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This excerpt taken from the ELN 6-K filed Mar 30, 2007. 31 Litigation
We are involved in legal and administrative proceedings that
could have a material adverse effect on us.
Securities
and Tysabri matters
Commencing in January 1999, several class actions were filed in
the US District Court for the Southern District of California
against Dura Pharmaceuticals, Inc. (Dura or defendant), one of
our subsidiaries, and various then current or former officers of
Dura. The actions, which allege violations of the US federal
securities laws, were consolidated and sought damages on behalf
of a class of shareholders who purchased Dura common stock
during a defined period. On 6 June 2006, the US District
Court issued an order granting in part and denying in part our
motion to dismiss. On 21 July 2006, the plaintiffs filed an
amended complaint seeking to cure their pleading problems. The
defendants subsequently filed a motion to dismiss in response to
the amended complaint. A hearing on the defendants’ motion
was originally scheduled to take place on 4 December 2006.
However, by order of the court on 28 November 2006, the
court deemed the motion submitted on the papers and determined
that no oral argument was necessary. The parties currently await
a final ruling on the defendants’ motion.
We and some of our officers and directors have been named as
defendants in putative class actions originally filed in the US
District Courts for the District of Massachusetts (on 4 and
14 March 2005) and the Southern District of New York
(on 15 and 23 March 2005) and the Superior Court of
the State of California, County of San Diego (on
22 March 2005). The class action complaints allege claims
under the US federal securities laws and state laws and, in the
actions originally filed in Massachusetts and New York, seek
damages on behalf of a class of shareholders who purchased our
stock prior to the announcement of the voluntary suspension of
Tysabri on 28 February 2005. The action filed in
California as a derivative action, purports to seek damages on
our behalf. The complaints allege that we caused the release of
materially false or misleading information regarding
Tysabri. The complaints allege that class members were
damaged when our share price fell after we and Biogen Idec
announced the voluntary suspension of the commercialisation and
dosing of Tysabri in response to reports of serious
adverse events involving clinical trial patients treated with
Tysabri. The complaints seek damages, reimbursement of
costs and other relief that the courts may deem just and proper.
On 4 August 2005, the US District Court for the Southern
District of New York issued an order consolidating the New York
actions. On or about 29 August 2005, the cases originally
filed in Massachusetts were transferred to the Southern District
of New York. Accordingly, all non-California securities
proceedings are now pending in New York.
In the California derivative action, we filed papers on
8 August 2005 demurring to the claims asserted in the
complaint and moving to quash service of the complaint on
certain of the named,
out-of-state
directors. To date, the plaintiffs have not responded to our
motions. However, we expect that the court will schedule a
hearing sometime during 2007.
In March 2005, we received a letter from the SEC stating that
the SEC’s Division of Enforcement was conducting an
informal inquiry into actions and securities trading relating to
Tysabri events. The SEC’s inquiry primarily relates
to events surrounding the 28 February 2005 announcement of
the decision to voluntarily suspend the marketing and clinical
dosing of Tysabri. We have
Elan Corporation, plc 2006 Annual
Report 125
Table of Contents
provided materials to the SEC in connection with the inquiry,
but have not received any additional requests for information or
interviews relating to the inquiry.
Antitrust
matters
In March 2001, Andrx Corporation (Andrx) filed a complaint in
the US District Court for the Southern District of Florida
alleging that we engaged in anti-competitive activities in an
effort to prevent or delay the entry of a generic alternative to
Naprelan. We filed a motion to dismiss the complaint and for
judgement on the pleadings. In April 2003, the court granted our
motion and dismissed Andrx’s complaint with prejudice and
without leave to amend. Andrx subsequently appealed this
decision. On 29 August 2005, the appellate court upheld the
lower court’s ruling, in part, but remanded the matter to
the district court to address certain issues. This matter
remains pending.
Indirect purchasers of Naprelan have filed three putative class
actions in the US District Court for the Eastern District of
Pennsylvania against Elan and Skye Pharma, Inc. In September
2002, the cases were consolidated and in October 2002, a
consolidated amended class action complaint was filed. The
consolidated complaint alleges that we violated the antitrust
laws by engaging in sham patent litigation and entering into an
unlawful settlement agreement in an effort to prevent or delay
the entry of a generic alternative to Naprelan. The damages
claimed are unspecified. Other than preliminary document
production, the litigation has been stayed and the case placed
on the court’s suspense docket pending the outcome of
further proceedings in pending related patent infringement
litigation between Elan and Andrx.
In 2002 and 2003, ten actions were filed in the US District
Courts (seven in the District of Columbia and three in the
Southern District of New York) claiming that we (and others)
have violated federal and state antitrust laws based on a
licensing arrangement between Elan and Biovail Corporation
relating to Nifedipine. The complaints seek various forms of
remedy, including damages and injunctive relief. The actions
have been brought by putative classes of direct purchasers,
individual direct purchasers, and putative classes of indirect
purchasers. On 29 May 2003, the Judicial Panel for
Multidistrict Litigation coordinated and consolidated for
pre-trial proceedings all pending cases in the US District Court
for the District of Columbia. On 1 September 2004, the
Court issued a Memorandum Opinion and Order granting in part and
denying in part the defendants’ motions to dismiss. The
Court held that none of the claims for injunctive relief had any
basis and, accordingly, the Court lacked jurisdiction over the
indirect purchaser federal and state claims.
Consequently, the Court granted the motion as it related to the
putative class of indirect purchasers and dismissed that
consolidated class complaint without prejudice. The Court also
dismissed the claims for injunctive relief of the purported
direct purchaser plaintiffs. The Court declined to dismiss the
damage claims of the purported direct purchaser plaintiffs,
ruling that it would be premature to do so without allowing
discovery given the Court’s obligation to accept as true
all allegations when tested on a motion to dismiss. The parties
in the litigation are in the process of completing discovery.
It should be noted that counsel for the putative indirect
purchaser class have also commenced an action asserting the same
or similar claims under California state law in California state
court. The parties have reached an
agreement-in-principle
on settlement. That agreement is subject to finalisation by the
parties and to approval by the California state court.
In June 2001, we received a letter from the US Federal Trade
Commission (FTC) stating that the FTC was conducting a
non-public investigation to determine whether Brightstone
Pharma, Inc. (Brightstone), Elan or others may have engaged in
an effort to restrain trade by entering into an agreement that
may restrict the ability of Brightstone or others to market a
bioequivalent or generic version of Naprelan. In October 2001,
our counsel met informally with FTC Staff to discuss the matter.
No further communication from the FTC was received until
December 2002, when we were served with a subpoena from the FTC
for the production of documents related to Naprelan. We
voluntarily provided documents and witness testimony in response
to the subpoena and continue to cooperate with the FTC relating
to this investigation.
Other
matters
In January 2006, our subsidiary, Elan Pharmaceuticals, Inc.
(EPI) received a letter and subpoena from the US Department of
Justice and the US Department of Health and Human Services
asking for documents and materials primarily related to
marketing practices concerning our former Zonegran product. In
April 2004, we completed the sale of our interests in Zonegran
in North America and Europe to Eisai. We are cooperating with
the government in its investigation. The resolution of this
Zonegran matter could require Elan to pay substantial fines and
to take other actions that could have a material adverse effect
on Elan. In
126 Elan
Corporation, plc 2006 Annual Report
Table of Contents
Notes to the
Consolidated Financial Statements
April 2006, Eisai delivered to Elan
a notice making a contractual claim for indemnification in
connection with a similar subpoena received by Eisai.
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