SAN FRANCISCO — Plaintiffs attorneys cleared a hurdle Thursday in a securities case against Sunnyvale's Intuitive Surgical Inc.
Labaton Sucharow and Robbins Geller Rudman & Dowd lawyers provided enough detail to support claims Intuitive executives knowingly misled investors about their products' safety, U.S. District Judge Edward Davila in the Northern District of California ruled. He OK'd allegations that defendants kept product liability claims and adverse patient reports from shareholders, and issued three "secret recalls" of their da Vinci surgery robots without shareholder knowledge.
"Plaintiff has pled facts that, when taken as true, show that defendants knew that their statements regarding da Vinci's safety benefits were false or misleading when said, and that defendants had financial motivations to maintain a misleading impression of da Vinci safety," Davila wrote.
Intuitive manufactures robotic arms controlled remotely by surgeons and designed to operate through tiny incisions with more dexterity than the human hand. But the company has been hit with multiple personal injury, product liability and securities lawsuits alleging the machines sometimes malfunction and discharge electric sparks into a patient's body, damaging tissue and internal organs. The problem prompted a review by the Food and Drug Administration last year, which plaintiffs allege led to a drop in stock prices after its was disclosed.
Plaintiffs lawyers claimed Intuitive executives made 64 misleading statements to shareholders.
Davila took issue with claims based on omissions in Intuitive's financial reports and filings with the Securities and Exchange Commission. "That the statements were not wholly complete does not necessarily render them misleading to the reasonable investor," Davila wrote, granting plaintiffs lawyers 15 days to amend those allegations.
Thursday's ruling follows an appellate win for Intuitive's legal team, led by Keker & Van Nest partner Michael Celio. Ruling last month, the U.S. Court of Appeals for the Ninth Circuit threw out an earlier shareholder suit against the company, affirming U.S. District Judge Lucy Koh's 2012 decision.Plaintiffs in that case had invoked the core operations inference of scienter, arguing the company's true financial situation was so vital it must have been known by company executives. The appellate panel shot down the argument, ruling plaintiffs lacked proof executives knowingly created false reports.
In Thursday's order, Davila ruled plaintiffs lawyer's scienter claims, based on testimony from a former Intuitive manager, were adequate. Plaintiffs lawyers also provided evidence defendants sold their Intuitive stock after learning of FDA involvement that would adversely affect the company, but before that information was public knowledge.
Contact the reporter at mkendall@alm.com.
Companies, agencies mentioned: Labaton Sucharow and Robbins Geller Rudman & Dowd | United States Securities & Exchange Commission | Ninth Circuit | Intuitive Surgical Inc. | U.S. Court of Appeals
Read more: http://www.therecorder.com/id=12026...Suit-Against-Intuitive-Surgical#ixzz3BXKbQN1S
Labaton Sucharow and Robbins Geller Rudman & Dowd lawyers provided enough detail to support claims Intuitive executives knowingly misled investors about their products' safety, U.S. District Judge Edward Davila in the Northern District of California ruled. He OK'd allegations that defendants kept product liability claims and adverse patient reports from shareholders, and issued three "secret recalls" of their da Vinci surgery robots without shareholder knowledge.
"Plaintiff has pled facts that, when taken as true, show that defendants knew that their statements regarding da Vinci's safety benefits were false or misleading when said, and that defendants had financial motivations to maintain a misleading impression of da Vinci safety," Davila wrote.
Intuitive manufactures robotic arms controlled remotely by surgeons and designed to operate through tiny incisions with more dexterity than the human hand. But the company has been hit with multiple personal injury, product liability and securities lawsuits alleging the machines sometimes malfunction and discharge electric sparks into a patient's body, damaging tissue and internal organs. The problem prompted a review by the Food and Drug Administration last year, which plaintiffs allege led to a drop in stock prices after its was disclosed.
Plaintiffs lawyers claimed Intuitive executives made 64 misleading statements to shareholders.
Davila took issue with claims based on omissions in Intuitive's financial reports and filings with the Securities and Exchange Commission. "That the statements were not wholly complete does not necessarily render them misleading to the reasonable investor," Davila wrote, granting plaintiffs lawyers 15 days to amend those allegations.
Thursday's ruling follows an appellate win for Intuitive's legal team, led by Keker & Van Nest partner Michael Celio. Ruling last month, the U.S. Court of Appeals for the Ninth Circuit threw out an earlier shareholder suit against the company, affirming U.S. District Judge Lucy Koh's 2012 decision.Plaintiffs in that case had invoked the core operations inference of scienter, arguing the company's true financial situation was so vital it must have been known by company executives. The appellate panel shot down the argument, ruling plaintiffs lacked proof executives knowingly created false reports.
In Thursday's order, Davila ruled plaintiffs lawyer's scienter claims, based on testimony from a former Intuitive manager, were adequate. Plaintiffs lawyers also provided evidence defendants sold their Intuitive stock after learning of FDA involvement that would adversely affect the company, but before that information was public knowledge.
Contact the reporter at mkendall@alm.com.
Companies, agencies mentioned: Labaton Sucharow and Robbins Geller Rudman & Dowd | United States Securities & Exchange Commission | Ninth Circuit | Intuitive Surgical Inc. | U.S. Court of Appeals
Read more: http://www.therecorder.com/id=12026...Suit-Against-Intuitive-Surgical#ixzz3BXKbQN1S