On April 18, 2014, The U.S. District Court for the Northern District of California denied the defendants’ motion to dismiss the plaintiff’s complaint in the securities class action Mulligan v. Impax Laboratories, Inc., ruling that the lead plaintiff had adequately pled claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
The complaint alleges that Impax Laboratories, Inc. (“Impax”) and certain of its executives issued false and misleading information to investors by failing to disclose pervasive, serious, and known deficiencies at Impax’s manufacturing facility in Hayward, California, as well as Impax’s inability to timely remedy these deficiencies as was required by the United States Food and Drug Administration (“FDA”). The complaint further alleges that the defendants lacked a reasonable basis for their repeated assurances to investors that Impax was capable of bringing its manufacturing and quality control systems into compliance with FDA standards so that a warning letter issued by the FDA in May 2011 to Impax could be resolved. Impax’s stock plummeted in March 2013 when Impax revealed to the market that a recent FDA inspection had found numerous problems at the Hayward facility, indicating that Impax had still not resolved the issues identified by the FDA in the warning letter.
U.S. District Judge Edward M. Chen agreed with the lead plaintiff’s arguments that the complaint adequately alleged the defendants’ statements were false or misleading and made with scienter, and allowed the case to proceed.
Cohen Milstein counsel Steven J. Toll, Daniel S. Sommers and Christopher Lometti represent the lead plaintiff in this class action, the Boilermaker-Blacksmith National Pension Trust. The case is Mulligan v. Impax Laboratories, Inc. et al., No. 13-cv-01037 (N.D. Cal.).