# In re Boston Scientific Corporation Securities Litigation

> District Court, D. Massachusetts · December 20, 2022

URL: https://www.frixlaw.com/law-library/cases/10200779

## Case

- **Court:** District Court, D. Massachusetts
- **Decided:** December 20, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10200779

## How later opinions describe it (automated extraction)

- explaining that a Section 20(a) claim is “derivative” of the Section 10(b) claim

## Opinion text

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

In re BOSTON SCIENTIFIC )
CORPORATION SECURITIES )
LITIGATION ) CIVIL ACTION NO.
) 20-12225-DPW
)
)
)

MEMORANDUM AND ORDER
December 20, 2022
I. BACKGROUND............T .A .B .L .E . O .F . .C .O .N .T .E .N .T .S . ...................... 5
A. The Parties ............................................. 5
B. Factual Background ...................................... 7
1. The Early Lotus Valve Recalls and Delays ............... 9
2. Launch in the United States ........................... 11
3. The Launch as Reported by Boston Scientific ........... 11
4. Boston Scientific Terminates the Lotus Valve Platform . 13
5. Failures of the Lotus Launch Revealed after the Class
Period .................................................... 15
6. Allegations of Executive Defendant False Statements ... 19
a. Mr. Mahoney’s Alleged Misstatements ................. 19
b. Mr. Ballinger’s Alleged Misstatements ............... 21
c. Ms. Lisa’s Alleged Misstatements .................... 21
d. Mr. Fitzgerald’s Alleged Misstatements .............. 22
e. Mr. Brennan’s Alleged Misstatements ................. 23
f. Mr. McCarthy’s Alleged Misstatements ................ 24
g. Dr. Meredith’s Alleged Misstatements ................ 24
7. Allegations of Executive Defendant Scienter ........... 25
a. Executive Defendant Knowledge throughout the Class
Period................................................... 25
b. Boston Scientific’s Need to Raise Funds to Keep Up with
Its Debts................................................ 27
c. Executive Defendant Conduct throughout the Class Period
28
C. Development of Challenged Amended Complaint by Plaintiff 31
II. STANDARD OF REVIEW........................................ 31
III. COUNT I - VIOLATION OF SECTION 10(b) AND RULE 10b-5...... 33
A. Applicable Legal Standard .............................. 33
B. Material Misstatements and Omissions ................... 34
1. Statements Regarding Lotus Edge Accounts and Orders ... 36
a. Statements Tallying the Lotus Edge Accounts and
Expressions of Satisfaction with the Launch.............. 42
b. Growing Use of Lotus Edge and Reorder Rates ......... 43
2. Simplicity and Ease of Use of Lotus Edge .............. 45
a. Ease of Use Statements .............................. 46
b. Failure to Disclose the Complexity of Device and
Delivery Malfunctions.................................... 47
3 E. dge M Li as us nt ca ht e .m .e .n .t .s . .a .n .d . .O .m .i .s .s .i .o .n .s . .a .s . .t .o . .t .h .e . .S .a .f .e .t .y . .o .f . .t .h .e . .L .o .t u 5s 1
4. Misleading Reports of the Success of the Lotus Platform
and its Role in the TAVR Portfolio ........................ 53
a. Disclosure of the Lotus Recall and Termination ..... 53
b. The Future of Lotus as a Growth Driver and
Strategic Investment..................................... 55
5. Conclusion ............................................ 59
C. Scienter ............................................... 59
1. Plaintiff’s General Scienter Allegations .............. 62
a. Confidential Source Accounts ........................ 62
b. Insider Trading Activity ............................ 65
c. The Resignations of Mr. McCarthy and Mr. Ballinger .. 67
d. Boston Scientific’s Need to Raise Capital and
Renegotiate Its Debts.................................... 68
e. Conclusion .......................................... 69
2. Scienter of Ms. Lisa and Mr. Fitzgerald ............... 69
3. Scienter of Mr. Mahoney ............................... 71
D. Reliance .............................................. 74
E. Economic Loss and Loss Causation ...................... 76
1. The Alleged Corrective Disclosures .................... 77
2. Additional Loss Causation Considerations .............. 79
3. Conclusion ............................................ 80
F. Whether Boston Scientific May Be Held Liable ........... 80
G. Summary ................................................ 82
IV. COUNT II - VIOLATION OF SECTION 20(a)..................... 82
V. CONCLUSION................................................. 84
APPENDIX A.................................................... 86
Mr. Mahoney................................................... 86
Mr. Ballinger................................................. 90
Ms. Lisa...................................................... 90
Mr. Fitzgerald................................................ 92
Mr. Brennan................................................... 92
Mr. McCarthy.................................................. 94
Dr. Meredith.................................................. 94
Before me is a motion [Dkt. No. 53] to dismiss a putative
securities fraud class action against Boston Scientific
Corporation (“Boston Scientific”). The motion to dismiss
submissions were developed in accordance with the demanding
protocols of the Private Securities Litigation Reform Act. The
operative Amended Consolidated Complaint [Dkt. No. 44] (“the
Complaint”) presents a narrative alleging attempts to deceive
investors regarding the success of the company’s new medical
device in an effort to prop up Boston Scientific stock prices,
raise capital and support improper insider trading.

Boston Scientific and seven high-ranking executives are
alleged to have perpetrated securities fraud on Boston
Scientific investors by making a host of false and misleading
statements about the commercial viability of Boston Scientific’s
Transcatheter Aortic Valve Replacement (“TAVR”) device: the
Lotus Edge. The overarching contention is that Boston
Scientific executives hid technical failures and sluggish sales
of the Lotus Edge from the public during the period February 6,
2019 to November 16, 2020. The Complaint alleges that by
providing false reassurances that the device was safe, simple,
and marketable, Defendants caused artificial inflation of Boston

Scientific common stock, in violation of Section 10(b), 15
U.S.C. § 78j(b) and Rule 10b–5, 17 C.F.R. § 240.10b–5 (Count I)
and in violation of Section 20(a) of the Securities Exchange Act
of 1934, 15 U.S.C. § 78t(a) (Count II).
Defendants have moved to dismiss the Complaint for failure
to meet the heightened pleading requirements for securities
fraud claims under FED. R. CIV. P. 9(b) and the Private Securities
Litigation Reform Act. I consider primarily two questions, both
of which must be answered in the affirmative if Plaintiff’s case
is to proceed: 1) whether any of the statements detailed in the
Complaint are both misleading and actionable and, if so, 2)
whether particularized facts alleged in the Complaint give rise
to a strong inference of Defendants’ scienter.
I will grant Defendants’ Motion to Dismiss the Complaint as

to Count I, except as to Defendant Mahoney — the Boston
Scientific Chairman, President and Chief Executive Officer — and
Boston Scientific, the corporation to which his scienter may be
imputed — because Plaintiff successfully pleads scienter and
material misrepresentations as to him. Meanwhile, I will deny
Defendants’ Motion to Dismiss Count II of the Complaint as to
the Section 20(a) claims alleged against the Executive
Defendants.
I. BACKGROUND
A. The Parties
Defendant Boston Scientific is a publicly traded

manufacturer of medical devices. Headquartered in
Massachusetts, Boston Scientific develops, manufactures, and
markets a range of medical device platforms, including
interventional cardiovascular technologies.
The Complaint names seven individual Boston Scientific
executives as Defendants (collectively, the “Executive
Defendants”):
•
Michael Mahoney, the Chairman, President, and Chief
Executive Officer;
•
Daniel Brennan, the Executive Vice President and Chief
Financial Officer;
•
Joseph Fitzgerald, the Executive Vice President and
President of Rhythm Management (through July 6, 2020),
and thereafter Executive Vice President and President of
Interventional Cardiology;
•
Shawn McCarthy, the Vice President and General Manager of
Structural Heart Valves (through 2020);
•
Kevin Ballinger, the Executive Vice President and
President of Interventional Cardiology (through July 3,
2020);
•
Ian Meredith, the Executive Vice President and Global
Chief Medical Officer; and
•
Susan Vissers Lisa, the Vice President of Investor
Relations.

Union Asset Management Holding AG is the Lead Plaintiff.
Lead Plaintiff brings suit on behalf of a class of investors who
purchased or acquired Boston Scientific common stock between
February 6, 2019 and November 16, 2020 (the Class Period). Lead
Plaintiff is the parent holding company of the Union Investment
Group, an asset management firm based in Frankfurt-am-Main,
Germany. Union Asset Management funds purchased common stock in
Boston Scientific during the Class Period. I refer to Lead
Plaintiff and the putative class it would represent as Plaintiff
throughout the remainder of this Memorandum except when reciting
the circumstances in which Union Asset Management became Lead
Plaintiff.
B. Factual Background
This action arises from Boston Scientific’s 2020 recall of
its Lotus Edge device and its decision to retire the entire
Lotus Valve Platform.
The Lotus Edge device is a transcatheter heart valve used
to treat patients suffering from aortic stenosis.1 Physicians
historically treated aortic stenosis with surgical aortic valve
replacement. A surgeon would perform open heart surgery to
replace a faulty aortic valve with a new mechanical or biologic
valve. Complaint, Dkt. No. 44 at ¶ 49. Surgical aortic valve

replacement was attended by high risks and prolonged recovery
times.
In 2002, however, surgeons began to see clinical success
with a new method: transcatheter aortic valve replacement, or
TAVR. TAVR surgery involved only a small incision to insert a
catheter, as opposed to an open heart surgery. Using the
catheter, a surgeon could then implant a new aortic valve
prosthesis to replace the diseased aortic valve. TAVR patients
recovered far faster and more easily than open-heart patients.

1 Aortic stenosis is a chronic and progressive form of heart
disease caused by narrowing of the aortic valve. Complaint,
Dkt. No. 44 at ¶ 45. Narrowing in this pathway reduces blood
flow from the heart’s left ventricle to the aorta.
Consequently, the aorta does not receive the blood necessary to
pump through the body, while the left ventricle sees a dangerous
The new TAVR procedure took the medical community by storm.
The global market for TAVR devices was projected to double in
between 2018 and 2023. Id. at ¶ 51. With the increasing
popularity of TAVR treatment came “immense competition among
several of the top medical device manufacturers to develop TAVR
valves.” Id. at ¶ 52. Boston Scientific’s competitors, Edwards
[Lifesciences Corporation] and Medtronic [PLC], quickly
developed their own TAVR devices and enjoyed “near total market
domination.” Id. Their devices utilized self-expanding or
balloon expanding valves.2

In 2010, Boston Scientific sought to claim a share of the
lucrative TAVR market by developing its own unique valve
replacement device, the Lotus Valve Platform.3 Id. at ¶ 53.
Unlike other TAVR devices on the market, the Lotus valve was the
first “fully repositionable device.” Id. at ¶ 53. With the
Lotus device, surgeons could position the valve, deploy it, and
then recapture and reposition it after deployment, allowing
optimal final placement of the valve. Id. at ¶ 55. The Lotus
valve also included a seal that would fill in gaps between the
implanted valve and the cardiac tissue, thereby preventing

2 Using these devices, a surgeon would insert the new valve with
the catheter, position it across the damaged aortic valve, and
deploy the valve where it would expand and seal into place,
pushing the remains of the diseased valve aside. Id. at ¶ 54.
3 For purposes of the Complaint, the Lotus Valve Platform is
presented as encompassing the first iteration of the Lotus
device (Lotus), and the Lotus Edge device, the iteration of
leakage. Boston Scientific marketed the Lotus device as
offering surgeons “superior ease of use” and “total control”
over the replacement valve’s positioning. Id. at ¶¶ 58-60.
Beginning with its announcement of the product in 2016,
Boston Scientific maintained an optimistic view of the device’s
potential in the structural heart therapies market. On November
17, 2020, however, Boston Scientific initiated a voluntary
recall of all Lotus Edge devices and announced its decision to
terminate the entire Lotus Valve Platform.
1. The Early Lotus Valve Recalls and Delays

Boston Scientific’s Lotus device first received regulatory
approval in Europe in 2013 and began clinical trials in the
United States shortly thereafter. Id. at ¶¶ 62-63 n.1. In its
early years on the European market, the Lotus device was the
subject of several recalls.5 Id. at ¶ 63. In February of 2017,
Boston Scientific recalled all Lotus devices based on reports

4 The Lotus device was designed to prevent a specific adverse
event associated with existing TAVR devices: paravalvular
leakage. Paravalvular leakage occurred most frequently when a
TAVR valve was not positioned properly to seal against cardiac
tissue or because the TAVR valve is undersized. Id. at ¶ 56.
5 Boston Scientific instituted a recall in November of 2014 due
to malfunctions in the mechanical locking mechanism. Id. at ¶
63. Boston Scientific then recalled 250 units of the device in
August of 2016, including Lotus devices being used in United
States clinical trials, this time due to breaks in the mechanism
that released the valve from its delivery system. Id. at ¶ 64.
In October of 2016, Boston Scientific recalled the second
generation of the Lotus valve, Lotus Edge, when reports surfaced
that the device could not be fully locked during the procedure.
that a pin connecting the valve to the delivery system was
faulty. Id. at ¶ 65.
Defendants reassured investors that each of these recalls
resulted from an issue in the device’s delivery and locking
mechanism, “not a design flaw” of the valve itself. Id. at ¶¶
67, 74. These issues, Boston Scientific maintains, could be
dealt with through manufacturing adjustments and specification
changes. Id. at ¶ 67. Nevertheless, in March of 2017 Boston
Scientific took on a new TAVR valve platform, the Acurate TA, as
a result of its acquisition of Swiss Manufacturer Symetis, which

used the traditional self-expansion design of competitor TAVR
devices, not the repositionable design of the Lotus. Id. at ¶
71. Boston Scientific’s Chairman, President and Chief Executive
Officer, Executive Defendant Michael Mahoney, however, reassured
investors that this new acquisition was not intended to replace
the Lotus device. Id. at ¶¶ 72-73.
Throughout 2017, Boston Scientific faced a series of delays
to the Lotus platform’s return to the European market and to its
approval by the United States Food and Drug Administration.
Boston Scientific executives maintained, however, that the
problem had been identified and resolved. Id. at ¶¶ 70, 74, 78.

