Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

In this complaint alleging that Defendants intentionally or recklessly misled investors about Ocular Therapeutix, Inc.'s manufacturing problems the First Circuit affirmed the judgment of the district court dismissing Plaintiffs' complaint for failure to state a claim, holding that Plaintiffs failed to allege facts giving rise to a strong inference of scienter as required by the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. 78u-4, 78u-5.In 2015, Ocular submitted a new drug application to the FDA for approval of Dextenza. In 2017, the FDA published its observations of issues at Ocular's manufacturing facility, which resulted in a drop in the company's stock price. Plaintiffs, several shareholders, brought this securities fraud action on behalf of themselves and a putative class of investors alleging violations of section 10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b) and section 20(a) of the Exchange Act, 15 U.S.C. 78t(a). The district court dismissed the complaint pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6), the Exchange Act, and the PSLRA. The district court granted the motion and dismissed the complaint with prejudice. The First Circuit affirmed, holding that Plaintiffs did not allege facts giving rise to a strong inference of scienter as required by the PSLRA. View "In re Ocular Therapeutix Inc." on Justia Law

The First Circuit reversed the judgment of the district court dismissing this qui tam action under the False Claims Act (FCA) against PharMerica, Inc. under the public disclosure bar, holding that relator James Banigan fell within an exception to that bar as an "original source of the information."Banigan and Richard Templin, former employees of the pharmaceutical company Organon, brought this action under the FCA and several of its state law equivalents alleging that PharMerica committed fraud by participating in a Medicaid scheme that rewarded it financially for incentivizing physicians to change patients' antidepressant prescriptions to Organon's medications. The district court dismissed the action under the public disclosure bar, which excludes from the subject matter jurisdiction of federal courts qui tam actions that are based upon the public disclosure of allegations in a civil hearing and other sources. The First Circuit reversed, holding that where the allegations of fraud were based upon Banigan's direct knowledge, Banigan's sources met the statutory requirement of "direct and independent knowledge of the information on which the allegations are based," see 31 U.S.C. 3730(e), to qualify as an original source. View "United States, ex rel. Banigan & Templin v. Pharmerica, Inc." on Justia Law

In these consolidated appeals arising out of two “off-label” prescription drug marketing cases aggregated for pretrial proceedings in the district court by order of a multidistrict litigation panel, the First Circuit reversed the dismissal of claims brought by two of the four plaintiffs, vacated the denial of Plaintiffs’ motion to compel the production of additional documents, and otherwise affirmed the district court's rulings.In their complaint, Plaintiffs claimed that Defendants, Forest Pharmaceuticals, Inc. and Forest Laboratories, Inc., engaged in an off-label marketing scheme aimed at fraudulently inducing doctors to write pediatric prescriptions of their antidepressant drugs when the FDA had not approved the use of these medications for minors. After discovery, the district court entered summary judgment for Defendant on Plaintiffs’ Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c)-(d), claims and dismissed Plaintiffs’ state-based allegations as deriving from their noncognizable RICO claims. The First Circuit (1) reversed the district court’s entry of summary judgment on certain plaintiffs’ RICO and state-law claims and on another plaintiff’s RICO and unjust-enrichment claims on the basis that the evidence was insufficient on these claims; (2) vacated the denial of Plaintiffs’ motion to compel; (3) affirmed the denial of class certification; and (4) otherwise affirmed. View "Painters & Allied Trades District Council 82 Health Care Fund v. Forest Pharmaceuticals, Inc." on Justia Law

The First Circuit reversed the district court’s certification of a class of all purchasers of Asacol, including purchasers who had not suffered any injury attributable to Defendants’ allegedly anticompetitive behavior, holding that the district court’s approach to certifying a class was at odds with both Supreme Court precedent and the law of this circuit.Drug manufacturer Warner Chilcott Limited’s coordinated withdrawal and entry of two drugs, Asacol and the similar drug called Delzicol, precluded generic manufacturers from introducing a generic version of Asacol, which would have provided a lower-cost alternative to Warner’s drugs, Delzicol and Asacol HD. Plaintiffs filed a class action alleging violations of the consumer protection and antitrust laws of twenty-five states and the District of Columbia. The district court certified a class of all Asacol purchasers who subsequently purchased Delzicol or Asacol HD in one of those twenty-six jurisdictions, finding that while ten percent of the class had not suffered any injury, those uninjured class members could be removed in a proceeding conducted by a claims administrator. The First Circuit reversed, holding that where injury-in-fact is a required element of an antitrust action, a class cannot be certified based on an expectation that the defendant will have no opportunity to press at trial genuine challenges to allegations of injury-in-fact. View "Teamsters Union 25 Health Services & Insurance Plan v. Warner Chilcott Limited" on Justia Law

The First Circuit held that federal law requires prior FDA approval for a manufacturer of prescription eye drops to change the medication’s bottle so as to alter the amount of medication dispensed into the eye, and therefore, state law claims challenging the manufacturers’ refusal to make this change are preempted.Plaintiff sued in federal court on their own behalf and on behalf of a putative class of prescription eye solution purchasers, asserting that Defendants deliberately designed their dispensers to emit unnecessarily large drops. Plaintiffs alleged that Defendants’ practice was “unfair” under Massachusetts state law and twenty-five other states and allied claims for unjust enrichment and for “money had and received.” The district court dismissed the complaint without ruling on the merits, finding that FDA regulations preempted Plaintiffs’ suit. The First Circuit affirmed, holding (1) changing a product bottle so as to dispense a different amount of prescription eye solution is a “major change” under 21 C.F.R. 314.70(b); and (2) therefore, Plaintiffs’ state law claims were preempted. View "Gustavsen v. Alcon Laboratories, Inc." on Justia Law

