Credit: Virojt Changyencham/ Credit: Virojt Changyencham/


Shareholder class actions are seeing an uptick after years of limping along, with two law firms out of New York leading the numbers by aggressively targeting biotech and pharmaceutical firms.

Last year’s rise in investor cases—an increase of 32 percent to 44 percent, depending on the research report—was driven in large part by a surge in cases against health care, pharmaceutical and biotech companies. Lawsuits targeting life sciences firms jumped 70 percent from 2014, according to a survey provided earlier this year by Dechert. And two firms, Pomerantz & Co. and The Rosen Law Firm, filed more than half of the 67 cases in that industry.

Pomerantz is one of the oldest shareholder plaintiffs’ firms in the country. The Rosen Law Firm is among the youngest. Sometimes rivals, other times partners, both firms have been consistent players in securities litigation with a relentless eye on the market of mid-tier companies.

“They’re both very aggressive in ascertaining potential new cases and moving quickly to try to prosecute those cases,” said Lionel Glancy, a partner at Los Angeles-based Glancy Prongay & Murray, who works with both firms.

The firms’ high-volume play in the biotech/pharma sphere has gotten results.

Pomerantz and The Rosen Law Firm tied for No. 2 in the number of shareholder settlements in 2016, according to Institutional Shareholder Services Inc.’s Securities Class Action Services, which publishes an annual top 50 plaintiffs’ firms list. Each firm reported 15 settlements in 2016, outpaced only by San Diego’s Robbins Geller Rudman & Dowd, which had 29 deals.

Credit: ISS Securities Class Action Service: Top 50 of 2016

Taking Stock

That distinction doesn’t mean that either firm got eye-popping settlements. At The Rosen Law Firm, the average individual settlement in 2016, was just $6.5 million.

“There are certain plaintiffs’ firms that have explicitly said their focus is bigger bang for the buck, leaving space for others to take those smaller opportunities,” said Andy Cottrell, vice president of Securities Class Action Services.

Robbins Geller, for instance, topped total settlement value in 2016 with $2.7 billion, which included a $1.6 billion settlement for former Household International shareholders. Bernstein Litowitz Berger & Grossmann, at No. 2 by dollar value, reported settlements worth more than $2 billion, half of which came from a deal with Merck & Co. Inc.

By contrast, Pomerantz’s total settlement value was $201.8 million, and The Rosen Law Firm’s was $97.5 million.

“We don’t have mega settlements,” acknowledged Phillip Kim, a partner at The Rosen Law Firm. He said the firm represents “people who have been defrauded at smaller stocks that other firms don’t want to take, for whatever reasons.”

Founded in 2001, The Rosen Law Firm has 18 lawyers and a satellite office in the Philadelphia area. Founder and managing partner Laurence Rosen splits his time between the New York and Los Angeles office.

In recent years, the firm rode the wave of suing Chinese firms that sought access to the U.S. public markets through reverse mergers. The suits accused the firms of fraudulent disclosures and accounting-related allegations.

“Our firm is growing—there’s no doubt about that,” Kim said. “We’ve had a lot of investors satisfied with our work and our results.”

Pomerantz, founded more than 80 years ago, is a bigger firm. It now has additional offices in Los Angeles and Chicago and, last month, opened an outpost in Paris.

“Pomerantz has been around and also gotten involved in some of the larger cases,” said David Tabak, managing director at National Economic Research Associates Inc. (NERA). Of particular note, he said, is the shareholder litigation brought over a bribery scandal against Brazilian oil giant Petroleo Brasileiro, or Petrobras, in which Pomerantz was named lead counsel.

Pomerantz co-managing partners Jeremy Lieberman and Patrick Dahlstrom did not respond to calls or requests for comment.

Target: Health Care

The boost in health care cases wasn’t the only reason for last year’s rise in shareholder cases. Researchers have attributed much of the growth in 2016 to a jump in merger objections filed in federal courts, particularly since the Delaware Court of Chancery’s 2016 decision in In re Trulia Stockholder Litigation limited “disclosure-only” settlements in state courts.

But 28 percent of securities class actions last year were brought against companies in the health technology and services sector, according to NERA. That shift comes as litigation against the financial sector is beginning to wane nearly a decade after the 2008 recession.

“It was definitely a big increase in filings in the sector,” Tabak said. “The number almost doubled from the prior year. So while all cases went up, they went up by a particularly large rate in the health technology and services sector.”

Credit: Dechert LLP: Developments in securities fraud class actions against U.S. life sciences companies

A handful of cases were filed amid reports of a U.S. Department of Justice investigation into price fixing of generic pharmaceuticals. But even taking those out of the mix, the number of cases against health care firms hit record levels. Many of the cases focus on the process for regulatory approval, upon which a company’s entire financial picture could depend.

Chicago lawyer David Kistenbroker, global co-chair of Dechert’s white-collar and securities litigation group, said the cases tend to focus on two types of stock drops: when a company fails to get approval from the U.S. Food and Drug Administration, or it comes out with bad clinical trial results, and after a company fails to meet its market projections. He expected the trend to continue into 2017.

But Kim, of The Rosen Law Firm, attributed the rise to a “confluence of factors,” including the DOJ’s investigation.

“I don’t view it as companies with a failed drug are getting sued,” he said. “We’re not focused on a particular sector; we’re focused on prosecuting securities fraud. What’s driven that is market volatility and stock price declines.”

Amanda Bronstad covers mass torts and class actions for ALM. Contact her at On Twitter: @abronstadlaw