Matrixx Initiatives, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Matrixx Initiatives, Inc. Summary: Two purported shareholder class action lawsuits have been filed against the Company and certain of its present and former executive officers, alleging violations of federal securities laws. Among other things, the lawsuits allege that between October 2003 and February 2004, defendants issued materially false and misleading statements regarding the company's Zicam Cold Remedy product, including failing to adequately disclose to the public the details of certain of the product liability lawsuits.

As summarized in the Company’s Form 10-Q for the quarter ended September 30, 2005, on January 18, 2005, the cases were consolidated and the court appointed James V. Sircusano as lead plaintiff. The amended complaint also includes the Company’s Vice President of Research and Development as a defendant and was filed March 4, 2005. The consolidated case is Sircusano, et al. vs. Matrixx Initiatives, Inc., et al., in the United States District Court, District of Arizona, Case No. CV04-0886 PHX DKD.

On March 8, 2006, the Court entered the Order and Judgment signed by U.S. District Judge Mary H. Murguia granting the motion to dismiss the First Amended Complaint without prejudice. On April 3, 2006, the plaintiffs filed a Notice of Appeal in the U.S. Court of Appeals for the Ninth Circuit.

According to an article dated October 30, 2009, in an October 28, 2009 opinion in a case in which the Ninth Circuit found the plaintiffs’ allegations met the heightened pleading standards of Twombley and Tellabs, the appellate court reversed the district court’s dismissal of the plaintiffs’ complaint in the Matrixx Initiatives securities class action lawsuit. … After reviewing the plaintiffs’ allegations, the Court found that the complaints allegations were sufficient to meet the PSLRA’s pleading requirements for materiality and, citing Twombley, to "nudge" the plaintiffs’ claims "across the line from conceivable to plausible."

On June 21, 2010, the Supreme Court entered an order granting the petition for a writ of certiorari.

In a unanimous opinion by the U.S. Supreme Court issued on March 22, 2011, the Court rejected the defendant’s argument that adverse product reports must be "statistically significant" in order for a manufacturer to have an obligation to disclose the reports to investors.

The Justice delivering the opinion went on to state, that absent a duty to speak, silence cannot be the basis of securities liability. Disclosure is only required when necessary to make previous statements not misleading; "Even with respect to information that a reasonable investor might consider material, companies can control what they have to disclose under these provisions by controlling what they say to the market."

As a result, shareholders claims against the company for its alleged failure to disclose reports that its Zicam cold remedy caused loss of smell for some users will now proceed.

On April 26, 2011, the Court entered the Mandate from the U.S. Court of Appeals, reversing and remanding the District Court decision.

INDUSTRY CLASSIFICATION:
SIC Code: 2834
Sector: Healthcare
Industry: Biotechnology & Drugs

COMPANY/ISSUER NAME:	Matrixx Initiatives, Inc.
COMPANY/ISSUER TICKER:	MTXX
COMPANY WEBSITE:	http://www.matrixxinc.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Stanley Sved, et al. v. Matrixx Initiatives, Inc., et al.

COURT: D. Arizona	DOCKET NUMBER: 04-CV-886
JUDGE NAME: Hon. Mary H. Murguia
DATE FILED: 04/27/2004	SOURCE: Notice of Filing
CLASS PERIOD START: 10/22/2003	CLASS PERIOD END: 02/06/2004
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Bonnett, Fairbourn, Friedman & Balint, PC (Phoenix) 4041 N. Cental Avenue, Suite 1100, Phoenix, AZ, 85012-3311 (voice) 602.274.1100, (fax) , Law Offices of Marc S. Henzel (Lawrence) 335 Central Avenue, Lawrence, NY, 11559 (voice) 516.374.0707, (fax) 516.295.3473, securitiesfraud@comcast.net Milberg Weiss Bershad Hynes & Lerach LLP (New York, NY) One Pennsylvania Plaza, New York, NY, 10119-1065 (voice) 212.594.5300, (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violation of Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 04/27/2004
U.S. District Court Civil Docket
Type: Docket		Date on the document: 12/09/2004

REFERENCE COMPLAINT

James V. Sircusano, et al. v. Matrixx Initiatives, Inc., et al.

COURT: D. Arizona	DOCKET NUMBER: 04-CV-886
JUDGE NAME: Hon. Mary H. Murguia
DATE FILED: 03/04/2005	SOURCE: Docket
CLASS PERIOD START: 10/22/2003	CLASS PERIOD END: 02/06/2004
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville) 200 Broadhollow, Suite 406, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, info@lerachlaw.com Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego) 655 West Broadway, Suite 1900, San Diego, CA, 92101 (voice) 619.231.1058, (fax) 619.231.7423, _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Amended Complaint For Violation Of Federal Securities Laws
Type: Complaint		Date on the document: 03/04/2005
Judgment
Type: Other		Date on the document: 03/08/2006
Order
Type: Order		Date on the document: 03/08/2006
Notice Of Appeal And Ninth Circuit Rule 3-2 Representation Statement
Type: Notice of Appeal		Date on the document: 04/03/2006
U.S. District Court Civil Docket
Type: Docket		Date on the document: 09/15/2007
Letter [From the Supreme Court of the United States, Office Clerk]
Type: Other		Date on the document: 06/21/2010
U.S. District Court Civil Docket
Type: Docket		Date on the document: 04/26/2011

OTHER DOCUMENTS
U.S. District Court Civil Docket
Case Name and/or Number: James V. Sircusano, et al. v. Matrixx Initiatives, Inc., et al.
Type: Docket		Date on the document: 01/27/2005
Opinion [from the U.S. Court of Appeals for the Ninth Circuit]
Case Name and/or Number: James V. Sircusano, et al. v. Matrixx Initiatives, Inc., et al.
Type: Other		Date on the document: 10/28/2009
Certiorari To The United States Court Of Appeals For The Ninth Circuit
Case Name and/or Number: Matrixx Initiatives, Inc., et al. v. James V. Sircusano, et al.
Type: Other		Date on the document: 03/22/2011
Mandate
Case Name and/or Number: James V. Sircusano, et al. v. Matrixx Initiatives, Inc., et al.
Type: Other		Date on the document: 04/26/2011

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