Plaintiffs Win Appeal in Eighth Circuit for Medtronic Investors
On December 28, 2016, the United States Court of Appeals for the Eighth Circuit ruled in plaintiffs’ favor in the Medtronic securities class action, vacating the district court’s summary judgment decision. The case alleges that Medtronic and certain of its officers and directors violated federal securities laws by engaging in a scheme to defraud Medtronic shareholders by secretly drafting and editing medical journal studies supposedly authored by doctors with lucrative financial ties to Medtronic, which studies and journals underreported or failed to report adverse events associated with the on-label use of Medtronic’s key bone growth treatment, INFUSE. Plaintiffs claim that Medtronic’s deception artificially inflated the stock price, which caused plaintiffs to suffer hundreds of millions of dollars in losses during the class period. Plaintiffs appealed the district court’s dismissal of the case after the court ruled in Medtronic’s favor, determining that plaintiffs’ claims were time-barred. In the appellate brief, plaintiffs argued that they did not know, and through the exercise of reasonable diligence could not have known, of the facts forming the basis of their §10(b) claims, particularly scienter, more than two years before June 28, 2013, when the complaint was filed.
In vacating the district court’s summary judgment decision, the Eighth Circuit panel found that shareholders were not able to discover facts regarding defendants’ scienter and involvement in the alleged scheme until the Senate Staff Report was published in October 2012, which was less than two years before the complaint was filed.
“We are pleased that the Eighth Circuit Court of Appeals reversed the dismissal of the action and affirmed that the statute of limitations did not run until the lead plaintiffs Employees’ Retirement System of the State of Hawaii and Union Asset Management Holding AG could discover facts sufficient to constitute a violation of law,” stated Robbins Geller partner Shawn Williams.
The Eighth Circuit vacated the district court’s summary judgment order and remanded the case to the district court for further proceedings.
West Virginia Pipe Trades Health & Welfare Fund, et al. v. Medtronic, Inc., et al., No. 15-3468, Opinion (8th Cir. Dec. 28, 2016).