Gagnon v. Alkermes PLC

NANCY GAGNON, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v. ALKERMES PLC, RICHARD F. POPS, and JAMES M. FRATES, Defendants.

17cv9178

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

July 2, 2019

MEMORANDUM & ORDER

WILLIAM H. PAULEY III, Senior United States District Judge:

On March 28, 2019, this Court issued an Opinion & Order (the "March 28 Opinion & Order") dismissing the Second Amended Complaint (the "Complaint") with prejudice for failure to state a claim. Lead Plaintiff Local 731 I.B. of T. Private Scavenger and Garage Attendants Pension Trust Fund ("Local 731") now moves for partial reconsideration of the March 28 Order under Rule 59(e) of the Federal Rules of Civil Procedure and Local Civil Rule 6.3. For the reasons that follow, Local 731's motion is denied.

BACKGROUND

The underlying facts are more fully set forth in the March 28 Opinion & Order, familiarity with which is presumed. See Gagnon v. Alkermes PLC, 368 F. Supp. 3d 750 (S.D.N.Y. 2019). In brief, Alkermes is a pharmaceutical company that produces an opioid dependence medication called Vivitrol. Local 731 alleges that the value of Alkermes stock progressively declined amid a wave of media and governmental scrutiny into Alkermes' efforts to market Vivitrol. According to Local 731, the publication of two academic articles finding Vivitrol to be—at best—no more effective than its competitors further exacerbated the drop in Alkermes' stock price.

Local 731 premises its securities fraud claims on three categories of misstatements by Alkermes' officers. See Gagnon, 368 F. Supp. 3d at 760-61. First, it alleges that Alkermes falsely characterized Vivitrol's success as organic and self-propagating without disclosing its aggressive and deceptive campaign to market Vivitrol to members of the criminal justice system—that is, policymakers and stakeholders who likely lacked the medical knowledge to understand Vivitrol's limitations vis-à-vis its competitors. Second, Local 731 contends that Alkermes misrepresented Vivitrol's efficacy by guaranteeing that patients who had been treated with Vivitrol would not relapse, despite internal studies suggesting the contrary. Finally, it avers that Alkermes falsely—and without any scientific basis—represented that only Vivitrol (and not its competitors) could lead to a drug-free life.

Defendants moved to dismiss Local 731's claims on falsity and scienter grounds. After culling the documents submitted in connection with Local 731's motion to dismiss,¹ this Court held that the majority of the statements proffered by Local 731 were not actionable as a matter of law. Gagnon, 368 F. Supp. 3d at 766-71. As relevant here, the March 28 Opinion & Order determined that in context, the statements that Vivitrol patients "will not" or "cannot" relapse to opioid dependence could not be fairly understood as guarantees against any potential relapse, but rather as representations about how Vivitrol was expected to work. Gagnon, 368 F. Supp. 3d at 769-70. On the other hand, this Court found a July 28, 2016 statement by Defendant James M. Frates attributing Vivitrol's sales growth to Alkermes' "focus on criminal justice programs" and "organic growth within the states" to be actionable half-truths based on Alkermes' purported concealment of the nature of its aggressive marketing efforts to the criminaljustice community. Gagnon, 368 F. Supp. 3d at 767-69.

Nonetheless, the March 28 Opinion & Order granted Defendants' motion to dismiss in full based on Local 731's failure to allege a strong inference of scienter with respect to the July 28, 2016 statement. This Court first rejected Local 731's allegations of stock sales by Alkermes' directors and officers as insufficient to demonstrate a motive to defraud. Gagnon, 368 F. Supp. 3d at 772-73. Local 731's allegations were also inadequate to show conscious misbehavior or recklessness by any individual whose state of mind could be imputed to the company. Gagnon, 368 F. Supp. 3d at 773-75. Finally, this Court explained that the July 28, 2016 statement was not so "important and dramatic" as to warrant a finding of corporate scienter notwithstanding Local 731's inability to pin scienter on a specific individual defendant. Gagnon, 368 F. Supp. 3d at 775-76 (citing, inter alia, Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 195-96 (2d Cir. 2008)). And based on the lack of a primary violation of the federal securities laws, this Court dismissed Local 731's Section 20(a) claim. Gagnon, 368 F. Supp. 3d at 776.

