In re Intuitive Surgical Securities Litigation
Status: Ongoing Case
Labaton Sucharow acts as lead counsel for lead plaintiff, Employees' Retirement System of the State of Hawaii, in In re Intuitive Surgical Securities Litigation, No. 13-cv-01920 (N.D. Cal.). On October 15, 2013, lead plaintiff filed an amended class action complaint alleging that Intuitive Surgical, Inc. ("Intuitive" or the "Company") and its CEO Gary Guthart, CFO Marshall Mohr, and Chairman Lonnie Smith violated federal securities fraud laws by concealing violations of FDA regulations and a dangerous defect in the Company's primary product, the da Vinci Surgical System.
Lead plaintiff represents a class consisting of all persons and entities who purchased or acquired common stock of Intuitive during the class period, February 6, 2012 and July 18, 2013, inclusive, and who were damaged thereby. Lead plaintiff alleges that the defendants made false and misleading statements and omissions concerning Intuitive's laparoscopic robotic surgical device called da Vinci by concealing critical defects. The da Vinci defects caused serious injuries and deaths in patients, and the defendants concealed the defects by improperly taking corrective action without notifying the FDA. At the same time, the defendants concealed from the FDA and investors a substantial increase in the number of adverse incidents related to da Vinci surgical procedures, and downplayed the seriousness of the adverse incidents that were reported.
Investors began to learn the truth about da Vinci's defect in February 2013. At that time, it was announced that the FDA was conducting a survey of da Vinci surgeons to determine whether an increased number of reported adverse surgical events was caused by problems with the robot. In April and July 2013, the Company disclosed that, amidst the negative news about da Vinci and the FDA probe, procedure growth was lower than anticipated. On July 18, 2013, the seriousness of Intuitive's misconduct was revealed when the Company announced that it had received a Warning Letter from the FDA identifying the numerous ways in which the Company had violated regulatory requirements and failed to properly report corrective actions related to da Vinci health risks. As a result of this fraud, Intuitive's stock price fell 68 percent, from $573.52 on February 27, 2013 to $392.67 on July 19, 2013.
On August 21, 2014, the court denied, in part, defendants' motion to dismiss the amended complaint. The court also found that plaintiffs adequately alleged scienter with respect to the sustained statements and omissions.
On December 16, 2014, the court denied the defendants' motion for reconsideration, indicating the court has not changed its assessment regarding the strength of lead plaintiff's allegations.