In the final months of 2018, Boston Scientific announced its
plans for an early 2019 European relaunch of the Lotus Edge.
Executives expected FDA approval for the Lotus device by the
middle of 2019. Id. at ¶ 80.
2. Launch in the United States

On the first day of the Class Period, February 6, 2019,
Mr. Mahoney announced plans for a “controlled launch” of the
Lotus Edge in the United States to begin in the second quarter
of 2019. Id. at ¶ 84. The FDA approved the Lotus Edge device
for certain high-risk surgical patients on April 23, 2019 and
Boston Scientific began its controlled launch. The full launch
of the Lotus Edge, however, was not scheduled to begin until the
fall of 2019. Id. at ¶ 96.
Mr. Mahoney told investors he expected that Lotus Edge
would be a “workhorse valve” as well as a specialized tool for
complex cases. Id. at ¶ 87. The United States launch strategy
was to open “roughly 150 accounts within the first 12 months of
launch” with at least 50 accounts to be opened by centers not
involved in the Lotus Edge clinical trials. Id. at ¶¶ 92, 94.
3. The Launch as Reported by Boston Scientific
Boston Scientific executives are alleged to have told
investors repeatedly that the Lotus launch was moving forward as
planned throughout 2019 and into early 2020. Id. at ¶¶ 95-97,
260, 279-281, 287, 292, 296. One of the early priorities of the
United States launch was ensuring a controlled, safe rollout of
this unique TAVR device. Various Executive Defendants also

represented that they were satisfied with the Lotus Edge’s early
success and Mr. Mahoney stated that he believed it was “doing
very well in the market.” Id. at ¶¶ 260, 280, 282, 302-303.
Analysts asked Boston Scientific executives repeatedly
about their goal of opening roughly 150 accounts in the United
States in the first year of the launch. Each time, they were
told that the Lotus team was on pace to meet its goal.
At a virtual event on August 19, 2020, an analyst asked for
a progress report as to the number of accounts opened in the
United States. The question was referred to Boston Scientific’s
vice president of Investor Relations, Executive Defendant Susan
Vissers Lisa, and her Director of Investor Relations, Lauren
Tengler. Ms. Tengler, who is not named as an Executive

Defendant, responded “we’re on track pre-COVID and we hit 138
accounts.” Id. at ¶¶ 99, 305.
On September 16, 2020 Mr. Mahoney told analysts that he
expected that “Lotus will continue to be an important product
for us. It’s a significant market as you know, and even small
share gains are significant for us. And so, Lotus will continue
to be an important growth driver for us supported with our whole
platform . . . .” Id. at ¶ 308. On October 15, 2020, Boston
Scientific’s executive vice president and president of
Interventional Cardiology, Executive Defendant Joseph
Fitzgerald, notified investors that Boston Scientific had

reached its goal of opening over 150 Lotus accounts in the
United States. Id. at ¶¶ 100, 313-314. The launch, he
represented, was “gaining momentum” and the Lotus platform was
“growing actual procedures per center, per month” in the United
States. Id. at ¶ 316.
On October 28, 2020 an analyst asked Mr. Mahoney whether it
made sense for Boston Scientific to be developing two different
TAVR platforms, the Lotus Edge and the more traditional self-
expanding Acurate valve. Mr. Mahoney maintained that developing
the Lotus Edge alongside the Acurate valve platform made
strategic sense, because the company was “seeing strong results
in the sites that are using Lotus in the U.S.” despite the
challenges they encountered opening new accounts. Id. at ¶ 319.

4. Boston Scientific Terminates the Lotus Valve Platform
On November 17, 2020, Boston Scientific issued a press
release announcing a “global, voluntary recall of all unused
inventory of the Lotus Edge Aortic Valve System due to
complexities associated with the product delivery system.” Id.
at ¶ 181. With “the additional time and investment required to
develop and reintroduce an enhanced delivery system,” the
company decided to “retire the entire [Lotus] product platform
immediately.” Id. Consequently, Boston Scientific would face
“pre-tax GAAP charges of approximately $225 million to $300
million” of which 100 to 150 million would impact the company’s
adjusted results. Id.

During a conference call on the Lotus recall, Boston
Scientific’s Executive Vice President and Chief Financial
Officer, Executive Defendant Daniel Brennan, stated that Lotus
was “overall a drag on the bottom line for the company.” at
¶ 183. Lotus sales, he said, accounted for only $60 million in
revenue in 2019 and would only reach about $75 million in 2020.
Id. Mr. Fitzgerald further explained Boston Scientific’s
reasons for retiring the Lotus platform at this stage:
So we just rounded the corner right at around TCT
[October 15, 2020] of a 1- year anniversary of
launching in the U.S. . . . And we’re – we have done a
really good job of training and retraining around the
complexities of the delivery system. But we came to the
conclusion that to scale this, to go from sub-100
accounts today in the United States to hundreds of
accounts, right, we really were going to struggle in
replicating that deep technical, clinical support as we
scale cases and go to 2, 3, 4, 5x without a design
enhancement. So I think it was the proper thing for us
to do to really be our own worst critics after the first
full year of having [Lotus] Edge on the market and
commercialized in the U.S. And it became very apparent
that without a design enhancement, that our program
wasn’t scalable and that [Lotus] would ultimately remain
as a niche device in a pretty expensive space to operate.

Dkt. No. 60-1 at 13.
By the end of the first year of the full United States
launch, it had become clear, he said on November 18, 2020, that
the Lotus Edge operated in a niche of the TAVR market, while
Boston Scientific’s Acurate platform would be a “super workhorse
valve.” Dkt. No. 64-1 at 6-7. According to Mr. Fitzgerald, it
took a full year of “the U.S. experience” to decide to terminate
Lotus. Id. at 6.
Following Boston Scientific’s announcement on November 17,
Boston Scientific common stock decreased in value by about $3.00
per share or approximately 8%, beginning the day at a price of
$38.03 and ending at $35.03. Dkt. No. 44 at ¶ 324.
5. Failures of the Lotus Launch Revealed after the Class
Period

Plaintiff alleges that it became clear to the Executive
Defendants that Lotus Edge was not commercially viable at least
six months before Boston Scientific announced its decision to
terminate the program. Plaintiff presents accounts from nine
confidential sources, each a former Boston Scientific employee
(“FE”), in support of this claim.
During the Lotus launch in the United States, FE 16 surveyed
physicians on how many TAVR patients they expected to treat
using the Lotus device. Physicians reported that the Lotus
device was not appropriate for most patients, that the Lotus
device would be used in about 5-6% of TAVR patients and that it
would achieve at most, 5-10% market share. Id. at ¶ 104. FE 27
reported that that the Lotus Edge device saw higher risk than
did its competitors, which hampered its sales. Id. at ¶ 106.
FE 38, a Therapy Consultant, described many challenges
associated with Lotus Edge’s delivery system. The complex

6 FE 1 was a Principal Therapy Consultant in Boston Scientific’s
Structural Heart Division in New York and New Jersey from 2000-
2021. Id. at ¶ 104.
7 FE 2 was a Principal Clinical Field Manager in Boston
Scientific’s Structural Heart division from 2017 to 2021. Id.
at ¶ 106.
8 FE 3 was a Therapy Consultant in the Structural Heart Division
delivery system required extensive training to operate and
involved many moving parts and steps to implant. Id. at ¶¶ 108-
111. To FE 49, Lotus “was the most complicated device on the
planet.” Id. at ¶ 113. Lotus Edge’s multi-step implantation
process was far more difficult, according to human factor
engineer FE 610 for example, than the two step process to implant
competitors’ valves. Id. at ¶ 124.
FE 3 also described specific malfunctions associated with
the Lotus delivery system, including the “Twisted Post”
phenomenon, wherein the rods in the delivery system prevented
the valve from locking into position.11 If the valve did not

lock into place, surgeons could be forced to convert the patient
to open heart surgery. Id. at ¶¶ 109, 128. According to FE 4,
malfunctions like the Twisted Post were common, happening in
“50% of all cases.” Id. at ¶ 112. FE 4 also claimed the Lotus
salesforce, clinical staff, and certified representatives lacked
the experience with TAVR procedures generally and the Lotus Edge
specifically to implement the Lotus launch responsibly. Id. at

9 FE 4 was an Interventional Cardiology Territory Manager at
Boston Scientific from 2016 to 2021. Id. at ¶ 112.
10 FE 6 was a Principal Human Factors Engineer at Boston
Scientific from 2019 to 2020. Id. at ¶ 122.
11 FE 5, a salesperson and care coordinator for Boston
Scientific’s southern Germany region from 2017 to 2020, noted
that the issues in the Lotus delivery system in 2019-2020 launch
were similar to those that plagued the device in 2016 and 2017.
¶¶ 112-113. As a result, FE 4 characterized the launch as
“clinically unsafe.” Id. at ¶ 113.
FE 6 reported that by the end of 2019, knowledge of Lotus
Edge’s complexity and delivery-system failures “went all the way
up” to the executive level.12 Id. at ¶ 123. Boston Scientific
reportedly shifted its objective from refining the Lotus
platform to replacing it with another TAVR system as soon as
possible. Id.
Senior Financial Analyst FE 713 revealed that the Lotus
launch also had not produced the kind of revenue that Boston

Scientific anticipated. In 2019, the Lotus Edge group failed to
meet their forecasted revenues by half. Id. at ¶ 133. By 2020,
it was clear to FE 7 that the Lotus Edge group was “consistently
underperforming.” Id. at ¶ 132. As of mid-2020, only twelve
United States centers were implementing two or more Lotus
devices per month. Id. at ¶ 131. Even with recalculated
forecasts reduced by 25% every quarter, FE 7 reported that the
Lotus Edge group’s revenue was still 25% below where it should
have been. Id. at ¶ 133. FE 1, too, noted the Lotus Edge’s
dwindling sales in 2020; of 120 sales representatives in the
Structural Heart group in the United States, he estimated that

12 As a basis for this view, FE 6 explained that the Lotus Edge
chief engineer Dan Foster told FE 6 during their job interview
that the Lotus Edge required “three hands to operate” and was
difficult for the surgeons to deploy. Id. at ¶ 124.
13 FE 7 was a Boston Scientific Senior Financial Analyst from
only about 15-20 hit their quotas, while the others missed often
by 50% or more. Id. at ¶ 134.
Beyond these sales challenges, Financial Analyst FE 8
reported that the Lotus Edge was abnormally difficult to
manufacture. The standard manufacturing yield rate for medical
devices (i.e., the proportion of devices produced that were
acceptable for commercial use) is about 85%. Id. at ¶ 141.
One Lotus Edge plant in the United States saw manufacturing
yield rates between 5-10% from 2016 to 2018, which only rose to
about 20% in 2019. Id. Low yield rates presented challenges at

other factories as well, according to FE 9, a Manufacturing
Engineer at the Boston Scientific plant in Penang, Malaysia.
Id. at ¶ 142. The poor yield so increased the cost of Lotus
Edge production that the device sales had a gross margin of less
than 30%, compared to the industry norms of around 90%. Id. at
¶ 144. Further, at the Penang plant, FE 9 reported that “zero
orders” for the Lotus Edge came in between the end of 2019 and
March of 2020. Id. at ¶ 273. Boston Scientific ultimately shut
down the plant and terminated its employees in March of 2020.
See id.; see also id. at ¶ 310.
The Complaint paints the Lotus platform as a slowly but

plainly sinking ship whose demise was obscured by Executive
Defendant disclosure misconduct. Plaintiff contends that the
Executive Defendants hid the Lotus Edge’s failures and delayed
disclosing their decision to terminate the Lotus platform to
inflate Boston Scientific’s stock value artificially.
6. Allegations of Executive Defendant False Statements
Plaintiff’s lengthy Complaint appears to raise sixty-three
of what it calls actionable false statements by the Executive
Defendants during the Class Period. I have gathered these
alleged misstatements by individual Executive Defendants said to
be the declarants in a Chart attached as an Appendix to this
Memorandum and Order.14
a. Mr. Mahoney’s Alleged Misstatements

About half of the alleged misstatements are attributed to
Executive Defendant Michael Mahoney, Boston Scientific’s
Chairman, President, and Chief Executive Officer. Mr. Mahoney
is alleged to have misled investors throughout 2019 and 2020 by
affirming the United States Lotus launch was “going extremely
well” and was “on track” to reach the company’s goal of opening
roughly 150 accounts in the first year.15 Mr. Mahoney touted the

14 Defendants identified seventy-five alleged misstatements in
Exhibit B [Dkt. No. 54-2] filed in support of their motion [Dkt.
No. 53] to dismiss. Some of those misstatements are attributed
to individuals not named as Defendants, appear to be the result
of fractionated versions of the statements reported, or refer to
company documents. The Appendix to this Memorandum and Order
sets forth only alleged misstatements made by the named
Executive Defendants.
15 Mr. Mahoney stated that the launch was going well, there was a
market demand for the product, and he remained confident in the
Lotus platform on February 6, 2019, Dkt. No. 44 at ¶ 237, ,
April 24, 2019, id. at ¶ 241, May 29, 2019, id. at ¶ 243, July
24, 2019, id. at ¶¶ 245-246, January 14, 2020, id. at ¶ 277,
“very high” rates at which centers were using and reordering the
device on four occasions.16 Plaintiff also asserts that Mr.
Mahoney’s proclamations of the Lotus Edge’s ease of use and his
descriptions of the initial Lotus launch as “controlled” were
materially misleading.17 In the months before the Lotus recall,
Mr. Mahoney allegedly misled investors as to the future
prospects of the Lotus Edge as well. In July of 2020, he
confirmed that the “gates [were] open[ing] up” for new Lotus
accounts. Id. at ¶ 303. On September 16, 2020, Mr. Mahoney
claimed that the Lotus platform was and “will continue to be an
important growth driver” for Boston Scientific. Id. at ¶ 308.

