The original complaint alleges that during the Class Period, defendants made materially false and misleading statements about KV’s compliance with federal regulations concerning the manufacture and marketing of certain generic drug products as well as the Company’s current and future financial prospects. Specifically, defendants failed to disclose: (i) that KV’s manufacturing facilities were in disarray resulting in the manufacture of unsafe drug products that would have to be recalled due to the fact that they may contain oversized tablets that may contain more than the intended levels of the active drug ingredient, which could result in patients receiving as much as about twice the expected dosage of these drugs; (ii) that KV’s management engaged in misconduct by failing to recall the Company’s unsafe drug products; (iii) that KV’s manufacturing facilities failed to comply with federal regulations, including FDA requirements and guidelines, generally referred to as current “Good Manufacturing Practices;” (iv) that manufacturing disruptions and inefficiencies were resulting in a material backlog of unshipped customer orders, thus further eroding the Company’s revenues and earnings; (v) that the Company failed to write off at least $24 million in inventories of discontinued products, seized by the U.S. Attorney for the Eastern District of Missouri due to defendants’ violation of FDA enforcement notices; (vi) that KV’s post-January 2008 sales of generics were being negatively impacted by material price erosion following the expiration of the Company’s exclusive sales period for the drug metoprolol succinate; (vii) that KV’s financial statements failed to comply with Generally Accepted Accounting Principles; and (vii) that, based on the foregoing, defendants lacked a reasonable basis for their current and future financial prospects.
Then, on November 13, 2008, KV announced that it would be unable to file its Form 10-Q for the quarter ended September 30, 2008 due to a continuing investigation by the Company’s Audit Committee into allegations of management misconduct concerning recalls of the Company’s drug products. Following this statement, the price of KV common stock fell from $14.26 per share to $5.90 per share – a drop of nearly 59% - on extremely heavy volume of more than 6.6 million shares, 33 times the stock’s average trading volume.
On April 15, 2009, the Honorable Carol E. Jackson granted the motion of the Public Pension Fund Group to consolidate actions, for appointment as lead plaintiff, and for approval of lead counsel. Public Pension Fund Group is appointed as lead plaintiff, the firms of Labaton Sucharow LLP and Bernstein Litowitz Berger & Grossmann LLP are appointed as lead counsel, and the firm of Osburn, Hine, Kuntze, Yates & Murphy, L.L.C. is appointed as liaison counsel. All pleadings and other documents in this matter shall be filed in Joseph Mas v. KV Pharm. Co., et al., No. 4:08-CV-1859 (CEJ). Any amended complaint is due no later than May 25, 2009.
On April 28, 2009, the Court entered the Amended Memorandum and Order granting the motion of the Public Pension Fund Group to consolidate actions, for appointment as lead plaintiff, and for approval of lead counsel. The Public Pension Fund Group is appointed as lead plaintiff, the firm of Labaton Sucharow LLP is appointed as lead counsel, and the firm of Osburn, Hine, Kuntze, Yates & Murphy, L.L.C. is appointed as liaison counsel.
On May 22, 2009, the lead plaintiff filed a Consolidated Amended Complaint. The defendants responded by filing various motions to dismiss the Consolidated Amended Complaint. On February 22, 2010, the Honorable Carol E. Jackson dismissed the action for failure to state a claim upon which relief can be granted. On March 18, 2010, the plaintiff filed a notice of appeal.
On October 20, 2010, the Honorable Carol E. Jackson signed the order denying the lead plaintiffs' motion for relief from the order of dismissal and to amend pleadings. On November 1, 2010, the lead plaintiff filed an amended notice of appeal.
On August 10, 2012, the Honorable Carol E. Jackson signed the order staying all proceedings in this action, pending completion of the bankruptcy case or further order of the Court.
On June 4, 2012, an appeal from the United States District Court was submitted on the record of the district court, briefs of the parties and was argued by counsel. After consideration, it was ordered and adjudged that the judgment of the district court in this cause is affirmed in part, reversed in part, and remanded to the district court for proceedings consistent with the opinion of this court.
On June 25, 2012, the Court entered a Mandate as to the Notice of Appeal filed by Public Pension Fund Group USCA, pursuant to the provisions of Federal Rule of Appellate Procedure 41(a), the formal mandate was issued in the above-style matter.
On April 30, 2013, the Court entered a Memorandum and Order denying the motion to dismiss filed by defendant Marc S. Hermelin.
On June 21, 2013, Defendants Rita E. Bleser, David A. Van Vliet motioned to Dismiss Party. On June 24, 2013 the Honorable Carol E. Jackson signed the order granting the dismissal of plaintiffs' claims against them.
On December 20, 2013, Plaintiff Public Pension Fund Group submitted a motion for Settlement Preliminary Approval of Proposed Class Action Settlement.