In re HeartWare International, Inc. Securities Litigation

Court: United States District, Southern District of New York
Case Number: No. 16-cv-520
Class Period: 06/10/2014 - 01/11/2016
Case Contacts: John Rizio-Hamilton, Michael D. Blatchley, Abe Alexander, Julia Tebor

This is a securities class action against HeartWare International, Inc. (“HeartWare” or the “Company”) (NASDAQ: HTWR) and its former Chief Executive Officer Douglas E. Godshall (collectively, “Defendants”). The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) on behalf of investors in HeartWare common stock between June 10, 2014 and January 11, 2016, inclusive (the “Class Period”).  

Lead Plaintiff Has Reached a Proposed Settlement for $54.5 Million

The Court-appointed Lead Plaintiff St. Paul Teachers’ Retirement Fund Association has reached a proposed settlement of this action for $54.5 million in cash that, if approved by the Court, will resolve all claims in the action. 

If you are a member of the Class, your rights will be affected and you may be eligible for a payment from the Settlement.  The Class consists of:

all persons and entities who purchased HeartWare common stock from June 10, 2014 through January 11, 2016, inclusive, and who were damaged thereby, except for certain persons and entities who are excluded from the Class by definition (see paragraph 24 of the Notice) or who request exclusion pursuant to the instructions set forth in the Notice (see paragraph 73 of the Notice).

Please read the Notice to fully understand your rights and options.  Copies of the Notice and Claim Form can be found on the Case Documents page.  You may also visit the Settlement website,, for more information about the Settlement.

If you are a member of the Class, in order to be potentially eligible to receive a payment under the proposed Settlement, you must submit a Claim Form postmarked no later than May 14, 2019

Payments to eligible claimants will be made only if the Court approves the Settlement and a plan of allocation, and only after any appeals are resolved, and after the completion of all claims processing.  Please be patient, as this process will take some time to complete.


May 14, 2019

Claim Filing Deadline. Claim Forms must be postmarked no later than May 14, 2019 to be eligible for a payment from the Settlement.

March 22, 2019

Exclusion Deadline. To exclude yourself from the Class, you must submit a written request for exclusion so that it is received no later than March 22, 2019, in accordance with the instructions in the Notice.

March 22, 2019

Objection Deadline. Any objections to the proposed Settlement, the proposed Plan of Allocation, and/or the request for attorneys’ fees and reimbursement of expenses, must be submitted to the Court no later than March 22, 2019, in accordance with the instructions in the Notice.

April 12, 2019
at 11:45 a.m.

Settlement Hearing.  The Settlement Hearing will be held on April 12, 2019 at 11:45 a.m., before the Honorable Ronnie Abrams at the United States District Court, Southern District of New York, Courtroom 1506 of the Thurgood Marshall United States Courthouse, 40 Foley Square, New York, NY 10007.  The Settlement Hearing will be held by the Court to consider, among other things, whether the proposed Settlement is fair, reasonable and adequate and should be approved; whether the proposed Plan of Allocation is fair and reasonable and should be approved; and whether Lead Counsel’s motion for attorneys’ fees and expenses should be approved.


HeartWare is a medical device company that develops and manufactures miniaturized implantable heart pumps.  The Complaint alleges that during the Class Period, HeartWare and certain of its senior executives violated provisions of the Exchange Act by making numerous false and misleading statements and omissions of material fact, including in press releases and in statements during conferences and conference calls with analysts and investors.  Specifically, the Complaint alleges that after the U.S. Food and Drug Administration (“FDA”) issued a Warning Letter identifying numerous manufacturing and other regulatory failures at the Company’s sole manufacturing facility, Defendants falsely assured investors that the Company had addressed those problems, and that they therefore posed no risk to the clinical trials or timely approval of MVAD, a pump that HeartWare is presently developing.

The truth concerning the Company’s failure to remediate the regulatory failures identified by the FDA and its impact on the viability of MVAD was revealed through a series of disclosures.  On September 1, 2015, HeartWare announced a highly dilutive acquisition of Valtech Cardio, Ltd., a manufacturer of medical devices used to treat heart disease.  The Complaint alleges that this disclosure revealed significant obstacles to the timely approval of MVAD.  On September 9, 2015, HeartWare disclosed that it was halting enrollment in the MVAD trial because of a manufacturing problem with the device.  On October 12, 2015, HeartWare disclosed that patients in the MVAD trial had suffered adverse events, and that the trial would be further delayed.  And on January 11, 2016, the Company revealed that problems with MVAD had resulted in serious adverse events in nearly half of the patients so far implanted with the device, and that the trial would be delayed indefinitely.  In response to each of these disclosures, the price of HeartWare’s common stock declined significantly.  In total, HeartWare’s common stock fell 72% from its Class Period high to close at $26.50 per share on January 12, 2016.    

