Guidant Corporation designs and manufactures cardiovascular medical products such as pacemakers, defibrillators and stents. The Company products focus on the treatment of cardiac arrhythmias, heart failure, and coronary and peripheral disease, including implantable defibrillator systems. The implantable defibrillator systems are used to detect and treat abnormally fast heart rhythms that could result in sudden cardiac death.

The original Complaint alleges that Guidant and certain of its officers and directors violated provisions of the Securities Exchange Act of 1934, causing the Company's stock price to become artificially inflated. On December 15, 2004, Guidant entered into a $24.5 billion merger deal with Johnson & Johnson. According to the Complaint, while the Company pointed to its defibrillator business as a key component of that deal, it concealed from investors significant unaddressed product defect and liability issues of the Company's implantable defibrillator product lines.

On June 17, 2005, the FDA issued a nationwide recall notification impacting Guidant's implantable defibrillators and cardiac resynchronization therapy defibrillators. Within that notification, the FDA advised the public that the malfunction of Guidant's devices could lead to a serious, life- threatening event for a patient. On July 18, 2005, the FDA published a "Recall - Firm Press Release" on its website that revealed the Company's knowledge of pacemaker-related defects. In the recall publication, Guidant warned physicians and patients to seek replacement of at least nine different cardiac pacemaker models and product lines.

The Complaint further alleges that Johnson & Johnson representatives subsequently revealed to the investment community that, as of October 18, 2005, it was seeking alternatives to the merger deal in earnest, as a direct result of the "developments" at Guidant. On November 2, 2005, Johnson & Johnson warned that it might withdraw from the merger deal due to broad product recalls and a regulatory agency investigation. Finally, on November 3, 2005, the Attorney General of the State of New York filed a Complaint, alleging "repeated and persistent fraud" by the Company in connection with its defibrillator sales. As investors learned the truth about the allegations of fraud made by the State of New York, the Company's shares tumbled from $60.40 on November 2, 2005, to as low as $57.05 per share in heavy trading.

On April 5, 2006, the Court entered the Order signed by U.S. District Judge Sarah Evans Barker consolidating all related actions, appointing lead Plaintiffs, and approving selection of Plaintiffs’ lead Counsel. On June 2, 2006, the Plaintiffs filed a Consolidated Complaint, and a Corrected Consolidated Complaint on June 8, 2006. The Defendants filed their motion to dismiss the Plaintiffs' Consolidated Complaint on August 15, 2006.

According to an article dated February 29, 2008, Guidant has won dismissal of a purported securities class action that alleged the medical device company glossed over problems with its defibrillators and their impact on Guidant's potential merger with Johnson & Johnson, leading investors to suffer billions of dollars in losses. Judge Sarah Evans Barker of the U.S. District Court for the Southern District of Indiana granted Guidant’s motion to toss the case Wednesday, saying that the putative class Complaint did not go far enough to show how the Company allegedly misled investors. Boris Feldman, an attorney representing Guidant, said Judge Barker's decision on Wednesday closes the case, and the Plaintiffs’ only recourse is to appeal the decision.