Kleinman v. Elan Corp., plc
2013 U.S. App. LEXIS 2338
| 2d Cir. | 2013Background
- Kleinman filed a putative class action on behalf of Elan call-option purchasers alleging a June 17, 2008 press release about bapineuzumab's Phase 2 results was misleading under Section 10(b) and 20(a).
- Elan and Wyeth (later Pfizer successor) jointly developed bapineuzumab; the June release highlighted encouraging subgroup results (ApoE4 non-carriers) while noting overall results were not statistically significant.
- Plaintiffs allege omissions included post-hoc analyses, dose-response concerns, subgroup demographics, and safety issues; ICAD full results were released six weeks later on July 29, 2008.
- The district court dismissed for failure to state a claim; Kleinman amended but the court again rejected the pleadings as failing to allege a false statement or necessary omission.
- The Second Circuit affirmed, holding the June press release was not false or misleading, and leave to amend was properly denied.
- July 30, 2008 stock price drop was not held to prove falsity, and post-hoc analyses were disclosed and framed as exploratory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the June press release violated §10(b)/Rule 10b-5 by omitting material information. | Kleinman | Elan/Pfizer | No actionable omission; not misleading as a whole. |
| Whether post-hoc analyses and ApoE4 subgroups render the disclosure misleading. | Kleinman | Defendants | Post-hoc analyses disclosed and reasonably interpretable; not actionable. |
| Whether statements like 'Encouraging Top-line Results' constitute actionable misrepresentation. | Kleinman | Elan/Wyeth | Not actionable puffery given context and accompanying disclosures. |
| Whether the price drop after ICAD undermines the alleged falsity. | Kleinman | Unrelated market factors; not proof of falsity | Not probative of falsity or materiality on these facts. |
| Whether leave to amend should have been granted. | Kleinman | Amendment would not cure deficiencies | Denied; amendment would not salvage the claim. |
Key Cases Cited
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (U.S. 2011) (disclosure not mandatory unless necessary to prevent misleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim to relief)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (fraud claim requires deception with resulting loss)
- In re Time Warner Inc. Sec. Litig., 929 F.2d 195 (2d Cir. 1991) (omissions may be actionable depending on context)
- Resnik v. Swartz, 303 F.3d 147 (2d Cir. 2002) (disclosure duties tied to materiality and context)