ROOFER'S PENSION FUND v. PAPA

[Docket Nos. 342, 344 and 346]

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

_____________________________

:

ROOFER’S PENSION FUND, et al., :

:

Plaintiffs, : Civil No. 16-2805 (RMB/LDW)

:

v. : OPINION

:

JOSEPH C. PAPA, et al., :

:

Defendants. :

_____________________________ :

APPEARANCES:

LOWENSTEIN SANDLER, LLP

By: Michael B. Himmel & Michael T.G. Long

One Lowenstein Drive

Roseland, New Jersey 07068

Counsel for the Lead Plaintiffs

POMERANTZ, LLP

By: Joshua B. Silverman (pro hac vice), Omar Jafri (pro hac vice)

Jeremy A. Lieberman (pro hac vice), & Thomas Przybylowski (pro hac vice)

10 South LaSalle Street

Suite 3505

Chicago, Illinois 60603

Counsel for the Lead Plaintiffs

BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP

By: Gerald H. Silk (pro hac vice), James A. Harrod (pro hac vice), &

Jesse L. Jensen (pro hac vice)

1251 Avenue of the Americas

New York, New York 10020

Counsel for the Lead Plaintiff

GREENBAUM ROWE SMITH & DAVIS

By: Alan S. Naar

99 Wood Avenue South

Iselin, New Jersey 07095

Counsel for Perrigo Company PLC

FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP

By: James D. Wareham (pro hac vice), James E. Anklam (pro hac vice),

Katherine L. St. Romain, Samuel P. Groner (pro hac vice),

Samuel M. Light (pro hac vice), & Jason Kanterman

801 17th Street, NW

Washington, DC 20006

Counsel for Perrigo Company PLC

GIBSON, DUNN & CRUTCHER LLP

By: Marshall R. King, Reed Brodsky (pro hac vice), &

David F. Crowley-Buck (pro hac vice)

200 Park Avenue

New York, New York 10166

Counsel for Joseph C. Papa

SULLIVAN & CROMWELL LLP

By: John L. Hardiman (pro hac vice), Brian T. Frawley, &

Michael P. Devlin (pro hac vice)

125 Broad Street

New York, New York 10004

Counsel for Judy Brown

RENÉE MARIE BUMB, Chief United States District Judge:

Securities fraud cases, like the one here, often turn on who said what, what they said,

when they said it, and what they knew when they spoke. This securities fraud class action

targets statements made by Defendant Perrigo Company PLC (Perrigo), Perrigo’s former

Chief Executive Officer, Joseph C. Papa (Papa), and Perrigo’s former Chief Financial Officer,

Judy Brown (Brown), about Perrigo’s generic drug pricing and its integration with a European

pharmaceutical company, Omega Pharma N.V. (Omega). Plaintiffs here, institutional

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investors, insurance companies, and pension funds, who owned stock in Perrigo when

Defendants made the challenged statements, contend those statements violated federal

securities laws because the statements were false and misleading, causing Perrigo’s stock price

to plummet when the market learned the truth about generic drug pricing and the Omega

integration.

Defendants have all moved for summary judgment, arguing, among other things, that

Plaintiffs have not shown those statements were false or that Defendants acted with scienter—

critical requirements to maintain a private cause action for securities fraud. Perrigo also

moves to exclude Plaintiffs’ experts claiming they either are unqualified to render expert

testimony or their opinions are unreliable. Plaintiffs oppose those motions, arguing material

facts are disputed requiring a jury to resolve, especially on Defendants’ scienter. They also

contend their experts should not be excluded.

The record before this Court on the motions is voluminous, consisting of hundreds of

pages of briefing, multiple declarations, statements of facts (in the hundreds of pages) with

thousands of pages of exhibits. The Court also heard oral argument on the motions for several

hours.1

Having extensively reviewed the record, this Court GRANTS Brown’s summary

judgment motion [Docket No. 344], GRANTS, in part, and DENIES, in part, Papa’s

summary judgment motion [Docket No. 346], RESERVES, in part, and DENIES, in part,

Perrigo’s summary judgment motion [Docket No. 342], and RESERVES on Perrigo’s motion

1 The Honorable Julien Xavier Neals, U.S.D.J., heard oral argument on the motions in April 2022. [Docket

No. 385.] The Court has reviewed the transcript of that proceeding.

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to exclude Plaintiffs’ experts until the Court holds Daubert hearings on each expert.

I. BACKGROUND

The parties are all too familiar with the facts, and the Court recites only those facts

necessary to address the pending motions. The Court mainly writes for the parties.

When Plaintiffs sued, they brought four theories for their securities fraud claims. [Am.

Compl. ¶ 1 (Docket No. 89).] According to Plaintiffs, Defendants made material

misrepresentations and omissions to overvalue Perrigo to fight off a potential takeover from

Mylan, N.V. (Mylan) which made a tender offer to buy Perrigo stock from its shareholders.

[Id.] Plaintiffs claim Defendants committed securities fraud by mispresenting: (1) Perrigo’s

largest financial asset, a royalty stream for the drug Tysabri (Tysabri Claim); (2) Perrigo’s

organic growth (Organic Growth Claim); (3) generic drug pricing (Generic Rx Claim)—that

is, Defendants hid from its shareholders its collusive pricing with other competitors and the

competitive environment for generic drugs; and (4) Perrigo’s integration success with Omega

(Omega Integration Claim). Defendants (and other named defendants) moved to dismiss

Plaintiffs’ entire lawsuit arguing mainly that Plaintiffs’ Complaint failed to establish that

Defendant made material misrepresentations and acted with scienter. Roofer’s Pension Fund v.

Papa, 2018 WL 3601229, at *6 (D.N.J. July 27, 2018).

The Court dismissed the Tysabri and Organic Growth Claims, but not the Generic Rx

and Omega Integration Claims, thus, significantly narrowing Plaintiffs’ lawsuit. Id. at *1,

*24. The Court dismissed the Tysabri Claim because: (1) Plaintiffs failed to plead facts

showing Defendants made material misrepresentations for one component of the claim

(GAAP violations for Tysabri’s royalty stream) and Defendants acted with scienter for the

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other component (Defendants’ statements about Tysabri’s value). Id. at *9-10, *18-21. The

Court also dismissed the Organic Growth Claim because Plaintiffs failed to plead specific

facts establishing scienter for the challenged statements about Perrigo’s organic growth. Id.

at *22. But the Court declined to dismiss the Generic Rx and Omega Integration Claims. Id.

at *10-12, *13-15, *21-22, *23-24

As to the Generic Rx Claim, the Court found the Amended Complaint alleged

sufficient facts that Defendants materially misrepresented generic drug pricing. Id. at *10-12.

The Court found the allegations as to Papa’s statements about keeping pricing “flat to up

slightly” despite price hikes of 300%-500% for certain drugs to be affirmatively misleading to

withstand a motion to dismiss. Id. at *12. The Court also found the Amended Complaint’s

allegations supported a finding of scienter. Id. at *21-22. The Court looked to the allegations

on Papa’s and Brown’s responses to analysts’ questions about pricing in Perrigo’s generic

division. Id. at *21. And the Court found the size of the collusive scheme supported an

inference of scienter. Id.

Turning to the Omega Integration Claim, the Court found Plaintiffs alleged enough

facts to show that Defendants made material misrepresentations as to the present success of

Perrigo’s integration of Omega. Id. at *14. The Court limited the Omega Integration Claim

to statements about “the present success of the integration.” Id. at *14. The Court dismissed

statements by former defendant Marc Coucke (Coucke)—Omega’s co-founder and former

Chairman and Chief Executive Officer—about Omega, and Defendants’ statements on

“purely forward-looking revenue and synergy projections.” Id. at *14. The Court also found

Plaintiffs alleged enough facts establishing scienter for Defendants’ statements about the

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Omega integration. Id. at *23. Looking to Papa’s and Brown’s statements, the Court noted

their statements implied first-hand knowledge of the integration, which supported an

inference of scienter. Id. Coupled with those statements, the Court also found Plaintiffs’

allegations about Omega’s management’s resistance to the integration and other impediments

to the integration supported a finding of scienter. Id. at *23-24. The Court, however, did not

credit the Amended Complaint’s “allegations regarding underperformance in individual

markets because [Plaintiffs] fail[ed] to allege any specific misrepresentations in connection

with underperformance and fail[ed] to quantify the importance of these markets in any

meaningful way.” Id. at 23 n.23.

After the Court decided the motions to dismiss, the parties engaged in discovery on

the Generic Rx and Omega Integration Claims. Years later, Defendants moved for summary

judgment on those claims arguing Plaintiffs unearthed no evidence to show Defendants made

material misrepresentations for the challenged statements or that they acted with scienter.

[Perrigo Mem. of Law in Support of Summ. J. 9-38 (Perrigo Br.) (Docket No. 343-3); Brown

Mem. of Law in Support of Summ. J. 24-39 (Brown Br.) (Docket No. 345); Papa Mem. of

Law in Support of Summ. J. 21-28, 30-39 (Papa Br.) (Docket No. 347).] Perrigo also contends

Plaintiffs cannot establish loss causation or damages to sustain their securities fraud claims.

[Perrigo Br. at 38-55.] The Court turns to these arguments now.

II. SUMMARY JUDGMENT STANDARD

Courts will grant summary judgment if “the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(a). A fact is “material” only if it might impact the “outcome of the

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suit under the governing law.” Gonzalez v. Sec’y of Dep’t of Homeland Sec., 678 F.3d 254, 261

(3d Cir. 2012). A dispute is “genuine” if the evidence would allow a reasonable jury to find

for the nonmoving party. Id.

In determining the existence of a genuine dispute of material fact, a court’s role is not

to weigh the evidence; all reasonable inferences and doubts should be resolved in favor of the

nonmoving party. Melrose, Inc. v. City of Pittsburgh, 613 F.3d 380, 387 (3d Cir. 2010). But a

mere “scintilla of evidence,” without more, will not give rise to a genuine dispute for trial.

Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001). Moreover, a court need not adopt

the version of facts asserted by the nonmoving party if those facts are “utterly discredited by

the record [so] that no reasonable jury” could believe them. Scott v. Harris, 550 U.S. 372, 380

(2007). In the face of such evidence, summary judgment is still appropriate “[w]here the

record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.”

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The movant has the initial burden of showing through the pleadings, deposition

testimony, answers to interrogatories, admissions on file, and any affidavits that the

nonmovant has failed to establish one or more essential elements of its case. Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986). If the moving party carries its burden, the burden then shifts

to the nonmovant who must establish that summary judgment is inappropriate. Matsushita,

475 U.S. at 586. But if the nonmoving party “‘fails to make a showing sufficient to establish

the existence of an element essential to [its] case, and on which [it] will bear the burden of

proof at trial,’ then summary judgment is appropriate for the moving party.” SodexoMAGIC,

LLC v. Drexel Univ., 24 F.4th 183, 204 (3d Cir. 2022) (alterations in original) (quoting Celotex,

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477 U.S. at 322).

In the face of a properly supported summary judgment motion, the nonmovant’s

burden is rigorous: the party “must point to concrete evidence in the record”—mere

allegations, conclusions, conjecture, and speculation will not defeat summary judgment.

