Matrixx Initiatives, Inc. v. Siracusano
131 S. Ct. 1309
| SCOTUS | 2011Background
- Respondents alleged Matrixx violated §10(b) and Rule 10b-5 by omitting adverse-event reports linking Zicam to anosmia.
- Matrixx argued the complaint failed to plead material misrepresentation/omission or scienter.
- Class period encompassed 2003–2004 with Zicam constituting ~70% of Matrixx’s sales.
- Matrixx publicly downplayed anosmia risks while possessing medical reports suggesting a link.
- FDA/DTCA and a later FDA warning letter cited broader postmarket evidence that could support disclosure.
- The Ninth Circuit affirmed against dismissal; Supreme Court granted certiorari and reversed for affirmance on materiality and scienter issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether adverse-event reports can be material without statistical significance. | Matrixx’s rule requires statistical significance for materiality. | Matrixx argues reports with no statistical significance are not material. | Not a bright-line rule; materiality depends on total mix of information. |
| Whether the complaint plausibly pleads materiality under Basic’s total mix standard. | Allegations show reports plausibly altering total mix. | Allegations insufficient to show material impact. | Yes; the facts alleged render material information plausible. |
| Whether the complaint plausibly pleads scienter under PSLRA. | Collective inferences show deliberate recklessness. | No strong inference of scienter from alleged facts. | Yes; allegations taken collectively provide cogent, compelling inference of scienter. |
Key Cases Cited
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality tied to total mix of information)
- Stoneridge Invest. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (U.S. 2008) (elements of §10(b) claim and reliance framework)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (U.S. 2007) (strong inference standard under PSLRA)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading standard; plausibility)
- Twombly, Bell Atlantic Corp. v., 550 U.S. 544 (U.S. 2007) (pleading requirements; plausible claims)
- TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (U.S. 1976) (materiality broad; not a single-factor rule)
- Basic, Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality standard—total mix)