The Boeing Company Employee Retirement Plans Master Trust v. Valeant Pharmaceuticals International, Inc.
Status: Ongoing Case
On September 28, 2017, Labaton Sucharow filed a lawsuit on behalf of the plaintiff Boeing Company Employee Retirement Plans Master Trust (Boeing) against Valeant Pharmaceuticals International, Inc. (Valeant), certain of Valeant’s current and former senior executives, and Valeant’s external auditor, PricewaterhouseCoopers (collectively, the defendants), in connection with alleged fraudulent activity. The action generally alleges a massive, fraudulent scheme perpetrated by the defendants to artificially inflate the price of Valeant’s securities through a covert pharmacy network, deceptive pricing and reimbursement, and improper accounting.
The plaintiff alleges violations of the federal securities laws, as well as claims under New Jersey state law. More specifically, they assert: 1) claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 2) claims for violations of Section 18 of the Securities Exchange Act of 1934, as well as common law fraud/fraudulent inducement and negligent misrepresentation, and 3) claims for violations of the New Jersey Racketeer Influenced and Corrupt Organizations Act. By invoking the RICO law in New Jersey, the location of Valeant's U.S. headquarters, the plaintiff could seek a penalty three times as large as the losses it sustained from the decline in Valeant's share price.
As the complaint alleges in greater detail, pharmaceutical and medical device manufacturer giant Valeant implemented a growth by acquisition model through which it massively increased the prices of newly acquired pharmaceutical products, including “orphan drugs” that treat rare medical conditions and have little to no generic competition. Unbeknownst to investors, Valeant’s sales of these products following their price-hikes, and its publicly reported revenue growth, depended upon a secret network of captive pharmacies and a number of deceptive business practices.
The defendants’ alleged misrepresentations inflated the price of the common stock and debt securities in which Boeing invested. When the truth was revealed through a series of disclosures that first began in late September and early October 2015, the value of Valeant securities plummeted over 90 percent, causing the plaintiff to suffer substantial investment losses.
The case is The Boeing Company Employee Retirement Plans Master Trust et al. v. Valeant Pharmaceuticals International, Inc., No. 17-cv-07636 (D.N.J.). Labaton Sucharow represents the plaintiff Boeing Company Employee Retirement Plans Master Trust in this direct action. The defendants are Valeant Pharmaceuticals International, Inc., certain of Valeant’s current and former senior executives, and Valeant’s external auditor, PricewaterhouseCoopers.