Inter-Local Pension Fund Gcc/i v. Rigel Pharmaceuticals, Inc.
2012 U.S. App. LEXIS 18743
9th Cir.2012Background
- This is a Ninth Circuit securities fraud appeal from a district court’s dismissal of a consolidated amended complaint alleging misstatements and omissions by Rigel Pharmaceuticals and others related to a Phase II trial of R788.
- Plaintiff Inter-Local Pension Fund GCC/IBT sued under Sections 10(b) and 20(a) and the safe harbor provisions of the Securities Exchange Act, and under Sections 11, 12, and 15 to the extent applicable.
- Alleged misstatements and omissions centered on a December 13, 2007 press release and a February 2008 SEC registration statement regarding R788’s trial results.
- The complaint highlighted top-line efficacy results (ACR20/50/70) and safety data, including dose-related adverse events, and claimed subsequent disclosures in a journal article and conference presentations were misleading.
- Plaintiff also alleged later statements about a potential development partnership for R788 and claimed country-specific data suggested a country interaction affecting efficacy.
- Defendants moved to dismiss; the district court granted the motion with leave to amend, and the district court’s dismissal was affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint adequately pleads falsity under Rule 10b-5 | Plaintiff contends falsity from misleading efficacy results and country interaction. | Defendants argue poses only disagreements over methodology, not false statements. | No adequate falsity pleading; district court affirmed. |
| Whether the complaint adequately pleads scienter under PSLRA | Plaintiff argues knowledge of data and motives show strong inference of intent to defraud. | Defendants contend scienter not sufficiently alleged given methodological disputes and lack of insider trading. | Weak scienter inference; district court affirmed dismissal. |
| Whether statements about safety were false or misleading under Matrixx | Omissions about safety data rendered initial safety statements misleading. | Matrixx does not require disclosure of all adverse events; statements were not false or misleading. | Matrixx applicable; no falsity found. |
| Whether statements about partnership prospects were false or misleading | Defendants knew results undermined partnership prospects but statements misrepresented expectations. | Statements reflect forward-looking expectations; not proven false at time. | Not adequately pled as false under Rule 9(b)/PSLRA. |
| Whether Section 11 claim is grounded in fraud and properly pleaded | Section 11 claim relies on allegedly fraudulent December 13 press release. | Claims tied to same misrepresentations; Rule 9(b) applies. | Section 11 claim grounded in fraud; fails Rule 9(b) pleading. |
Key Cases Cited
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (strong inference required for scienter; holistic view of allegations)
- GlenFed, Inc. Securities Litig., 42 F.3d 1541 (9th Cir. 1994) (requires pleading falsity with specificity)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (S. Ct. 2011) (not all adverse events must be disclosed; omissions must not render statements misleading)
- Ronconi v. Larkin, 253 F.3d 423 (9th Cir. 2001) (context for falsity vs. scienter in forward-looking statements)
- Lipton v. Pathogenesis Corp., 284 F.3d 1027 (9th Cir. 2002) (motive alone is insufficient for scienter)
- Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049 (9th Cir. 2008) (stock sales timing affects scienter inference)
- Rubke v. Capitol Bancorp Ltd., 551 F.3d 1156 (9th Cir. 2009) (Rule 9(b)/fraud pleading standards for securities claims)