Orsatti v. New Jersey State Police, 71 F.3d 480, 484 (3d Cir. 1995); accord Jackson v. Danberg, 594

F.3d 210, 227 (3d Cir. 2010) (“[S]peculation and conjecture may not defeat summary

judgment.” (citing Acumed LLC. v. Advanced Surgical Servs., Inc., 561 F.3d 199, 228 (3d Cir.

2009))). Moreover, “the court need only determine if the nonmoving party can produce

admissible evidence regarding a disputed issue of material fact at trial”; the evidence need not

be in admissible form at the time of summary judgment. FOP v. City of Camden, 842 F.3d 231,

238 (3d Cir. 2016).

III.OVERVIEW OF SECURITIES FRAUD LAW

The Securities Exchange Act of 1934 (Exchange Act) regulates the trading of securities

on the secondary market. Slack Tech., LLC v. Pirani, 143 S. Ct. 1433, 1437 (2023). Section

10(b) of the Exchange Act prohibits the “use or employ, in connection with the purchase or

sale of any security . . . [of] any manipulative or deceptive device or contrivance in

contravention of such rules and regulations as the Commission may prescribe as necessary or

appropriate in the public interest or for the protection of investors.” 15 U.S.C. § 78j(b). The

Securities and Exchange Commission, the agency responsible for implementing Section 10(b)

of the Exchange Act, enacted Rule 10b-5 making it unlawful “[t]o make any untrue statement

of a material fact or to omit to state a material fact necessary in order to make the statements

made, in the light of the circumstances under which they were made, not misleading.” 17

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C.F.R. § 240.10b-5(b).

“Together, § 10(b) and Rule 10b-5 imply a private cause of action for securities fraud.”

City of Warren Police & Fire Dep’t Retirement Sys. v. Prudential Fin., Inc., 70 F.4th 668, 679 (3d.

Cir. 2023). To prevail on a securities fraud claim under Section 10(b) and Rule 10b-5, a

plaintiff must show: “(1) a material misrepresentation or omission by the defendant; (2)

scienter; (3) a connection between the misrepresentations or omission and the purchase or

sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; (6)

and loss causation.”2 In re Amarin Corp. PLC Sec. Litig., 2022 WL 2128560, at *2 (3d Cir. June

14, 2022) (quoting Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 37-38 (2011)); accord Slack

Tech, 143 S. Ct. at 1437. Because Defendants’ motions focus largely on the material

misrepresentations and scienter elements, the Court elaborates on those elements.

To prevail under Section 10(b) and Rule 10b-5, a private plaintiff must first show the

defendant made an affirmative material misrepresentation, or in the alternative, bears

responsibility for a material omission. “Material information is ‘information that would be

important to a reasonable investor in making his or her investment decision.’” Oran v. Stafford,

226 F.3d 275, 282 (3d Cir. 2000) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d

1410, 1425 (3d Cir. 1997)); see also In re Amarin Corp. PLC Sec. Litig., 2016 WL 1644623, at *7

(D.N.J. Apr. 26, 2016) (“Under Section 10(b) and Rule 10b–5, a misrepresentation or

2 Plaintiffs have also brought claims under Sections 14(e) and 20(a) of the Exchange Act. Section 14(e) liability

attaches for misrepresentations and omissions made in connection with a tender offer. Roofer’s, 2018 WL

3601229, at *7. Besides the tender offer setting, the elements to establish Section 14(e) liability are the same as

Rule 10b-5. Id. Section 20(a) imposes liability on certain “control persons.” 15 U.S.C. § 78t. The claim is

derivative of a Section 10(b) claim, and so, a plaintiff first needs to establish a violation of Section 10(b) by a

control person. Roofer’s, 2018 WL 3601229, at * 7.

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omission of fact is material ‘if there is a substantial likelihood that a reasonable shareholder

would consider it important’ in making an investment decision, and there is a ‘substantial

likelihood that the disclosure of the omitted fact would have been viewed by the reasonable

investor as having significantly altered the 'total mix' of information made available.’”

(quoting Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988))). “To be actionable, a statement

or omission must have been misleading at the time it was made; liability cannot be imposed

on the basis of subsequent events.” In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1330 (3d Cir.

2002); see also Fan v. StoneMore Partners LP, 927 F.3d 710, 715-16 (3d Cir. 2019).

On top of showing the defendant made a material misrepresentation, the “plaintiff

must prove that the defendant acted with scienter.” Matrixx, 563 U.S. at 48. To make that

showing, a plaintiff must show defendant made the challenged misrepresentation either: (1)

intentionally—that is, “a mental state embracing intent to deceive, manipulate, or defraud,”

see id. (quoting Tellabs, Inc. v. Makor Issue & Rts., Ltd., 551 U.S. 308, 319 (2007)), or (2)

recklessly—that is, under circumstances showing “an extreme departure from the standards

of ordinary care, . . . which presents a danger of misleading buyers or sellers that is either

known to the defendant or is so obvious that the actor must have been aware of it,” see In re

Ikon Office Sols., Inc., 277 F.3d 658, 667 (3d Cir. 2002) (quoting SEC v. Infinity Grp. Co., 212

F.3d 180, 192 (3d Cir. 2000)).

A plaintiff can prove scienter by direct or circumstantial evidence showing: (1)

defendants had a both a motive and opportunity to commit the fraud; or (2) conscious

misbehavior or recklessness. In re Bristol-Myers Squibb Sec. Litig., 2005 WL 2007004, at *14

(D.N.J. Aug. 17, 2005). To establish reckless or conscious misbehavior, a plaintiff must show

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that defendants either: (1) “egregious[ly] refused to see the obvious, or [failed] to investigate

the doubtful,” or (2) had “knowledge of facts or access to information contradicting their

public statements such that defendants knew or should have known that they were

misrepresenting material facts related to the corporation.” In re Interpool, Inc. Sec. Litig., 2005

WL 2000237, at *12 (D.N.J. Aug. 17, 2005) (quoting Novak v. Kasaks, 216 F. 3d 300, 308 (2d.

Cir. 2000)). While scienter is often a jury call, see SEC v. Ficken, 546 F.3d 45, 51 (1st Cir.

2008), courts will grant summary judgment if “no reasonable trier of fact could find the

element of scienter satisfied” see In re Merck & Co., Sec., Derivative & “ERISA” Litig., 2015 WL

2250472, at *23 (D.N.J. May 13, 2015). See also In re Tyson Foods, Inc., 2004 WL 1396269, at

*9 (D. Del. June 17, 2004) (granting summary judgment because plaintiffs failed to produce

evidence to show scienter), aff’d, 155 F. App’x 53 (3d Cir. 2005). To defeat a defendant’s

summary judgment motion on scienter grounds, a plaintiff “must present significant probative

evidence of scienter.” In re REMEC Inc. Sec. Litig., 702 F. Supp. 2d 1202, 1236 (S.D. Cal.

2010) (citation and internal quotation marks omitted).

IV. DISCUSSION

While Defendants offer varying reasons why Plaintiffs’ remaining claims fail, the

thrust of their arguments focus on Plaintiffs’ failure to establish scienter. Indeed, securities

fraud cases, like the one here, often rise and fall on a plaintiff’s ability to prove scienter. Thus,

this Court will largely focus on Plaintiffs’ proffered evidence they claim shows Defendants’

possessed scienter when making the challenged statements.

A. Papa’s and Brown’s Motive and Opportunity to Commit Securities Fraud

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Before turning to the Generic Rx and Omega Integration Claims, this Court reviews

Plaintiffs’ argument that Papa and Brown were motivated to commit securities fraud—that

is, they acted with scienter. While “motive and opportunity” to commit fraud is not “an

independent means of establishing scienter,” see In re Anadigics, Inc., Sec. Litig., 2011 WL

4594845, at *32 (D.N.J. Sept. 30, 2011), aff’d, 484 F. App’x 742 (3d Cir. 2012), a plaintiff’s

failure to show motive to commit fraud is “significant,” see Rahman v. Kid Brands, Inc., 736

F.3d 237, 245 (3d Cir. 2013). See also In re Adolor Corp. Sec. Litig., 616 F. Supp. 2d 551, 572

(E.D. Pa. 2009) (dismissing Section 10(b) claim for failure to establish scienter and ruling the

“absence of motive here is significant”).

At the motion-to-dismiss stage, the Court found Plaintiffs’ allegations that Papa and

Brown were motivated to commit fraud based on their trading history and efforts to fend off

the Mylan takeover lacking. Roofer’s, 2018 WL 3601229, at *17-18. Plaintiffs again rehash

their arguments that Papa’s and Brown’s stock sales and efforts to fight off the Mylan takeover

show Papa and Brown had motive to commit fraud. [Pls. Mem. of Law in Opp’n to Defs.

Summ. J. Mot. 34-35, 65-66 (Pls. Br.) (Docket No. 359).] The completed record, however,

does not support Plaintiffs’ arguments.

First, undisputed evidence shows Papa and Brown both increased their ownership in

Perrigo when Mylan made the tender offer either through vesting of restricted stock awarded

years earlier or through compensation. [Defs. Joint Statement of Undisputed and Material

Facts ¶¶ 12, 20 (Defs. SOF) (Docket No. 343-3).] Further, before Mylan’s tender offer, both

Papa and Brown sold thousands of their shares in Perrigo. [Defs. SOF ¶¶ 10, 19.] See also

Roofer’s, 2018 WL 3601229, at *17 (“[I]t appears undisputed that Papa and Brown sold greater

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or comparable amounts of Perrigo stock in the 25 months prior to the Class Period than they

did during the Class Period.”).

That Papa and Brown increased their holdings in Perrigo during Mylan’s takeover

efforts cuts against finding scienter. See Adolor, 616 F. Supp. 2d at 572-73 (ruling allegations

that defendants “held onto their shares” and “actually increased their holdings incrementally

throughout Class Period . . . raises a compelling inference against scienter”). And given

Papa’s and Brown’s trading history before Mylan’s tender offer, the Court finds their trading

patterns during the takeover period are not unusual to raise an inference of scienter. In re

Pixar Sec. Litig., 450 F. Supp. 2d 1096, 1104-05 (N.D. Cal. 2006) (ruling allegations did not

demonstrate scienter based on insider’s trading history because insider sale of 150,000 shares

during five-month class period was not unusual since the sale was not “dramatically out of

line with . . . prior trading practices,” where insider sold 100,000 shares in the two quarters

before the class period).

Still, faced with this evidence, Plaintiffs claim Papa nefariously executed trading plans

to sell his Perrigo stock before and after Mylan’s takeover efforts, and so, an inference of

scienter arises. [Pls. Br. at 65-66.] This argument is unpersuasive, and Plaintiffs

mischaracterize the record. Before Mylan’s tender offer, Papa executed a Rule 10b5-1 plan

to sell over 40,000 of his Perrigo shares on various dates at a limit price of $150 per share.

