Roofers' Pension Fund v. Joseph C.Papa, et al.

Court: U.S. District Court for the District of New Jersey
Case Number: 16-cv-02805
Judge: Hon. Madeline Cox Arleo
Class Period: 04/21/2015 - 05/03/2017
Case Contacts: James A. Harrod, Jesse L. Jensen, R. Ryan Dykhouse

This securities class action asserts claims under Sections 10(b), 14(e), and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78n(e), and 78t(a), against generic drug and over-the-counter healthcare product manufacturer Perrigo Company, plc (“Perrigo” or the “Company”) and the Company’s former Chief Executive Officer Joseph C. Papa (“Papa”) and former Chief Financial Officer Judy Brown (“Brown”) (collectively “Defendants”), on behalf of three classes: (1) investors who purchased or otherwise acquired Perrigo common stock between April 21, 2015 and May 3, 2017, inclusive (the “Class Period”), on the New York Stock Exchange or any other trading center within the United States; (2) investors who purchased or otherwise acquired Perrigo common stock during the Class Period on the Tel Aviv Stock Exchange and (3) investors in Perrigo common stock as of November 13, 2015, which was the deadline for Perrigo investors to tender their shares in connection with a tender offer made by competing drug manufacturer Mylan N.V. (“Mylan”). 

The Complaint alleges that, as part of a public campaign to defeat Mylan’s attempt to purchase Perrigo, the Company and its senior executives made false and misleading statements and omissions in press releases, financial statements, filings with the U.S. Securities and Exchange Commission, and during investor conference calls, concerning: (i) that Defendants had successfully integrated its most recent acquisition, Omega Pharma N.V. (“Omega”), when in fact the integration was floundering; and (ii) Perrigo’s generic drug or “Generic Rx” division had a “flat to up slightly” pricing strategy, when in fact Defendants’ practice was to massively hike prices in generic drugs where anticompetitive pricing could be achieved. Convinced by Defendants’ misleading statements, on November 13, 2015, the majority of the Company’s shareholders rejected Mylan’s tender offer, and the offer expired by its own terms. Thereafter, Defendants continued to deceive investors to stem declines in Perrigo’s share price.

However, the truth began to be revealed on February 18, 2016, when Defendants reported Perrigo’s financial results for the first time after the failed tender offer. That day, Perrigo announced the sudden need to restructure parts of the Omega business and that it would record a $185 million impairment charge related to Omega’s assets. Two months later, on April 25, 2016, Defendant Papa—Perrigo’s longtime CEO—resigned at the same time that the Company drastically lowered its earnings guidance for 2016 and announced weak preliminary first-quarter 2016 results, which the Company attributed to increased competitive pressures in its Generic Rx segment and weaker than expected performance within Omega. Then, on May 12, 2016, Perrigo announced an additional $467 million impairment charge relating to the Omega acquisition. Next, on August 10, 2016, Perrigo announced poor earnings and further decreased guidance, citing “competition and price erosion” in its Generic Rx division and continued problems at Omega. On December 8, 2016, Perrigo announced a total restructuring of its branded division (consisting of Omega’s former assets) and additional impairment charges, bringing total Omega-related charges to over $2 billion. Finally, on March 3, 2017, a Bloomberg report revealed that antitrust regulators were investigating Perrigo, and on May 2, 2017, Perrigo disclosed that the U.S. Department of Justice had raided the Company’s offices in connection with a price-fixing investigation. These disclosures caused a material decline in the price of Perrigo stock—by the time the truth about Perrigo’s collusive Generic Rx pricing practices and the failed integration of Omega were fully revealed to the market, Perrigo’s stock had lost more than 62% of its value.

On February 10, 2017, the Court appointed Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Fund Ltd., Clal Insurance Company Ltd., Clal Pension and Provident Ltd., Atudot Pension Fund for Employees and Independent Workers Ltd., and Meitav DS Provident Funds and Pension Ltd. (collectively, the “Perrigo Institutional Investor Group”) as Lead Plaintiff and Pomerantz LLP and Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel. Lead Plaintiff filed their Amended Complaint on June 21, 2017.

On July 27, 2018, the Court issued an order denying in part Defendants’ motion to dismiss and sustaining the claims described above regarding Omega’s integration and the pricing practices of the Company’s Generic Rx division. On November 30, 2018, Lead Plaintiff filed its motion for certification of the three classes described above. Discovery has been ongoing since September 2018.

On November 14, 2019, U.S. District Judge Madeline Cox Arleo certified three classes of Perrigo investors - two classes who purchased shares of the company on either the New York Stock Exchange or the Tel Aviv Stock Exchange between April 21, 2015, and May 3, 2017, and a third class, including anyone who owned Perrigo stock Nov. 12, 2015 and held it through 8:00 a.m. the next day, regardless of whether they tendered their shares in response to Mylan’s offer.

The certification includes a class of investors who purchased stock in Perrigo between April 2015 and May 2017 on either the New York Stock Exchange (NYSE) or the Tel Aviv Stock Exchange (TASE). This is the first time that a U.S. District Court has certified a class of investors who purchased on a non-U.S. exchange since the U.S. Supreme Court's 2010 ruling in Morrison v. Nat'l Australia Bank.  In Morrison, the Court held that shareholders purchasing securities on exchanges outside the U.S. exchanges did not have claims under U.S. securities laws. The now certified claims in Perrigo on behalf of purchasers in Israel were brought under parallel provisions of the Israeli securities statutes.

The ruling in Perrigo not only sets the stage for the case to advance but also sets a precedent for shareholders in other cases involving purchases of securities on non-U.S. exchanges, an important development in the fight for shareholder rights in an increasingly global market.  If you wish to discuss this action or have any questions concerning your rights or interests, please contact James A. Harrod, Jesse L. Jensen, or R. Ryan Dykhouse at 212-554-1400. 


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