In re Intuitive Surgical Securities Litigation
Status: Ongoing Case
The Firm secures a string of favorable rulings in this securities class action against da Vinci Surgical System maker Intuitive Surgical, highlighting the strengths of lead plaintiffs’ allegations
On October 15, 2013, Labaton Sucharow, as lead counsel, filed an amended class action complaint on behalf of the lead plaintiff. A motion to amend and proposed second amended complaint was filed on November 2, 2016.
The complaint alleges that Intuitive Surgical, Inc. (Intuitive) 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. 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.
On August 21, 2014, the court denied, in part, the defendants’ motion to dismiss the amended complaint. The court also found that the lead 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 the lead plaintiff's allegations.
On December 22, 2016, the court granted both the lead plaintiffs’ motion for class certification and lead plaintiffs’ motion to amend. The second amended complaint, found under “Case Materials,” is now the operative pleading.
The case is In re Intuitive Surgical Securities Litigation, No. 13-cv-01920 (N.D. Cal.). Labaton Sucharow represents lead plaintiff Employees’ Retirement System of the State of Hawaii. The defendants are Intuitive Surgical, Inc. and its CEO Gary Guthart, CFO Marshall Mohr, and Chairman Lonnie Smith.
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.