[Pls. Statement of Additional Disputed Material Facts in Opp’n to Defs. Mot. for Summ. J. ¶

5 (Pls. SOF) (Docket No. 359-2).] “A Rule 10b5–1 plan is a written plan that allows corporate

insiders to make prearranged stock transactions.” In re Synchronoss Tech., Inc., Sec. Litig., 2019

WL 2849933, at *16 n.11 (D.N.J. July 2, 2019). Stock trades made under these plans are not

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enough to establish motive and opportunity to commit fraud. In re Audible Inc., Sec. Litig.,

2007 WL 1062986, at *12 (D.N.J. Apr. 3, 2007) (“[T]here is evidence that at least some of

these stock sales were made via Rule 10(b)5–1 plans, which would prevent those shares from

being considered in the motive and opportunity [scienter] analysis.”). Indeed, “[c]ourts have

consistently held that trades made under automatic trading plans are of minimal value in

establishing an inference of scienter.” Synchronoss, 2019 WL 2849933, at *16 (cleaned up)

(quoting Lovallo v. Pacira Pharm., Inc., 2015 WL 7300492, at *13 (D.N.J. Nov. 18, 2015)). In

any event, Papa cancelled that trading plan after Mylan made the tender offer, see Pls. SOF

¶ 5, because he “didn’t feel that the CEO trading during that time period would be

appropriate,” see Ex. 500 (Papa Tr. 194:20-23) (Docket No. 365-4). After Mylan’s tender

offer expired, Papa executed another Rule 10b5-1 and sold over 10,000 of his personal shares

under the plan. [Pls. SOF ¶ 5; see also Ex. 6 (Docket Nos. 353-7, -8, -9).]

Because Papa’s trades were made under a Rule 10b5–1 plan, this Court finds the trades

insufficient to establish Papa’s motive and opportunity to commit fraud. Audible, 2007 WL

1062986, at *12. Even though Papa sold over 10,000 of his shares after Mylan’s failed

takeover, this Court finds those trades cannot establish scienter given Papa’s trading history.

See Pixar, 450 F. Supp. 2d at 1104-05. Indeed, those 10,000 shares represent a fraction of the

shares Papa sold before Mylan’s tender offer. See In re Copper Mountain Sec. Litig., 311 F. Supp.

2d 857, 875 (N.D. Cal. 2004) (finding CEO sales of between 17% to 21% of his stock during

the class period “not suspicious enough to raise a strong inference of scienter”). Thus, even

viewing the evidence in the light most favorable to Plaintiffs, the Court finds Papa’s and

Brown’s trading patterns insufficient to establish scienter.

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Second, Plaintiffs contend Mylan’s takeover efforts motivated Papa’s and Brown’s

statements about the success of the Omega integration to defeat the takeover. [Pls Br. at 34-

35.] The Court previously considered this argument and rejected it. Roofer’s, 2018 WL

3601229, at *18. The Court noted that mostly “all publicly traded companies are interested

in . . . avoiding hostile takeovers” and that executives want to fight off a hostile takeover “fall

woefully short of demonstrating scienter under federal securities law.” Id. (internal quotation

marks omitted) (quoting In re Goodyear Tire & Rubber Co. Sec. Litig., 1993 WL 130381, at *16

(E.D. Pa. Apr. 22, 1993)). Plaintiffs’ arguments have not persuaded this Court to deviate

from its earlier findings.

In the end, the Court finds Plaintiffs have not shown Papa and Brown were motivated

to commit securities fraud based on their trading patterns and efforts to thwart Mylan’s

takeover. Because “motive and opportunity” to commit fraud is not “an independent means

of establishing scienter,” Anadigics, 2011 WL 4594845, at *32, this Court will now consider

whether Plaintiffs have established scienter on their Generic Rx and Omega Integration

Claims through circumstantial evidence of conscious misbehavior or recklessness, Roofer’s,

2018 WL 3601229, at *18.

B. The Generic Rx Claim

During the relevant class period, Perrigo had mainly five business units: (1) Consumer

Healthcare; (2) Branded Consumer Healthcare; (3) Prescription Pharmaceutical (Generic

Rx); (4) Specialty Sciences; and (5) Other—the company’s active pharmaceutical ingredient

business. [Defs. SOF ¶ 2.] The Generic Rx unit marketed about 800 generic prescription

drugs and over-the-counter products with over 1,400 SKUs (stock keeping units). [Id. ¶ 125.]

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Generally, the company’s individual business units determined the pricing for the company’s

products. [Id. ¶¶ 224-25.] The Generic Rx unit had a pricing committee consisting of

members from the company’s generic drug contracts, marketing, sales, forecasting, and

finance teams. [Id. ¶ 227.]

The parties dispute who had the final say on pricing for Perrigo’s generic drugs.

Defendants contend John Wesolowski (Wesolowski), who held various executive titles at

Perrigo, had “the ultimate decision-making authority” on generic drug pricing. [Id. ¶¶ 128,

228.] Plaintiffs argue that a committee set the pricing, and former Perrigo employee Tony

Polman—who Plaintiffs claim was enmeshed in collusive behavior with other competitors—

sat on that committee. [Pls. SOF ¶¶ 208, 217; see also Pls. Response to Defendants’ Joint

Statement of Undisputed and Material Facts ¶ 228 (Pls. Res.).] That dispute aside, all agree

Papa and Brown did not sit on any pricing committee. [Defs. SOF ¶¶ 229, 232.] Still Plaintiffs

contend Papa and Brown took part in generic pricing decisions because: (1) the executive

committee that Papa and Brown sat on “very well could have” discussed drug pricing, see

Ex. 170 (Perrigo Rule 30(b)(6) Tr. 35:2 to 6); (2) “sometimes . . . senior management” like

Brown or Papa provided “input” on generic drug pricing, see Ex. 179 (Boothe Tr. 27:23 to

28:15) (Docket No. 359-27); and (3) Brown’s “organization” would review pricing actions,

see id. (Boothe Tr. 190:8 to 191:11).

Plaintiffs argue Defendants committed securities fraud by: (1) concealing Perrigo’s

involvement in a price-fixing scheme with other pharmaceutical companies; (2)

misrepresenting the competitive environment of generic drugs; and (3) misrepresenting

Perrigo’s drug pricing policy. [Pls. Br. at 65-66; see also Am. Compl. ¶¶ 176-79, 180-81, 182-

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86, 190-97, 200-04.] Because Plaintiffs largely base their Generic Rx Claim on the failure to

disclose an illegal price-fixing scheme, they must show the “underlying conduct occurred.”

Roofer’s, 2018 WL 3601229, at *11 (quoting Menaldi v. Och-Ziff Cap. Mgmt. Grp., LLC, 164 F.

Supp. 3d 568, 578 (S.D.N.Y. 2016)). To do so, Plaintiffs must show—either by direct or

circumstantial evidence—an agreement to fix prices. Id. The Third Circuit has identified a

list of “plus factors” that tend to suggest the existence of collusion, such as evidence showing:

(1) a motive to conspire to fix prices; (2) the defendant “acted contrary to its interests;” and

(3) “a traditional conspiracy.” Lifewatch Servs. Inc. v. Highmark, Inc., 902 F.3d 323, 333 (3d

Cir. 2018) (quoting In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 321-22 (3d Cir. 2010)).

At the motion-to-dismiss stage, the Court found that Plaintiffs’ “allegations related to

the price-fixing scheme . . . narrowly surpassed the bar for pleading scienter.” Roofer’s, 2018

WL 3601229, at *22 (emphasis added). Now, with the benefit of discovery, the Court finds

Plaintiffs have not passed the high scienter bar to move this case forward to a jury as to Brown

and Papa.

1. Brown

Plaintiffs claim Brown committed securities fraud based on eight statements she made

on generic drug pricing: five in SEC filings, two on investor calls, and one at a conference.

[Am. Compl. ¶¶ 184, 192, 194, 196, 200-01, 203.]

For the SEC filings, Plaintiffs challenge Brown’s statements that “Perrigo operated in

a highly competitive environment” and “faced vigorous competition from other

pharmaceutical companies that may threaten the commercial acceptance and pricing of our

products,” see Defs. SOF ¶¶ 303 (Perrigo’s Form 10-K (August 13, 2015)), 305 (Perrigo’s

17

Form 10-KT (February 25, 2016)), and that Perrigo suffered a “recent reduction in pricing

expectations in our U.S. businesses from historical patterns, in particular in our Rx segment

due to industry and competitive pressures,” see id. ¶¶ 307 (Perrigo’s Form 10-Q (May 16,

2016)), 309 (Perrigo’s Form 10-Q (August 10, 2016)), and 311 (Perrigo’s Form 10-Q

(November 10, 2016)). As to Brown’s statements on investor calls, Plaintiffs challenge her

statements that “pricing wise, [Perrigo] did see some pressure, give or take, in the total

portfolio over the course of the year, approximately 1%,” and “sharp price erosion in a

number of topical products” and “continued pricing had further impacted [Perrigo’s] ability

to execute on [its] planned pricing strategies.” [Id. ¶¶ 304 (February 18, 2016 call), 306 (May

12, 2016 call) (alterations in original and internal quotation marks omitted).] Finally,

Plaintiffs challenge Brown’s statement at a conference where she told investors Perrigo “saw

some competitive pressure and was seeing a different pricing dynamic for the remainder of

the year.” [Id. ¶ 308 (May 24, 2016) (internal quotation marks omitted).]

Plaintiffs offer several reasons why Brown acted with scienter when she made the

above statements. None, however, are persuasive. First, they contend Brown held herself

out as knowledgeable about Perrigo’s drug pricing by answering pointed questions from

analysts, and so, an inference of scienter arises. [Pls. Br. at 59.] Because she had personal

knowledge, the argument goes, she either knew the “truth” about Perrigo’s pricing practices—

that Perrigo was colluding with competitors—or was reckless in not finding out the “truth.”

[Id.]

True, some courts have found that a corporate officer’s responses to analysts’ questions

that imply first-hand knowledge of a particular matter, while not conclusive, can bolster an

18

inference of scienter. See, e.g., In re PTC Thera. Inc. Sec. Litig., 2017 WL 3705801, at *17

(D.N.J. Aug. 28, 2017). But Brown’s knowledge of Perrigo’s pricing practices does not mean

she knew of, or was reckless in not finding out, a supposed price-fixing scheme even if

Perrigo’s generic drug operations were key to the company’s business. See Utesch v. Lannett

Co., 316 F. Supp. 3d 895, 906 (E.D. Pa. 2018) (finding allegations did not support an inference

of scienter because knowledge about a company’s drug pricing—even if a “core operation” of

the company—does not mean the speaker knew about illegal activities involving pricing).

Indeed, “corporate management's general awareness of the day-to-day workings of the

company's business does not establish scienter—at least absent some additional allegations of

specific information conveyed to management and related to fraud.” Rahman, 736 F.3d at

247 (citation and internal quotation marks omitted). Brown’s statements suggest she knew

about Perrigo’s overall drug prices, not that she knew how Perrigo came to a price

determination for each drug in the company’s portfolio and whether collusion with other

competitors influenced that price determination.