On October 28, 2020, about three weeks before announcing the end

and July 29, 2020, id. ¶ 301. He represented that the launch
was “on track” or “on pace” to achieve 150 accounts on July 24,
2019, id. at ¶ 246, October 23, 2019, id. at ¶¶ 260-261,
February 5, 2020, id. at ¶ 279, and March 11, 2020, id. at
¶ 296.
16 Mr. Mahoney told investors on September 5, 2019 that the Lotus
team was seeing “very high” and “strong” reorder rates. Id. at
¶ 251. On July 29, 2020, he affirmed that the Lotus Edge
“continues to see strong utilization within existing accounts,”
id. at ¶ 301, and then stated that “current centers are using
the device quite consistently,” id. at ¶ 302. He told investors
again on September 16, 2020 that the “reorder rate for existing
users is quite high.” Id. at ¶ 308. On October 28, 2020, Mr.
Mahoney stated that although opening new sites had proven
challenging, “the sites that are using Lotus in the U.S. are
using it quite regularly.” Id. at ¶ 319.
17 Mr. Mahoney described “[p]ositive physician feedback
highlight[ing] the benefit of [the] complete control” afforded
by the repositionable Lotus device on July 24, 2019. Id. ¶ 245,
246. He also, at various times, described the company’s
approach to the Lotus launch as a “deliberate” and “controlled”
one and “focused on quality, strong patient outcomes, and
of the Lotus platform, Mr. Mahoney told investors “we’re seeing
strong results in the sites that are using Lotus in the U.S. . .
. So we do believe that the two-valve strategy makes sense.”
Id. at ¶ 319.
b. Mr. Ballinger’s Alleged Misstatements

Plaintiff relies upon four misstatements by Boston
Scientific’s executive vice president and president of
Interventional Cardiology until his resignation on July 3, 2020,
Executive Defendant Kevin Ballinger, as to the success of the
Lotus launch and the Lotus Edge’s ease of use. Boston
Scientific engineers, Mr. Ballinger claimed, made “something
that is very complex feel really simple” with the Lotus Edge.
Id. at ¶ 226. Mr. Ballinger told investors in September of 2019
that the Lotus Edge was “not a complicated device” but one that
“actually takes stress out of the [TAVR] procedure.” Id. at ¶
258. Like Mr. Mahoney, Ballinger described the Lotus rollout as
“self-constrained” due to the “exceptional proctoring [and]
training” the company hoped to provide for users. Id. at ¶ 256.
Finally, Mr. Ballinger also stated, in September 2019, that
Boston Scientific was “on track” for its goal of 150 accounts.
Id. at ¶ 255.

c. Ms. Lisa’s Alleged Misstatements

Boston Scientific’s vice president of Investors Relations,
Executive Defendant Susan Vissers Lisa, is said to have misled
investors by repeatedly expressing satisfaction with the
progress of the Lotus launch. She also gave allegedly false
descriptions of a “controlled” initial Lotus launch, id. at ¶
253, and the Lotus team’s focus on training and proctoring, id.
at ¶¶ 267, 269. Plaintiff disputes Ms. Lisa’s characterization
of the Lotus Edge as a “big driver” for Boston Scientific and a
product that was “gaining [market] share. . . from both the
competitors in the U.S. market.” Id. at ¶¶ 275, 286. Ms. Lisa,
like Mr. Mahoney, stated throughout the Class Period that the
Lotus launch was “on target” or “on track” to achieve 150
accounts. During a conference call with analysts on August 19,

2020, Ms. Lisa allowed her Director of Investor Relations,
Lauren Tengler, to report without contradiction that “we hit 138
accounts” when, Plaintiff alleges, the company had only opened
around 100 accounts. Id. at ¶ 99, 305.
d. Mr. Fitzgerald’s Alleged Misstatements

Boston Scientific’s executive vice president and president
of Interventional Cardiology beginning in July 2020, Executive
Defendant Joseph Fitzgerald, is alleged to have misled investors
with his public statements in the weeks leading up to the Lotus
recall. On September 28, 2020, Mr. Fitzgerald told investors
that the Acurate neo2 TAVR device represented “the natural
evolution of our complementary dual-valve TAVI toolkit,” along
with the Lotus Edge. Id. at ¶ 311. Plaintiff contends Boston
Scientific planned to replace the defective Lotus Edge with the
Acurate platform.
On October 15, 2020, Mr. Fitzgerald announced “we have
opened more than 150 accounts in the U.S.” Id. at ¶ 314. Mr.
Fitzgerald reiterated that “I like what I see in terms of us
being now in 150 accounts . . . I think our launches, I know our
launch is gaining momentum.” Id. at ¶ 316. He then described
the launch as “a ground game where we are expanding our
footprint in the US, each month we’re growing actual procedures
per center, per month.” Id. at ¶ 316.
e. Mr. Brennan’s Alleged Misstatements

Boston Scientific’s executive vice president and chief
financial officer, Executive Defendant Daniel Brennan, is
alleged to have mischaracterized the Lotus launch as “very
controlled” and paced according to the proctoring and training
needs for a safe introduction of the Lotus Edge to the market.18
Mr. Brennan predicted throughout the Class Period that the Lotus
launch would grow and gain momentum. He also periodically
affirmed that the launch was “on track for 150 centers.”19 Id.
at ¶ 292.

18 Mr. Brennan referred to the launch as “controlled” in November
2019 and February and March of 2020. Id. at ¶¶ 271, 281, 292.
He explained that the launch has been “more kind of slow and
steady” with a “heavy emphasis on proctoring and making sure
folks are 100% able and ready to use the valve.” Id. at ¶ 292.
19 On November 19, 2019, Mr. Brennan predicted “Lotus, as we
continue to go at a controlled rollout pace and enter new
accounts, will continue to grow.” Id. at ¶ 271. On February 5,
2020, he predicted the launch “should gain momentum over time.”
Id. at ¶ 281. On March 3, 2020, Mr. Brennan maintained that the
company’s successes “should be built on the momentum that we
Boston Scientific’s vice president and general manager of
Structural Heart Valves from July 2017 through January 2020,
Executive Defendant Shawn McCarthy, is said to have made two
alleged misstatements. Both statements related to the function
of the Lotus Edge. On June 26, 2019, Mr. McCarthy stated “we
believe we’re offering unmatched control and predictability”
with the Lotus Edge. He also affirmed that “early
indications... are very positive” and that “we’ll want to make
sure we’re doing the exact work we will as a world-class

organization to train physicians to use and reuse the
technology” as the Lotus team pursued its goal of launching
roughly 150 accounts in the first year. Id. at ¶ 244.
g. Dr. Meredith’s Alleged Misstatements

Boston Scientific’s executive vice president and global
chief medical officer during the Class Period, Executive
Defendant Ian Meredith, is said to have misled investors as to
the success and pacing of the launch. On October 23, 2019, he
claimed “the limited market release is going very well. It's on
track and the plans haven't changed thus far.... But the rollout
of Lotus Edge of course is a planned controlled release. And in
the short term, it will be determined by training.” Id. at ¶
263.
7. Allegations of Executive Defendant Scienter
a. Executive Defendant Knowledge throughout the
Class Period
Plaintiff alleges that Boston Scientific’s leadership was
“absolutely aware” of Lotus Edge’s failing performance, even as
they touted its success. Id. at ¶ 204. Plaintiff identifies
the following as evidence that the Executive Defendants knew the
Lotus launch was doomed throughout the Class Period.
•
In November of 2019, Executive Defendants Meredith,
Ballinger, and McCarthy convened an emergency meeting of
the entire Lotus Edge salesforce over Thanksgiving
weekend to discuss the poor patient outcomes and
malfunctions associated with the Lotus valve. FE 1 and
FE 2, who attended the meeting, reported that the group
also discussed Lotus’s lagging sales and failure to meet
revenue targets. Id. at ¶¶ 137, 208.
•
According to FE 8, the device’s low manufacturing yield
rate was a “hot topic,” discussed at monthly engineering
status updates with Boston Scientific’s senior
leadership, though FE 8 does not specify which Executive
Defendants allegedly attended these monthly updates. Id.
at ¶ 143.
• The Executive Defendants are alleged to have known that
the Lotus Edge was associated with disproportionately
high rates20 of adverse medical events because Boston
Scientific was legally required to track these adverse
events and report them to the FDA. Id. at ¶¶ 117-118.
Executive Defendants Ballinger, Meredith and McCarthy
reportedly discussed these adverse events regularly in
companywide training sessions. Id. at ¶ 117.
•
FE 7 reported that Boston Scientific’s leaders often
discussed “how to turn [Lotus] around” in 2019 and then
in 2020. Defendant Mahoney, in particular, “constantly”
asked the divisional controller about the progress of
Lotus sales. Id. at ¶ 136. According to FE 1, Boston
Scientific began to authorize bulk-order discounting for
Lotus sales after low order rates for the Lotus Edge
caused many units to “never be[] used and just expir[e]
on the shelf.” Id. at ¶ 147. FE 9 alleged that Boston
Scientific then shut down the Penang plant in March of
2020 after it received “zero orders” from the end of 2019
to 2020. Id. at ¶ 146.

20 Between May 2019 and November 2020, Lotus Edge accounted for
12% of all TAVR adverse events reported, though it was used in
• The Lotus group’s underperformance was reflected in the
monthly and quarterly revenues routinely uploaded to
Boston Scientific’s company-wide dashboard. Id. at
¶¶ 134, 204. As alleged, all Executive Defendants had
access to this dashboard. Id. at ¶ 134.
b. Boston Scientific’s Need to Raise Funds to Keep
Up with Its Debts
Plaintiff alleges Boston Scientific’s need to raise capital
and renegotiate its debts in 2020 was Defendants’ motive to
delay announcement of the Lotus recall until November 17, 2020.
Id. at ¶¶ 155-156, 214. Following the first quarter of 2020,
Boston Scientific allegedly was in danger of breaching its loan
covenants unless it could renegotiate its debts and raise
capital.21 Id. at ¶ 152. On May 21, 2020, the Company held its
largest ever secondary public equity offering, raising over two
billion dollars, at a common stock price of $34.25 per share.
Id. at ¶ 156 & n.3. Around this same time, Boston Scientific

21 According to the Complaint, Boston Scientific’s covenants at
the end of 2019 required the company to maintain a debt leverage
ratio of total debt to consolidated EBITDA of 3.75, except if
the company undertook a “Qualified Acquisition.” Id. at ¶ 151.
In the case of a Qualified Acquisition, Boston Scientific’s
leverage ratio maximum was 4.75, subject to quarterly “step-
down[s].” Id. Boston Scientific made a “Qualified Acquisition”
in 2019 and ended the year with a debt leverage ratio of 4.75.
The Complaint alleges that, in 2020, even if the company used
its available cash to reduce its debts, by the fourth quarter
its leverage ratio would amount to 4.05, exceeding the 3.75
was able to renegotiate over four billion dollars of its debt.
Id. at ¶ 155.
According to Plaintiff, the failure of one of Boston
Scientific’s most significant investments could have caused
share prices to plummet and made investors doubt the security of
Boston Scientific’s structural heart portfolio. Id. at ¶¶ 155-
156. Boston Scientific would then have struggled to raise
capital and renegotiate its debts. Id. at ¶ 155. Plaintiff
asserts that Defendants decided in April of 2020 to delay
announcing the retirement of the Lotus platform to prevent

investors from losing faith in the TAVR portfolio until after
Boston Scientific raised capital and renegotiated its debts.
c. Executive Defendant Conduct throughout the Class
Period
At the end of 2019 and in 2020, several Executive
Defendants made decisions for their own professional and
financial futures that, according to Plaintiff, show their
complicity in a plot to deceive investors.
Two leaders of the Lotus team resigned during the United
States launch. Executive Defendant Shawn McCarthy, the General
Manager of the Structural Heart Valves division, left his role
at the end of 2019. Id. at ¶ 149. Executive Defendant Kevin
Ballinger also resigned his post as the executive vice president
and global president of Interventional Cardiology and left the
Company in June of 2020. Id. In addition, a Lotus Edge sales
leader and area vice president for the Structural Heart division
in the United States, Richard Maher, resigned in February of
2020 and the head of Lotus sales in Europe, Sandrine Maset, was
removed from her post and transferred to a different department
in May of 2019. Id.
The Complaint alleges improper insider trading by
Executive Defendants Ballinger, Brennan, Fitzgerald, and
Mahoney. Messrs. Ballinger, Brennan, and Fitzgerald received
significantly greater proceeds overall from their sales during
the Class Period than from their sales from the preceding one-
year-and-nine-month period.22 Id. at ¶ 224. Mr. Ballinger and

Mr. Fitzgerald sold most of their shares based on trading plans
adopted during the Class Period or otherwise outside of any Rule
10b5-1 plan.23
Mr. Mahoney set up a Rule 10b5-1 trading plan on August 25,
2020 for 259,207 shares of his own Boston Scientific stock, then

22 Plaintiff presents Executive Defendant insider sales records
from the twenty-one-month period before the Class Period, April
28, 2017 to February 5, 2019 as a Control Period, to which they
compare the Executive Defendant Class Period sales. Id. at ¶¶
217, 223.
23 According to the Complaint, Mr. Ballinger sold over 200,000 of
his shares in excess of eight million dollars; only 11% of his
shares were sold pursuant to a pre-Class Period trading plan.
Id. at ¶ 223. Two of his major sales were in August and
September of 2020, after he left Boston Scientific. Id. at ¶
224. Mr. Fitzgerald sold over 250,000 of his shares for a total
in excess of ten million dollars; 16% of these shares were sold
pursuant to a pre-Class Period trading plan. Id. at ¶ 223. Mr.
Brennan made over seven million dollars selling over 170,000 of
his shares; 88% of these shares were sold pursuant to a pre-
worth about ten million dollars. at ¶ 161. Mr. Mahoney’s
plan was designed to expire on November 6, 2020. Id. at ¶ 180.
Mr. Mahoney’s 10b5-1 plan covered a shorter period than all of
his publicly available previous plans, which covered three-to-
twelve-month periods. In fact, this plan covered the shortest
period of any Boston Scientific executive since 2017. Id. at ¶
162. Mr. Mahoney’s August 10b5-1 plan also differed from his
previous plans in that it sold all 259,207 shares at once,
instead of in a series of sales over time. Id. at ¶ 220.
According to public records presented by Defendants [Dkt.

