Judge Tosses Medtronic Securities Class Action

Judge Tosses Medtronic Securities Class Action - 3/10/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Judge Tosses Medtronic Securities Class Action
Christine Caulfield

Securities Law 360. March 10, 2009
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EXCERPT: A judge has dismissed a securities class action against Medtronic Inc. that alleged the medical device giant covered up fatal defects in its defibrillators and was responsible for the company's stock price collapse in 2007. In a 42-page order issued Tuesday, Judge Richard Kyle of the U.S. District Court for the District of Minnesota said shareholders of the Minnesota-based company had failed to make their case for fraud with the specificity required by federal law. Granting Medtronic's motion to dismiss the consolidated class action — which named three of the company's top executives as co-defendants — Judge Kyle said the complaint did not comply with the demanding pleading standards of the Private Securities Litigation Reform Act. Under the PSLRA, plaintiffs alleging securities fraud based on material misstatements or omissions must “specify each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading.” The law also requires that the claims imply intent to defraud on the part of the defendants. The complaint alleged that Medtronic and its senior officers and directors concealed through omissions and misstatements the true performance of its faulty Sprint Fidelis defibrillation leads until the company disclosed in mid-October 2007 that it would voluntarily stop distributing the devices. The complaint, brought on behalf of investors of Medtronic who held stock in the company from June to October 2007, claimed that the leads caused a high incidence of lead fractures. The suit cited a letter by Medtronic advising doctors that it had “received reports from a limited number of implanting physicians indicating they have experience higher than expected conductor fracture rates in their centers with Sprint Fidelis leads.” The company said in the letter that it was investigating the reports but that the “current overall Sprint Fidelis performance” was “consistent with other leads.”

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