Second, Plaintiffs contend a jury could infer scienter from internal documents Brown

reviewed before she made the challenged statements. [Pls Br. at 59-60.] In some cases, a

plaintiff can establish scienter by showing the defendants had “knowledge of facts or access

to information contradicting their public statements.” Novak, 216 F.3d at 308. This Court

has viewed the documents Plaintiffs rely on (generously in their favor) and they offer Plaintiffs

no support. Those documents, in fact, show Brown’s challenged statements align with the

information she received. Indeed, the very documents Plaintiffs point to that Brown received

in 2015—reports projecting declines in generic drug pricing, price erosion because of

19

increased competition, minimal opportunities for generic drug pricing, greater competition

across the portfolio, and generic drug pricing $11 million lower than internal estimates—

mirror Brown’s statements Plaintiffs claim are fraudulent. [Pls Br. at 59-60; see also Exs. 183

(April 2015 email with report) (Docket No. 359-31), 242 (April 2015 email with report)

(Docket No. 359-87), 245 (July 2015 email with report (PRGO_SECLIT0002489286)

(Docket No. 359-90), 241 (September 2015 email with report) (Docket No. 359-86), 246 (2015

report) (Docket No. 359-91), and 295 (2015 report) (Docket No. 360-40).] No reasonable jury

could infer Brown recklessly spoke about Perrigo’s generic drug pricing and the competitive

environment for generic drugs given the documents she had. See In re Symbol Tech. Class Action

Litig., 950 F. Supp. 1237, 1245-46 (E.D.N.Y. 1997) (granting summary judgment because

plaintiffs failed to establish scienter since a “jury would have nothing upon which it could

base a finding that defendants had the requisite intent” because “all of the internal documents

support the assessments and projections in the three statements at issue”).

Third, Plaintiffs argue a jury could find scienter based on documents outlining various

penalties that Perrigo pays wholesalers when the company increases the “Wholesale

Acquisition Cost” (WAC) for certain drugs and the millions Perrigo had paid in penalties for

doing so. [Pls Br. at 60-61; see also Exs. 278 (Docket No. 360-23 & 279 (Docket No. 360-

24).] According to Plaintiffs, Brown (and Papa) would incur these penalties because they

“believed a lack of competition would allow the price increases to stick.” [Pls Br. at 61.] By

example, Plaintiffs point to a slide show Brown received stating that Perrigo increased the

WAC for econazole by 950%, incurring about $6.8 million in penalties. [Id. at 61-62; see also

Ex. 274 (Docket No. 360-19).] According to Plaintiffs, Perrigo off-set those penalties in the

20

following fiscal quarters. [Id.]

Plaintiffs unreasonably stretch the inferences to be drawn from the evidence. At best,

the evidence shows Brown knew that if Perrigo increased the WAC for generic drugs, Perrigo

had to pay a contractual penalty to the wholesaler, and Perrigo had paid millions in penalties.

Nothing in the evidence supports Plaintiffs’ strained inference that Brown (or Papa) knew

Perrigo could only overcome the price penalty if a competitor too increased the WAC, and

so, Perrigo and its competitors colluded with each other. Again, an executive’s knowledge

about pricing is different from knowing about an illegal pricing scheme. Utesch, 316 F. Supp.

3d at 906. In fact, one would expect a pharmaceutical company’s CFO (and CEO like Papa)

to know about the company’s drug pricing, but that knowledge does not mean the CFO knew

about illegal activities with pricing. Cf. Rahman, 736 F.3d at 245 (“[T]he fact that a CEO

visited a subsidiary's premises to meet with its president will not establish that the CEO had

knowledge of illegal activities at the subsidiary. After all, it would be expected that the CEO

would visit his company's subsidiaries in the course of conducting legitimate business.”).

Fourth, Plaintiffs assert record evidence shows Brown and Papa were personally

involved in generic drug pricing. Plaintiffs rely mainly on testimony from two executives

from Perrigo’s generic drug business, Douglas Boothe (Boothe) and Wesolowski, and

Perrigo’s corporate designee who testified that senior management took part in drug pricing.

[Pls Br. at 63.] Boothe testified that “sometimes . . . senior management” like Brown or Papa

provided “input” on generic drug pricing. [Ex. 179 (Boothe Tr. 27:23 to 28:15) (Docket No.

359-27).] Plaintiffs claim Boothe also testified that he “would not put forward a pricing action

until . . . someone from [Brown’s] organization” reviewed it. [Pls Br. at 63 (citing Ex. 179

21

(Boothe Tr. 190:8 to 191:11).] Wesolowski testified that when price changes were made,

“because of the financial implications being mostly negative at the front end of it,” the pricing

committee informed Boothe, who, in turn, “would normally take that to [Brown] and then it

would cascade back.” [Ex. 171 (Wesolowski Tr. 83:16 to 25).] Perrigo’s corporate designee

testified it “very well could have happened” that Perrigo’s executive committee discussed

generic drug pricing. [Ex. 170 (Perrigo Rule 30(b)(6) Tr. 35:2 to 6).]

Plaintiffs mischaracterize the record by placing the relevant testimony out-of-context.

Boothe testified that since a pricing action “could have an effect of negative revenues or other

implications on the reported revenues for the division, which could spill across the entire

company,” his “practice” was to have “someone from [Brown’s] organization” review the

matter to “make sure there was no lack of understanding” of those implications. [Defs. SOF

¶ 246 (citing Ex. 92 (Boothe Tr. 190:15 to 91:11)); see also Ex 93 (Wesolowski Tr. 84:21 to

85:3 (testifying that Boothe informed Brown on “WAC AWP change[s] that could negatively

affect the financials of the company”).] Boothe testified “it was more of a communication”

matter than approval. [Ex. 179 (Boothe Tr. 191:12 to 18).] Thus, the evidence shows Brown

learned about drug pricing that could harm the company’s finances. [See Def. SOF ¶ 231

(citing to Perrigo’s Director of Marketing who testified Brown was not “involved in increasing

the prices for any generic drugs” and would learn about price increases through “reporting in

later business reviews”).]

The record shows that Brown was not a member of any Perrigo drug pricing committee

and she was not involved in setting pricing for the company’s generic drugs. [Def. SOF ¶¶

229-30.] According to Perrigo’s former Director of Marketing, James Booydegraaf, Brown

22

would only learn about price increases through “reporting in later business reviews.” [Id. ¶

231 (citing Booydegraaf Tr. 42:18 to 43:2).]3 Even if Brown learned about price increases,

Plaintiffs have presented no evidence that she learned of the reasoning for the increases—that

is, whether the increases flowed from collusive behavior or not. That the executive committee

“very well could have” discussed generic drug pricing is pure conjecture. Plaintiffs offer

nothing on what was said at those meetings even though they had years of discovery to

explore more than the “what could have been.” See In re Asbestos Prods. Liability Litig., 2014

WL 6988692, at *2 (D. Del. Dec. 9, 2014) (“Plaintiff only offers the possibility that [the injured]

worked on AM General vehicles in Fulda, but mere speculation is insufficient to raise a

genuine dispute of material fact.”).

Finally, Plaintiffs contend a jury can infer scienter based on Brown’s (and Papa’s)

attendance at pharmaceutical industry conferences attended by Perrigo’s competitors. [Pls

Br. 64.] According to Plaintiffs, Perrigo’s “largest price increase actions in 2013-2014”

followed many of those conferences. [Id.; see also [Ex. 160 (Docket No. 359-8).] Plaintiffs

point to an email discussing price increases after a 2013 industry conference. [Ex. 284 (Docket

No. 360-29).] This argument is entirely speculative because, beside her mere presence at those

conferences, Plaintiffs—after years of discovery—offer no evidence on who Brown spoke to,

what was said about generic drug pricing (if any), or what she heard at those conferences.

And neither Brown nor Papa are copied on the email discussing price increases. Plaintiffs’

speculation cannot defeat summary judgment. Jackson, 594 F.3d at 227 (“[S]peculation and

3 Pointing to Boothe’s, Wesolowski’s, and Perrigo’s corporate designee’s deposition testimony, Plaintiffs dispute

those paragraphs of Defendants’ Joint Statement of Material Facts. [Pls. Resp. ¶¶ 230-31.] This Court finds

those disputes are not genuine because Plaintiffs have unfortunately taken the relevant deposition testimony

out-of-context.

23

conjecture may not defeat summary judgment.”).

After viewing the evidence in the light most favorable to Plaintiffs, this Court finds

they have presented no probative evidence to show Brown possessed scienter when she made

the challenged statements. Without proof of scienter, the Generic Rx Claim against her fails.

Merck, 2015 WL 2250472, at *14 (granting summary judgment because plaintiffs failed to

present evidence to permit a jury to find that, based on the information defendant had at the

time of the challenged statements, defendant knowingly or recklessly deceived the public).

a. Plaintiffs cannot hold Defendants liable for Brown’s October 22, 2015

Statement

In their opposition papers, Plaintiffs seek to hold Brown and Perrigo liable for her

October 22, 2015 statement she made on an earnings call that Perrigo’s “revenues are

insulated from the current pricing drama you see playing out in the pharmaceutical industry

today.” [Ex. 76 (PRGO_SECLIT0001345412) (Docket No. 349-21); see also Pls Br. at 60.]

Plaintiffs did not plead this statement in their Amended Complaint, and cannot now inject

this statement into the case to hold Brown liable for securities fraud. Indeed, Plaintiffs admit

the Amended Complaint does not reference Brown’s October 2015 statement. [Pls. Br. at 13].

The October 2015 statement forms a new fraud theory on Perrigo’s generic drug

pricing—that is, Defendants failed to disclose increased competition and downward pricing

pressure. Carmignac Gestion, S.A. v. Perrigo Co. PLC, 2019 WL 3451523, at *6, *11 (D.N.J.

July 31, 2019) (lawsuit filed by opt-out plaintiffs from current class action against same

Defendants raised “a new theory” based on Brown’s October 2015 statement that

“Defendants violated securities laws by making misrepresentations and omissions to investors

about the stability and sustainability of Perrigo's drug pricing, while failing to disclose

24

increased competition and downward pricing pressure in the generic drug market”). That

theory is different from the one pled in the Amended Complaint. As pled, Plaintiffs claim

Defendants committed securities fraud by engaging in a price-fixing scheme with their

competitors, failing to disclose that scheme, and failing to disclose a lack of competition.

Roofer’s, 2018 WL 3601229, at *3.

Courts have rejected a plaintiff’s attempt to inject new theories for securities fraud to

oppose summary judgment, and this Court will too. In re Saint Jude Med., Inc., Sec. Litig., 629

F. Supp. 2d 915, 920-21 (D. Minn. 2009) (refusing to consider new fraud theory raised to

oppose summary judgment because to consider the theory would defeat Congress’ purposes

of enacting the Private Securities Litigation Reform Act (PSLRA) that requires private

securities complaints to “specify each statement alleged to have been misleading,” as well as

the “reason or reasons why the statement is misleading” (quoting 15 U.S.C. § 78u-4(b)(1)(B)));

cf. In re Bristol-Myers Squibb Sec. Litig., 228 F.R.D. 221, 230 (D.N.J. 2005) (refusing to allow

plaintiffs to amend complaint to include new statements because allowing the amendment

“would frustrate the heightened pleading requirements of the PSLRA”). If Plaintiffs wanted

to hold Defendants liable for a new fraud theory based on Brown’s October 2015 statement,

they should have moved to amend their complaint. They did not, and summary judgment is

not the proper vehicle to drive this new fraud theory. Saint Jude, 629 F. Supp. 2d at 921

(“Plaintiffs survived a motion to dismiss in light of the theories they, themselves, chose; they

may not now evade Congress's PSLRA mandates by switching horses midstream and

pursuing a new theory.”).4

4 Plaintiffs cannot seek refuge in Chabot v. Walgreens Boots All., Inc., 2023 WL 2908827 (M.D. Pa. Mar. 31, 2023)

because there, unlike here, “Plaintiffs provided sufficient notice [that the challenged] statement might be at issue

25

2. Papa

Plaintiffs contend Papa committed securities fraud when he spoke about Perrigo’s drug

pricing policy and the competitive environment for generic drugs. They challenge several of

Papa’s statements where he stated he tried to “keep pricing flat to up slightly.” [Am. Compl.

