A federal judge in Boston dismissed a shareholders derivative lawsuit against Abiomed(NSDQ:ABMD) Friday, ruling that the plaintiff failed to prove that the medical device company’s board and its management deliberately concealed allegedly illegal marketing practices for its Impella 2.5 heart pump.
“We were very pleased with the relatively quick dismissal of the derivative action suit,” a company representative told MassDevice.com.
Plaintiff Marta Bryceland filed a shareholder derivative lawsuit Feb. 4 in the U.S. District Court for Massachusetts, accusing chairman, president & CEO Michael Minogue and the rest of the company’s directors of issuing falsely rosy statements to artificially inflate its share price, despite knowing of a U.S. Justice Dept. investigation.
ABMD shares plunged more than 30% in November 2012 after the Abiomed revealed the Justice Dept. probe.
Bryceland alleged that the directors and Minogue "made false and/or misleading statements and/or failed to disclose: (1) that the company was improperly marketing and/or labeling its Impella 2.5 system; (2) that the company’s financial results would be materially impacted if the company were either forced to stop its improper conduct or unable to continue its improper conduct; (3) that the company lacked adequate internal and financial controls; and (4) that, as a result of the foregoing, the company’s statements were materially false and misleading at all relevant times," according to court documents.
But Judge Dennis Saylor IV ruled that Bryceland’s allegations weren’t specific enough to prove that Abiomed’s board did anything wrong.
"Here, the complaint specifically alleges that the directors violated their fiduciary duties by ‘allowing’ material misstatements about the resolution of the dispute with the FDA and by ‘failing to disclose" Abiomed’s improper marketing and labeling practices in the company’s SEC filings," Saylor wrote, according to court documents. "The complaint makes no particular allegations as to what the directors knew, or what they approved of, or when. It is true that the complaint alleges the content of the SEC filings with particularity. Unfortunately for plaintiff, however, those filings suggest that the directors were exercising their duties in good faith."
Abiomed is facing another lawsuit over the Impella marketing probe, also in the Massachusetts federal court before Judge Saylor. Abiomed moved to dismiss that case as well; a hearing on that bid was held May 8, according to court records. The plaintiffs filed an amended complaint May 20, according to the records.
A 3rd lawsuit containing similar allegations was voluntarily dismissed in January, according to the court’s records.