about the group
appellate attorneys
docket reports
oral arguments
news on
16 June 2010

US Supreme Court Grants Certiorari in Matrixx Initiatives, Inc. v. Siracusano

Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 provide that a business may be held liable for failure to disclose any material fact in connection with the purchase or sale of its securities. For pharmaceutical companies, these facts may include so-called “adverse event reports” that are received when the users of a drug experience adverse side-effects. The Supreme Court granted certiorari on June 14, 2010, in Matrixx Initiatives, Inc. v. Siracusano, No. 09-1156, to determine whether a drug company can be held liable for failure to disclose adverse-event reports if the undisclosed reports do not constitute statistically significant evidence that the drug caused the adverse events.

This case is important not only to pharmaceutical companies, but to any public company subject to liability under SEC Rule 10b-5. The Court’s decision will likely clarify when a company has a duty to disclose potential adverse information to the public, and it may also affect which securities fraud claims are subject to summary dismissal and which will get to a jury.

The petitioner in this case manufactures Zicam Cold Remedy. Between 1999 and 2004, petitioner received 12 reports of Zicam users experiencing anosmia, or the loss of the sense of smell. Respondents filed this class-action lawsuit alleging that petitioner committed securities fraud by failing to disclose these reports. The First, Second, and Third Circuits would have dismissed the lawsuit because the complaint did not allege that the number of known reports of anosmia was statistically significant. In the decision below, however, the Ninth Circuit rejected any rigid statistical-significance requirement and instead held that it should be left to the trier of fact to determine whether the nature and number of adverse-event reports rise to the level of material information.

Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 5, 2010, and amicus briefs in support of the respondent will be due on September 7, 2010. Any questions about this case should be directed to Dan Himmelfarb (+ 202 263 3035) in our Washington, DC office.

Learn more about our Life Sciences and US Supreme Court & Appellate practices.

[ Go Back ]

© 2015. The Mayer Brown Practices. All rights reserved. --  Legal Notices | Attorney Advertising

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the “Mayer Brown Practices”). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. “Mayer Brown” and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.