¶¶ 176 (April 21, 2015), 178 (May 12, 2015), 180 (June 2, 2015), 182 (August 5, 2015), 186

(October 22, 2015), 190 (January 5, 2016).] And they challenge Papa’s statements that it’s a

“competitive market out there” for generic drugs, “we think there’s still opportunities to do

pricing” for generic drugs, and “we’re recognizing that there is going to be some products in

Rx that I’m going to have to decrease for competitive reasons as well as increase some.” [Am.

Compl. ¶¶ 178 (May 12, 2015), 180 (June 2, 2015), 182 (August 5, 2015).]

Besides a note from a customer complaining about the cost of a particular generic drug,

Plaintiffs muster the same evidence and arguments against Papa to establish scienter as they

did for Brown. [Pls. Br. 58-64.] For the reasons already discussed, that evidence is not enough

to show that Papa recklessly spoke about the competitiveness of the generic drug market or

that he engaged in conscious misbehavior. As noted, a corporate executive’s general

knowledge about drug pricing does not mean the executive knew about a price-fixing scheme

or that price increases resulted from illegal activity. Utesch, 316 F. Supp. 3d at 906. That Papa

knew Perrigo had contractual obligations to pay penalties and had paid penalties for raising

WAC does not mean that he knew about illegal activity related to pricing (or that he knew

that Perrigo raised the price because of collusion). See Rahman, 736 F.3d at 247 (“[C]orporate

when they quoted it at length in their complaint.” Id. at *35 n.7 (emphasis added). As noted above, the Amended

Complaint is devoid of any allegation on Brown’s October 2015 statement as Plaintiffs have admitted. [Pls. Br.

at 13.]

26

management's general awareness of the day-to-day workings of the company's business does

not establish scienter.” (citation and internal citation marks omitted)).

Moreover, the internal Perrigo documents Plaintiffs point to (discussed above) do not

establish Papa’s scienter. Several of those documents contain information mirroring Papa’s

statements that Plaintiffs claim violate federal securities law. For example, in July 2015,

Papa received an internal report alerting him about “minimal price increase opportunities.”

[Pls. Br. 36, 60.] He told investors a month later he thought there was “still opportunities to

do pricing.” [Id.] Given the information Papa had, no reasonable juror could find he

recklessly spoke about the competitiveness of the generic drug market. In re Symbol Tech. Class

Action Litig., 950 F. Supp. at 1245-46.

Further, the various documents Papa (and Brown too) received do not support a

reasonable inference Papa knew about a price-fixing scheme. For example, Plaintiffs point

to a PowerPoint presentation given to Perrigo’s Board of Directors in October 2015. [Ex. 271

(Docket No. 360-16).] Plaintiffs focus on one slide on generic drugs “[m]arket

dynamics/[u]pdate” stating “pricing environment more difficult” because “[u]p front costs

are significant” and “[d]rug pricing now ‘in the news.’” [Id. (PRGO_SECLIT0002478598).]

Based on that presentation, Plaintiffs argue Perrigo’s internal acknowledgment of government

and public scrutiny on generic drug pricing “is more consistent with illicit collusion than legal

oligopolistic conduct.” [Pls. Br. at 53.] Nothing in this document (even viewed generously

in Plaintiffs favor) supports any inference on Papa’s knowledge of a price-fixing scheme

involving Perrigo. Said another way, a jury could not look at this document and reasonably

conclude Papa either knew about illegal collusive behavior or turned a blind eye to a

27

price-fixing scheme because he learned generic pricing is “now in the news.”

Like Brown, Plaintiffs’ remaining arguments against Papa are speculative and cannot

defeat summary judgment. Jackson, 594 F.3d at 227. That Papa attended pharmaceutical

industry conferences—without more—does not establish scienter. Again, after years of

discovery, Plaintiffs offer no evidence on who Papa spoke to at those conferences, what was

said, or what he heard. Like Brown, Plaintiffs rely on Papa’s mere presence at the conferences

followed by a price increase. But Plaintiffs offer no evidence to connect Papa to the price

increase. And they offer no evidence to support a reasonable inference that Papa knew of the

price increase or the reason for it.

Likewise, Plaintiffs unfortunately mischaracterize the record by arguing Papa was

personally involved in generic drug price increases. [Pls Br. 63.] The undisputed evidence

shows Papa was not a member of any drug pricing committee. [Def. SOF ¶ 232.] Even if the

executive committee “very well could have” discussed generic drug pricing, Plaintiffs again

offer nothing on the contents of those discussions to support a reasonable inference that Papa

knew about price colluding, or recklessly disregarded information suggesting the existence of

a collusive scheme. Again, Plaintiffs only offer speculation, which cannot defeat summary

judgment. In re Asbestos Prods. Liability Litig., 2014 WL 6988692, at *2.

In a last-ditch effort, Plaintiffs try too hard to stretch the inferences to be drawn from

a sole customer’s complaint sent to Papa’s attention. [Pls. Br. at 53; see also Ex. 272 (Docket

No. 306-17). In November 2014, a customer wrote to Papa complaining about a “6-fold”

price increase for one of Perrigo’s generic products, jumping from $48 to about $242 over a

15-month timeframe. [Ex. 272.] From this evidence, Plaintiffs claims Papa “was well aware

28

of the magnitude of price increases Perrigo was implementing.” [Pls. Br. at 53.] Even viewing

this customer’s complaint in Plaintiffs favor, it does not a support a reasonable inference that

Perrigo’s price increases were part of a price-fixing scheme with the company’s competitors

or that Papa knew of the scheme. Once more, knowing about price increases is different from

knowing about an illegal pricing scheme. Utesch, 316 F. Supp. 3d at 906.

Turning to Papa’s challenged “flat to up slightly” statements on Perrigo’s pricing

strategy, Plaintiffs contend those statements “were materially false and misleading[] because

Perrigo’s actual pricing strategy was to wildly increase pricing in noncompetitive Generic Rx

drugs to mask growing price erosion in the remainder of Perrigo’s Generic Rx portfolio.”

[Pls. Br. at 55.] Pointing to Papa’s October 2015 statement, Plaintiffs contend the “flat to up

slightly” policy did not apply “just on a portfolio basis” as Papa claims, but rather, “at

product, category, and business segment levels.” [Id.] Plaintiffs cherry-pick Papa’s statements

in a misleading effort to manufacture an issue of fact.

Take Papa’s October 2015 statement for example. When making their argument that

Papa’s “flat to up slightly” comments applied to each product, Plaintiffs omit Papa’s

preceding remarks to the analyst’s question. Indeed, when asked about drug pricing, given

that “financial markets have become very concerned about the price inflation component of

growth also on the generic and brand side going forward,” Papa responded that:

On the question on pricing, certainly, we see that out in the

marketplace. But I would remind the audience today that what

we’ve always said about pricing is that our pricing across our

total book of business is flat to up slightly. While there may be a

product that we do raise the price on, there are other products

we're taking price down. Our total strategy for pricing, as I have

said I think on numerous calls, is keep pricing flat to up slightly,

which means that yes, some products we may attempt to the

29

raise price there, but in another products we're bringing the price

down. So think about us as keeping pricing flat to up slightly as

really the way we're going to look at our total portfolio.

Whether we're talking about any specific product or any specific

category or any segment of our business, the overall comment is

flat to up slightly for our pricing. And I think that's really the

best place for the long, sustainable consistent approach to pricing

that we've bad in the past and will in the future.

[Ex. 76 (PRGO_SECLIT0001345425 to 26) (Docket No. 349-21).]

Plaintiffs cling to Papa’s words—“Whether we’re talking about any specific product

or any segment of our business”—to support their argument that Perrigo’s “flat to up slightly”

policy applied to each generic drug. To make this argument, Plaintiffs ignore what Papa said

a few breaths before. When placed in proper context, there is no “issue for trial” on what

Papa said. His words are clear: the “flat to up slightly” policy applied “across our total book

of business”—that is, the company’s “total portfolio.” Papa’s actual words refute Plaintiffs’

argument. SEB Inv. Mgmt. AB v. Align Tech., Inc., 485 F. Supp. 3d 1113, 1126-27 (S.D. Cal.

2020) (dismissing Section 10(b) claim for challenged statement and ruling “Plaintiff may not

simply cherry-pick portions of Defendants’ statements and ignore other portions, but must

instead account for the entirety of the statements on which they rely.”) (cleaned up). Indeed,

before and during the class period, Papa reiterated that his “flat to up slightly” pricing policy

applied to Perrigo’s company-wide portfolio. [Ex. 41 (Papa on February 5, 2015 earnings call

stating, “First comment I offer is that across the total Perrigo portfolio, our goal is always to

keep pricing flat to up slightly.”) (PRGO_SECLIT0001605877) (Docket No. 353-48); Ex.

124 (Papa at May 12, 2015 healthcare conference stating, “But I will caution everybody – our

approach in our total business is to keep our pricing flat to up slightly.”)

30

(PRGO_SECLIT0001407601 (Docket No. 353-131); Ex. 123 (Papa at June 2, 2015

healthcare conference stating, “The approach we take on pricing is really a portfolio approach

. . . . Across all the Perrigo segments, the consumer segment, the nutrition segment, the Rx

segment, and the API segment, we try to take a view on pricing across that total portfolio,

with a goal of keeping our pricing flat to up slightly.”) (PRGO_SECLIT0002495403 to 04)

(Docket No. 353-130).]

Still undeterred, Plaintiffs press on, arguing that, regardless if Papa’s statements

applied to specific products or not, there is “extensive evidence” from which a jury could find

Perrigo’s pricing strategy was affirmatively false and misleading by omission because Perrigo

issued “waves” of price increases just before the class period in select drugs, including

“significant” price increases for some generic drugs. [Pls. Br. at 56-57.] Wrong. Plaintiffs

once again ignore Papa’s words. For example, on a January 2016 earnings call, Papa

reiterated his goal is “to keep my pricing flat to up slightly” either by “tak[ing] some products

up, and some products can be competition and I’m taking them down.” [Ex. 43 at 15 (Docket

No. 348-61).] He then acknowledged that “there may be more volatility up or down” in

pricing for generic drug products. [Id.]

All in all, Plaintiffs have pointed to no probative evidence suggesting that either Papa

knew about an illegal pricing fixing scheme, or that he acted recklessly in not finding out if

one existed. When viewed in the proper context, Papa’s statements on pricing and the

competitive nature of generic drugs are not misleading. Rather, Plaintiffs have tried to

manufacture an issue of fact for their Generic Rx Claim against Papa by mischaracterizing

the record evidence and warping his words. This is troubling. At any rate,Plaintiffs’

31

“evidence” does not support an inference of scienter against Papa, and so, this Court grants

Papa’s summary judgment motion on the Generic Rx Claim. Merck, 2015 WL 2250472, at

*14.

3. Perrigo

At bottom, Perrigo offers two reasons why the Generic Rx Claim against it fails.

[Perrigo Br. at 9-32, 36-38.] First, Perrigo argues Plaintiffs have not established the existence

of a price-fixing scheme among Perrigo and its competitors, and therefore, Defendants’ failure

to disclose that scheme did not render their statements on generic drugs false or misleading.

