A Manhattan federal judge has ruled that the U.S. Supreme Court's recent ruling in Stoneridge Investment Partners v. Scientific-Atlanta Inc., 128 S.Ct. 761, does not shield from securities fraud claims a Bristol-Myers Squibb Co. executive who made no public statements but whose behavior is central to the company's alleged misconduct.
Bristol-Myers shareholders are suing the company and two of its top executives for allegedly misleading them about patent litigation against Apotex, a manufacturer of a generic version of Bristol-Myers' best-selling Plavix blood-thinning drug. According to shareholders, the company bargained away much of its right to seek damages for patent infringement to strike a licensing deal with Apotex that was subsequently rejected by regulators.
The company allegedly concealed the extent to which it had hamstrung its litigation options and publicly stated it would "vigorously pursue" patent litigation against Apotex. Andrew Bodnar, Bristol-Myers' former senior vice president for strategy, carried out the settlement negotiations with Apotex but made no public statements about them.
Bodnar asked to be dismissed from the shareholder suit under Stoneridge, which sharply limited liability for securities fraud by actors who were "too remote" from investors. But Southern District of New York Judge Paul A. Crotty rejected that argument in In re Bristol-Myers Squibb Co. Securities Litigation, 07 civ. 5867. "Bodnar made no public statements himself, but investors relied on his good faith in negotiating the Apotex settlement agreement and committing the company to its terms," he wrote.
The judge also denied motions to dismiss by Bristol-Myers and former chief executive Peter Dolan.
Bodnar, who is represented by Elkan Abramowitz of Elkan Abramowitz of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, was indicted in April for concealing the negotiations with Apotex from the Federal Trade Commission. The lead plaintiffs in the shareholder case are being represented by Bernstein Litowitz Berger & Grossman, while Bristol-Myers is being represented by Debevoise & Plimpton.