St. Jude Medical (NYSE:STJ) wants a federal judge in Minnesota to toss a class action lawsuit filed by shareholders after the medical device company’s stock took a dive in 2009 when it reduced its guidance.
The lawsuit, filed in March 2010, alleges that St. Jude and its management concealed evidence of slowing demand and lower orders for its cardiac rhythm management products. St. Jude lowered its guidance ahead of its fiscal 3rd-quarter earnings release, citing "lower than expected sales" due to what CEO Daniel Starks called at the time "macro-economic factors coupled with the continues pressures surrounding healthcare reform," according to court documents.
In the period leading up to the lowered outlook, St. Jude "failed to disclose and misrepresented … material adverse facts, which were known to defendants or recklessly disregarded by them," the lawsuit alleges.
In a motion for summary judgment filed Oct. 15, however, St. Jude countered that the plaintiffs "cannot prove the allegations of ‘fraud’ in their complaint," according to the documents.
"With respect to forward-looking guidance provided to investors regarding revenue the evidence shows management made good faith efforts to inform the market. Importantly, and directly contrary to the complaint, the guidance was lower than the internal forecasts," according to the documents [emphasis theirs]. "No defendant stood to (or did) profit from the purported fraud; indisputably, as significant shareholders, they lost money. The SEC filings which plaintiffs contend are misleading were fully vetted by professionals and were accurate.
"At the end of the day, mere assertions by plaintiffs are not enough – plaintiffs do not have the evidence necessary to satisfy the elements of their claims," St. Jude argued.
The St. Paul, Minn.-based company is facing other shareholder actions as well. A group of stock owners late last year accused St. Jude and 3 executives of making “false and misleading statements” about its Durata heart implant wires. A lawsuit filed in June 2012 alleged that the company downplayed device failures that led to the recall of its Riata defibrillator leads in 2011.