[Id. at 10-12.] Perrigo contends Plaintiffs’ evidence only shows the company operated in an

oligopolistic market, and thus parallel pricing among competitors is not evidence of collusion.

[Id.] And it argues Plaintiffs’ remaining evidence—calls between Perrigo and its competitors,

price increases following industry conferences, social interactions between Perrigo employees

and its competitors, and Perrigo’s monitoring of its competitors’ pricing—cannot establish the

existence of a conspiracy to fix prices. [Id. at 12-22.] Second, Perrigo contends Plaintiffs have

not established scienter against Papa and Brown on the Generic Rx Claim, and so, that claim

against the company falls by the wayside. [Id. at 36-38.]

Plaintiffs offer many arguments opposing Perrigo’s summary judgment motion.

Plaintiffs contend they have both “direct” and “circumstantial” evidence of Perrigo’s

involvement in a price-fixing scheme with its competitors. [Pls. Br. at 38-53.]

First, they offer a Deferred Prosecution Agreement (DPA) executed by Sandoz, Inc.,

another pharmaceutical company and one of Perrigo’s competitors. [Pls. SOF ¶¶ 196-97.]

Under the DPA, Sandoz agreed to pay a multi-million-dollar criminal penalty for “conspiring

32

to allocate customers, rig bids and fix prices for generic drugs.” [Id. ¶ 196.] In the DPA,

Sandoz admitted that from about July 2013 to December 2015, the company conspired with

“Company B”—a generic drug company having its principal place of business in Michigan—

to “suppress and eliminate competition” by agreeing to allocate customers through rig bidding

and price-fixing for “certain generic drugs, including desonide ointment.” [Id. ¶ 197.] To

connect the dots to Perrigo, Plaintiffs offer an affidavit from Sandoz’ Vice President and Chief

Ethics, Risk, Compliance Officer, and member of Sandoz’ Executive Committee, Edward

Stueck (Stueck). [Id. ¶ 197; see also Ex. 121 (Docket No. 349-68.] Stueck declares that Perrigo

is “Company B” referenced in the DPA, and “[i]f called to testify in this matter, Sandoz would

confirm” the contents of his affidavit. [Ex. 121 ¶¶ 3-4.] Plaintiffs have also offered a letter

from Sandoz’ outside counsel confirming that “Sandoz will appear, through a corporate

representative, to testify at trial” here. [Ex. 161.]

Second, Plaintiffs rely on an affidavit from Sandoz Executive Anthony Thomassey

(Thomassey) who certifies to certain allegations in a complaint that various State Attorneys

General filed against Perrigo and other pharmaceutical companies for, among other things,

illegal price-fixing for generic drugs (State AG Complaint). [Pls. Br. 41-42; see also Exs. 116,

159 (Docket Nos. 349-63, 359-5, -6, & -7).] The State AG Complaint alleges that “CW-6”

communicated over 300 times with Tony Polman (Polman), a Perrigo sales executive, with

the “goal” to “always to keep prices as high as possible.” [Pls. SOF ¶ 208.] Thomassey

declares that he is CW-6, the information the State AG Complaint attributes to him “is true

and accurate,” and he is willing to testify to confirm the contents of his affidavit if needed.

[Ex. 116.] The State AG Complaint outlines many phone calls between Thomassey and

33

Polman surrounding price hikes for various generic drugs. [Pls. SOF ¶¶ 209-212, 213.] While

Perrigo disputes the State AG Complaint provides information on the contents of their calls,

Perrigo does not deny the calls occurred. [Defs. J. Reply to Pls. Statement of Additional

Disputed Material Facts in Opp’n to Defs. Mot. for Summ. J. ¶¶ 209-212, 213 (Defs. Resp.)

(Docket No. 365-1).]

Third, Plaintiffs offer a variety of circumstantial evidence. They offer evidence

suggesting Perrigo did not want to bid for business based on current market share. [Pls. Br.

at 46-47 (collecting record evidence).] They also point to steep increases for certain generic

drugs, such as a 400% price increase for desonide cream and an over 700% increase for

econazole (to name a few). [Id. at 47.] And Plaintiffs point to hundreds of communications

between Perrigo employees and other pharmaceutical companies. [Id. at 47-48 (collecting

record evidence).] Perrigo does not dispute that the State AG Complaint “documents

hundreds of communications between Perrigo employees and other Generic Rx

manufacturers,” as well as additional calls between Polman and other pharmaceutical

employees. [Def. Resp. ¶¶ 225-27.] Again, Perrigo disputes the State AG Complaint reveals

the contents of those communications. [Id.] Moreover, the State AG Complaint names both

Boothe and Wesolowski as defendants. [Ex. 159.] The State AG Complaint outlines many

communications between Boothe and Wesolowski and various pharmaceutical companies’

representatives. [Pls. SOF ¶¶ 228-29, 232-34.] For example, Boothe “spoke to a generic drug

executive at Taro multiple times on July 24, 2014, the same day Perrigo increased its WAC

price for econazole by 600%, which was promptly followed by a matching increase by Taro.”

[Id. ¶ 233.] Again, Perrigo does not dispute the calls discussed in the State AG Complaint

34

occurred. [Def. Resp. ¶¶ 228-29, 232-34.]

Viewing the evidence in the light most favorable to Plaintiffs, the Court finds Plaintiffs

have barely raised just enough facts to show a genuine issue of fact exists on the existence of

a price-fixing scheme for generic drugs and Perrigo’s participation in that scheme with its

competitors.

For Plaintiffs’ “direct” evidence of collusion, Perrigo largely argues the evidence is

inadmissible hearsay, and so this Court should not consider it. [Perrigo Reply Mem. of Law

in Support of Sum. J. 7-9, 14-17 (Perrigo Reply Br.) (Docket No. 365); see also Perrigo Br. at

24-28.] Yet Plaintiffs have explained “the admissible form” they anticipate for their “direct

evidence”—live testimony from a Sandoz corporate representative and Thomassey on

Perrigo’s involvement in a price-fixing scheme for generic drugs—and “[t]hat is all that [is]

required” for now. FOP, 842 F.3d at 238-39 (reversing district court’s decision refusing to

consider hearsay on summary judgment motion because plaintiff identified declarants and

“nothing suggests that those declarants would be unavailable to testify at trial”); J.F. Feeser,

Inc. v. Serv-A-Portion, Inc., 909 F.2d 1524, 1542-43 (3d Cir. 1990) (ruling district court erred by

rejecting affidavit containing hearsay statements from company’s salesforce because “there is

no indication that . . . salesforce would be unavailable to testify at trial”). This Court need

not rule on whether that testimony, the DPA, or the State AG Complaint “will actually be

admitted at trial” because that “question need not be answered now.” FOP, 842 F.3d at 239.

Perrigo also argues that Thomassey’s conversations with Polman are irrelevant

because Polman did not have pricing authority. [Perrigo Reply Br. at 4-5.] That is a disputed

fact calling for a jury resolution. Plaintiffs have presented facts suggesting that pricing for the

35

company’s generic drugs were set by a committee, and at times, Polman sat on that committee

with Wesolowski, who, according to Perrigo, had the ultimate authority to set prices. [Pls.

SOF ¶ 217 (citing Ex. 171); see also Defs. Resp. ¶ 217 (citing Exs. 86 & 171).] Plaintiffs have

pointed to evidence suggesting that Wesolowski was in “close contact” with Polman, having

spoken “to him almost everyday and sometimes multiple times a day.” [Ex. 171 (Wesolowski

Tr. 268:17 to 22).] Wesolowski testified that “he had an idea of what [] Poleman was doing

in terms of his business at Perrigo.” [Id. (Wesolowski Tr. 268:23 to 269:15).] Viewing the

facts in light most favorable to Plaintiffs and affording them all reasonable inferences from

that evidence, a jury could infer Polman could have influenced the generic pricing

committee’s decisions, or held sway over Wesolowski to influence his decisions on pricing.

In addition, Perrigo rejects Plaintiffs’ “circumstantial evidence” as suggesting a

price-fixing scheme by looking at each category of evidence in isolation. [Perrigo Reply Br.

at 9-14.] But when viewed together, coupled with Plaintiffs “direct” evidence (of course all

in Plaintiffs’ favor), this Court cannot say a reasonable jury would find the evidence

insufficient to establish the existence of a price-fixing scheme and Perrigo’s involvement in

that scheme with its competitors.

Still, since the Generic Rx Claim against Papa and Brown fail for lack of scienter, this

Court finds Perrigo’s argument that the claim against it too must fail persuasive. [Perrigo Br.

at 37.] Because corporations “do not have their own state of mind,” corporate liability for

securities fraud under Section 10(b) and Rule 10b-5 must flow from the corporation’s agents.

Smallen v. the W. Union Co., 950 F.3d 1297, 1312 (10th Cir. 2020). The “most straightforward

way” to impute scienter to a corporation is “to impute it from an individual defendant who

36

made the challenged misstatement.” Jackson v. Abernathy, 960 F. 3d 94, 98 (2d. Cir. 2020): see

also Smallen, 950 F.3d at 1312 (observing “the scienter of a corporation's agents must be

imputed to [the corporation]”). But since the evidence against Papa and Brown (the only two

remaining named individual-defendants) does not establish scienter, there is no scienter to

impute to Perrigo.5

To get around this, Plaintiffs attempt to invoke the “corporate” or “collective” scienter

doctrine to hold Perrigo liable on the Generic Rx Claim. [Pls. Br. at 65.] Plaintiffs seek to

use the doctrine to impute Boothe’s and Wesolowski’s state of minds to Perrigo. [Id.]

According to Plaintiffs, a jury could find Wesolowski and Boothe were complicit in the

price-fixing scheme and point out the State AG Complaint names both as defendants. [Id.]

Plaintiffs argue a reasonable jury could find Wesolowski had scienter given his oversight and

communications with Polman, “Perrigo’s main link to other cartel members.” [Id.] And they

argue a reasonable jury could find Boothe had scienter based on his multiple communications

with a competitor the very same day Perrigo increased its cost for econazole by 600%. [Id.]

The corporate scienter doctrine often arises at the pleadings stage, and courts across

the country take varying approaches on the doctrine’s application. The Third Circuit has

never accepted or rejected it. Rahman, 736 F.3d at 246. The late-Honorable William Walls

and the Honorable Esther Salas both extensively reviewed the doctrine and the differing

5 All the more reason to find Plaintiffs failed to establish that Papa and Brown acted with scienter is the

undisputed evidence shows the State AG Complaint “contains no allegations that [Papa] or [Brown] engaged

in, or were aware of, any wrongdoing at Perrigo.” [Defs. SOF. ¶ 263; Pls. Resp. ¶ 263.] Moreover, at the

motion-to-dismiss stage, the Court found an inference of scienter based on the Amended Complaint’s allegations

that the Department of Justice started investigating Perrigo over generic drug pricing and raided Perrigo’s offices.

Roofer’s, 2018 WL 3601229, at *22. Now, the undisputed evidence shows “[t]he federal government has brought

no action claiming that [Papa] or [Brown] engaged in, or were aware of, any wrongdoing at Perrigo.” [Defs.

SOF. ¶ 281; Pls. Resp. ¶ 281.]

37

approaches courts have taken—narrow, intermediate, and broad. In re Cognizant Tech. Sols.

