The original Complaint charges the Defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, for misrepresenting to investors known adverse side-effects associated with the use of Zyprexa, the Company's best-selling drug and by failing to disclose a systematic and illegal campaign by the Company to increase Zyprexa sales by marketing Zyprexa for unapproved, off-label uses. The Complaint alleges that for over a decade, Eli Lilly knew of links between Zyprexa and extreme weight gain and diabetes. In addition, during the Class Period, the Company engaged in a scheme to market Zyprexa for uses that were not approved by the FDA, in violation of FDA regulations that proscribed such marketing. Federal and state regulators have commenced law suits against Lilly based on these marketing schemes and the Company has denied any wrongdoing.
The complaint further alleges that during the Class Period, in the face of mounting independent research connecting Zyprexa to diabetes and weight gain, and lawsuits by persons who suffered these side-effects, Lilly emphatically denied any such link. Yet, as public agencies raised warnings about the safety of Zyprexa, and Lilly settled product liability lawsuits involving the drug, Lilly's stock lost more than $30 billion in market value in connection with the fraud.
On June 26, 2007, the Court entered the Order Consolidating the actions, appointing lead plaintiff and approving lead plaintiffs' selection of lead counsel. On August 21, 2007, the plaintiffs filed a Sealed "Confidential Consolidated Securities Class Action Complaint.” The defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint. On November 13, 2007, Senior Judge Jack B. Weinstein signed the Order converting the defendant’s motion to dismiss into a motion for summary judgment solely on the issue of statute of limitations. The remainder of defendant's motion to dismiss is not converted. On April 30, 2008, Senior Judge Weinstein signed the Memorandum, Order and Judgment granting the motion for summary judgment. The case dismissed. On May 5, 2008, a Supplemental Memorandum and Order was filed. Clerk’s Judgment was entered on May 6, 2008. The case is dismissed and costs and disbursements are awarded to defendants.