ADR Class Certified Against Sanofi-Aventis
U.S. District Judge George B. Daniels recently certified a class of investors in a securities-fraud case proceeding in the Southern District of New York against pharmaceutical giant Sanofi-Aventis.
This case was filed in 2007, alleging the company and two of its former senior executives made false and misleading statements regarding its potential blockbuster drug, rimonabant. Sanofi sought marketing approval in the United States to market rimonabant to treat obesity, as well as to aid in smoking cessation. Clinical trials of the drug allegedly showed a significant relationship between use of the drug and suicidality. Plaintiffs alleged that defendants concealed this link, and the FDA’s concern about it, during the class period. When the FDA held an Advisory Committee meeting in June 2007 to evaluate rimonabant, the advisory panel voted unanimously not to approve the drug, citing concerns over the adverse psychiatric safety data.
In February 2012, plaintiffs sought to certify a class of investors in Sanofi common stock and American Depository Receipts (“ADRs”) who purchased stock between February 20, 2006 and June 13, 2007. On March 20, 2013, Judge Daniels certified a class of investors who purchased Sanofi ADRs from February 24, 2006 through June 13, 2007, but did not certify the class as to foreign ordinary shares.
Much of defendants’ briefing was devoted to the issue of whether plaintiffs could prove the materiality of their misstatements and omissions, and, by extension, whether the fraud-on-the-market presumption would apply to plaintiffs’ claims. Following the Supreme Court’s decision in Amgen, however, defendants withdrew this portion of their argument. Judge Daniels noted this in his opinion and further found that the predominance and superiority requirements of Rule 23(b) were satisfied because “[a]s is often the case in securities class actions, whether Defendants’ statements were materially misleading to a reasonable investor is an issue ‘subject to generalized proof, and thus applicable to the class as a whole.’’’ Judge Daniels also rejected defendants’ attempts to portray plaintiffs as subject to unique defenses, finding that defendants had failed to show that class representative Hawaii Annuity Trust Fund for Operating Engineers was uniquely knowledgeable about rimonabant’s approval status, or had not suffered damages. Finally, because the first alleged misstatement about rimonabant occurred on February 24, 2006, Judge Daniels held that this was the appropriate start date for the class period.
In re Sanofi-Aventis Sec. Litig., 293 F.R.D. 449 (S.D.N.Y. 2013).