Ninth Circuit Decision Makes it Harder for Plaintiffs to Plead Securities Fraud Claims Against Drug & Medical Device Companies

In Vicky Nguyen v. Endologix, Inc., et al., the Ninth Circuit affirmed in a published decision the district court’s dismissal with prejudice of a putative securities fraud class action because plaintiff failed to meet the heightened pleading standard for scienter required under the Private Securities Litigation Reform Act of 1995 (“PSLRA”). On July 20, 2020, the Ninth Circuit denied plaintiff’s petition for rehearing. A Stradling team lead by Jason de Bretteville represented defendants-appellees in the case.

Key Takeaway: This decision makes it harder for plaintiffs to adequately plead securities fraud claims against drug and medical device companies on the implausible theory that they sought FDA approval of a product that they allegedly knew was doomed to fail.

Read the full alert below.