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Kleinman v. Elan Corp.

United States Court of Appeals for the Second Circuit

April 19, 2012, Argued; February 1, 2013, Decided

Docket No. 11-3706-cv


 [*147]  Hall, Circuit Judge:

Plaintiff-Appellant Gary Kleinman ("Kleinman") appeals from the judgment of the district court (Hellerstein, J.) dismissing Kleinman's amended complaint with prejudice for failure to state a cause of action under Fed. R. Civ. P. 12(b)(6) and denying leave to amend. Kleinman alleges that Defendants-Appellees Elan Corporation, plc ("Elan"), Pfizer, Inc. ("Pfizer") (as successor-in-interest to Wyeth, Inc. ("Wyeth")), G. Kelly Martin, and Lars Ekman (collectively, the "Defendants") violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 by issuing a misleading press release on June 17, 2008 (the "June press release") concerning the results of a clinical trial for a drug called bapineuzumab (then under joint development by Elan and Wyeth). Kleinman brought this putative class action on behalf of all those who purchased Elan's call options during  [**3] the Class Period—June 17, 2008, to July 29, 2008. He alleges the press release omitted several facts that, in his view, were necessary to prevent the press release from being misleadingly optimistic. We write to explain how, in the context of the full presentation of the details surrounding the study of the drug, nothing omitted from the June press release rendered it false or misleading to a reasonable investor. Moreover, we hold that Kleinman offered insufficient additional allegations to cure this deficiency. For the reasons that follow, we affirm the judgment of the district court.


We draw the following facts from Kleinman's amended complaint, written instruments attached to it, and statements or documents incorporated by reference. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).

Elan is a neuroscience-based biotech company with operations in New York, California, and Pennsylvania. Elan's American Depositary Receipts ("ADRs") are traded on the New York Stock Exchange and its publicly traded call options are derivative of, and trade in tandem with, Elan's ADRs. Wyeth was a Delaware Corporation before its acquisition by Pfizer  [*148]  in October 2009. During  [**4] the relevant timeframe, Wyeth and Elan had a joint project aimed at researching, developing, and eventually marketing drugs designed to treat mild to moderate Alzheimer's.

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706 F.3d 145 *; 2013 U.S. App. LEXIS 2338 **; Fed. Sec. L. Rep. (CCH) P97,277


Subsequent History: As Amended March 29, 2013.

Prior History:  [**1] Plaintiff appeals from a judgment of the district court (Hellerstein, J.) dismissing his amended complaint in this putative class action securities litigation. Defendants, including two pharmaceutical companies jointly developing an Alzheimer's drug called bapineuzumab, are alleged to have issued a misleading press release describing the preliminary clinical trial results for bapineuzumab, which omitted several facts that rendered the press release false and misleading in contravention of Section 10(b) of the Securities Exchange Act of 1934. The facts omitted were disclosed six weeks later by the companies when they released the full results of the clinical trial. The United States District Court for the Southern District of New York dismissed the amended complaint on the ground that it failed to allege a false or misleading statement. We agree with the district court and hold that nothing omitted from the press release rendered it false or misleading to a reasonable investor.

Kleinman v. Elan Corp., PLC (In re Elan Corp. Secs. Litig.), 2011 U.S. Dist. LEXIS 40989 (S.D.N.Y., Mar. 18, 2011)

Disposition: AFFIRMED.


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Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Pleadings, Heightened Pleading Requirements, Fraud Claims, Securities Law, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Civil Liability Considerations, Securities Litigation Reform & Standards, General Overview, Elements of Proof, Postoffering & Secondary Distributions, Heightened Pleading Requirements, Duty to Disclose, Materiality, Amendment of Pleadings, Statements of Opinion