Second Circuit Revives Investors’ Securities Class Action Against Pfizer

On April 12, 2016, the United States Court of Appeals for the Second Circuit determined that the United States District Court for the Southern District of New York improperly excluded Plaintiffs’ expert, Daniel R. Fischel, from testifying at a 2014 trial on loss causation and damages associated with Pfizer, Inc.’s (Pfizer) alleged misrepresentations about the safety risks of the company’s drugs Celebrex and Bextra.  Without testimony on these issues, Plaintiffs could not sustain key elements of their claims and the district court granted Pfizer’s summary judgment motion in 2014.

The Second Circuit also concluded that the district court erred in its earlier summary judgment ruling that no reasonable jury could find Pfizer liable for statements made by G.D. Searle & Co. (Searle) and Pharmacia Corporation (Pharmacia), the companies that owned the drugs before Pfizer.  Citing the Supreme Court’s landmark decision in Janus Capital Grp. v. First Derivative Traders, 131 S. Ct. 2296, 2302 (2011), Circuit Judge Debra Ann Livingston explained that “in the ordinary case,” the statements’ attribution to Searle or Pharmacia employees is “strong evidence” that the statements were made only by “the party to whom [they were] attributed.”  Here, however, “Plaintiffs have presented sufficient evidence to permit a reasonable jury to conclude that Pfizer had ultimate authority over [certain] statements’ content and whether and how to communicate them.”

With respect to Fischel’s testimony, the Second Circuit concluded that the district court erred in finding that Fischel needed to disaggregate the effects of Pfizer’s allegedly fraudulent conduct from Searle’s or Pharmacia’s, regardless of Pfizer’s ultimate liability for those companies’ statements.  “Under Plaintiffs’ theory of the case,” Circuit Judge Livingston wrote, “Fischel’s testimony could have been helpful to the jury even without such disaggregation.”  Although the district court did not abuse its discretion in concluding that part of Fischel’s economic analysis “was not sufficiently reliable to be presented to a jury,” the Second Circuit determined, “Fischel’s error did not render the remainder of his testimony unreliable.”

Accordingly, the panel vacated and remanded the district court’s judgment.  The case is In re Pfizer Inc. Sec. Litig., Case No. 14-2853-cv (2d Cir. Apr. 12, 2016).

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Faruqi & Faruqi focuses on complex civil litigation, including securities, antitrust, wage and hour, and consumer class actions as well as shareholder derivative and merger and transactional litigation.  The firm is headquartered in New York, and maintains offices in California, Delaware and Pennsylvania.  Since its founding in 1995, Faruqi & Faruqi has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers and employees.

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About Katherine Lenahan

Katherine M. Lenahan is an Associate in Faruqi & Faruqi, LLP’s New York office.  Ms. Lenahan focuses her practice on securities litigation, representing plaintiffs in federal securities fraud class actions.  Please feel free to contact Katherine regarding any questions concerning this blog post or any questions related to F&F’s practice areas.

Posted by Katherine M. Lenahan

Partner at Faruqi & Faruqi, LLP
New York Office
Tel: (212) 983-9330
Fax: (212) 983-9331

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