Overview
On July 23, 2015, Judge Edward M. Chen of the United States District Court for the Northern District of California granted approval to an $8 million cash settlement against Impax Laboratories, Inc. Investors claimed that Impax knowingly made false or misleading statements about serious deficiencies at a manufacturing facility, as well as its inability to timely remedy those deficiencies as was required by the U.S. Food and Drug Administration.
Cohen Milstein was Co-Lead Counsel in this securities class action. The firm represented Lead Plaintiff, Boilermaker-Blacksmith National Pension Trust.
Important Rulings
- On April 18, 2014, The U.S. District Court for the Northern District of California denied the defendants’ motion to dismiss the plaintiff’s complaint in the securities class action Mulligan v. Impax Laboratories, Inc., ruling that the lead plaintiff had adequately pled claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
In its ruling, the Court agreed with the lead plaintiff’s arguments that the complaint adequately alleged the defendants’ statements were false or misleading and made with scienter and allowed the case to proceed stating:
“[It] is ‘absurd’ to think that the CEO and CFO of a pharmaceutical company would be unaware of the alleged substandard, noncompliant conditions pervading their company’s manufacturing and quality control divisions — the heart of a company whose main business is manufacturing pharmaceuticals for public consumption.”
Case Background
The complaint alleged that Impax and certain of its executives issued false and misleading information to investors by failing to disclose pervasive, serious, and known deficiencies at Impax’s manufacturing facility in Hayward, California, as well as Impax’s inability to timely remedy these deficiencies as was required by the FDA.
The complaint further alleged that the defendants lacked a reasonable basis for their repeated assurances to investors that Impax was capable of bringing its manufacturing and quality control systems into compliance with FDA standards so that a warning letter issued by the FDA in May 2011 to Impax could be resolved.
Impax’s stock plummeted in March 2013 by 45% when Impax revealed to the market that a recent FDA inspection had found numerous problems at the Hayward facility, indicating that Impax had still not resolved the issues identified by the FDA in the warning letter.