Class Certified in Endo International Securities Litigation
On May 20, 2021, U.S. District Judge Michael M. Baylson of the Eastern District of Pennsylvania granted class certification to investors and appointed Pomerantz LLP as Co-Lead Class Counsel in Pelletier v. Endo International plc et al, 2:17-cv-05114 (E.D. Pa.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Endo International plc (“Endo” or the “Company”) inflated its revenue from generic pharmaceuticals by misrepresenting its pricing practices.
Endo is a pharmaceutical company that manufactures and sells generic and branded subscription medications in the U.S. and internationally.
Taking a cue from Giuseppe Verdi’s 19th century grand opera Don Carlo, Judge Baylson framed the issues in dramatic terms:
“In the opera world, misrepresentations are common, whether Mozart’s ingenious disguises of Papagena in The Magic Flute and Despina in Cosi Fan Tutte but do not impact any class and are quickly remedied. However, tragedies can involve class impact. Consider Verdi’s Don Carlo, where Spain’s King Philip, in an effort to secure a treaty between Spain and France, usurps the engagement of his son, the title character Don Carlo, to the French princess Elizabeth, who must instead marry Phillip. However, it soon appears that Phillip uses this treaty to tighten his dictatorial grip on the Flemish people, and they surely represent a class. The issue of whether Phillip’s domination over the Flemish people “predominates” over the more dramatic but individualized ensuing palace intrigues can be debated.”
After a rigorous analysis, the Court explained that defendants failed to show a lack of price impact for the corrective disclosures at issue, and their remaining arguments related to issues of loss causation and falsity that cannot be considered on class certification.
The Court also held that corrective disclosures could be part of the case against Endo even if they were not described as part of the loss causation allegations in the amended complaint (though the amended complaint discussed them in other contexts). The Court explained that “the purpose of discovery” is to “aid a party in the preparation or presentation of his case,” which may lead parties to “expand on what has been pleaded in the complaint or answer.”
The Court also rejected defendants’ arguments that lead counsel are conflicted and that the lead plaintiffs were not suitable to represent the Class. The court held that defendants’ arguments about supposed conflicts stemming from other, opioid-related, litigation against Endo were too speculative, there are structural safeguards in place to protect the Class, and the lead plaintiffs satisfy the typicality and adequacy requirements for class certification.