History of the Litigation

On January 22, 2016, Lead Plaintiff filed a class action complaint in the United States District Court for the Southern District of New York.  On April 11, 2016, the Court ordered that the case be recaptioned as In re HeartWare International, Inc. Securities Litigation, Master File No. 1:16-cv-00520 (the “Action”) and appointed St. Paul Teachers’ Retirement Fund Association as Lead Plaintiff for the Action; and approved Lead Plaintiff’s selection of Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel for the class.

On June 29, 2016, Lead Plaintiff filed and served its Amended Class Action Complaint (the “Complaint”) asserting claims against both Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, and against Defendant Godshall under Section 20(a) of the Exchange Act.  The Complaint alleges that, during the Class Period, Defendants made materially false and misleading statements about; (i) the safety and commercial viability of the MVAD, and (ii) the progress of HeartWare’s remediation of deficiencies identified in the FDA’s warning letter. The Complaint further alleges that the price of HeartWare common stock was artificially inflated as a result of Defendants’ allegedly false and misleading statements, and declined when the truth was revealed.

On August 30, 2016, Defendants filed and served a motion to dismiss the Complaint.  On October 28, 2016, Lead Plaintiff served its memorandum of law in opposition to this motion and, on December 9, 2016, Defendants served their reply papers.  On December 12, 2016, the Action was reassigned to the Honorable Ronnie Abrams for all further proceedings. 

The Court held oral argument on Defendants’ motion to dismiss on March 16, 2018.  Following the argument, the Court issued its decision from the bench denying Defendants’ motion to dismiss the Complaint.  That same day, the Court entered an Order reflecting that decision.  On May 16, 2018, Defendants filed and served their Answer to the Complaint. 

Discovery in the Action commenced in April 2018. Lead Plaintiff prepared and served initial disclosures, requests for production of documents, and interrogatories on Defendants, exchanged numerous letters with Defendants concerning discovery issues, and served 27 document subpoenas on third parties, including the FDA.  As part of its extensive efforts to conduct third-party discovery, Lead Plaintiff successfully applied for letters rogatory to obtain evidence from the United Kingdom clinical research organization that HeartWare had hired to assist with aspects of the clinical trial of MVAD.  Defendants and third parties produced a total of approximately 450,000 pages of documents to Lead Plaintiff, and Lead Plaintiff produced over 7,500 pages of documents to Defendants in response to their requests.

On June 22, 2018, Lead Plaintiff filed its motion for class certification, which was accompanied by a report from Lead Plaintiff’s expert on market efficiency and common damages methodologies.  On August 17, 2018, Defendants filed a Notice of Non-Opposition to the class certification motion and, on August 27, 2018, the Court granted the motion, certifying the proposed Class, appointing Lead Plaintiff as Class Representative and appointing Bernstein Litowitz Berger & Grossmann LLP as Class Counsel.

While discovery continued, the Parties discussed the possibility of resolving the litigation through settlement and agreed to mediation before Jed D. Melnick, Esq. of JAMS.  An in-person mediation session with Mr. Melnick was scheduled for September 12, 2018.  In advance of the mediation, the Parties exchanged detailed mediation statements addressing liability and damages issues with numerous exhibits.  At the September 12, 2018 mediation session, the Parties engaged in vigorous settlement negotiations with the assistance of Mr. Melnick but were not able to reach an agreement. The Parties continued their negotiations and scheduled a second mediation with Mr. Melnick for October 3, 2018.  Following that session, the Parties agreed to settle the Action in return for a cash payment by or on behalf of Defendants of $54,500,000 for the benefit of the Class.

On November 13, 2018, the Parties entered into the Stipulation and Agreement of Settlement (the “Stipulation”), which sets forth the terms and conditions of the Settlement.  On November 16, 2018, Lead Plaintiff filed its motion for preliminary approval of the Settlement with the Court.  On December 12, 2018, the Court entered its Order Preliminarily Approving Settlement and Authorizing Dissemination of Settlement Notice, which scheduled a hearing for April 12, 2019 to consider final approval of the Settlement and related matters. 

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