2011 WL 6962826
D. Minn.2011Background
- Plaintiffs are institutional investors who bought Medtronic common stock between Nov 20, 2006 and Nov 17, 2008 and allege false/misleading statements about Infuse.
- Infuse is a surgically implanted device using a genetically engineered protein to stimulate bone growth; FDA-approved uses are limited.
- Plaintiffs allege Medtronic promoted off-label Infuse uses—potentially over 85% of Infuse sales were off-label.
- FDA issued a warning in 2008 about a particular off-label Infuse use; DOJ later investigated off-label use; stock fell over 45% after these disclosures.
- Amended Complaint asserts violations of §10(b), §20(a), and Rule 10b-5; plaintiffs rely on testimony from confidential witnesses; defendants challenge the witnesses’ testimony.
- Court analyzes Rule 23 prerequisites and ultimately finds the class certifiable on numerosity, commonality, predominance, typicality, and superiority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the class meets Rule 23 prerequisites | Plaintiffs meet numerosity, commonality, predominance, typicality, and adequacy | Defendants challenge adequacy of counsel and standing concerns | Yes, prerequisites satisfied; class certification appropriate |
| Adequacy of class representation | Counsel is capable; witnesses’ declarations are subject to deposition testing | Plaintiffs’ counsel misrepresented witnesses’ testimony | Premature to deny; depose witnesses; no basis to find inadequate representation at this stage |
| Class definition and standing | Class definition broad but includes proper purchasers/acquirers | Definition may include non-standing individuals | Defendants’ standing challenge rejected; definition acceptable for certification |
| Lead plaintiff certification (PSLRA) | Institutional lead plaintiff appropriate; Oklahoma Teachers valid under PSLRA | Potential professional plaintiff issues; not fatal | Oklahoma Teachers permitted as lead plaintiff; PSLRA considerations discussed; not a bar to certification |
| Appointment of class counsel | Current lead counsel should serve as class counsel | No formal Rule 23(g) appointment made | Court defers ruling on class counsel; requires litigation management plan within 30 days |
Key Cases Cited
- Gen. Tel. Co. v. Falcon, 457 U.S. 147 (U.S. 1982) (burden on class certification; analysis limited to prerequisites)
- Thompson v. Am. Tobacco Co., 189 F.R.D. 544 (D.Minn.1999) (burden to examine factual record in certification)
- Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir.1996) (class certification analysis involves intertwined factual/legal issues)
- Reiter v. Sonotone Corp., 442 U.S. 330 (U.S. 1979) (broad discretion in determining class certification)
- Creative Montessori Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913 (7th Cir.2011) (fiduciary impairment concerns in class representation; contingent on facts)
- In re Fannie Mae Sec. Litig., 355 F. Supp. 2d 261 (D.D.C.2005) (institutional investors may exceed PSLRA lead-plaintiff limits)
- Erica P. John Fund v. Halliburton Co., 131 S. Ct. 2179 (U.S. 2011) (loss causation standards for class certification)