Perrigo plc
“The first certification of a foreign purchaser class
since the Supreme Court’s landmark 2010 Morrison ruling.”
Jeremy A. Lieberman
Jeremy A. Lieberman
Pomerantz set historic precedent for global investors in a securities litigation against global pharmaceutical company Perrigo Co. plc (“Perrigo”) on November 14, 2019, when Judge Arleo of the District of New Jersey certified parallel classes of investors that 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 ruling was the first to certify a foreign purchaser class since the Supreme Court’s landmark 2010 ruling in Morrison v. National Australia Bank, Ltd.
Morrison appeared to close the door of U.S. federal courts to investors who purchased on foreign exchanges, reasoning that the Securities Exchange Act of 1934 was not intended to have extraterritorial effect. Morrison was particularly limiting for investors in dual-listed shares, a staple of most global portfolios. Dual-listed shares are traded both on U.S. and foreign exchanges, affording institutional investors the opportunity to execute trades on the venue offering the most favorable trading hours, pricing, and liquidity at any given moment. However, under Morrison, two purchasers of the same dual-listed stock at the same time injured by the same fraudulent misrepresentations and omissions might have very different remedies, depending on the trading venue. Those that purchased on a U.S. exchange would be able to join together with other similarly situated investors to collectively seek compensation in a U.S. class action. Investors purchasing on a foreign exchange, under Morrison, were generally left to pursue claims individually in a foreign court likely to be less familiar with and less favorable to securities fraud litigation.
Pomerantz represents a number of Israeli institutional investors that purchased Perrigo securities on both the NYSE and the TASE after an offer by Mylan N.V. to tender Perrigo shares in November 2015. Perrigo has been dual-listed on the NYSE and the TASE for more than a decade. In connection with its dual-listing, Perrigo had elected to take advantage of a provision of the Israel Securities Act providing that its disclosure obligations in Israel would be governed by the standards of its country of primary listing – here, the United States – rather than by Israeli standards. Thus, for companies like Perrigo, Israeli law applies the standards of Section 10(b) of the Securities Exchange Act of 1934 to assess claims of securities fraud.
Perrigo violated Section 10(b) by making material misrepresentations and omissions that injured investors whether they purchased on the TASE or the NYSE. Specifically, to defeat Mylan’s hostile tender offer and to artificially inflate its share price, Perrigo concealed problems with its largest acquisition, Omega, and anticompetitive pricing practices in its generic prescription drug business. While Perrigo’s misrepresentations and omissions helped convince shareholders to reject the tender offer, shares plummeted as the truth was disclosed.
In the litigation that followed, Pomerantz brought claims under Israeli law, applying the Section 10(b) standard for TASE purchasers, as well as traditional claims under U.S. law for U.S. purchasers. In its opinion sustaining the core parts of the amended complaint over motions to dismiss, the Court held that supplemental jurisdiction was properly exercised over the TASE purchaser claims, noting that they applied the same standards as the claims asserted under U.S. law.
Pomerantz asked the Court to certify three classes: a U.S. purchaser class, a TASE purchaser class, and a tender offer class for investors who held Perrigo shares at the expiration of the failed tender offer. Pomerantz and its expert-marshalled evidence demonstrating that TASE trading satisfied each of the criteria traditionally used to assess market efficiency under Cammer v. Bloom: volume, analyst coverage, market makers, float and financial disclosure requirements relevant to Form S-3 eligibility, and cause-and-effect relationship between dissemination of value-relevant company-specific information and abnormal returns in stock prices.
The Court accepted these arguments and certified all three proposed classes. Defendants did not challenge certification of the TASE purchaser class in their petition for interlocutory appeal, which was limited to the tender offer class.
Exercising supplemental jurisdiction of foreign securities claims while adjudicating U.S. claims does not offend Morrison and offers substantial efficiencies that benefit both plaintiffs and defendants. Litigating all claims in a single forum avoids duplicative discovery and motion practice, eliminates the risk of inconsistent judgments, and facilitates global settlement discussions.
Pomerantz’s Perrigo litigation is led by partners Jeremy A. Lieberman and Joshua B. Silverman.
Roofer’s Pension Fund v. Papa, et al. No. 16-2805 (D.N.J.)
Class Period: April 21, 2015 to May 3, 2017, both dates inclusive
For violations of the Securities Exchange Act of 1934