St. Jude faces escalation of shareholder lawsuits over Durata leads
|Durata Leads--courtesy of St. Jude Medical|
St. Jude Medical's ($STJ) Durata defibrillator lead was meant to be a safer replacement for Riata--a faulty predecessor product recalled in 2011 due to various production flaws. But as the Star Tribune reports, the company is now dealing with at least three shareholder lawsuits alleging that product is also a risky proposition and the company tried to downplay that reality. And more lawsuits are likely.
The lawsuits against the company and various executives stem from an FDA report in November that criticized St. Jude recently for Durata-related testing and manufacturing issues (and subsequently led to a 12% stock price plunge).
One lawsuit we told you about earlier this month, for example--filed by the Canton, MA-based Norfolk County Retirement System--alleging that St. Jude was aware of the problems even as it said during an Oct.17 investor call that Durata lacked the issues that Riata faced. A single investor sued the company earlier in December, and other investors filed a third suit this week, the story notes. Like the Norfolk County Retirement System lawsuit, the others also alleged that St. Jude downplayed the significance of the FDA report to investors, regarding production at a California plant. They're also well aware that St. Jude's initial public disclosure of the matter redacted any reference to Durata by name. Rumors have also circulated, fair or not, that Durata might also be pulled from the market as Riata was, and those certainly can't help matters.
St. Jude spokeswoman Amy Jo Meyer, perhaps not surprisingly, told the Star Tribune that "we believe the lawsuits are without merit, and we will vigorously defend against the allegations."
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