Corp. Sec. Litig., 2018 WL 3772675 (D.N.J. Aug. 8, 2018) (Walls, J.) (Cognizant I) & 2020 WL

3026564 (D.N.J. June 5, 2020) (Salas, J.) (Cognizant II).

The narrow approach, applicable in the Fifth and Eleventh Circuits, requires a plaintiff

to identify a corporate official responsible for the challenged statement who also possessed

scienter. Cognizant II, 2020 WL 3026564, at *25 (citing Southland Sec. Corp. v. INSpire Ins. Sols.,

Inc., 365 F.3d 353, 366 (5th Cir. 2004); Phillips v. Scientific-Atlanta, Inc., 374 F.3d 1015, 1017

(11th Cir. 2004)). Judge Walls rejected this narrow approach, finding it would allow

corporations to escape “liability through tacit encouragement and willful ignorance,” and

because it “fails to address instances where widespread corporate fraud cannot be connected

to individual defendants at the pleading stage.” Cognizant I, 2018 WL 3772675, at *33

(citations and internal quotation marks omitted).

The intermediate approach taken by the Sixth Circuit looks to the state(s) of minds of

certain employees to determine whether to impute scienter to the corporation. In re Omnicare,

Inc. Sec. Litig., 769 F.3d 455, 476 (6th Cir. 2014). Under this approach, courts may look to:

a. The individual agent who uttered or issued the

misrepresentation;

b. Any individual agent who authorized, requested, commanded,

furnished information for, prepared (including suggesting or

contributing language for inclusion therein or omission

therefrom), reviewed, or approved the statement in which the

misrepresentation was made before its utterance or issuance;

c. Any high managerial agent or member of the board of directors

who ratified, recklessly disregarded, or tolerated the

misrepresentation after its utterance or issuance.

Id. (citations omitted).

38

The broad approach, applicable in the Second and Seventh Circuits, allows a plaintiff

to establish scienter against a corporation without specifically identifying an individual in a

pleading. Cognizant II, 2020 WL 3026564, at *28. Under this approach, scienter can be

imputed to a corporation in two ways: (1) from an individual defendant, director, or officer

who either made the challenged statement, or who was “involved in the dissemination of the

fraud” even if not the speaker; or (2) from the statement itself in those “exceedingly rare

instances” where the statement is “so dramatic that collective corporate scienter may be

inferred.” Nandkumar v. AstraZeneca PLC, 2023 WL 3477164, at *4 (2d Cir. May 16, 2023)

(quoting Jackson, 960 F.3d at 98-99). If a plaintiff seeks to impute scienter to a corporation

from a person who was “not the actual speaker” of the challenged statement, the plaintiff

must establish “connective tissue between those employees and the alleged misstatements.”

Jackson, 960 F.3d at 98-99); see also Silvercreek Mgmt., Inc. v. Citigroup, Inc., 248 F. Supp. 3d 428,

440 (S.D.N.Y. 2017) (“Silvercreek has not alleged a connection between the

recommendations and reports (the alleged misstatements) and the knowledge of their falsity

sufficient to support a strong inference that the alleged misstatements themselves were made

with an intent to defraud.”).

To infer scienter from the statement itself, the statement must be “so dramatic” or

extreme to permit an inference that knowledgeable corporate officials approved the statement.

In Makor Issues & Rights, Ltd. v. Tellabs Inc., 513 F.3d 702 (7th Cir. 2008), the Seventh Circuit

gave an example of such a statement:

Suppose General Motors announced that it had sold one million

SUVs in 2006, and the actual number was zero. There would be

a strong inference of corporate scienter, since so dramatic an

39

announcement would have been approved by corporate officials

sufficiently knowledgeable about the company to know that the

announcement was false.

Id. at 710. This statement-based-only approach to impute scienter to a corporation is reserved

for “unique and extraordinary circumstances.” Christian v. BT Grp. PLC, 2020 WL 1969941,

at *8 (D.N.J. Apr. 24, 2020) (citing City of Roseville Emps. Ret. Sys. v. Horizon Lines, Inc., 442 F.

App’x 672, 676 (3d Cir. 2011)), aff’d sub nom., Pamcah-UA Local 675 Pension Fund v. BT Grp.

PLC, 2021 WL 3415060 (3d Cir. Aug. 5, 2021).

Setting aside these varying approaches, “at the summary judgment stage, ‘[t]o prove

liability against a corporation, . . . a plaintiff must prove that an agent of the corporation

committed a culpable act with the requisite scienter, and that the act (and accompanying

mental state) are attributable to the corporation.’” Cognizant I, 2018 WL 3772675, at *32

(alteration in original ) (quoting Teamsters Local 445 Freight Div. Pension Fund v. Dynex Cap.,

531 F.3d 190, 195 (2d Cir. 2008)). This is so because the corporate scienter doctrine is a

“pleading rule.” See Dynex Capital, 531 F.3d at 195; cf. In re Volkswagen “Clean Diesel” Mktg.,

Sales Practices, & Prod. Liab. Litig., 2017 WL 6041723, at *11-12 (N.D. Cal. Dec. 6, 2017)

(finding caselaw supported defendants’ argument the corporate scienter doctrine is only a

pleading rule). Indeed, the Second Circuit, while following the broad approach, still requires

proof that a corporate agent committed the culpable act with the required scienter before

imputing scienter to the corporation at the liability stage. Dynex Capital, 531 F.3d at 195

(explaining difference between pleading rules and liability rules).

Although seeking to invoke the corporate scienter doctrine, Plaintiffs have cited no

decision applying the doctrine outside the motion-to-dismiss setting. [Pls Br. at 31-34.]

40

Because the Third Circuit has neither accepted nor rejected the corporate scienter doctrine,

the Court is inclined to grant Perrigo’s summary judgment on the Generic Rx Claim for lack

of scienter. Plaintiffs seem to believe that Boothe’s and Wesolowski’s state of minds can be

imputed to Perrigo, but they offer no explanation on how. They do not show any connection

between Boothe’s and Wesolowski’s alleged misdeeds and their knowledge of the price-fixing

scheme to the challenged statements at issue. Plaintiffs have left this Court clueless because

they have not shown, for example, whether Boothe or Wesolowski furnished any information

to Papa and Brown, or drafted, reviewed, or approved the challenged statements. See

Cognizant II, 2020 WL 3026564, at *27 (imputing scienter to defendant-company under Fifth

Circuit’s narrow approach based on allegations non-defendant executive furnished

information he knew to be false for the company’s financial statements). It is truly

unfortunate that Plaintiffs have not adequately addressed this theory at this late stage of the

case. Nonetheless, as an exercise of caution, and acutely aware that further delay will result,

the Court will require additional briefing on the corporate scienter doctrine and the evidence

(if any) Plaintiffs rely on to support its corporate scienter argument. Until then, the Court

reserves on Perrigo’s summary judgment motion on the Generic Rx Claim.

C. Omega Integration Claim

Omega was one of Europe’s largest over-the-counter healthcare companies having a

commercial presence in about 35 countries. [Def. SOF ¶ 23.] In 2014, Perrigo announced it

was acquiring Omega for $4.5 billion. [Id. ¶ 36.] Perrigo “told its investors that the acquisition

would expand Perrigo’s market access across a larger global platform with critical mass in all

key European countries.” [Id. (cleaned up).] In March 2015, Perrigo closed its acquisition

41

of Omega. [Id. ¶ 53.]

Following the acquisition, Perrigo incurred hundreds of millions in impairment

charges. [Pls. SOF ¶ 178.] See also Roofer’s, 2018 WL 3601229, at *5. In addition, Perrigo

announced changes its 2016 estimate of future earnings several times, reducing the earning

guidance per share more than once. Roofer’s, 2018 WL 3601229, at *5. And Perrigo

announced its plan to restructure some of Omega’s assets. Id.

Plaintiffs challenge several of Defendants’ statements on the integration, such as

Papa’s statements that Omega “has been accretive to our growth rate” and Perrigo

“delivered” on its Omega integration plans. [Am. Compl. ¶¶ 133, 141.] They claimed those

statements were false and misleading because Defendants knew about serious impediments

to the integration before making the statements. [Id.]

At the motion-to-dismiss stage, the Court found Defendants’ statements on the

“present success” of the integration to be “actionable representations.” Roofer’s, 2018 WL

3601229, at *14. And the Court found Plaintiffs alleged enough facts to establish scienter

because Papa’s and Brown’s statements on the integration suggested personal knowledge,

which supported an inference of scienter. Id. at *23. On top of that showing, the Court

credited allegations of former employees “who allegedly confirmed that Papa and Brown

were aware of the problems with the Omega integration.” Id. And the Court found the

Omega integration to be a “core operation” of Perrigo, which also supported an inference of

scienter. Id. at *24.

Defendants move for summary judgment arguing Papa’s and Brown’s statements were

not false and they did not possess scienter. The Court agrees as to Brown, but finds genuine

42

issues of facts exist as to Papa and Perrigo.

1. Brown

Plaintiffs contend Brown committed securities fraud when she made a single statement

about Perrigo’s integration of Omega. According to Plaintiffs, Brown’s statement on the

integration—that “I should say in line with our going online integration process. Back office

is working smoothly. We are bringing them on to all of our back office systems.”—was

materially false and misleading. [Am. Compl. ¶¶ 139-40; see also Pls Br. at 25-26.] Plaintiffs

claim that statement was false and misleading because when Brown made it, she knew about

impediments to the integration. [Pls. Br. at 26.]

Plaintiffs hang their hat on Omega’s co-founder and former Chairman and Chief

Executive Officer Marc Coucke’s (Coucke) behavior at an executive committee meeting a

week before Brown’s challenged statement where Coucke “erupted” stating “nothing is

working right with integration.” [Pls Br. at 15, 25-26; see also Ex. 165 (Farrington Tr. 234:15

to 23 (Docket No. 359-13).] Plaintiffs also point to Brown’s email to Coucke following the

meeting to discuss his outburst. [Ex. 206 (Docket No. 359-52).] They also point to documents

discussing Omega’s performance before the integration, cashflow issues, site plan meeting

cancellations, and IT integration issues. [Pls. Br. at 26; see also Ex. 207 (Docket No. 359-54);

Pls. SOF ¶¶ 100-01, 103, 105-06, and 115.]

Viewing Plaintiffs’ evidence in light most favorable to them, this Court finds it

insufficient to show scienter or falsity. Plaintiffs unreasonably—indeed, unfairly— stretch the

inferences to be drawn from Coucke’s eruption. At best, Coucke’s behavior shows his

frustration with the integration and losing control over his former company. Indeed, Thomas

43

Farrington (Farrington), the Perrigo executive in charge of the Omega integration, described

Coucke’s outburst as “an emotional one” because Coucke “never focused on things that were

working well,” rather, he “only talk[ed] about the things that were negative in his view.” [Ex.

165, Farrington Tr. 237:22 to 238:17.] Brown has also given Coucke’s eruption context.

Following his outburst, Coucke wrote to Farrington stating Perrigo “wants to change us” and

never “asks [Omega] how to do something,” but insists on “the Perrigo way.” [Defs. SOF ¶¶

78-79.] Coucke added that while Omega acquisition was “not yet 3 months old,” there were

a “list of areas . . . where Perrigo already tried to change Omega.” [Id. ¶ 79 (cleaned up).]

