Pfizer Inc. won a key ruling on Thursday that could upend a huge securities fraud case over the company’s marketing of the painkillers Celebrex and Bextra.
In a three-page order, U.S. District Judge Laura Taylor Swain in Manhattan granted a motion by Pfizer to exclude the testimony of Daniel Fischel, the former dean of the University of Chicago Law School and a frequent expert witness in high-profile securities cases. A class of Pfizer shareholders had hoped to use Fischel’s testimony to illustrate that Pfizer caused them billions of dollars’ worth of losses. But Swain ruled that Fischel’s testimony was unreliable because he didn’t properly explain a recent adjustment to his damages calculation.
The ruling is a big win for Beth Wilkinson of Paul Weiss Rifkind Wharton & Garrison, who Pfizer retained to try the case after it lost a motion for summary judgment last year. Pfizer is also represented by attorneys at Simpson Thacher & Bartlett and DLA Piper. Jay Eisenhofer of Grant & Eisenhofer is lead plaintiffs counsel.
In 2004 medical studies linked Celebrex and Bextra to cardiovascular problems. Pfizer pulled Bextra from the U.S. market, and Celebrex sales dropped dramatically. Pfizer lost $68.4 billion in market value between October 2004 and October 2005.
In their suit filed in 2004, shareholders alleged that Pfizer executives covered up the health risks of Celebrex and Bextra for years prior to the 2004 stock drop. Individual Pfizer executives are named as defendants in the case. Michele Roberts of Skadden Arps Slate Meagher & Flom represents former Pfizer CEO Henry “Hank” McKinnell. Michael Calhoon of Baker Botts is advising former Pfizer vice chairman Karen Katen. Pamela Chepiga of Allen & Overy represents former Pfizer chief medical officer Joseph Feczko. And George Stamboulidis of Baker Hostetler is defending Gail Cawkwell, the leader of Pfizer’s medical team for Celebrex.
In March 2012, Swain certified a class of individuals that bought Pfizer stock between October 2000 and October 2005. The plaintiffs are seeking in excess of $10 billion in damages. A trial date is set for September 9.
Without Fischel’s expert report, however, Grant & Eisenhofer is unable to show “loss causation,” a key element of a securities case. At a hearing on Friday, the firm asked to amend Fischel’s report to respond to Swain’s concerns. The judge allowed the plaintiffs to submit a briefing on whether it should be allowed to amend the report. But the judge also invited Pfizer’s defense lawyers to move for summary judgment.