By Dow Jones Business News, February 27, 2013, 03:10:00 PM EDT
--Supreme Court won't block securities-fraud suit against Amgen
--Lower courts allowed case to proceed as class action
--Amgen says it will vigorously defend itself
(Updates with comments and details on the ruling.)
By Brent Kendall
WASHINGTON--The U.S. Supreme Court on Wednesday refused to block a securities-fraud lawsuit alleging Amgen Inc. ( AMGN )
played down safety concerns about two drugs used to treat anemia.
The court's 6-3 decision, written by Justice Ruth Bader Ginsburg, affirmed a lower-court ruling that certified the
lawsuit to proceed as a class action.
The suit, brought by Connecticut pension funds on behalf of purchasers of Amgen stock, alleged the Thousand Oaks,
Calif., company repeatedly reassured investors about the safety of anti-anemia drugs Aranesp and Epogen even as clinical
trial data raised concerns that the drugs could harm cancer patients who were taking them. Amgen's statements led to
inflated share prices, the suit alleged.
The lawsuit alleged the misrepresentations took place from April 2004 through May 10, 2007, a day when Amgen's shares
dropped more than 9% after a Food and Drug Administration panel expressed concerns about the drugs and recommended new
limits on patient use.
Contesting the lawsuit in pretrial proceedings, Amgen argued the plaintiffs couldn't show that the alleged
misrepresentations had a material effect on the price of its shares. The market had readily available access to the
safety information that Amgen allegedly played down, the company said.
Justice Ginsburg, writing for the court's majority, said the pension funds would have to prevail on materiality to win
the ultimate case, but didn't need to demonstrate such proof at the early stages in order to proceed as a class action.
"Essentially, Amgen, also the dissenters from today's decision, would have us put the cart before the horse," Justice
Ginsburg wrote in the court's 26-page opinion.
Three conservative justices dissented, they being Antonin Scalia, Clarence Thomas and Anthony Kennedy.
An Amgen spokeswoman noted that the ruling was solely procedural and not a decision on the merits of the case. She
said the company "will vigorously defend itself" when the case returns to a trial court for further proceedings.
Washington lawyer David C. Frederick, who represented the pension funds at the high court, said the ruling was "a
terrific result for investors."
Mr. Frederick said a majority of U.S. appeals courts that have considered the issue reached the same conclusion as the
Supreme Court. He said the ruling may have its biggest impact in the New York-based Second U.S. Circuit Court of
Appeals, a venue where securities cases are common. The Second Circuit had imposed additional requirements in
securities-fraud cases similar to what Amgen was seeking, he said.
Amgen, backed by business groups, had argued that companies needed to be able to defeat weak lawsuits before a judge
certifies a class action, which increases financial pressures on companies to settle rather than risk significant
Justice Ginsburg said Congress already had taken steps to curb abusive securities-fraud lawsuits, but had not adopted
the rule Amgen was seeking.
After Wednesday's ruling, business defendants will still make the same legal arguments against securities-fraud
plaintiffs, but they'll have to wait until later in the legal proceedings, said Peter Morrison, a lawyer with Skadden,
Arps, Slate, Meagher & Flom LLP.
The case is Amgen v. Connecticut Retirement Plans and Trust Funds, 11-1085.
Write to Brent Kendall at firstname.lastname@example.org
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