No. 55-2 at 11], Mr. Mahoney’s plan had a price trigger of
$35.00 per share with an earliest sale date of October 29, 2020,
the day after his third-quarter earnings call with investors.24
The price of Boston Scientific shares rose to $35.06 on November
3 and Mr. Mahoney sold all 259,207 of his shares for about nine
million dollars.25 Id. at ¶¶ 218, 219. Two weeks later, on

24 I consider Mr. Mahoney’s plan documents as records integral to
the Complaint. Shaw v. Digit. Equip. Corp., 82 F.3d 1194, 1220
(1st Cir. 1996), abrogated in part by 15 U.S.C. § 78u–4(b).
Though Plaintiff in its opposition brief characterizes
Defendants’ inclusion of these plan documents in their Motion to
Dismiss as “improper” [Dkt. No. 61 at 43], Plaintiff does not
appear to dispute the authenticity or accuracy of their
contents.
25 This was the first day after the plan’s earliest sale date of
October 28 when Boston Scientific shares reached the minimum
November 17, Mr. Mahoney announced Boston Scientific’s decision
to terminate the Lotus platform.26 Id. at ¶ 181.
C. Development of Challenged Amended Complaint by Plaintiff
On December 16, 2020, plaintiff Mariano Errichiello filed
the original complaint in the instant action, on behalf of
himself and similarly situated investors. Plaintiff Errichiello
sought class certification pursuant to FED. R. CIV. P. 23(a).
[Dkt. No. 1] On February 2, 2021, Union Asset Management
Holding AG moved to be appointed Lead Plaintiff pursuant to
Section 21D(a)(3)(B) of the Exchange Act, 15 U.S.C. § 78u-
4(a)(3(B). [Dkt. No. 16] I consolidated Errichiello v. Boston
Scientific Corporation, No. 1:20-cv-12225-DPW (D. Mass.) and

Jevons v. Boston Scientific Corporation, No. 1:21-cv-10033-DPW
(D. Mass.) pursuant to FED. R. CIV. P. 42(a), and appointed Union
Asset Management Holding AG as the Lead Plaintiff for the
putative class on March 30, 2021. [Dkt. No. 31]
Lead Plaintiff in due course filed the Amended,
Consolidated Class Complaint now under consideration.
II. STANDARD OF REVIEW
To survive a motion to dismiss, a complaint must contain
plausible factual allegations sufficient to “raise a right to

26 I note that although Boston Scientific share prices did drop
about 8% following the announcement that the Lotus would be
recalled and terminated, the shares had approximately the same
value at the close of trading on November 17, $35.03, as they
had on November 3 when Mr. Mahoney traded his shares, $35.06.
relief above the speculative level.” v.
Twombly, 550 U.S. 544, 555 (2007). The plaintiff must allege
specific facts supporting each element of their cause of action;
conclusory assertions of the defendant’s liability will not
suffice. Id.
I accept as true all well-pleaded factual allegations in
the Complaint and draw all reasonable inferences in Plaintiff’s
favor – though, as explained infra Part III, Plaintiff faces a
higher standard as to inferences of scienter. Tellabs, Inc. v.
Makor Issues & Rts., Ltd., 551 U.S. 308, 321, 324 (2007). “In

deciding a motion to dismiss a securities action, [I] may [also]
properly consider the relevant entirety of a document integral
to or explicitly relied upon in the complaint . . . .” Shaw v.
Digit. Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996) (citing
Watterson v. Page, 987 F.2d 1, 3–4 (1st Cir. 1993)),abrogated in
part by 15 U.S.C. § 78u-4(b)(2). Here, although they were not
appended to the Complaint, I consider the transcripts of
Defendants’ earnings calls, conference talks, question and
answer sessions, and other public statements referenced in the
Complaint.27

27 No dispute as to the accuracy and authenticity of these
transcripts and other public statements has been raised before
III. COUNT I - VIOLATION OF SECTION 10(b) AND RULE 10b-5

A. Applicable Legal Standard
Plaintiff raises in Count I a claim under Section 10(b) of
the Exchange Act, 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17
C.F.R. § 240.28 To allege a right to relief under Section 10(b),
a plaintiff must adequately plead:
(1) a material misrepresentation or omission; (2)
scienter; (3) a connection with the purchase or sale
of a security; (4) reliance; (5) economic loss; and
(6) loss causation.
Constr. Indus. & Laborers Joint Pension Tr. v. Carbonite, Inc.,
22 F.4th 1, 6 (1st Cir. 2021) (quoting In re Biogen Inc. Sec.
Litig., 857 F.3d 34, 41 (1st Cir. 2017)).
Beyond the general requirements of an adequately pled
complaint, the plaintiff in a securities fraud case must meet
the heightened pleading requirements of FED. R. CIV. P. 9(b) and
the Private Securities Litigation Reform Act (“PSLRA”). 15
U.S.C. § 78u-4(b) (describing pleading requirements in private

28 The U.S. Securities and Exchange Commission (“SEC”)
investigated whether Boston Scientific violated the federal
securities laws with respect to its actions surrounding the
discontinuation of Lotus Edge. Dkt. No. 72. That investigation
concluded on January 3, 2022, with the SEC not recommending an
enforcement action against Boston Scientific. Dkt. No. 72-1.
That the SEC decided not to take an enforcement action is not
material to my disposition on the motion to dismiss now before
me. The SEC’s letter explains that it “must in no way be
construed as indicating that [Boston Scientific] has been
exonerated or that no action may ultimately result from the
staff’s investigation.” Dkt. No. 72-1 (quoting Procedures
Relating to the Commencement of Enforcement Proceedings and
Termination of Staff Investigations, Securities Exchange Act of
actions alleging securities fraud); v. ,
665 F. Supp. 2d 28, 33 (D. Mass. 2009). All allegations of
fraud must be stated “with particularity.” FED. R. CIV. P. 9(b).
The PSLRA requires the plaintiff to “specify each [defendant]
statement alleged to have been misleading” and explain “the
reason or reasons why the statement is misleading.” In re
Biogen Inc. Sec. Litig., 857 F.3d at 41 (quoting 15 U.S.C. §
78u-4(b)(1)).
Under the PSLRA, a plaintiff is obligated to allege
specific facts giving rise to a strong inference of the

defendants’ scienter, defined as either “intentional or willful
conduct designed to deceive or defraud investors by controlling
or artificially affecting the price of securities” or a “high
degree of recklessness.” Id. (internal quotations and citations
omitted).
B. Material Misstatements and Omissions
To avoid dismissal, a plaintiff must identify at least one
material misrepresentation or omission during the Class Period.
See Aldridge v. A.T. Cross Corp., 284 F.3d 72, 78, 82 (1st Cir.
2002).
Not every arguably false or misleading statement by a
corporate executive is actionable under the PSLRA. Shaw, 82
F.3d at 1217; Fire & Police Pension Ass'n of Colo. v. Abiomed,
Inc., 778 F.3d 228, 242 (1st Cir. 2015). A defendant’s forward-

looking, predictive statement will not be found actionable if it
falls within the PSLRA’s Safe Harbor provision, 15 U.S.C. § 78u–
5(c)(1), as a statement that “(1) includes a disclaimer
regarding risks and the possibility that results will differ
from projections; (2) is immaterial; or (3) the executives of
the company had no actual knowledge . . . was false or
misleading.” In re Smith & Wesson Holding Corp. Sec. Litig.,
604 F. Supp. 2d 332, 340 (D. Mass. 2009).
A plaintiff must also show that a defendant’s misstatements
were material, such that there is “a substantial likelihood that
a reasonable investor would have viewed [the statement] as

significantly alter[ing] the total mix of information made
available” on the market. Fire & Police Pension Ass'n of Colo.,
778 F.3d at 240 (internal quotations and citations omitted).
Statements constituting mere puffery, or vague corporate
optimism on the current success of a product or its prospects,
for example, are not material and do not prove a basis for a
securities fraud action. Metzler Asset Mgmt. GmbH v. Kingsley,
305 F. Supp. 3d 181, 209 (D. Mass. 2018), aff'd, 928 F.3d 151
(1st Cir. 2019). Statements “clearly constituting the opinions
of the speaker” are equally immaterial, Shaw, 82 F.3d at 1217,
because a reasonable investor would not consider these
statements important in assessing the market. Id. To sort

actionable misrepresentations from non-actionable puffery or
optimism, I consider “(1) whether [each] statement is so vague,
so general, or so loosely optimistic that a reasonable investor
would find it unimportant to the total mix of information and
(2) whether the statement was also considered unimportant to the
total mix of information by the market as a whole.” In re
Biogen Inc. Sec. Litig., 193 F. Supp. 3d 5, 41 (D. Mass. 2016)
(internal quotations and citation omitted), aff’d, 857 F.3d 34
(1st Cir. 2017).
Here, I can discern four broad categories of what Plaintiff
characterizes as material misrepresentations: (1) false reports
as to the accounts opened and orders received during the Lotus
Edge launch in the United States; (2) mischaracterizations of

the Lotus Edge device as a simple, user-friendly device
competitive with existing TAVR devices; (3) omissions and
misstatements as to the safety of the Lotus Edge device and its
launch; and (4) Executive Defendant failures to disclose their
mid-2020 decision to terminate the Lotus Edge project and
reporting misleading reports regarding the future of the Lotus
Valve Platform.
1. Statements Regarding Lotus Edge Accounts and Orders
Plaintiff contends that a number of Executive Defendant
progress reports on the success of the United States Lotus
launch constitute fraud. I find that the vast majority of these
misstatements are not material representations upon which the

reasonable investor would rely.
Executive Defendant pronouncements that the launch was
going well, that Boston Scientific was “on track” to meet the
goal of roughly 150 accounts, that the launch was “gaining
momentum” and that Boston Scientific was seeing “strong” sales
and order rates, are all statements of immaterial corporate
puffery. Dkt. No. 44 at ¶¶ 260, 265, 267, 274-275, 279-280,
286-287, 291-292, 296, 303, 305, 309, 313, 316, 319. “Analysts
and arbitrageurs rely on facts in determining the value of a
security, not mere expressions of optimism from company
spokesmen.” Suna v. Bailey Corp., 107 F.3d 64, 72 (1st Cir.
1997) (internal quotations omitted) (quoting Raab v. Gen.
Physics Corp., 4 F.3d 286, 290 (4th Cir. 1993)). None of these

rosy assessments, devoid as they are of detail, would have been
confused for factual representations important to the market.
See In re Wayfair, Inc. Sec. Litig., 471 F. Supp. 3d 332, 339
(D. Mass. 2020) (executives’ reports that they were “delighted”
with the progress and that the market-share would grow were not
actionable); In re iRobot Corp. Sec. Litig., 527 F. Supp. 3d
124, 138 (D. Mass. 2021) (statements related to market momentum
or reports of traction are not actionable). To the extent that
these statements were demonstrably false at all, they were vague
proclamations of progress to which a reasonable investor would
assign little weight. See Hensley v. Imprivata, Inc., 260 F.
Supp. 3d 101, 124 (D. Mass. 2017) (citing Shaw, 82 F.3d at 1217–

18).
Opinions offered by Executive Defendants, for example, that
the Lotus team was “really pleased” by the pace of the launch,
that Lotus was “doing very well on the market,” that the device
was being used and ordered “quite consistently,” and that
results were “encouraging,” are equally immaterial. Dkt. No. 44
at ¶¶ 260, 267, 274, 286, 292, 301, 302. These opinions
regarding the current state of the Lotus launch and its future
prospects are not the factual representations that would be
considered in the total mix of information in the market. In re
iRobot Corp. Sec. Litig., 527 F. Supp. 3d at 138 (citing In re
Boston Sci. Corp. Sec. Litig., No. 1:10-cv-10593-DPW, 2011 WL
4381889, at *11 (D. Mass. Sept. 19, 2011), aff’d, 686 F.3d 21

(1st Cir. 2012)).
Finally, Plaintiff contends that several forward-looking
statements, such as the predictions that Lotus “will continue to
grow” in new accounts and sales were “expect[ed] to get back to
our regular cadence” in the second half of 2020, are actionable.
Dkt. No. 44 ¶¶ 271, 301. Those predictions fall under the
PSLRA’s Safe Harbor provision and do not give rise to liability.
Not all of Executive Defendant alleged misstatements may be
disposed of as non-actionable puffery, opinions, or predictions,

however. Four representations from Ms. Lisa, Mr. Mahoney, and
Mr. Fitzgerald require more careful analysis.
• On August 19, 2020, Ms. Lisa allowed her Director of
Investor Relations to report without contradiction that
“we hit 138 accounts” in the Lotus Launch.29 Id. at ¶¶

