Securities fraud class action filed on behalf of purchasers of Medtronic, Inc. ("Medtronic" or the "Company") common stock from November 20, 2006 through November 17, 2008 (the "Class Period") alleging that Medtronic, and certain of its current and former officers and directors, made false and misleading statements in connection with its flagship INFUSE Bone Graft ("INFUSE") product, causing Medtronic's stock to trade at artificially inflated prices.
On May 26, 2009, the Honorable Paul A. Magnuson appointed BLB&G client, the Teachers' Retirement System of Oklahoma, as Co-Lead Plaintiff and BLB&G as Co-Lead Counsel for the Class. On August 21, 2009, the Lead Plaintiffs filed a Consolidated Complaint in the action.
Lead Plaintiffs allege that during the Class Period, Defendants Medtronic, its Chief Executive Officer William A. Hawkins III ("Hawkins"), former Chief Executive Officer Arthur D. Collins, Jr. ("Collins"), and Chief Financial Officer Gary Ellis ("Ellis") violated the federal securities laws by issuing false and misleading press releases, financial statements, filings with the Securities and Exchange Commission, and statements during investor conference calls.
Specifically, the Defendants misled shareholders regarding a near decade-long campaign to illegally promote INFUSE for uses not approved by the Food and Drug Administration, or so-called "off-label uses," and concealed from shareholders the fact that the reported sales and future growth of this business line and its associated revenues was driven by misconduct that invited, and ultimately brought about, the scrutiny of federal regulators and an abrupt decline in sales. The Defendants' false and misleading statements concerning INFUSE and the Company's financial condition artificially inflated the price of the Company's publicly traded securities during the Class Period. Revelations concerning Defendants' false and misleading statements during the Class Period caused significant losses to investors as the prices of the Company's securities experienced severe declines as a direct result of these revelations, with the Company's stock price closing the day after the end of the Class Period at $31.60 per share, down from a Class Period high of $57.86 per share.
The Consolidated Complaint alleges that the Defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, and that Defendants Hawkins, Collins and Ellis violated Section 20(a) of the Exchange Act.
On October 5, 2009, Defendants filed a motion to dismiss the Consolidated Complaint and Judge Magnuson heard arguments concerning that motion on January 7, 2010. On February 3, 2010, Judge Magnuson substantially denied Defendants' motion to dismiss, except as to certain statements that the Court held were not actionable, and otherwise sustained all claims against the Company and the individual defendants. The litigation has moved into discovery on these claims.