DISCUSSION

I. Legal Standard

The standard for reconsideration "is strict, and ultimately, the decision is within the sound discretion of the trial court." McGraw-Hill Glob. Educ. Holdings, LLC v. Mathrani, 293 F. Supp. 3d 394, 397 (S.D.N.Y. 2018); see also U.S. Bank Nat'l Ass'n v. Triaxx Asset Mgmt. LLC, 352 F. Supp. 3d 242, 246 (S.D.N.Y. 2019) (describing reconsideration as "an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources" (citation omitted)). Judges in this district have routinely recognized that the standards governing a motion to amend or alter a judgment under Rule 59(e) andmotions for reconsideration under Local Civil Rule 6.3 are the same. E.g., In re Facebook, Inc., IPO Secs. & Derivative Litig., 43 F. Supp. 3d 369, 373 (S.D.N.Y. 2014).

It is well-settled that a motion for reconsideration is not "a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a second bite at the apple." Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (citations and quotation marks omitted); see also Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (explaining that motions to reconsider "should not be granted where the moving party seeks solely to relitigate an issue already decided"). Such a motion "cannot assert new arguments or claims which were not before the court on the original motion" to "'ensure the finality of decisions and to prevent the practice of a losing party examining a decision then plugging the gaps of a lost motion with additional matters.'" McGraw-Hill Glob. Educ. Holdings, LLC, 293 F. Supp. 3d at 397 (citation omitted). In other words, a motion for reconsideration is "not an invitation for parties to 'treat the court's initial decision as the opening of a dialogue in which that party may then use such a motion to advance new theories or adduce new evidence in response to the court's rulings.'" McGraw-Hill Glob. Educ. Holdings, LLC, 293 F. Supp. 3d at 397 (citation omitted).

Thus, a motion for reconsideration "will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked—matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader, 70 F.3d at 257. The movant may satisfy its burden by demonstrating, for example, "an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." U.S. Bank Nat'l Ass'n, 352 F. Supp. 3d at 246 (quotation marks omitted) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d1245, 1255 (2d Cir. 1992)).

II. Application

Local 731 seeks partial reconsideration of the March 28 Opinion & Order on two grounds—namely, that this Court erred in holding one category of alleged misstatements to be non-actionable and finding the Complaint's scienter allegations insufficient with respect to the sole statement that this Court found to be actionable. This Court addresses each ground in turn.

A. Vivitrol Efficacy Statements

Local 731 contends that this Court erred in finding the statements relating to Vivitrol's efficacy non-actionable. Specifically, Local 731 asserts that instead of adopting its interpretation of the Vivitrol efficacy statements, this Court improperly read those statements in Defendants' favor. It argues, moreover, that in doing so, the March 28 Opinion & Order implicitly (and erroneously) concluded that Defendants had established a truth-on-the-market defense.

As an initial matter, Local 731's suggestion that this Court effectively found that Defendants established a truth-on-the-market defense misunderstands the March 28 Opinion & Order. Under the truth-on-the-market doctrine, "a misrepresentation is immaterial if the information is already known to the market because the misrepresentation cannot then defraud the market." Ganino v. Citizens Utils. Co., 228 F.3d 154, 167 (2d Cir. 2000). To raise such a defense, a defendant must show that the corrective information is "conveyed to the public 'with a degree of intensity and credibility to counter-balance effectively any misleading information created by' the alleged misstatements." Ganino, 228 F.3d at 167 (citation omitted). And because the "truth-on-the-market defense is intensely fact-specific," the Second Circuit has cautioned that it "is rarely an appropriate basis for dismissing a § 10(b) complaint for failure toplead materiality." Ganino, 228 F.3d at 167.

Fair enough—but the March 28 Opinion & Order never addressed the materiality of the Vivitrol efficacy statements, only finding them to be non-actionable as a matter of law.² Put differently, the relevance of the FDA labels is "not to show that plaintiffs knew the truth" in the contents of the labels. Accord City of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 186 n.62 (2d Cir. 2014) (emphasis removed) (rejecting argument that district court "impermissibly considered a 'truth on the market' defense"). Rather, as this Court explained, the reference to the FDA labels and the uses for which Vivitrol was approved or indicated add important context to the nature of the Vivitrol efficacy statements. Gagnon, 368 F. Supp. 3d at 770. Thus, the March 28 Opinion & Order had no occasion...