29 Plaintiff alleges “Boston Scientific” reported the 138-account
tally on August 19, 2020. Yet the Complaint attributes the
statement “we hit 138 accounts” to Director of Investor
Relations Lauren Tengler, who is not named as a Defendant in the
Complaint. Dkt. No. 44 at ¶ 99, 305-306.
The only possible Defendant to whom this statement might be
attributed is Ms. Lisa, the vice president of Investor
Relations, because Plaintiff presents no facts to suggest that
Ms. Tengler’s scienter may be imputed to Boston Scientific
itself. Ms. Lisa 1) presumably supervised Ms. Tengler, 2) was
on the conference call with Ms. Tengler when she made this
statement, and 3) permitted Ms. Tengler to respond to an
analyst’s request for account tallies that had been directed to
both Ms. Lisa and Ms. Tengler. Though I need not resolve the
issue in this case, I note that whether Ms. Lisa can be said to
have “ma[d]e” this alleged false statement within the meaning of
Section 10(b) is not a question to which First Circuit case law
provides a clear answer.
Section 10(b) imposes liability on “any person, [that]
directly or indirectly, . . . make[s] any untrue statement of a
material fact or [omits] a material fact necessary in order to
make the statements made, in the light of the circumstances
under which they were made, not misleading.” 15 U.S.C. § 78j(b),
as refined in 17 C.F.R. § 240.10b–5(b).
In Janus Capital Group, Inc. v. First Derivative Traders, 564
U.S. 135, 145 (2011), the Supreme Court considered whether Janus
Capital Management LLC could be held liable for statements made
in its wholly owned subsidiary’s prospectuses, which allegedly
were misleading. Id. at 137–142. Holding that Janus Capital
Management could not be held liable, the Supreme Court explained
that the “maker” of a false statement is “the person or entity
with ultimate authority over the statement, including its
content and whether and how to communicate it.” Id. at 142; see
also id. at 148. Accordingly, only the wholly owned subsidiary
could be held liable because Janus Capital Management did not
have “the statutory obligation to file prospectuses with the
SEC.” Id. at 146–147.
Since Janus, courts have disagreed as to whether Section 10(b)
contemplates liability for the corporate executive who knowingly
permits third parties to make false statements in her presence
but does not author such statements herself. For example, the
99, 305.
•
On September 16, 2020, Mr. Mahoney told analysts that
“Lotus remains a key growth driver for us. And we’re not

imposes a “duty to correct” misstatements made by others, and
“if there were one, Janus Capital itself would have come out the
other way.” Fulton Cnty. Emps. Ret. Sys. v. MGIC Inv. Corp.,
675 F.3d 1047, 1051–52 (7th Cir. 2012). Other courts apply
Janus similarly. See Oaktree Principal Fund V, LP v. Warburg
Pincus LLC, No. CV 15-8574 PSG (MRWx), 2017 WL 3187688, at *8
(C.D. Cal. Jan. 17, 2017) (“[S]peakers are only liable for
failing to correct their own omissions.”); Ho v. Duoyuan Glob.
Water, Inc., 887 F. Supp. 2d 547, 572 n.13 (S.D.N.Y. 2012). In
contrast, at least one court post-Janus has explained that “a
high ranking company official cannot sit quietly at a conference
with analysts, knowing that another official is making false
statements and hope to escape liability for those statements.”
Ga. Firefighters’ Pension Fund v. Anadarko Petroleum Corp., 514
F. Supp. 3d 942, 956 (S.D. Tex. 2021) (quoting Barrie v.
Intervoice-Brite, Inc., 397 F.3d 249, 262 (5th Cir. 2005)).
The First Circuit has not weighed in on this issue post-Janus,
though courts have acknowledged its earlier decision in SEC v.
Tambone, 597 F.3d 436, 442–43 (1st Cir. 2010) (en banc) as
“consistent with Janus.” See, e.g., SEC v. City of Victorville,
No. ED CV13-00776 JAK (DTBx), 2017 WL 11679413, at *60 (C.D.
Cal. June 2, 2017). In Tambone, the Court of Appeals explained
that “[r]eading ‘make’ to include the use of a false statement
by one other than the maker” would stretch liability under Rule
10b-5(b) too far. Tambone, 597 F.3d at 446. Even in Tambone,
however, the First Circuit left open the possibility that Rule
10b-5(b) liability may attach where “defendants have expressly
or impliedly adopted the [mis]statements, placed their
imprimatur on the [mis]statements, or have otherwise entangled
themselves with the analysts to a significant degree.” Id. at
449 (quoting In re Cabletron Sys., Inc., 311 F.3d 11, 37–38 (1st
Cir. 2002)).
I need not decide the question of whether Ms. Tengler’s
alleged false statement or misleading omission could be said to
have been “made” by Ms. Lisa. For the purposes of this
Memorandum only I will refer to the statement as one made by Ms.
Lisa. However, as further explained infra Part III.C.2, I hold
that even if Ms. Lisa is legally responsible for failing to
correct the inaccurate 138-account tally, Plaintiff has not made
a sufficient showing of Ms. Lisa’s scienter to support its
claims.
going to give share [] estimates, but we’re continuing to
invest along those lines. We’re starting to do more
account openings, the reorder rate for existing users is
quite high, and we’re slowly beginning to penetrate some
new accounts . . . .” Id. at ¶ 308 (emphasis added).
•
On October 15, 2020, Mr. Fitzgerald told analysts “we
have opened more than 150 accounts in the [United
States].” He then announced that the Lotus Edge launch
was “expanding our footprint in the [United States]” and
that “each month we’re growing actual procedures per
center, per month.” Id. at ¶¶ 314, 316 (emphasis added).
•
On October 28, 2020, when Mr. Mahoney was asked whether
it made strategic sense for Boston Scientific to develop
two different TAVR platforms — the Lotus platform and the
Acurate platform — he responded “we do believe that the
two-valve strategy makes sense” despite the continued
challenges of opening new Lotus accounts in the United
States. Id. ¶ 319 (emphasis added).
In contrast to most statements discussed above these are, at
least arguably, factual representations. I turn to whether
Plaintiff has stated with particularity that they are both false
and material. See Greebel v. FTP Software, Inc., 194 F.3d 185,
193–194 (1st Cir. 1999).
Expressions of Satisfaction with the Launch
Plaintiff pleads adequately that Ms. Lisa and Mr.
Fitzgerald misstated the number of Lotus accounts opened in the
United States as of August 19, 2020 (138 accounts) and October

15, 2020 (over 150 accounts) and that the misstatements were
material. As alleged, the day after Boston Scientific announced
its decision to terminate the Lotus platform, Mr. Fitzgerald
announced that Lotus Edge had only launched “about 100 accounts
in the U.S.” Dkt. No. 44 at ¶ 194. Making all reasonable
inferences in Plaintiff’s favor, I find Mr. Fitzgerald’s
November report of 100 accounts, accompanied by Boston
Scientific’s decision to terminate the Lotus platform, support
the conclusion that Ms. Lisa and Mr. Fitzgerald presented
inaccurate tallies of Lotus Edge accounts.30
Account reports by Ms. Lisa and Mr. Fitzgerald’s are also
material. Ms. Lisa and Ms. Fitzgerald both represented that the

Lotus Edge launch was hitting concrete milestones when,
according to the allegations in the Complaint, it was not.

30 Defendants read Mr. Fitzgerald’s November tally of about 100
open Lotus accounts as including only then-active accounts and
contend there may have been more accounts open when Ms. Lisa and
Mr. Fitzgerald gave their earlier tallies. I, however, read the
allegations in the light most favorable to Plaintiff and find
that Plaintiff has pleaded falsity with sufficient
particularity. However, I do recognize that Mr. Fitzgerald’s
November 18 statement could be read to a narrower class of
accounts than the class of accounts described by Ms. Lisa and
Mr. Fitzgerald in their August and October tallies in my
These are not the subjective, vague statements of corporate
optimism that reasonable investors would disregard. Rather they
should be considered at this stage as factual representations
relevant to potential investment decisions. In re Cytyc Corp.,
No. 1:02-cv-12399-NMG, 2005 WL 3801468, at *20 (D. Mass. Mar. 2,
2005) (“The more specific, definite or concrete the outward
statement is . . . the greater the likelihood the statement is
material and not mere puffery.”).
b. Growing Use of Lotus Edge and Reorder Rates
Mr. Fitzgerald’s statement that “each month we’re growing

actual procedures per center, per month,” Dkt. No. 44 at ¶¶ 100,
316, is not materially misleading. Plaintiff claims that Mr.
Fitzgerald’s statement was false because by mid-2020 “only 12
Lotus Edge accounts in the country used more than 2 devices per
month, and only nine of those centers used more than 2.5 per
month.” Id. at ¶ 204. Mr. Fitzgerald’s statement and the rates
of use alleged are not mutually exclusive. Plaintiff does not
allege that the average number of monthly procedures performed
per center was not increasing, month after month, or that there
were few centers using more than two per month. Cf. Coyne v.
Metabolix, Inc., 943 F. Supp. 2d 259, 268-69 (D. Mass. 2013)

(plaintiffs failed to plead falsity when the defendant’s
statements and the facts pleaded in the complaint were not
necessarily mutually exclusive). Consequently, Mr. Fitzgerald’s
statement is not actionable.
Plaintiff claims that Mr. Mahoney further misled investors
by claiming that “the reorder rate for existing [Lotus Edge]
users is quite high,” Dkt. No. 44 at ¶ 308, when “only 12 Lotus
Edge accounts in the country used more than 2 devices per
month.” Id. at ¶ 204. With the Lotus device used so rarely,
Plaintiff claims, Defendants could not have been seeing “very
high” reorder rates. Id. at ¶ 203. Again, Plaintiff has not
explained with particularity why Mr. Mahoney’s statement was
misleading. See Shaw, 82 F.3d at 1217.
First, Plaintiff has not alleged that the rate at which a
center orders Lotus devices is the same as the rate at which it
uses the device; centers may order more devices than they use

monthly or be unable to predict the number of devices needed
each month.
Second, Plaintiff has not pleaded that an order rate of one
to two Lotus devices per month is not a high reorder rate to Mr.
Mahoney. I cannot conclude that Mr. Mahoney’s statement was
false under these circumstances. See Fitzer v. Sec. Dynamics
Techs., Inc., 119 F. Supp. 2d 12, 26-27 (D. Mass. 2000).
Even if it were false, Mr. Mahoney’s statement is too vague
to be one upon which investors would rely. Mr. Mahoney made no

representation as to the actual rate at which centers that
purchased one Lotus device returned for future orders. He did
not claim that the device was used at a certain rate across the
existing accounts. He stated only that the frequency of reorder
was “high” in his view. This alone does not constitute a
fraudulent statement. See id. at 26 (representation of
“continued market demand” for a company’s product is too vague
to be material as defendants did not specify “a particular
market demand, a market share figure, or represent that the
market demand is static, shrinking, or growing”).
2. Simplicity and Ease of Use of Lotus Edge
Defendant statements in marketing the Lotus Edge as a
device offering “superior ease of use” were, Plaintiff alleges,
materially false and misleading. See Dkt. No. 44 at ¶¶ 226,

229, 233-235, 269. In reality, Lotus Edge was a complicated
instrument that Plaintiff alleges required three hands and
thirty-five steps to implant. Id. at ¶ 124. Defendants contend
that any statements of their hopes for the Lotus Edge’s
simplicity and ease of use were statements of opinion and
corporate optimism.
Defendant comments regarding the Lotus Edge’s ease of use
and marketability are not actionable misstatements. The
statements to which Plaintiff directs my attention are vague
statements of corporate puffery and overly optimistic opinion.
To the extent Plaintiff raises any material statements by

Defendants, its claims are of fraud by hindsight and must fail.
City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v.
Waters Corp., 632 F.3d 751, 759 (1st Cir. 2011).
Defendants’ rosy assessments of the Lotus Edge product as
“a simpler device to use” or “a superb choice for operators
early in their TAVR experience” were not objective assessments
that could deceive investors. Dkt. No. 44 at ¶¶ 231-232.
Plaintiff does not claim, for example, that Defendants made
false statements as to the number of steps it took to implement
the Lotus Edge, the mechanics by which it operated, or the
limits of its use in TAVR procedures. A reasonable investor
would not rely on Defendants’ vague praise of their own
product’s potential market-advantages. See Wang Yan v. ReWalk
Robotics Ltd., 330 F. Supp. 3d 555, 571 (D. Mass. 2018)

(references to medical device as a “breakthrough product” and to
“compelling” clinical data found to be “unquestionably
subjective, optimistic statements that a reasonable investor
would not consider material”), aff'd sub nom. Yan v. ReWalk
Robotics Ltd., 973 F.3d 22 (1st Cir. 2020).
Even were Defendants’ ease of use statements more than
vague puffery, Plaintiff has pleaded nothing more than fraud by
hindsight. Plaintiff essentially claims that investors were
promised a simple and easy-to-implement design but ended up with

a device that required “three hands to operate.” Dkt. No. 44 at
¶¶ 233-234. However, Plaintiff cannot “simply contrast a
defendant’s past optimism with less favorable actual results,
and then contend[] that the difference must be attributable to
fraud.” , 82 F.3d at 1223 (alteration in original)
(citation omitted). There are no facts in the Complaint
suggesting that the Defendants’ expressed their goal to build a
user-friendly yet repositionable device in bad faith. Here, the
Complaint makes out “general allegations that defendants knew
earlier what later turned out badly” which are not sufficient to
sustain a claim for securities fraud. Ezra Charitable Tr. v.
Tyco Int'l, Ltd., 466 F.3d 1, 6 (1st Cir. 2006) (internal
quotations and citation omitted).
b. Failure to Disclose the Complexity of Device and
Delivery Malfunctions
Plaintiff also contends that various descriptions by
Defendants regarding the Lotus device omit essential information
about the complexity of the device and its malfunctions. I
disagree.
As an initial matter, “[a] defendant does not have a duty
to cast the descriptions of its business in the most negative
light.” Coyne, 943 F. Supp. 2d at 269. A defendant is liable

for omissions in statements comparing its product’s merits (i.e.
its simplicity and safety) to those of competitors only if his
statements are “so incomplete as to mislead” reasonable
investors. Backman v. Polaroid Corp., 910 F.2d 10, 16 (1st Cir.
1990) (en banc) (citation omitted).
Here, Plaintiff relies primarily on the accounts of
confidential sources that Defendants failed to disclose the
Lotus valve’s known design flaws:
•
Sales representatives in charge of overseeing Lotus
procedures described the Lotus Edge as “the most
complicated device on the planet,” Dkt. No. 44 at ¶ 231,
and the complexity of the Lotus device and delivery
system posed significant medical and sales challenges,
id. at ¶ 232.
•
The Lotus device’s complexity required “extensive
training that Boston Scientific failed to provide.” Id.
at ¶ 235.
•
Malfunctions in the delivery system resulted in “an
alarming rate of adverse events, including patient deaths
and injuries, that far outpaced those of its two primary
competitor devices.” New iterations of the device did
not resolve these issues. Id. at ¶¶ 235-236.
Plaintiff presents accounts from confidential sources FE 3,
4, and 6, describing the Lotus device as overly complex and
prone to specific malfunctions in the delivery system. Weighing
these source accounts based on “the level of detail provided by
the confidential sources, the corroborative nature of the other
facts alleged (including from other sources), the coherence and
plausibility of the allegations, the number of sources, [and]
properly alleged a material omission. ,
Inc., 311 F.3d 11, 29-30 (1st Cir. 2002). Plaintiff’s
confidential sources make conclusory statements about the
complexity of the Lotus device and the training challenges it
posed. They do not, however, explain with sufficient
particularity the factual basis for their conclusions.31 See
Dkt. No. 44 at ¶¶ 234-235.
It also does not appear that Defendants withheld
information from investors that would have been new and
material. “A plaintiff fails to plead an actionable § 10(b)

claim predicated on the concealment of information if that
information was, in fact, disclosed.” In re The First
Marblehead Corp. Sec. Litig., 639 F. Supp. 2d 145, 155 (D. Mass.
2009). Here, investors and analysts were well-acquainted with
the challenges posed by the Lotus delivery system. When
Defendants announced the decision to end the Lotus platform, one
analyst noted “the delivery issues have been front and center
for years.” Dkt. No. 44 at ¶ 194. Defendants discussed the
complexities of the Lotus device’s delivery system with