In these consolidated appeals from orders dismissing two putative antitrust class actions, the First Circuit affirmed the judgment of the district court holding that purchasers of a brand-name prescription drug had not plausibly alleged that either exception to Noerr-Pennington immunity applied to the alleged conduct of the drug maker and, on that basis, dismissing the putative class actions for failure to state a claim.Plaintiffs filed these antitrust actions alleging that Defendant unlawfully delayed the entry of generic versions of the drug at issue into the United States market by a fraud on the United States Patent and Trademark Office. Defendant moved to dismiss the actions, arguing that there was no fraud and claiming that it was immune from antitrust liability based on the Noerr-Pennington doctrine. See United Mine Workers of America v. Pennington, 381 U.S. 657 (1965). The district court dismissed the putative class actions under Fed. R. Civ. P. 12(b)(6), concluding that Noerr-Pennington immunity applied to Defendant’s alleged conduct and that the two exceptions to the immunity did not apply here. The First Circuit affirmed, holding that there was no reason to disturb the district court’s ruling dismissing Plaintiffs’ antitrust suits for failure to state a claim. View "United Food & Commercial Workers Unions & Employers Midwest Health Benefits Fund v. Novartis Pharmaceuticals Corp." on Justia Law

The district court did not err in dismissing Plaintiffs’ first amended complaint (FAC) for failure to state a claim or in denying Plaintiffs leave to file their proposed second amended complaint (PSAC) in this litigation in which Plaintiffs brought securities fraud claims against Sarepta Therapeutics, Inc. (Sarepta), Sarepta’s chief executive officer and Sarepta’s chief scientific officer (collectively, Defendants).Plaintiffs sought to represent a class of purchasers of securities that Sarepta issued between April 21, 2014 and October 27, 2014. Plaintiffs alleged that Defendants knowingly or recklessly misled investors about their target date for submitting an application to the United States Food and Drug Administration (FDA) for approval of the drug eteplirsen. The district court dismissed the FAC and denied Plaintiffs leave to file the PSAC. The First Circuit affirmed, holding (1) the district court did not err in dismissing the FAC for failure to state a claim because Plaintiffs did not adequately plead scienter in the FAC; and (2) and even assuming that the PSAC was not futile, the district court did not abuse its discretion in denying the PSAC on undue delay grounds. View "Kader v. Sarepta Therapeutics, Inc." on Justia Law

The First Circuit affirmed the district court’s finding, in this securities fraud class action against Sarepta Therapeutics, Inc. and former and current Sarepta executives, that Plaintiffs, several shareholders, failed to allege facts creating a strong inference that Defendants intentionally or recklessly deceived the investing public in the months before the Food and Drug Administration deemed premature Sarepta’s application for approval of a novel gene therapy. The price of the publicly traded securities issued by Sarepta dropped sixty-four percent after the FDA judged Sarepta’s filing premature. Plaintiffs allegedly that Defendants overstated the significance of certain data and exaggerated the likelihood that the FDA would accept a new drug application for filing, thereby deceiving the investing public and causing the purchase of Sarepta securities at inflated prices. The First Circuit affirmed the district court’s dismissal of this action, holding that Plaintiffs failed to satisfy the requisite pleadings standards. View "Corban v. Sarepta Therapeutics, Inc." on Justia Law

In this action brought by two individuals (Relators) under the False Claims Act (FCA) and various state analogues, the First Circuit affirmed in part and reversed in part the district court’s dismissal of the complaint. The district court concluded that Relators failed to plead false claims under either the FCA or the state-law versions of the FCA with the particularity required by Fed. R. Civ. P. 9(b). The First Circuit held (1) the complaint was correctly dismissed to the extent it relied on the alleged falsity of statements made by the product manufacturer in securing approval from the FDA to market a hip-replacement device; but (2) the district court erred in dismissing the complaint to the extent to rested on allegations that the manufacturer sold latently defective versions of its FDA-approved product on unsuspecting doctors who sought government reimbursement for defective products, as Relators’ complaint was sufficient to survive a Rule 9(b) motion to dismiss. View "Nargol v. DePuy Orthopaedics, Inc." on Justia Law

The First Circuit affirmed the district court’s dismissal of this putative class action alleging violations under sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The district court concluded that the initial amended complaint failed to meet the heightened pleading requirements of the Private Securities Litigation Reform Act (PSLRA). Thereafter, the court denied Plaintiffs’ subsequent motion to vacate the judgment and for leave to file a second amended complaint to include purportedly new evidence. The First Circuit held, on de novo review, that (1) the initial amended complaint failed to plead particularized facts giving rise to a strong inference of scienter, as required by the PSLRA; and (2) the district court did not abuse its discretion in denying the motion to vacate the judgment and for leave to file a second amended complaint. View "In re Biogen Inc. Securities Litigation" on Justia Law