The original complaint alleges that during the Class Period, Boston Scientific, a company that engages in the development and marketing of cardiovascular and endosurgery medical device products, and certain individual defendants violated provisions of the Securities and Exchange Act of 1934, causing its stock to trade at artificially inflated levels. Specifically, the complaint alleges that Boston Scientific provided highly explicit false and misleading assurances of the Company's ability to satisfy FDA regulations governing its medical device product quality, as well as affirmative representations as to the Company's knowledge and expertise regarding design, development, marketing approval and sales of its medical devices. The complaint further alleges over $400 million sold in insider trading.
The complaint further alleges that on or around August 23, 2005, based on the cumulative impact of three separate FDA Warning Letters, investors learned of defendants' broad-based concealment of its broken quality program and the risks the Company faced. As a result, Boston Scientific's stock price dropped $1.23, or 4.5% to $25.92, on volume of 15.8 million shares -- nearly $19.89 or 43.4% from its Class Period high of $45.81 on April 5, 2004.
As summarized by the Company’s FORM 10-Q for the quarterly period ended September 30, 2006, on February 15, 2006, the Court ordered that the five class actions be consolidated and appointed the Mississippi Public Employee Retirement System Group as lead plaintiff. A consolidated amended complaint was filed on April 17, 2006. The consolidated amended complaint alleges that the Company made material misstatements and omissions by failing to disclose the supposed merit of the Medinol litigation and DOJ investigation relating to the 1998 NIR ON® Ranger with Sox stent recall, problems with the TAXUS® drug-eluting coronary stent systems that led to product recalls, and the Company’s ability to satisfy FDA regulations concerning medical device quality. The consolidated amended complaint seeks unspecified damages, interest, and attorneys’ fees. The defendants filed a motion to dismiss the consolidated amended complaint on June 8, 2006.
According to an article dated July 31, 2007, on June 21, 2007, the U.S. District Court for the District of Massachusetts dismissed a securities fraud class action against Boston Scientific Corp. and its individual officers and directors, finding that the plaintiffs' allegations of fraud were not pled with the requisite particularity to evidence scienter and loss causation. The district court also found that Boston Scientific disclosed many risks associated with the alleged misstatements and that many statements were mere puffery.
The lead plaintiff filed an appeal from the March 30, 2007 Order on Motion to Dismiss. On April 17, 2008 the U.S. Court of Appeals reversed the lower court's previous ruling on dismissal. Defendants have answered the complaint and discovery is scheduled to continue through June 2009. On November 7, 2008, the lead plaintiff filed a motion to certify the class. On November 7, 2008, the lead plaintiff filed a Second Consolidated Amended Complaint. On March 10, 2009, Judge Douglas P. Woodlock granted the motion to certify the class.
On January 22, 2010, the defendants filed a motion for summary judgment. On April 27, 2010, Judge Douglas P. Woodlock granted the motion for summary judgment. Judgment was entered in favor of the defendants and the civil case was terminated. The plaintiffs filed a Notice of Appeal on May 27, 2010. On August 5, 2011, the Court entered the Mandate from the U.S. Court of Appeals for the First Circuit. The district court's entry of judgment for the defendants is affirmed. Costs are a awarded to defendants.