31 None of Plaintiff’s confidential sources report, for example,
that the Lotus valve’s design or mechanical function differed
from Defendants’ descriptions to the public. None suggested
that Defendants concealed records of adverse patient events or
instances of device malfunction from the public. The sources
opined on the incredible complexity of the device and
physicians’ difficulty using it but Plaintiff has not supported
these accounts with any internal reports or accounts from
investors as early as 2016 and 2017 during the first Lotus
recalls. Id. at ¶¶ 65, 67-68, 78. Moreover, Boston Scientific
made records of each instance of the Lotus device malfunction,
including malfunctions that occurred within the delivery system,
and reported them to the FDA. These reports were made available
through the FDA’s public Manufacturing and User Facility Device
Experience database. Id. at ¶ 116. I cannot conclude that
Defendants misled, let alone intended to defraud, investors as
to the safety and design of the Lotus device.32
I also reject Plaintiff’s contention that Mr. Fitzgerald

admitted on November 18, 2020 that Defendants knew as of April
2020 that the Lotus valve design posed too many clinical support
challenges to be commercially viable. As further discussed
infra Part.III.B.4.a., Mr. Fitzgerald’s full November 18
statement states the view that the company determined that the
Lotus valve was not commercially viable in the fall of 2020, not
that it was perceived as such in April of 2020. Boston

32 I observe that Defendants do not assert a truth on the market
defense, as Plaintiff suggests in its opposition brief. See
Dkt. No. 61 at 40. “The truth on the market defense is used to
rebut a plaintiff's presumption of reliance on the market by
arguing that even if fraudulent statements were made, truthful
information later entered the market.” In re The First
Marblehead Corp. Sec. Litig., 639 F. Supp. 2d 145, 155 n.75 (D.
Mass. 2009). Here, Defendants point to their public disclosures
as evidence that they had no intent to mislead investors or
conceal safety data regarding the Lotus Edge. See id.
(“Defendants have not raised a truth on the market defense, but
instead argue that ‘Plaintiffs have failed to plead facts to
show that there were any misstatements or scienter in the first
Scientific weighed the high manufacturing costs of the device,
the resources needed to train representatives to use it safely,
and the niche position the device occupied in the TAVR market
just before the Lotus platform was terminated. With these
allegations, I see no basis to support the contention that
Defendants failed to timely disclose material information to
investors.
3. Misstatements and Omissions as to the Safety of the
Lotus Edge Launch
Plaintiff argues Defendants misled investors by proclaiming
that the Lotus launch was a safe and controlled one, when it was
actually conducted in a manner that was “clinically unsafe.”
Dkt. No. 44 at ¶ 248. Further, Plaintiff alleges that
Defendants should have disclosed the fact that Defendants’
“[e]gregiously [i]nadequate [t]raining [l]ed [t]o [p]atient
[i]njuries [a]nd [d]eath.” See id. at 96. I find no actionable
misrepresentations or omissions.

Several of the misrepresentations alleged in this category
occurred before the Class Period and, as such, I need not
consider them as bases for a securities fraud claim. Shaw, 82
F.3d at 1217 n.31 (“We limit our analysis of the. . .plaintiffs'
claims of affirmative misrepresentation to the statements
allegedly made by defendants within the Class Period.”); see
also In re Refco, Inc. Sec. Litig., 503 F. Supp. 2d 611, 643
(S.D.N.Y. 2007) (“Although pre-class-period statements can be
relevant for showing whether defendants had knowledge that their
later statements were false, those statements cannot themselves
give rise to liability.” (internal citations omitted)). So far
as appears, Plaintiff’s remaining allegations, that Defendants
did not require sufficient training for its sales and clinical
representatives and that Defendants did not provide the level of
clinical support necessary, are thinly veiled criticisms of the
way that Boston Scientific conducted its product launch, not
particularized claims that Defendants’ deceived investors.
The Complaint does not adequately support Plaintiff’s

contention that Defendants withheld information about the safety
of the Lotus launch and jeopardized patient safety. As
discussed supra Part III.B.2.b, information regarding the safety
of the Lotus Edge and its launch in the United States was made
publicly available to investors.33 Plaintiff has not clearly
articulated which of Defendants’ duties, if any, would obligate
them to disclose further information regarding the Lotus’s
design and function. Plaintiff has not, for example, alleged
that Defendants failed to meet their obligations under 21 C.F.R.
§§ 803.50 and 803.52 to disclose safety information or adverse
device events to the FDA. At most they allege that puffing by

certain Executive Defendants suggesting that the Lotus launch

33 In fact, Plaintiff presents exactly this publicly available
data in the Complaint to demonstrate the number of adverse
events associated with the Lotus Edge Delivery System throughout
would be a controlled one focused on strong patient outcomes was
misleading because, in the conclusory opinion of one of the
Plaintiff’s confidential sources, the launch was clinically
unsafe. The Complaint fails to allege satisfactorily that
Defendants withheld material information from investors based on
these allegations.
4. Misleading Reports of the Success of the Lotus
Platform and its Role in the TAVR Portfolio
a. Disclosure of the Lotus Recall and Termination
Plaintiff claims Defendants decided to terminate the Lotus
platform in April of 2020 but delayed announcing this decision
to inflate the value of Boston Scientific stock during a
financially challenging period for the company. Plaintiff bases
this allegation on carefully excerpted phrases from Executive
Defendant Joseph Fitzgerald’s November 18, 2020 explanation of
when Boston Scientific decided to terminate the Lotus platform:
according to the Complaint Mr. Fitzgerald allegedly “admitted”

that Boston Scientific senior management made the decision by
“no later than April 2020” when he said “[i]t took us about 12
months after full launch to evaluate [Lotus].” Id. at ¶¶ 194-
195. The “full launch,” according to Plaintiff, began when the
device gained FDA approval on April 23, 2019, meaning Boston
Scientific leaders fully evaluated Lotus around or before April
of 2020. Id. at ¶ 195.
Plaintiff’s interpretation of Mr. Fitzgerald’s words is
strained and contorted. The Complaint makes clear that April
23, 2019 marked the beginning of a controlled launch of the
Lotus Edge. The full launch began in the fall of 2019. Id. at
¶ 96. Mr. Fitzgerald apparently shared this understanding.
Asked on November 18, 2020 why it “took so long” to end the
Lotus platform, Mr. Fitzgerald responded:
So really, when you think about it, with getting approval
in April and then going into our limited market release
a few months later and then really full launch this time
last year, right? So we've had essentially 12 months.
And oh, by the way, COVID is right in the middle of those
12 months. But we needed to get the U.S. experience to
determine what's going to be the rightful place in the
universe for the LOTUS valve. And the decision we came
to after thousands of implants, we launched about 100
accounts in the U.S., was that LOTUS was going to remain
a niche. . . And it took launching in a country like the
U.S. for us to figure that out because of the past of
what we purposefully did in Europe. So I think, you look
at it, and I think I would characterize it as it took us
about 12 months after full launch to fully evaluate
LOTUS, to fully understand ACURATE neo2.
Dkt. No. 64-1 at 6 (emphasis added). Mr. Fitzgerald made clear
that he was stating that Boston Scientific leaders decided to
terminate the Lotus platform in the fall of 2020, within weeks
of later disclosing that decision to investors. I therefore
find no adequate basis for a securities fraud claim on the
ground that the Defendants delayed disclosure of the Lotus
shutdown.
Strategic Investment
Plaintiff identifies Executive Defendant Michael Mahoney’s
September 16 statement34 and October 28 statement35 to investors
affirming that the Lotus platform remained an important growth

driver and strategic investment. Given their temporal proximity
to Defendants’ decision to terminate the Lotus platform

34 On September 16, 2020 Mr. Mahoney made the following statement
at the Morgan Stanley Health Conference, in response to an analyst
question:
I think, you know, certainly Lotus will continue to be
an important product for us. It’s a significant market
as you know, and even small share gains are significant
for us. And so, Lotus will continue to be an important
growth driver for us supported with our whole platform
with ACURATE neo2. So, overall, Lotus remains a key
growth driver for us. And we’re not going to give share
estimates, but we’re continuing to invest along those
lines. We’re starting to do more account openings, the
reorder rate for existing users is quite high, and we’re
slowly beginning to penetrate some new accounts with
some new training.
Dkt. No. 44 at ¶ 307–08.
35 On October 28, 2020 during Boston Scientific’s third quarter
earnings call, Mr. Mahoney allegedly “highlighted [Boston
Scientific’s] ‘continued U.S. and Japan rollout of Lotus Edge and
U.S. intermediate risk trial enrollment’” and emphasized the
“’distinct benefits’ of the Lotus Edge.” Id. at ¶ 318.
Mr. Mahoney also made the following statement, in response to an
analyst’s question:
And we’ve obviously had the two-valve strategy, and
we’re seeing strong results in the sites that are using
Lotus in the U.S. Opening new sites has been a
challenging exercise for us given the pandemic, but the
sites that are using Lotus in the U.S. are using it quite
regularly. So we do believe that the two-valve strategy
makes sense and we’re excited about the Acurate neo2
launch in Europe.
Id. at ¶ 319.
altogether, these statements are adequately alleged to have
misled the reasonable investor.
The First Circuit, in Construction Industry and Laborers
Joint Pension Trust v. Carbonite, Inc., 22 F.4th 1 (1st Cir.
2021) (“Carbonite”), and my colleague Judge Young, in In re
Allaire Corporation Securities Litigation, 224 F. Supp. 2d 319
(D. Mass. 2002), addressed similar representations and found
them actionable. I find their reasoning persuasive.
In In re Allaire Corporation Securities Litigation, 224 F.
Supp. 2d 319, 331-332 (D. Mass. 2002) the defendant president of

the company stated in an interview that the company’s latest
software product was “fueling growth” when the product was known
—by “customers, distributors, sales personnel, and technical
personnel”— to be defunct. Id. at 331. Judge Young concluded
that the defendant’s “precise statement” that a specific product
is driving profit growth for the company is actionable when the
statement “could not have been believed by its maker — at least
not without recklessness on his part.” Id. at 331-332.
The statements in Carbonite were similar, though some were
“presented in the form of a statement of belief.” 22 F.4th at
7. Despite the at-issue product allegedly never working, the

defendant CFO stated that the company “put something out that we
think is just completely competitive and just a super strong
product” and the defendant CEO stated that the product “improves
our performance” and “makes us really competitive.” Id.
(emphasis in original). Although defendants argued, ,
that the statements were opinions, the First Circuit explained
that the use of certain phrases, such as “I think” or “I
believe,” to characterize a statement “does not preclude the
possibility that the statement as a whole may still mislead as
to some fact.” Id. (internal citation omitted) (citing
Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension
Fund, 575 U.S. 175, 193 (2015)). Statements of opinion “may
convey three facts: that the speaker has such a belief; that the
belief fairly aligns with the facts known to the speaker;

and . . . that the speaker has made the type of inquiry that a
reasonable investor would expect given the circumstances.” Id.
Guided by the reasoning of Carbonite and In re Allaire
Corp. Sec. Litig., I find Mr. Mahoney’s statements are
adequately alleged to have been materially misleading when
viewed in the light most favorable to Plaintiff. According to
Mr. Fitzgerald’s November 18 account of the decision to retire
the Lotus platform, discussed above, Defendants were in the
process of critically evaluating the Lotus platform in the fall
of 2020. When Mr. Mahoney made these representations that Lotus
was driving growth and a dual-valve strategy made sense for the

company, Boston Scientific’s leadership had either already
decided the Lotus platform was unsalvageable or was on the cusp
of doing so in a matter of weeks. Under these circumstances,
the representations that the Lotus platform was still driving
growth and its continuation made sense from an investment
standpoint are adequately alleged to constitute specific
misrepresentations that the Lotus Edge was and would remain
viable. See In re Cytyc Corp., No. Civ.A. 02–12399–NMG, 2005 WL
3801468, at *20 (more concrete representations are more likely
to be misleading). Unlike the less concrete claims discussed in
Part III.B.1, these statements could have been material to
investors.
To the extent Defendants argue that these statements are
nonactionable opinions, I disagree. Here, Mr. Mahoney’s

statements “could be reasonably construed in context as a
statement of fact,” such that “it would be false as compared to
the [C]omplaint’s contention that” leadership at Boston
Scientific was deciding to pull the plug on the Lotus platform.
Carbonite, 22 F.4th at 7. Moreover, as the First Circuit
explained, framing a statement as a “belief” is not dispositive
of whether it is an opinion and nonactionable. Id. Here, Mr.
Mahoney’s statement could have “plausibly conveyed” that he
“actually believed” the Lotus platform “will continue to be an
important product,” that his opinion was “fairly align[ed] with”
the information he possessed at the time, and that this “opinion

was based on the type of reasonable inquiry that an investor in
context would expect to have been made.” Carbonite, 22 F.4th at
7.
5. Conclusion
Nearly all of the misrepresentations alleged by Plaintiff
amount to nonactionable corporate puffery, opinions, and
predictions. Two sets of statements detailed in the Complaint,
however, are actionable: 1) The inaccurate tallies of the number
of accounts opened in the Lotus launch by Ms. Lisa and Mr.
Fitzgerald on August 19 and October 15, 2020, respectively; and
2) Mr. Mahoney’s September and October statements that the Lotus
platform was a key growth driver and a viable investment. I
turn now to whether Plaintiff has met its burden of pleading the

Defendants’ scienter with respect to these statements.
C. Scienter
Under Section 10(b)’s scienter element, Plaintiff must
plead particularized facts that raise a “strong inference” that
Defendants made their actionable misstatements and omissions
with “either conscious intent to defraud or ‘a high degree of
recklessness.’” ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d
46, 58 (1st Cir. 2008) (quoting Aldridge, 284 F.3d at 82); 15
U.S.C. § 78u-4(b)(2)(A). “A statement cannot be intentionally
misleading if the defendant did not have sufficient information
at the relevant time to form an evaluation that there was a need

to disclose certain information and to form an intent not to
disclose it.” N.J. Carpenters Pension & Annuity Funds v. Biogen
IDEC Inc., 537 F.3d 35, 45 (1st Cir. 2008). Recklessness in the
Section 10(b) context involves “not merely simple, or even
inexcusable, negligence, but an extreme departure from the
standards of ordinary care, and . . . presents a danger of
misleading buyers and sellers that is either known to the
defendant or is so obvious that the actor must have been aware
of it.” Mehta v. Ocular Therapeutix, Inc., 955 F.3d 194, 206
(1st Cir. 2020)(quoting Brennan v. Zafgen, Inc., 853 F.3d 606,
613 (1st Cir. 2017)).
Under the PSLRA, the pleading standard for scienter is a
“rigorous” one, ACA Fin. Guar. Corp., 512 F.3d at 58, in its
requirement of a “strong inference” of scienter, Tellabs, Inc.,

