

((Mike.Scarcella@thomsonreuters.com;))