Pomerantz Obtains $97 Million Settlement in Perrigo Shareholder Suit

Last week, Pomerantz moved the court to approve a $97 million settlement in a securities fraud class action against the pharmaceutical company Perrigo Co. plc. The proposed settlement follows a multi-year litigation that included 40 depositions and the review of over half a million documents. Managing Partner Jeremy Lieberman expressed his satisfaction at the result: “We are very proud of our team’s hard-fought accomplishment in bringing this case to a successful resolution after nearly eight years of litigation through a ruling on summary judgment.”

Perrigo is one of the world’s largest pharmaceutical manufacturers. Pomerantz’s suit alleges that the company made a series of misleading statements about the strength of its business in order to fend off a $29 billion hostile takeover bid launched in 2015 by fellow drug manufacturer Mylan. According to the complaint, Perrigo concealed its involvement in an alleged price-fixing scheme relating to its generic drugs and downplayed the difficulties surrounding its 2015 acquisition of the European pharmaceutical company Omega Pharma NV. Over the first half of 2016, a series of news reports and disclosures from the company revealed the relatively weaker position of Perrigo’s business, causing the share price to plummet and damaging investors in the process.

During the litigation, Pomerantz achieved a historic ruling when it convinced the court to certify parallel classes of investors who had purchased Perrigo shares in the United States on the New York Stock Exchange (“NYSE”) and in Israel on the Tel Aviv Stock Exchange ("TASE”). The U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank Ltd. barred foreign plaintiffs from pursuing recovery in U.S. federal courts for losses from transactions on foreign exchanges. Given that Perrigo’s shares are dual-listed on the NYSE and the TASE, this meant that the purchasers on the two different exchanges would have two vastly divergent pathways for recovery. In response, Pomerantz developed a novel legal theory to persuade the court to exercise supplemental jurisdiction over claims brought under Israeli law on behalf of the TASE purchasers. As part of Perrigo’s dual-listing on the TASE, the company applied a provision of the Israeli Securities Act stating that the Perrigo’s disclosure obligations would be governed by the laws of the country of primary listing, in this case the United States.  Pomerantz argued that supplemental jurisdiction was warranted because Israeli law applied the same standards as U.S. law, a position that was accepted by the court during briefing on the defendants’ motion to dismiss.

During class certification, the defendants mounted a strenuous opposition, contending that shares on the TASE did not trade efficiently. This would contravene the presumption of reliance granted in Basic v. Levinson, raising questions of individual reliance that cut against the certification of a coherent class. Pomerantz marshalled expert testimony demonstrating that TASE trading satisfied the traditional criteria of market efficiency, including volume, analyst coverage, market makers, and float, among others. The court again accepted Pomerantz’s arguments, granting that TASE purchasers were entitled to the presumption of reliance and certifying parallel classes of NYSE and TASE purchasers.

For Jeremy Lieberman, this ruling was particularly significant. “The court’s certification of a class of TASE purchasers represents the first time a class of non-U.S. securities purchasers was certified as a class in a U.S. court since Morrison, underscoring the trail-blazing nature of this litigation.”  Indeed, this decision represents a major victory for global investors. Dual-listed shares are a staple of sophisticated investment portfolios in the 21st century. The precedent Pomerantz established in Perrigo provides investors in dual-listed shares a viable path to recovery in spite of the obstacles presented by Morrison. In fact, investors have already begun to benefit. In a series of individual opt-out litigations against Israeli pharmaceutical company Teva in which the firm represented 22 Israeli institutional investors, Pomerantz successfully convinced the court to apply supplemental jurisdiction over Israeli law claims, bolstering the ultimate resolution of that matter.

The settlement in Perrigo comes after a setback last August in which U.S. District Judge Renée Marie Bumb dismissed the claims against Perrigo’s former CFO Judy Brown and former CEO Joseph Papa. Despite this obstacle, the $97 million settlement represents a very strong recovery. A motion for summary judgment in the case was stayed in November in light of ongoing settlement talks. Pomerantz served as Co-Lead Counsel in the litigation alongside attorneys from Lowenstein Sandler LLP, and Bernstein Litowitz Berger & Grossmann LLP.