512 F.Supp.3d 321
D. Conn.2021Background
- Plaintiffs (dozens of institutional and direct-action investors) allege Teva engaged in a multi-year scheme (2013–2019) to raise and collude on prices of certain generic drugs, inflating revenue, profits, and Teva’s stock price. Early alleged misstatement: Feb. 6, 2014; many Direct Actions filed Feb. 2019–Apr. 2020.
- Cases were consolidated in D. Conn.; Direct Actions are opt-outs of the putative class and plead overlapping misstatements/omissions and securities claims under the Exchange Act, Securities Act, and, in some actions, Israel Securities Law (ISL, 1968) and Pennsylvania law.
- Defendants moved (1) to dismiss Exchange Act/PSA claims based on statutes of repose for misstatements older than five years under 28 U.S.C. § 1658(b)(2) and 70 Pa. Stat. § 1-504(a); and (2) to decline supplemental jurisdiction or dismiss Israeli-law claims (ISL) on forum non conveniens grounds.
- Court: granted defendants’ partial repose motion—§1658(b)(2) operates to bar claims based on misstatements/omissions older than five years because each misstatement/omission can constitute a separate ‘‘violation’’; continuing-violation or equitable tolling theories do not avoid repose. Related PSA claims were treated the same.
- Court: denied defendants’ motion to decline supplemental jurisdiction and denied forum non conveniens dismissal of ISL claims—finding U.S. law governs ISL liability for dual-listed companies, Israeli precedent and administrative guidance support that approach, overlap with federal claims favors exercising jurisdiction, and practical inconveniences/comity concerns were speculative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does the §1658(b)(2) (five-year) repose period begin for §10(b) claims? | Repose clock begins at the last culpable misstatement/omission (so older statements fall within a continuing violation). | Repose clock begins at each alleged misstatement/omission; each can constitute a separate violation, so claims tied to >5-year-old statements are time-barred. | Held: Clock runs from each alleged misstatement/omission; plaintiffs cannot avoid repose by invoking continuing-violation or equitable tolling. |
| Can Rule 10b-5 “scheme liability” or a continuing-fraud theory render time-barred misstatements timely? | Plaintiffs suggested scheme liability and that the scheme persisted, which would make earlier acts part of a continuing violation. | Defendants: plaintiffs effectively seek equitable tolling/continuing-violation to evade repose; scheme label cannot convert misstatement claims into independent scheme liability. | Held: Plaintiffs did not plead a distinct scheme-liability claim with necessary elements; relief denied—misstatements/omissions cases remain subject to repose analysis per each act. |
| Should the court decline supplemental jurisdiction over Israeli-law (ISL) claims under 28 U.S.C. § 1367(c)? | ISL claims mirror U.S. law for dual‑listed companies; exercising supplemental jurisdiction promotes economy and avoids duplicative litigation in Israel. | Defendants urged declining jurisdiction because choice-of-law and Israeli-law issues are novel/complex, parallel Israeli suits exist, and comity favors Israeli courts. | Held: Court exercised supplemental jurisdiction—Israeli precedent and ISA guidance indicate U.S. law governs ISL liability for dual‑listed companies; the ISL issues are not novel/insurmountable and overlap with federal claims favors retention. |
| Should the ISL claims be dismissed on forum non conveniens? | Plaintiffs: U.S. forum is appropriate (many witnesses/evidence in U.S., strong overlap with federal claims, Teva previously sought U.S. proceedings). | Defendants: many Israeli plaintiffs are foreign/Israeli; Israel is adequate and preferable for Israeli-exchange claims; risk of double or inconsistent liability and comity concerns. | Held: Court denied forum non conveniens dismissal—gave medium deference to plaintiffs’ forum choice; overlap, witness/evidence location, dual‑listing policy, and speculative nature of defendants’ comity concerns weigh against dismissal. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible to survive Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards and reasonable inferences on motion to dismiss)
- Cal. Pub. Emps.’ Ret. Sys. v. ANZ Securities, Inc., 137 S. Ct. 2042 (2017) (statutes of repose begin to run on date of last culpable act/omission; distinguishes repose from limitations)
- CTS Corp. v. Waldburger, 573 U.S. 1 (2014) (statutes of repose set an outer limit measured from defendant’s last culpable act)
- P. Stolz Family P’ship L.P. v. Daum, 355 F.3d 92 (2d Cir. 2004) (discussion of repose functioning and related tests)
- SRM Global Master Fund Ltd. P’ship v. Bear Stearns Cos., LLC, 829 F.3d 173 (2d Cir. 2016) (§1658(b)(2) is a statute of repose not subject to equitable tolling)
- Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258 (2014) (a single misstatement/omission can establish a §10(b) violation)
- Morrison v. Nat’l Australia Bank, Ltd., 561 U.S. 247 (2010) (limits extraterritorial application of §10(b); relevance to dual‑listing/territoriality issues)