$50 Million Recovery Preliminarily Approved in St. Jude Medical
On March 9, 2015, United States District Judge Susan Richard Nelson of the District of Minnesota granted preliminary approval to a $50 million settlement in the securities class action lawsuit In re St. Jude Medical, Inc. Securities Litigation. The agreement to settle the case subject to court approval came on the eve of trial after investor class members, represented by lead plaintiff and class representative Building Trades United Pension Trust Fund (“Building Trades”), obtained significant pretrial rulings in their favor and defeated attempts by defendants to obtain summary judgment and decertify the class.
Robbins Geller and named plaintiff City of Taylor Police and Fire Retirement System filed the case on March 18, 2010 on behalf of purchasers of St. Jude Medical, Inc. (“STJ” or the “Company”) securities between April 22, 2009 and October 6, 2009, inclusive. The complaint names as defendants STJ, CEO Dan Starks, CFO John Heinmiller, Group President Mike Rousseau, and President of the Cardiac Rhythm Management Division Eric Fain.
The complaint alleges that STJ, a medical device manufacturer based in St. Paul, Minnesota, defrauded investors by utilizing heavily discounted end-of-quarter bulk sales to meet quarterly expectations, which created a false picture of demand by increasing customer inventory of STJ medical devices. Because these reported sales outpaced true demand, customer shelf stock built and put STJ’s ability to make future sales at risk. The complaint also alleges that defendants issued deliberately inflated guidance to investors that was contradicted by STJ’s internal forecasts and concealed the extent to which an ongoing economic recession was affecting or could potentially affect sales and demand for its products. According to the Complaint, due to the Company’s extensive reliance on end-of-quarter bulk sales of products in amounts that exceeded customers’ demand, STJ’s business was at great risk of declining during an extended recession.
“Through 4-1/2 years of hard-fought litigation, we succeeded in obtaining strong evidence to present at trial to prove the fraud that had been perpetrated on Building Trades and the other members of the class,” said Robbins Geller partner Dennis J. Herman. “The defendants are represented by skilled counsel who left no stone unturned in their efforts to defeat liability. That we were able to withstand these attacks and were prepared to present this case to a jury is a testament to the efforts of our trial team and our commitment to pursuing a recovery on behalf of injured investors, no matter the obstacles placed in our way.” The $50 million recovery, voluntarily reached with the assistance of a respected mediator, reflects the merits of the claims while avoiding the cost and uncertainty of continued litigation.
Building Trades and Robbins Geller aggressively litigated this action up to the eve of the scheduled February 23, 2015 trial. Building Trades overcame defendants’ motion to dismiss on December 23, 2011; successfully obtained an order certifying the case as a class action on October 25, 2012; and prevailed in all significant respects on defendants’ motion for summary judgment on August 11, 2014. During this time Robbins Geller attorneys engaged in expansive discovery, spanning approximately three years, developing evidence that would have been used to demonstrate fraud at trial. Robbins Geller attorneys obtained more than 230,000 documents from STJ and conducted more than 40 depositions, including current and former STJ employees and experts defendants retained to testify at trial.
Robbins Geller attorneys Darren J. Robbins, Dennis J. Herman, Daniel S. Drosman, Luke O. Brooks, Matthew S. Melamed, Armen Zohrabian, and X. Jay Alvarez litigated this case on behalf of the class. The final approval hearing is scheduled for June 12, 2015.
In re St. Jude Medical, Inc. Sec. Litig., No. 0:10-cv-00851-SRN-TNL (D. Minn.).