551 U.S. at 314 (quoting 15 U.S.C. § 78u-4(b)(2)). Alleged
facts said to evidence a defendants’ scienter “need not be
irrefutable” but, taken together, they must raise “at least as
compelling [an inference] as any opposing inference one could
draw from the facts alleged.” Tellabs, Inc., 551 U.S. at 323-
324. The “classic evidence” of scienter are facts showing that
the defendant knew their public statements to be inaccurate or
recklessly disregarded the risk that they would be. Aldridge,
284 F.3d at 83.
To plead a corporate defendant’s knowledge of or disregard
for the misleading nature of statements successfully, a

plaintiff must do more than describe a declarant’s high-ranking
position at the company. Coyne, 943 F. Supp. 2d at 272
(“[S]cienter allegations based solely on a defendant's high-
ranking position in the company are not sufficient.”). A
defendant’s motive and opportunity to deceive investors, without
more, also may not suffice to establish the defendant’s
knowledge. “[C]lear allegations of admissions, internal records
or witnessed discussions suggesting that at the time they made
the statements claimed to be misleading, the defendant officers
were aware that they were withholding vital information or at
least were warned by others that this was so” are often
necessary to meet the PSLRA’s scienter requirement. In re Bos.
Sci. Corp. Sec. Litig., 686 F.3d 21, 31 (1st Cir. 2012).
Finally, “the importance of a particular item to a

defendant can support an inference that the defendant is paying
close attention to that item,” but that inference can only aid a
plaintiff “in establishing scienter if that close attention
would have revealed an incongruity so glaring as to make the
need for further inquiry obvious.” Local No. 8 IBEW Retirement
Plan & Tr. v. Vertex Pharms., Inc., 838 F.3d 76, 82 (1st Cir.
2016) (internal citations and quotations omitted); see also
Carbonite, 22 F.4th at 9–10.
Guided by these principles, I consider whether Plaintiff
here has raised a strong inference that the misrepresentations
were made with the required scienter. I first address

Plaintiff’s generalized allegations of scienter, which I do not
find sufficient. Then, because I have found actionable only
statements by Ms. Lisa, Mr. Fitzgerald, and Mr. Mahoney, I will
focus my analysis on those Executive Defendants. See N.J.
, 537 F.3d at 44
(“The PSLRA requires that the plaintiffs' complaint, ‘with
respect to each act or omission ..., state with particularity
facts giving rise to a strong inference that the defendant acted
with the required state of mind.’” (quoting 15 U.S.C. § 78u–
4(b)(2))).
1. Plaintiff’s General Scienter Allegations
Plaintiff makes generalized allegations of scienter on the
basis of the following evidence: (1) accounts from confidential
sources, which Plaintiff alleges bear upon corporate executives’

knowledge; (2) insider trading activity by four Executive
Defendants; (3) resignations by two Executive Defendants
involved with the Lotus platform; and (4) inferences concerning
Boston Scientific’s motive to hide the Lotus platform’s failure
in order to raise capital and renegotiate its debts. See Dkt.
44 at ¶¶ 201–224. As I explain, these allegations are not
sufficient to raise a “strong inference” of scienter, either
individually or collectively, as to Defendants.
a. Confidential Source Accounts
Plaintiff contends that its nine confidential sources provide
accounts of Defendants’ knowledge required to infer scienter. I

disagree. These former employees accounts are largely devoid of
the facts necessary to raise a strong inference of scienter,
including “particular times, dates, places, or other details of
the alleged fraudulent activity.” Orton v. Parametric Tech.
, 344 F. Supp. 2d 290, 306 (D. Mass. 2004) (quoting
v. Summa Four, Inc., 93 F.3d 987, 992 (1st Cir. 1996)); see id.
at 307-308(“spotty and vague” accounts from unnamed former
employees will not establish scienter). “The absence of [such]
key details ‘is indicative of the excessive generality of
[Plaintiff’s] allegations’” of scienter. Sousa v. Sonus
Networks, Inc., 261 F. Supp. 3d 112, 120 (D. Mass. 2017)
(quoting Greebel, 194 F.3d at 204).
First, the sources upon which Plaintiff relies most heavily
in the Complaint provide only their own opinions as to what the

senior leadership knew about the Lotus launch. These include FE
7 with his oft quoted opinion that Executive Defendants were
“absolutely aware” that Lotus sales were sluggish and FE 6’s
claim that knowledge of the Lotus valve’s design issues “went
all the way up.” These accounts do not provide the details at
the core of scienter: “what [each] defendant[] had knowledge of
and when.” In re Boston Tech., Inc. Sec. Litig., 8 F.Supp.2d
43, 57 (D. Mass. 1998). Such conclusory opinions from
confidential sources, unsupported by detail or explanation, do
not establish scienter. Fire & Police Pension Ass'n of Colo.,
778 F.3d at 245.

I also do not find an adequate basis for scienter in
conclusory assertions by former employees that specific
obstacles to the Lotus launch’s success were “constantly”
discussed at meetings with senior leadership. “[A]llegations
that the defendants attended unspecified meetings where” the
Lotus platform’s challenges were “discussed constantly . . .
fall[] well below the threshold for adequately pleading
scienter.” Coyne, 943 F. Supp. 2d at 273 (internal quotation
omitted).
Those former employees who did recount meetings attended by
the named Executive Defendants still have not recounted facts
that suggest fraud or a high degree of recklessness. FE 1 and
FE 2’s account of the Thanksgiving 2019 Lotus salesforce
meeting, for example, allows me to infer only that certain

Executive Defendants were aware of early adverse events
associated with the Lotus valve and lagging Lotus sales in
November of 2019. According to the Complaint, Defendants were
still committed to making the Lotus platform a success at this
stage; this Thanksgiving meeting was “focused on retraining the
sales staff to help prevent the bad outcomes [for] Lotus
patients” and teaching sales representatives to sell physicians
better on the Lotus valve. Dkt. No. 44. at ¶ 12.
Allegations that various employees at Boston Scientific
believed the Lotus platform was beset by fatal flaws is also not
compelling; there is no evidence that any of the Executive

Defendants shared the views of these nameless former employees.
In the 140-page Complaint, Plaintiff has not provided a single
contemporaneous statement from any of the Executive Defendants
to demonstrate their fraudulent intent. Cf. Crowell v. Ionics,
, 343 F.Supp.2d 1, 5–6, 17-18 (D. Mass. 2004)(suggesting
that an allegation that a specific defendant said “I want to go
on the record stating it's not proper accounting—but it's nice
to make money” during a specific meeting supported a strong
inference of fraudulent intent).
b. Insider Trading Activity
Plaintiff’s insider trading allegations are equally lacking
as a basis for scienter. To be sure, insider trading “may offer
some support” for an inference of securities fraud, Fire &
Police Pension Ass'n of Colo., 778 F.3d at 245–246 (quotations

and citation omitted), but only when the trade is so unusual
that it goes “well beyond the normal patterns of trading” for a
given defendant, Greebel, 194 F.3d at 198.
Mr. Mahoney’s November 3, 2020 sale was not so unusual or
suspicious as to be probative of his scienter. First, this
trade was made according to a 10b5–1 trading plan. Use of a
prescheduled 10b5-1 plan “negates an inference of scienter.”
Leavitt v. Alnylam Pharms., Inc., 451 F. Supp. 3d 176, 188 (D.
Mass. 2020). Mr. Mahoney’s plan specified that the earliest
date he could sell was October 29, 2020 and the plan was
scheduled to terminate on November 6, 2020. The plan-provided

shares could only be sold at a price equal to or higher than
$35.00 per share. Dkt. No. 55-2 at 11. November 3, the date of
the sale, was the first day in the sale period during which
Boston Scientific stock reached a value of over $35.00 per
share. The structure of this 10b5-1 plan, even if shorter in
duration than Defendants’ prior plans, is not so unusual as to
raise suspicion.
Plaintiff nevertheless characterizes the timing and
quantity of the sales as highly suspicious. On its face, the
timing of the sales, does not evince fraudulent intent. It also
cannot be said that Mr. Mahoney sold his shares at the height of
their value; in fact, Mr. Mahoney’s shares had nearly the same
value on November 3 as they did on November 17, after it was
announced that the Lotus platform had been terminated.36

Further, Plaintiff has not alleged sufficient information about
Mr. Mahoney’s trading practices to suggest that the timing,
amount, and price of his sales were otherwise highly suspicious.
Leavitt, 451 F. Supp. 3d at 187–188 (“The plaintiff bears the
burden of showing that insider sales were suspicious and must
provide a complete picture of the defendant's trading, both
before and after the class period.”). These facts do not lead
me to infer that Mr. Mahoney’s acted with fraudulent intent.
As for Defendants Ballinger, Fitzgerald, and Brennan,
Plaintiff has not shown that their trading during the Class
Period was so unusual or suspicious as to raise an inference of

scienter. Plaintiff contends that because these Defendants

36 Boston Scientific common stock was valued at $35.06 per share
on November 3. Id. at ¶ 219. It was valued at $35.03 following
reaped greater proceeds during the Class Period than the control
period, their trading warrants suspicion. Those circumstances
may warrant some degree of suspicion, but that, however, is not
enough. As Defendants point out, Mr. Fitzgerald and Mr. Brennan
made their trades through Rule 10b5-1 plans. Mr. Fitzgerald
increased his holdings in Boston Scientific over the Class
Period, undermining Plaintiff’s theory that his advanced
knowledge of Lotus’s doom led him to sell off his shares before
their value declined. Mr. Ballinger made his large sales
immediately after leaving his position at Boston Scientific, not

an unusual decision as the First Circuit has noted in the past.
Greebel, 194 F.3d at 206 (“It is not unusual for individuals
leaving a company . . . to sell shares.”).
c. The Resignations of Mr. McCarthy and Mr.
Ballinger

Plaintiff has not alleged particularized facts regarding
the reason for and timing of either Mr. McCarthy’s or Mr.
Ballinger’s resignation to support a strong inference of
scienter. So far as appears, these resignations were not the
result of any investigation of fraud or recklessness on the part
of these defendants. Cf. Collier v. ModusLink Glob. Sols.,
Inc., 9 F. Supp. 3d 61, 65, 76 (D. Mass. 2014) (SEC
investigation into the company’s accounting practices led to an
internal audit that “culminated in the resignation” of two key
executives and contributed to a strong inference of scienter).
Even if these Executives Defendants resigned to distance
themselves from the challenges and disappointments of the Lotus
launch, that circumstance does not raise a strong inference that
Executive Defendants knew that the Lotus platform was not
commercially viable. None of the confidential sources recount
statements or reports from Executive Defendants McCarthy or
Ballinger that express such knowledge. Their resignations also
do not allow me to infer that the Defendants intentionally or
recklessly deceived investors.
d. Boston Scientific’s Need to Raise Capital and
Renegotiate Its Debts

Plaintiff contends that Defendants’ capital-raise on May
21, 2020 and its efforts to renegotiate its debts in April of
2020 provided a compelling motive to lie to investors, from
which I should infer scienter. I reject this contention. The
First Circuit has “set a high bar” for a plaintiff seeking to
rely upon an inference of scienter based on a defendant’s public
equity offering during the Class Period. Kader v. Sarepta
Therapeutics, Inc., 887 F.3d 48, 60 (1st Cir. 2018). The
generic claim that Defendants had a motive to inflate stock
values before conducting public equity offering, without some
other indication of fraud, is not sufficient. See id.
Moreover, it must be noted that none of the actionable
misstatements alleged in the Amended Complaint predate the
Defendants’ capital-raise and debt renegotiation. Ms. Lisa and
Mr. Fitzgerald offered their allegedly inaccurate account
tallies in August and October of 2020 and Mr. Mahoney made his
alleged misstatements in September and October. Defendants had
already secured their two billion dollars in capital and
renegotiated four billion dollars of debt by May 21, 2020. Even
if Defendants were motivated to inflate Boston Scientific stock
values in advance of the capital raise in this setting, the
Defendants would not have been so motivated after they
successfully raised the desired capital and avoided default on
their debts. I can draw no strong inference of scienter on this

basis.
e. Conclusion
None of Plaintiff’s general allegations of scienter, either
individually or considered together, give rise to an inference
that is “at least as compelling as any opposing inference of
nonfraudulent intent”. Tellabs, Inc., 551 U.S. at 314. I now
turn to whether allegations of misrepresentation, specific to
Ms. Lisa, Mr. Fitzgerald, and Mr. Mahoney, can meet the
“rigorous” inference standard for scienter. ACA Fin. Guar.
Corp., 512 F.3d at 58.
2. Scienter of Ms. Lisa and Mr. Fitzgerald

Ms. Lisa and Mr. Fitzgerald may have given investors
inaccurate tallies of Lotus accounts but that does not raise a
strong inference that they provided fraudulent tallies. The
Complaint provides no particularized facts upon which to
conclude that Ms. Lisa or Mr. Fitzgerald were aware of the true
account tallies but inflated the numbers to reassure investors.
That they were executives involved in the Lotus Launch and had
access to the company sales dashboard, without more, does not
establish that these Defendants intentionally lied to investors.
See In re Wayfair, Inc. Sec. Litig., 471 F. Supp. 3d at 344-345.
Although Plaintiff may suggest an inference, it is
certainly not “strong” nor is it “at least as compelling as any
opposing inference of nonfraudulent intent.” Tellabs, Inc., 551
U.S. at 314. There are multiple explanations for the

discrepancy between counts offered by Ms. Lisa and Mr.
Fitzgerald, and the statement by Mr. Fitzgerald that the launch
only reached 100 accounts. Ms. Lisa and Mr. Fitzgerald could
have been operating with inaccurate or outdated information when
they made those initial tallies. They could have been referring
to a broader category of accounts than just those opened in the
United States during the launch. Some of the accounts open in
August and October of 2020 may have closed by November 18, when
Mr. Fitzgerald noted there were only 100 accounts opened. In
the absence of any allegations that Executive Defendants Lisa
and Fitzgerald had access to reports and data reflecting only

