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So says the unanimous Supreme Court today in Matrixx Initiatives, Inc. v, Siracuso, 09-1156, slip op. (U.S. March, 22, 2011).  We’re not securities lawyers, so we’re primarily concerned with how Matrixx could affect product liability litigation.
We don’t think it will have all that much, since the court makes pretty sure that “materiality” for securities litigation does not mean proof of medical causation that would stand up in a court of law.  Instead it basically shies away from a “bright line” test.  Slip op. at 11-12.
We’ve discussed earlier how the government (especially FDA) can, and does, act on data that could not establish causation in a court of law.   The Supreme Court’s decision also makes that clear:

Not only does the FDA rely on a wide range of evidence of causation, it sometimes acts on the basis of evidence that suggests, but does not prove, causation.  For example, the FDA requires manufacturers of over-the-counter drugs to revise their labeling “to include a warning as soon as there is reasonable evidence of an association of a serious hazard with a drug; a causal relationship need not have been proved.”  21 CFR §201.80(e).  More generally, the FDA may make regulatory decisions against drugs based on postmarketing evidence that gives rise to only a suspicion of causation.

Slip op. at 13-14 (citation omitted).  Indeed, specifically with respect to the civil “more likely than not” civil liability standard, the court quotes the Manual on Scientific Evidence – “[R]isk assessors may pay heed to any evidence that points to a need for caution, rather than assess the likelihood that a causal relationship in a specific case is more likely than not.”  Slip op. at 14 n.9.
Frankly, we’d rather the Court not have cited expert witness cases allowing “testimony on causation based on evidence other than statistical significance,” slip op. at 12, especially the pre-Daubert abomination, Wells v. Ortho Pharmaceutical Corp., 788 F.2d 741 (11th Cir. 1986).  But the Court did go out of its way to state that “We need not consider whether the expert testimony was properly admitted in those cases, and we do not attempt to define here what constitutes reliable evidence of causation.”  Slip op. at 12. But since we’ve never been able to have Daubert construed as limiting experts solely to statistically significant epidemiological proof (as opposed to the infamous “differential diagnosis”), we’d actually have been jealous if the securities defense bar had been able to pull off that result.
Basically, Matrixx comes down on the side of a case-by-case assessment of whether statistically significant adverse events are considered “material” in any particular case.  The bottom line:

Application of [the prevailing securities law] standard does not mean that pharmaceutical manufacturers must disclose all reports of adverse events.  Adverse event reports are daily events in the pharmaceutical industry. . . . The fact that a user of a drug has suffered an adverse event, standing alone, does not mean that the drug caused that event. The question remains whether a reasonable investor would have viewed the nondisclosed information as having significantly altered the “total mix” of information made available.  For the reasons just stated, the mere existence of reports of adverse events – which says nothing in and of itself about whether the drug is causing the adverse events – will not satisfy this standard.  Something more is needed, but that something more is not limited to statistical significance and can come from “the source, content,and context of the reports.

Slip op. at 15-16 (various citations omitted) (our bold emphasis added, other emphasis original).
Sure, we’d rather the Court have bought into a bright line statistical significance standard – because we’d have tried to import it into Daubert – but after the oral argument, we didn’t see that as in the cards, and it definitely wasn’t.
One final observation:  anybody who claims that the current court is “pro-business” is just spouting plaintiff-side propaganda.