Alonzo v. Dexcom Inc.
3:24-cv-01485
S.D. Cal.May 14, 2025Background
- The National Elevator Industry Pension Fund, as lead plaintiff, brought a class action against Dexcom, Inc. and certain current and former executives for alleged securities fraud under the Exchange Act.
- The suit claims Dexcom misled investors about its ability and progress in capturing market share in the Type 2 Basal diabetes CGM market after an expansion in Medicare coverage.
- Plaintiff alleges Dexcom hid significant competitive disadvantages versus Abbott, including weaker relationships with primary care physicians, lack of rebate programs, and issues transitioning sales channels.
- After initially positive statements throughout 2023 and early 2024, Dexcom lowered guidance and admitted struggles on July 25, 2024, resulting in a major stock drop.
- The action consolidates multiple related cases; the operative complaint asserted § 10(b) and § 20(a) Exchange Act violations and was met with a motion to dismiss by Dexcom.
- The court reviewed the pleadings under the heightened pleading requirements of Rule 9(b) and the PSLRA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Clarity of Allegedly False Statements | Dexcom made 14 misleading statements about market share and sales force capabilities. | Complaint is a “puzzle pleading”; not clear which words/phrases are being challenged or why. | Dismissed: Complaint fails to clearly identify false/misleading statements as required by law. |
| Compliance with PSLRA and Rule 8 Pleading Standards | Complaint highlights alleged misstatements using bold/italics and alleges deception. | Merely highlighting/bolding text is insufficient; specifics are not clearly pleaded. | Dismissed: Complaint does not comply with PSLRA/Rule 8 requirements. |
| Sufficiency of Allegation Matching Statement to Falsity/Scienter | Allegations are sufficient by highlighting and providing context. | Defendants and court must not guess what part of statements are challenged; specific explanation needed for falsity/scienter. | Dismissed: Must specify why each statement is false/misleading and include scienter. |
| Leave to Amend | Leave to amend complaint should be allowed if deficiencies are curable. | N/A | Granted: Plaintiff given 14 days to amend with greater specificity. |
Key Cases Cited
- In re VeriFone Holdings, Inc. Sec. Litig., 704 F.3d 694 (9th Cir. 2012) (discussing heightened PSLRA pleading standards)
- Oklahoma Firefighters Pension & Retirement System v. Nektar Therapeutics, 34 F.4th 828 (9th Cir. 2022) (heightened standard for pleading securities fraud)
- Glazer Capital Mgmt., L.P. v. Forescout Techs., Inc., 63 F.4th 747 (9th Cir. 2023) (discussing PSLRA’s robust pleading hurdles)
- Knappenberger v. City of Phx., 566 F.3d 936 (9th Cir. 2009) (leave to amend standard)