The Trustees of Welfare & Pension Funds of Local 464A – Pension Fund v. Medtronic PLC, 726 F. Supp. 3d 938 (D. Minn. 2024).
Case Highlights
On March 28, 2024, a federal district court held that positive statements about the prospect of U.S. Food and Drug Administration (FDA) approval of a company’s latest product were not sufficiently alleged to be false or misleading even though the company did not disclose that it had received a Form 483—a form issued by the FDA following an inspection that lists objectionable conditions an investigator believes violate the Food, Drug, and Cosmetic Act and other related acts. The plaintiffs in The Trustees of Welfare & Pension Funds of Local 464A – Pension Fund v. Medtronic PLC (“Medtronic”), 726 F. Supp. 3d 938 (D. Minn. 2024), filed a lawsuit alleging that Medtronic misled investors when it disclosed that the application process for FDA approval for its next generation insulin pump designed to manage type 1 diabetes—the MiniMed 780G (780G)—was “on track.” The plaintiffs alleged that this statement led investors to believe that FDA approval was likely when, in fact, Medtronic had received a Form 483 following the FDA’s inspection of a Medtronic facility, which ultimately led to an FDA warning letter and a decision to delay approval. Medtronic’s stock price dropped when it announced that it could no longer include FDA approval of 780G in its guidance for fiscal year 2023. The plaintiffs claimed that the defendants had a duty to disclose Medtronic’s receipt of Form 483—which it had received approximately six months before the warning letter was disclosed—given Medtronic’s disclosures that its submission for FDA approval of 780G was “on track.” While the court acknowledged that this was a “close[ ] question,” it found that the complaint did not allege that the “on track” statement was false or misleading. The court distinguished Public Pension Fund Group v. KV Pharmaceutical Company (“KV Pharmaceutical”), 679 F. 3d 972 (8th Cir. 2012), where the Eighth Circuit held that defendants in that case had a duty to disclose the receipt of Form 483 when they told shareholders that the company was compliant with FDA regulations given “numerous, severe, and pervasive objectionable conditions” covering “the entire range of the defendants’ operations and products.” Here, unlike KV Pharmaceutical, the Medtronic complaint did not allege how the issues raised in Form 483 would necessarily doom or impact the timeline for FDA approval and the defendants never represented that Medtronic was in compliance with all FDA regulations.