Mississippi Public Employees' Retirement System v. Boston Scientific Corp., 649 F.3d 5

Mississippi Public Employees' Retirement System sued Boston Scientific for alleged Section 10(b) and 20(a) violations tied to the Taxus stent, claiming omissions and misstatements about defect risks and recalls.
The district court granted summary judgment, holding plaintiff failed to show scienter; the First Circuit previously reversed a Rule 12(b)(6) dismissal on a strong-inference pleading standard.
Express2 and Taxus systems share the same catheter; no-deflate issues arose from focal necking due to laser heating and tensile forces, with multiple phases of corrective actions beginning in 2003.
Express2 Phase actions included SLCA/CAPA investigations, PIR reporting, and harmonizing distal outers and laser welds across Maple Grove and Galway facilities.
Taxus PMA process ran concurrently; a 2003-2004 design shift and reticle inspections were implemented to address no-deflate and related issues, with FDA involvement.
In 2004, recalls were issued for certain lots (Maple Grove pre-reticle inspection, Galway pre-reticle inspection) and later expanded upon uncovering cone-puffing and laser-shift findings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiff showed scienter to defeat summary judgment	Yopp argues defendants had knowledge contradicting public statements.	BSC contends no evidence of conscious intent or extreme recklessness; disclosures were not misleading.	No genuine triable issue; no sufficient scienter shown.
Was the laser shift disclosure timing actionable	Failure to disclose the laser shift sooner implied scienter.	Laser shift did not determinatively govern recalls and was not disclosed prematurely given validation status.	No scienter; disclosure timing was not misleading.
Were statements about physician familiarity misleading	Statements attributing problems to physician unfamiliarity misled investors about manufacturing risk.	Statements distinguished between sticky stent and no-deflate issues; not misleading.	No scienter; statements properly distinguished causes and were not knowingly false.
Was recall risk adequately disclosed or were omissions material	Recall risk should have been disclosed earlier; omissions were material.	Risk disclosures were adequate; omission was not necessary to avoid misleading.	Disclosures were sufficient; no material omission as to recall risk.

Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (2011) (materiality is contextual to what a reasonable investor would view as altering total information)
Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976) (gives definition of scienter as intent to defraud or high degree of recklessness)
ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46 (1st Cir. 2008) (recklessness requires extreme departure from standards of ordinary care)
Waters Corp. v. City of, 632 F.3d 756 (1st Cir. 2011) (summary judgment standard and pleading burdens in securities actions)
In re Carter-Wallace, Inc. Sec. Litig., 220 F.3d 36 (2d Cir. 2000) (focus on whether defendants had a sound basis to doubt commercial viability)
Hill v. Gozani, 638 F.3d 40 (1st Cir. 2011) (risk disclosure does not require detailing every factor; unknown level permits restraint)
Basic Inc. v. Levinson, 485 U.S. 224 (1988) (materiality and the total mix of information)
Greebel v. FTP Software, Inc., 194 F.3d 185 (1st Cir. 1999) (recklessness and omissions analysis in securities fraud)
Upjohn Co. v. United States, 449 U.S. 383 (1981) (attorney-client privilege framework for communications)