Align Technology, the maker of Invisalign clear teeth aligners, has agreed to pay $27.5 million to settle a lawsuit accusing it of participating in an illegal antitrust conspiracy that inflated the prices of aligners made by its rival, SmileDirectClub.
The settlement, which was filed in federal court in San Francisco on Thursday night, will cover nearly 1.45 million purchasers of SmileDirectClub aligners between October 22, 2017, and August 18, 2022. Additionally, Align will offer each class member a $300 coupon for Invisalign treatment.
The settlement requires approval by U.S. District Judge Vince Chhabria. While Align denied any wrongdoing, it chose to settle to avoid the costs and distractions associated with prolonged litigation, according to court documents.
The lawsuit stemmed from an alleged 2016 agreement between Align and SmileDirectClub, which was founded in 2014, to “allocate” the market for clear teeth aligners. At the time, Align sold its aligners through dental offices, while SmileDirectClub offered its aligners directly to consumers.
The plaintiffs argued that Align violated the Sherman Antitrust Act by agreeing not to enter the direct-to-consumer market, allowing SmileDirectClub to charge higher prices. In exchange, Align received a minority stake in SmileDirectClub and a share of its profits.
SmileDirectClub ceased operations last December, less than three months after filing for Chapter 11 bankruptcy protection.
Hagens Berman Sobol Shapiro, the law firm representing the plaintiffs, stated that the settlement would enhance treatment options for patients affected by SmileDirectClub’s closure or those seeking more comprehensive teeth straightening than what SmileDirectClub’s aligners provided. The firm plans to request legal fees of up to $6.875 million, plus 25% of the value of reimbursed coupons, with total fees capped at $8.25 million.
Align, based in San Jose, California, has not yet responded to requests for comment.
The case is Snow v. Align Technology Inc, U.S. District Court, Northern District of California, No. 21-03269.
