By Jonathan Stempel
Aug 30 (Reuters) - Align Technology ALGN.O, the maker of Invisalign clear teeth aligners, agreed to pay $27.5 million to settle a lawsuit claiming it entered an illegal antitrust conspiracy that drove up prices of aligners made by rival SmileDirectClub.
The settlement would cover 1.45 million purchasers of SmileDirectClub aligners between Oct. 22, 2017, and Aug. 18, 2022. Align would also offer each class member a $300 coupon for Invisalign treatment.
A preliminary settlement of the proposed class action was filed on Thursday in federal court in San Francisco, and requires approval by U.S. District Judge Vince Chhabria.
Align denied wrongdoing but settled to avoid the cost and distraction of litigation, court papers show.
The case arose from an alleged 2016 agreement between Align and SmileDirectClub, which had been founded two years earlier, to "allocate" the market for clear teeth aligners.
Align had been selling its aligners through dental offices, while SmileDirectClub sold its aligners directly to consumers.
The plaintiffs said Align violated the Sherman federal antitrust law by agreeing to enter the direct-to-consumer market, freeing SmileDirectClub to charge more, in exchange for a minority stake in SmileDirectClub and a share of its profits.
SmileDirectClub shut down last December, fewer than three months after filing for Chapter 11 bankruptcy protection.
Hagens Berman Sobol Shapiro, the plaintiffs' law firm, said the settlement will improve treatment for patients affected by SmileDirectClub's closure, or who want more comprehensive teeth straightening than SmileDirectClub's aligners provided.
The law firm said it plans to seek 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 is based in San Jose, California. It did immediately respond on Friday to requests for comment.
The case is Snow v Align Technology Inc, U.S. District Court, Northern District of California, No. 21-03269.
(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)
((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.))