Despite the “spin” Plaintiffs wish to put on Coucke’s behavior, the evidence shows Perrigo

progressed with key integration tasks.

Even if a reasonable jury could infer the integration had setbacks from Coucke’s

behavior, other information Brown had when she spoke shows she was not reckless or that

her statement was false. Indeed, weeks before she spoke, Brown received information that

the integration was progressing. For example, Brown received an update that Omega’s

conversion to GAAP standards “was progressing,” and Perrigo’s finance team spoke with

Omega “on month and quarterly reporting.” [Defs SOF ¶¶ 73.] She then received

information about a “VERY positive call” from Omega’s CFO about “the finance integration

work streams with Omega.” [Id. ¶ 74.] She again learned the Omega’s conversion to GAAP

was “progressing” with a pass off to Omega” shortly before her challenged statement. [Id. ¶

75.] Brown then learned that Omega’s CFO was “very positive on approach and progress of

integration” and “from a finance perspective, integration was very positive.” [Id. ¶ 76

(cleaned up).]

44

The above evidence presents conflicting assessments on the success of the integration.

On the one hand, Brown was present when Coucke erupted claiming “nothing is working

right with integration.” [Ex. 165 (Farrington Tr. 234:15 to 23.] On the other, Brown received

several updates that integration was progressing. Given the conflicting information Brown

had when she spoke, this Court finds that no reasonably jury could find Brown was reckless

when she spoke about the integration. Bristol-Myers Squibb, 2005 WL 2007004, at *56, *60,

*62 (granting summary judgment for lack of scienter because speaker’s statement—that

certain medication would be a “blockbuster” for the treatment of heart failure—was not

reckless given the conflicting assessments speaker had received on the medication). Indeed,

the recklessness needed to establish scienter is high, requiring “an extreme departure from the

standards of ordinary care.” Ikon, 277 F.3d at 666. Plaintiffs’ evidence against Brown does

not pass that high bar. At best, the evidence suggests Brown’s statement was ill-advised given

the conflicting information she had, which is not enough to establish scienter. In re Level

Commc’n, Inc. Sec. Litig., 667 F.3d 1331, 1345 (10th Cir. 2012) (affirming dismissal of securities

fraud claims because “a close reading of some of defendants' progress estimates suggests that

they may have been inconsistent with a few internal reports does not lead us to a strong

inference that defendants' statements were intentionally fraudulent or extremely reckless,” but

rather, “defendants were negligent”). Thus, the Court grants summary judgment on the

Omega Integration Claim against Brown. Merck, 2015 WL 2250472, at *14.6

2. Papa

6 In addition, Plaintiffs mischaracterize some of the record evidence. For example, Plaintiffs claim that an

integration update Brown received in May 2015 listed “IT Security Integration” as a “Must Do” activity that

was on hold. [Pls SOF ¶ 103.] However, that update states that IT Security Integration was “Not a current

‘Must Do’ activity.” [Ex. 55.]

45

Plaintiffs challenge several of Papa’s statements on the success of the Omega

integration. [Pls. Br. at 13-19, 23-31.] They challenge Papa’s April 2015 statement that

Omega “has been accretive to our growth” as false and misleading. [Am. Compl. ¶ 133.]

Plaintiffs also challenge Papa’s May 2015 statement where he “touted Omega’s

performance.” [Pls. Br. at 14 (citing Am. Compl. ¶ 133).] And they contend Papa’s August

2015 statement that Perrigo “delivered on our Omega integration plans, achieved great

operational efficiencies and productivity improvement” was also materially false and

misleading. [Am. Compl. ¶¶ 141-42.] In addition, they assert Papa’s September 2015

statement that Perrigo “successfully integrated 27 acquisitions” and “supplemented [Omega]

with our manufacturing infrastructure” was false and misleading. [Id. ¶¶ 143-145.]

After viewing the evidence in Plaintiffs favor and affording them every reasonable

inference from that evidence, the Court finds material facts are disputed as to whether Papa’s

statements were false and whether he acted with scienter. Resolving these disputes would

necessarily require the Court to make credibility determinations and “weigh the evidence and

determine the truth of the matter,” which is not permitted at the summary judgment stage.

Anderson, 477 U.S. at 249. As noted earlier, scienter is often a jury call because “whether a

party acted with scienter, intertwined as it may be with an assessment of witness credibility,

often cannot be undertaken appropriately on summary judgment proceedings[.]” Ikon, 277

F.3d at 668. Suffice it to say, Papa’s evidence is not so one-sided on a scienter and falsity,

and whether his statements were false and he acted recklessly when he spoke on the success

of the Omega integration given the information he had is best left for a jury.

Setting that finding aside, the Court rejects Plaintiffs’ attempt to reinject Defendants’

46

October 2015 and January 2016 statements back into this case. [Pls. Br. at 17-19.] The Court

already dismissed Plaintiffs’ challenges to those statements under the PSLRA’s safe-harbor

for forward-looking statements. Roofer’s, 2018 WL 3601229, at *15 (ruling “with regard to

purely forward-looking statements, or portions of statements, the Court finds that

[Defendants’] warnings were sufficient to insulate Defendants’ projections regarding

synergies and potential revenue from liability”). Plaintiffs (once again) mischaracterize the

record to get around the Court’s prior ruling.

Take for example Plaintiffs’ challenge to Defendants’ October 2015 statement.

According to Plaintiffs, Defendants committed securities fraud when they “told investors that

aggressive projections for Omega and the assumption that the Omega integration ‘will

proceed as planned and will not be subject to unforeseen delays.”’ [Pls. Br. at 17 (citing Am.

Compl. ¶ 147 & Ex. 69).] By selectively quoting the evidence, Plaintiffs create an illusion that

the statement focuses solely on the integration itself. But the statement (housed in a Profit

Forecast in an SEC Form 8-K) is an “assumption” that “[t]he integration and realization of

synergies in relation to the acquisition of, Omega Pharma, certain branded consumer

healthcare products from GSK, and Yokebe will proceed as planned and will not be subject

to unforeseen material delays.” [Ex. 69 at 7.] The Court already dismissed Plaintiffs’

challenges to these types of statements. Roofer’s, 2018 WL 3601229, at *15 (dismissing,

among other things, “the purely forward-looking revenue and synergy projections described

in the Amended Complaint”). Plaintiffs challenge to Papa’s January 2016 statement fares no

better because the statement focuses on revenue synergies. [Am. Compl. ¶¶ 149-50.] Plaintiffs

should have known that they cannot now resurrect their challenges to those statements.

47

3. Perrigo

Because this Court finds genuine issues of fact exist on the falsity of Papa’s statements,

and whether he possessed scienter when he spoke, this Court denies Perrigo’s summary

judgment motion. If a jury concludes Papa’s statements were false and he acted with scienter,

Papa’s scienter may be imputed to Perrigo. Jackson, 960 F. 3d at 98; see also Cognizant I, 2018

WL 3772675, at *32.

D. Loss Causation

Perrigo also moves for summary judgment contending Plaintiffs cannot prove loss

causation or damages for their securities fraud claims. [Perrigo Br. at 38-55.] To prevail on

their claims, Plaintiffs must show Defendants’ challenged statements “actually caused the

economic loss suffered.” McCabe v. Ernst & Young, LLP, 494 F.3d 418, 425 (3d Cir. 2007).

“The fact that a misrepresentation occurred and the share price declined is not enough.”

Omanoff v. Patrizio & Zhao, LLC, 2015 WL 1472566, at *6 (D.N.J. Mar. 31, 2015). Rather, to

show loss causation, Plaintiffs must prove “that the untruth was in some reasonably direct, or

proximate, way responsible for his loss.” Id. (quoting McCabe, 494 F.3d at 426). As the Third

Circuit has repeatedly warned, loss causation is a fact-sensitive inquiry often reserved for the

trier of fact. EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 886 (3d Cir. 2000) (“Whether

the plaintiff has proven causation is usually reserved for the trier of fact”); see also McCabe, 494

F. 3d at 427 n.4.

The Court denies Perrigo’s summary judgment on loss causation for three reasons.

First, the Court finds genuine issues of fact are in dispute on some corrective disclosures

precluding summary judgment on loss causation. For example, Plaintiffs’ expert, Dr.

48

Zachary Nye, Ph.D, concludes that news of Papa’s resignation from Perrigo caused the

company’s stock to drop around 5.8%. [Ex. 134 ¶ 61.] Canvassing multiple analysts’ and

financial institutions’ reporting on Papa’s resignation, Nye finds that Papa’s departure was

linked to problems with the Omega integration. [Id. ¶¶ 59, 62.] Indeed, Nye points to several

analysts’ reports linking Papa’s resignation to Perrigo’s problems with Omega. [Id. ¶ 59.]

Perrigo contends there were other factors at play causing Perrigo’s stock price to decline based

on reports that Papa planned to resign, such as news that Papa’s potential successor being

“largely unknown” and whether he had the ability to operate Perrigo’s business. [Perrigo Br.

at 46.] This all may be true, but the parties’ competing reasons for the stock decline will need

to be resolved by a jury. EP Medsystems, 235 F.3d at 886.

Second, Perrigo and Plaintiffs have both submitted detailed, but conflicting expert

reports on loss causation, making summary judgment inappropriate. Leader Tech., Inc. v.

Facebook, Inc., 2011 WL 1514701, at *2 (D. Del. Mar. 14, 2011) (denying summary judgment

and ruling that “conflicting expert testimony raises genuine issues of material fact that are

appropriate for consideration by a jury in the first instance and, hence, preclude summary

judgment”); see also In re Biogen ’755 Patent Litig., 2018 WL 3586271, at *9 (D.N.J. July 26,

2018). Moreover, Perrigo seeks to exclude Nye as an expert witness, arguing he is unqualified

to render expert testimony and his opinion is unreliable. [Perrigo Br. at 68-74.] Until this

Court holds Daubert hearings on each expert witness Perrigo seeks to exclude, the Court

declines to grant summary judgment on loss causation, which will require expert testimony.

And third, as noted above, this Court is inclined to grant Perrigo’s summary judgment

on the Generic Rx Claim against it for lack of scienter. The Court is reserving on that aspect

49

of the motion pending further briefing and argument. If the Court grants Perrigo’s motion

and dismisses the entire Generic Rx Claim, that decision will affect the loss causation

analysis. Indeed, several of Plaintiffs’ corrective disclosures focus on Perrigo’s generic drug

business. [Pls. Br. at 74-81 (April 25, May 12, August 10, 2016, March 3, and May 3, 2017).]

Thus, at this time, the Court denies Perrigo’s summary judgment motion on loss causation

without prejudice.

V. CONCLUSION

For the above reasons, the Court GRANTS Defendant Judy Brown’s summary

judgment motion [Docket No. 344] and DISMISSES all claims against her, GRANTS, in

part, and DENIES, in part, Defendant Joseph Papa’s summary judgment motion [Docket

No. 346], RESERVES, in part, and DENIES, in part, Perrigo Company PLC’s summary

judgment motion [Docket No. 342], and RESERVES on Perrigo’s motion to exclude

Plaintiffs’ experts until the Court holds Daubert hearings on each expert [Docket No. 342].

An accompanying Order as of today’s date shall issue.

s/Renée Marie Bumb

RENÉE MARIE BUMB

Chief United States District Judge

Dated: August 17, 2023

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