On March 10, 2009, the judge entered a Final Order dismissing the case in its entirety with prejudice. In the 42 page order, the judge noted that plaintiffs were unable to allege securities fraud with particularity, a component of the higher pleading standards created under PLSRA to avoid frivolous lawsuits against companies and their officers and directors.
An amended complaint was filed, following consolidation, on April 18, 2008. The company and its officers and directors filed a joint motion for dismissal on July 17, 2008.
On January 7, 2008, several motions were filed by Ryysylainen Group and Detroit General Retirement System to consolidate cases, for appointment as lead plaintiffs and for selection as lead counsels. Accordingly, an Order granting the above mentioned motions was entered on February 04, 2008.
According to a press release dated February 8, 2008 Kirby McInerney, LLP (KM) announced that the U.S. District Court for the District of Minnesota has appointed KM to serve as lead counsel in the securities class action lawsuit against Medtronic, Inc.(MDT). KM's client, a public pension fund, was appointed to serve as lead plaintiff. The lawsuit charges that Medtronic knowingly concealed information regarding their Sprint Fidelis defibrillation leads during the class period.
The complaint charges that during the Class Period Medtronic misrepresented the true facts concerning the Sprint Fidelis defibrillation leads, and that those true facts were only disseminated to investors on October 15, 2007 when the Company disclosed that it would voluntarily suspend distribution of these defibrillator leads. The Sprint Fidelis defibrillation leads were introduced to the market in September 2004 and, according to an article in The Wall Street Journal on October 30, 2007, by early 2007 "about 90% of new Medtronic defibrillators used Fidelis leads."
By January 2007 Medtronic had received 679 reports of injuries caused by fractures in the Sprint Fidelis defibrillation leads. In a meeting with Dr. Robert G. Hauser, of the Minneapolis Heart Institute in February 2007, Medtronic was informed specifically that the Minneapolis Heart Institute would cease using the Fidelis leads in operations and would use Medtronic's earlier generation Sprint Quattro leads. The reports of lead failures led Medtronic to send a letter dated March 21, 2007 to physicians treating patients with the Sprint Fidelis leads describing the nature of the lead failures and attributing the failures to physician error, or "variables within the implant procedure." Medtronic continued receiving further reports of lead failure subsequent to March 21, 2007. In fact the number of lead failures grew from a total of 795 injuries reported by April 30, 2007 to a total of 1,053 injuries reported by June 30, 2007.
Notwithstanding this increased evidence of severe problems with the leads, Medtronic stated (falsely) in its Form 10-K for fiscal year end April 27, 2007 (filed with the SEC on June 25, 2007) that the Sprint Fidelis lead had experienced "strong market acceptance" and "increasing clinical data that supports these devices" since its introduction to the market in September 2004. From July 2007 through September 2007, Medtronic continued to receive increasingly frequent reports of lead failures, with the number of reported failures reaching 1,661 by September 30, 2007.
Finally, on October 15, 2007, Medtronic belatedly acknowledged that the increasingly frequent adverse reports were the result of manufacturing defects and suspended distribution of the Sprint Fidelis defibrillation leads because of the high incidence of lead fractures. The Company further admitted that it had "identified five patient deaths in which a Sprint Fidelis lead fracture may have been a possible or likely contributing factor." Upon the release of this information into the market, Medtronic's stock dropped $6.33 per share or 11.2% on volume of approximately 62.9 million shares.