Securities Law

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We almost never post on securities decisions, but we’re making an exception today. Our readers know that the initiation of MDLs and state court coordinated proceedings—often loaded with unvetted and bogus claims—can drive down defendants’ stock prices. When that happens the plaintiffs’ class action bar swoops in and files securities class actions, essentially trying to make the same defendant pay twice for the same claims.  Call it the “unholy alliance.” Today’s decision (another one arising out of the Zantac litigation) is notable because it strikes directly at the linkage between mass torts and the securities class actions that try to play piggyback.  In Roofers Loc. No. 149 Pension Fund v. GSK PLC, 2026 U.S. Dist. LEXIS 44087 (E.D. Pa. March 4, 2026), the information contained in mass tort filings and accompanying discovery were enough to bar the securities class action based on the statute of limitations.

Continue Reading Untimely Piggybacking
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This week, we are attending the 139th annual Westminster Kennel Club dog show. We are Standard Poodle aficionados. Before the current passel of Drug and Device Rescue Dogs – mixed breeds – we always had a Standard Poodle or two. Though Standard Poodles were developed as hunting dogs in Germany – water retrievers — the Standard Poodle class at a dog show displays these tough, athletic creatures in extreme haircuts (we won’t waste blog space on the utilitarian origins of these haircuts) as they prance – “gait” – around a ring. Our all-time favorite movie, “Best in Show,” portrays this accurately. While we adore Westminster, it is startling for the uninitiated, some of whom recoil at the spectacle of these beautiful animals out of their natural context and in unfamiliar trappings. And that sets the stage for our weak transition to today’s case. It is a case about off-label promotion, but not in its familiar context. Rather, this interesting and sensible decision out of the (not always hospitable) First Circuit rejects plaintiffs’ attempt to dress off-label promotion in the trappings of a 10(b)(5) violation.

In Fire and Police Pension Association of Colorado v. Abiomed, No. 14-1502, 2015 U.S. App. LEXIS 1944 (1st Cir., Feb. 6, 2015) the First Circuit considered the appeal of the district court’s dismissal of a complaint alleging that defendant Abiomed and two of its officers had committed securities fraud when they told investors that the company’s policy was “to avoid off-label marketing” of its Impella 2.5 micro heart pump, when they were in fact “orchestrating and engaged in widespread off-label marketing promotion.” Fire and Police Pension Association, 2015 U.S. App. LEXIS 1944 at *2 (citation omitted). The complaint further alleged that defendants told investors that the company was cooperating with the FDA’s investigation into its marketing practices and working “to resolve a few discrete issues,” while it was actually “trivializing the concerns” and “continuing to off-label market.” Id. (citation omitted). The district court held that plaintiffs had not pleaded facts “giving rise to a cogent and compelling inference of scienter,” as required under the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Id. at *2-3.Continue Reading Off-label Promotion, Securities Law Style

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Today, the United States Supreme Court decided Halliburton Co. v. Erica P. John Fund, Inc., No 13-317 (U.S. June 23, 2014).  Here’s a link to the
opinion.  As we mentioned in our prior post, one of the questions the Supreme Court took the case to decide was whether to abolish altogether the so-called “fraud on the market” presumption of reliance in securities cases that the Court had recognized, 4-3, in Basic, Inc. v. Levinson, 485 U. S. 224 (1988).

The Court didn’t do that.  The vote on that point was six-to-three.  A combination of stare decisis (slip op. at 4, 7-8, 11), that Congress could have abolished the presumption itself but hadn’t (id. at 12-13, 15-16), and the Court’s emphasis on the rebuttable nature of the presumption – its “modest premise” (id.
at 10, see id. at 7, 10, 14-15) preserved it in cases where the evidence supported the existence of an “efficient” securities market.

We’re not securities lawyers here.  We’re interested in Halliburton primarily for its effect in keeping “fraud on the market” presumptions out of our sandbox – the manifestly non-“efficient” market for prescription medical products, where patients cannot even buy these products without a learned intermediary physician first prescribing them.  As we laid out at some length in a prior post (one of our 50-state surveys) back in 2010, the fraud on the market theory has been roundly rejected by courts applying state law, even in securities cases.  Our chief concern at present isn’t state law, but rather the abominable RICO-based liability theories that the First Circuit embraced in its Neurontin trilogy.  We discussed at length here how that court had allowed expert testimony that didn’t just presume reliance in a RICO case claiming off-label promotion, but allowed expert testimony amounting to a conclusive presumption of reliance – a presumption that that court held overcame the testimony of every prescribing physician who testified that they had not relied on the promotion.  What’s more, the First Circuit in Neurontin even allowed that expert to impugn the credibility of the physician witnesses before the jury.

What happened in Neurontin was unprecedented, and we hope that, after what we gleaned from today’s Supreme Court decision, it remains that way.  There’s a chance of that because the Supreme Court today had a lot to say about rebuttable presumptions of reliance, even in the sometimes “efficient” securities market.Continue Reading Supreme Court Dents, But Keeps, “Fraud on the Market” in Securities Cases

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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 …

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Last year the Ninth Circuit, in a case called Siracusano v. Matrixx Initiatives, 585 F.3d 1167 (9th Cir. 2009), issued a really troubling decision, holding that reports of adverse product events – although not even the plaintiff claimed that they were statistically significant – were enough to get past a motion to dismiss in…

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Some folks visit this site by choice — they search the web and come to us.

Others, however, now subscribe by a “Google E-Mail Group,” which means that we inflict an e-mail on you every time we publish a post. That briefly made us more reluctant to waste your time by posting off-topic or frivolous…

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We talk like product liability lawyers, but we can spell “10b-5.” Trust us.
We even read securities cases every once in a while. Here’s one we recommend to readers of this blog who are fighting some types of pharmaceutical or medical device class actions in Texas state courts: Citizens Insurance Company of America v. Daccach…

Drug & Device Resources

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FDA-regulated products now account for an estimated one-fifth of overall economic activity in the U.S. They have also been the focus of a litigation explosion. This timely guide covers all aspects of litigation involving drugs, medical devices, vaccines and other FDA-regulated prescription products.
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