100 open accounts, I cannot find the high degree of recklessness
required to support scienter. Accordingly, Plaintiff has not
pleaded scienter as to Ms. Lisa and Mr. Fitzgerald at the time
of these statements.
3. Scienter of Mr. Mahoney
As I have already indicated, I do not find Plaintiff’s
allegations related to Mr. Mahoney’s insider trading activity
adequate to show scienter. However, Mr. Mahoney’s actionable
statements are undeniably similar to those held to show scienter
in Carbonite and raise an inference of scienter on that basis.
Compare Dkt. No. 44 at ¶¶ 308 (“Lotus will continue to be an
important growth driver for us. . . .”); 319 (“[W]e do believe
that the two-valve strategy makes sense. . . .”), with
Carbonite, 22 F.4th at 7, 11 (“[W]e have put something out that

we think is just completely competitive and just a super strong
product.” (alteration in original) (emphasis removed)).
In Carbonite, the First Circuit held that defendants had
the requisite scienter based on “two specific plugs from top
management” despite the product “never once [doing] what it
[was] supposed to do,” and allegations in the complaint that did
not “leave open the possibility that . . . management was
somehow in the dark about [its] true status.” 22 F.4th at 9,
10. On those facts, there was a “strong inference” that the
executive defendants “either inquired about [the product] before
deciding to promote it to investors or were reckless in failing
to do so.” Id. at 10. The Court of Appeals contrasted the
facts in Carbonite, where it was allegedly widely known within
the company that the product was defective, with Vertex

Pharmaceuticals, Inc., 838 F.3d at 82–83, where the product
received inaccurate positive testing results, but the complaint
did not allege that anyone at the company (including experts)
“noticed or suspected” that the results as reported were wrong.
There were no allegations in Vertex Pharmaceuticals, Inc.
showing the results were “so obviously suspect” as to warrant a
“strong inference that the defendants were reckless in failing
to consult the raw data themselves for verification.” 838 F.3d
at 83.
Plaintiff’s allegations fall somewhere in between those at
issue respectively in Carbonite and Vertex Pharmaceuticals,
Inc., but I find that they are sufficient to raise the required
strong inference of scienter. Unlike in Carbonite, where the

product never worked, there was a market for Lotus, albeit
modest. Dkt. No. 44. at ¶ 105. Similarly, Plaintiff’s
allegations related to management’s awareness of Lotus’
shortcomings are not as strong as those in Carbonite. However,
I am cognizant of my duty “not to scrutinize each [scienter]
allegation in isolation but to assess all the allegations
holistically.” Tellabs, Inc., 551 U.S. at 326. I must ask
whether there is an inference of scienter “[w]hen the
allegations are accepted as true and taken collectively.” Id.
Taken together, and in light of Carbonite, Plaintiff’s pleadings
sufficiently allege an inference of scienter. See ACA Fin. Gur.
Corp., 512 F.3d at 59 (“[W]here there are equally strong
inferences for and against scienter, now awards the draw
to plaintiff.” (citing Tellabs, Inc., 551 U.S. at 324)).
Mr. Mahoney, the CEO of Boston Scientific, on two occasions
in fall 2020 — shortly before directing discontinuance of the
Lotus platform — made specific statements touting Lotus and the
two-valve strategy. Dkt. No. 44 at ¶¶ 308, 319. As I discussed
supra Part III.B.4., Mr. Fitzgerald’s November 18, 2020
explanation of the termination of the Lotus platform reasonably
construed indicates that the decision was made in fall 2020.
Plaintiff does not plead specifically that Mr. Mahoney was party

to the decision to terminate the Lotus platform; however, Mr.
Mahoney announced the decision to discontinue Lotus, stating
that the decision was made “[a]fter much analysis and careful
consideration.” Id. at ¶ 182 (alteration in original). It is
not unreasonable to infer that Mr. Mahoney was privy to, or at
least aware of, discussions surrounding Lotus during this time
period, given his September and October statements plugging the
product and his position as CEO of Boston Scientific.
Moreover, the Complaint alleges that the Lotus’ limited
market share “was documented in internal company records.” Id.
at ¶¶ 104, 105. Accordingly, “nothing in the alleged facts

renders less than sufficiently compelling the conclusion that
[Mr. Mahoney] would have known of the product’s status had [he]
inquired.” Carbonite, 22 F.4th at 10. In light of the
preceding, “the [C]omplaint, alleges facts raising a strong
inference that [Mr. Mahoney] either inquired about [Lotus]
before deciding to promote it to investors or [was] reckless in
failing to do so.” Carbonite, 22 F.4th at 10.
As the Court of Appeals explained in Carbonite, “the
relevant point here is not that [Lotus] was the only or the most
‘outsized’ [Boston Scientific] product.” Id. at 9. The point
is that when a chief executive, like Mr. Mahoney, makes specific
remarks on the role of a product in a company’s portfolio, there
is a “very strong inference” that such an executive “would have
paid at least some attention to the product’s status.” Id. I

find that, on the facts as pleaded in the Complaint, the
inference applies. In summary, Plaintiff has pleaded scienter
as to Mr. Mahoney.
Defendants do not dispute the other elements of Plaintiff’s
Section 10(b) claim, namely reliance, economic loss, and loss
causation, however, in the interest of completeness and in
anticipation of further proceedings, I will briefly address
reliance, economic loss, and loss causation.37
D. Reliance
Plaintiff invokes the fraud on the market rebuttable
presumption under Basic, Inc. v. Levinson, 485 U.S. 224 (1988)

37 As to “connection with the purchase or sale of a security,”
Plaintiff pleaded [Certification Pursuant to the Federal
Securities Laws, Dkt. No. 45] many purchases and sales of Boston
to prove reliance. Dkt. No. 44 at ¶¶ 329–330. I find that
Plaintiff has sufficiently pleaded this element.
As the Supreme Court has explained, “[t]he ‘traditional
(and most direct) way’ for a plaintiff to prove reliance is to
show that he was aware of a defendant’s misrepresentation and
engaged in a transaction based on that misrepresentation.”
Goldman Sachs Grp., Inc. v. Ark. Teacher Ret. Sys., 141 S. Ct.
1951, 1958 (2021) (quoting Halliburton Co. v. Erica P. John
Fund, Inc., 573 U.S. 258, 267 (2014)). Under Basic, however, a
plaintiff may prove reliance “by invoking a [rebuttable]

presumption that the price of stock traded in an efficient
market reflects all public, material information—including
material misstatements.” Halliburton Co., 573 U.S. at 263. The
“fraud-on-the-market theory undergirding” Basic is that “an
investor presumptively relies on a misrepresentation so long as
it was reflected in the market price at the time of his
transaction.” SEC v. Sargent, 589 F. Supp. 3d 173, 198 (D.
Mass. 2022) (quoting Erica P. John Fund v. Halliburton Co., 563
U.S. 804, 813 (2011)).
The rebuttable presumption “has particular significance in
securities-fraud class actions.” Amgen, Inc. v. Conn. Ret. Plans
& Tr. Funds, 568 U.S. 455, 462 (2013). It “allows plaintiffs to

38 Plaintiff also alleges that the presumption in Affiliated Ute
Citizens of Utah v. United States, 406 U.S. 128 (1972) applies.
See Dkt. No. 44 at ¶ 331. I need not address those allegations
establish the necessary element of reliance through common
proof.” In re New Motor Vehicles Canadian Exp. Antitrust
Litig., 522 F.3d 6, 25 (1st Cir. 2008). In an efficient market,
“the theory goes,” prices take into account all public
information, “so that an investor who buys or sells stock in
reliance on the integrity of the market price is in fact buying
or selling stock in reliance on the material
misrepresentations.” Id. At this stage, Defendants do not
dispute Plaintiff’s assertion that the presumption in Basic
applies.
E. Economic Loss and Loss Causation

To plead loss causation, Plaintiff must have “adequately
alleged a causal connection between the [D]efendants’ material
misrepresentations and the drop in [Boston Scientific’s] share
price.” Mass. Ret. Sys. v. CVS Caremark Corp., 716 F.3d 229,
237 (1st Cir. 2013). Said another way, “the stock market must
have reacted to the subsequent disclosure of the misconduct and
not to a ‘tangle of [other] factors.’” Bricklayers & Towel
Trades Int’l Pension Fund v. Credit Suisse Sec. (USA) LLC, 752
F.3d 82, 86 (1st Cir. 2014) (alteration in original) (quoting
Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 343 (2005)).
Plaintiffs typically allege39 loss causation by

39 It is up for debate whether the Rule 9(b) pleading standard
applies to loss causation. See Coyne, 943 F. Supp. 2d at 273–74
(describing Circuit split regarding proper pleading standard for
(1) identifying a ‘corrective disclosure’ (a release of
information that reveals to the market the pertinent
truth that was previously concealed or obscured by the
company's fraud); (2) showing that the stock price
dropped soon after the corrective disclosure; and (3)
eliminating other possible explanations for this price
drop, so that the factfinder can infer that it is more
probable than not that it was the corrective disclosure
. . . that caused at least a ‘substantial’ amount of the
price drop.

Mass. Ret. Sys., 716 F.3d at 237–38 (quoting FindWhat Inv. Grp.
v. FindWhat.com, 658 F.3d 1282, 1311–12 (11th Cir. 2011)). A
corrective disclosure “must connect the current, present,
negative information to the earlier false or misleading
statement.” Coyne, 943 F. Supp. 2d at 273 (internal citations
omitted). Accordingly, “[i]f [p]laintiff’s loss resulted from
the disclosure of negative information other than a prior false
or misleading statement by the Defendants, then she cannot show
that Defendants' conduct caused her injury and she has not pled
an adequate claim for securities fraud.” Id.
Here, Plaintiff’s allegations fall into the “inflation-
disclosure-deflation cycle,” whereby “loss causation may be
established, provided the disclosure is sufficiently connected
to the misstatement or omission.” Miller Inv. Tr. v. Morgan
Stanley & Co., LLC, 308 F. Supp. 3d 411, 445 (D. Mass. 2018).
1. The Alleged Corrective Disclosures
Plaintiff alleges two corrective disclosure events: (1) the

I proceed in the same manner here. Id. at 274; see also Miller
Inv. Tr. v. Morgan Stanley & Co., LLC, 308 F. Supp. 3d 411, 445
October 15, 2020 statement that Lotus Edge would not receive an
intermediate risk indication from the FDA until 2024, delaying
the expansion of Lotus Edge’s market from high risk patients to
intermediate risk patients, see Dkt. No. 44 at ¶¶ 86, 172, and
(2) the November 17, 2020 Lotus Edge recall announcement, id. at
¶ 324.
As a threshold matter, Plaintiff has alleged economic loss.
See id. at ¶ 324 (summarizing declines in share price following
each corrective disclosure). However, Plaintiff has only
demonstrated a causal connection between the loss and the

actionable misstatements as to the November 17, 2020 corrective
disclosure.
Mr. Mahoney’s statements on September 16 and October 28,
2020 are the only actionable statements made with scienter.
Those statements emphasize Lotus’ role as “an important growth
driver,” and the benefits of the two-valve strategy. See id. at
¶¶ 307, 308, 319. The first alleged corrective disclosure, on
October 15, 2020, relates to the timeline for Lotus’
intermediate risk indication, not whether Lotus will be a
“growth driver” or whether the two-valve strategy “makes sense.”
Although the corrective disclosure “need not be a mirror-image”

or “direct admission that a previous statement is untrue,” it
“must relate to the same subject matter as the alleged
misrepresentation.” Mass. Ret. Sys., 716 F.3d at 240 (emphasis
added) (internal citations and quotations omitted). The alleged
corrective disclosure on October 15, 2020 relates to the
intermediate risk indication for Lotus, not the future of Lotus
within Boston Scientific’s TAVR portfolio, which is the subject
matter of the actionable misstatements. Accordingly, Plaintiff
cannot plead loss causation on this ground.
In contrast, the November 17, 2020 recall announcement is
related to the same subject matter as the actionable
misstatements. When Defendants announced Lotus’ recall on
November 17, 2020, Mr. Mahoney explained that “[Boston
Scientific] [could] better serve [its] patients by prioritizing

and focusing our financial and employee resources on [a] one-
valve platform,” Dkt. No. 44 at ¶ 182, clearly indicating that
the two-valve strategy did not “make[] sense” and Lotus would
not drive growth, id. at ¶¶ 308, 319. The recall announcement
at least “partially disclosed what the alleged
misrepresentations had concealed from the market.” Omanoff v.
Patrizio & Zhao LLC, No. 14–723, 2015 WL 1472566, at *6 (D.N.J.
Mar. 31, 2015) (quoting In re Bradley Pharms., Inc. Sec. Litig.,
421 F. Supp. 2d 822, 829 (D.N.J. 2006)).
2. Additional Loss Causation Considerations
Plaintiff has adequately pleaded that “the stock price

dropped soon after the corrective disclosure” on November 17,
2020. Mass. Ret. Sys., 716 F.3d at 237 (citation omitted); see
Dkt. No. 44 at ¶¶ 192, 324. Plaintiffs have also, as alleged,
“eliminat[ed] other possible explanations for this price drop.”
, 716 F.3d at 238 (citation omitted). In the
Complaint, Plaintiff described in detail the questions analysts
asked following the announcement on November 17, 2020, as well
as articles40 published after the announcement, which all
centered on the decision to terminate the Lotus platform. See
Dkt. No. 44 at ¶¶ 182–191. As alleged, “[I] can infer that it
is more probable than not that it was the corrective
disclosure. . . that caused at least a ‘substantial’ amount of
the price drop.” Mass. Ret. Sys., 716 F.3d at 238 (citation
omitted).

3. Conclusion
Plaintiff’s allegations adequately pleaded loss causation
and economic loss, though only as to the alleged corrective
disclosure on November 17, 2020 based on the alleged
misstatements in the Complaint that I have found actionab

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10200779. Public record. Not legal advice.