POTTER v. VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
3:15-cv-07658
| D.N.J. | May 3, 2024Background
- This opinion addresses Plaintiffs' partial motion for reconsideration of the court's prior ruling partially granting Defendants summary judgment in a complex securities litigation concerning Valeant Pharmaceuticals International, Inc.
- At issue were whether three specific dates identified as "corrective disclosure events" actually revealed new, corrective information to the market about Defendants' alleged misstatements about Valeant’s business model and practices.
- The court had previously granted summary judgment for Defendants as to four of the sixteen alleged corrective events, finding no new information was disclosed to the market.
- Plaintiffs sought reconsideration as to three of these four events (October 20 & 22, 2015, and March 15, 2016), arguing the court overlooked or misconstrued material facts.
- The legal standard for reconsideration under Local Civil Rule 7.1 is stringent, only granted for new law, new evidence, or clear error to prevent manifest injustice.
- The primary legal question relates to what constitutes a "corrective disclosure" sufficient to establish loss causation under § 10(b) of the Securities Exchange Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| October 20, 2015 Corrective Disclosure | NYT article revealed new facts re: Valeant's use of Philidor specialty pharmacy | NYT article contained no new information; facts were public via SIRF report | No new information; motion for reconsideration denied |
| October 22, 2015 Corrective Disclosure | Court relied on wrong press release; Philidor's option for R&O was new info | Press release confirmed what Citron report showed; no new, non-confirmatory info | Responsibility to cite correct record; no basis for reconsideration |
| March 15, 2016 Corrective Disclosure | First actual numbers showing impact of Philidor exit; revealed undisclosed reliance | Prior disclosures about business disruption existed; Q4 miss ≠ corrective info | Earnings miss insufficient for corrective disclosure |
| Reconsideration Standard | Court overlooked/misconstrued key facts | No new law or evidence; arguments repeatedly raised already | No new evidence, law, or clear error shown |
Key Cases Cited
- In re Merck & Co., Inc. Sec. Litig., 432 F.3d 261 (3d Cir. 2005) (repackaging previously known information does not constitute a corrective disclosure)
- McCabe v. Ernst & Young, 494 F.3d 418 (3d Cir. 2007) (sets forth elements required for a § 10(b) securities fraud claim)
- Omnicom Grp., Inc. Sec. Litig., 597 F.3d 501 (2d Cir. 2010) (a recharacterization of known facts is not a corrective disclosure)
- Pub. Emps. Ret. Sys. of Miss. v. Amedisys, Inc., 769 F.3d 313 (5th Cir. 2014) (speculation or inconclusive reports do not trigger loss causation)