A New York federal judge has given approval to a $468 million settlement in a long-running multidistrict litigation (MDL) against Pfizer Inc. U.S. District Judge Laura Taylor Swain said this was a “very complex” case, which accused Pfizer of misleading investors about the risks of its pain treatments Celebrex and Bextra, lasted for 12 years and involved more than 100 depositions, 65 million pages of documents and nearly 300,000 hours of legal work in its prosecution and investigation. There were three motions for summary judgment and a trip to the Second Circuit and back before arm’s-length negotiation with an experienced mediator produced what Judge Swain called “an outstanding result.” Judge Swain said: “The legal work in this case was done extraordinarily well and billed in an appropriate manner.”
Judge Swain thanked and congratulated the lawyers on both sides after more than a decade of litigation. She told the lawyers it had been “an honor and a pleasure to work with you over the years.” Jay W. Eisenhofer of Grant & Eisenhofer, representing the class, told Judge Swain the settlement, which represented about 9 percent of potential damages against Pfizer, should be allowed to settle because the case was heavily dependent on one corrective disclosure and had the case been lost, it would have been “devastating for the class.” He urged Judge Swain to approve the approximately $130 million in fees and more than $20 million expenses, noting that 45 percent of the lawyers’ time was spent on fact discovery. Jay said that it would take 500 lawyer-years to get through all of the documents reading at one page per minute. He added:
This was a very, very hard-fought case. Every stop was pulled out, everybody did their utmost, everybody did their best. We really gave everything we had to this case.
Lynn K. Neuner of Simpson Thacher & Bartlett LLP, representing Pfizer, asked Judge Swain to approve the settlement and said the company took no position on the issue of fees and expenses. This statement was issued by Pfizer:
Pfizer reached a settlement to resolve this securities class action case for all defendants. This resolution reflects our desire to avoid the distraction of continued litigation and instead, to focus on the needs of patients and prescribers. We and all other defendants deny wrongdoing as part of the agreement.
The underlying suit alleged that the company and its executives, including CEO Henry McKinnell, knew that drug safety studies conducted between 1998 and 2004 showed Celebrex and Bextra posed serious cardiovascular risks but hid the information from the public.
A consolidated class complaint was filed in February 2006, and in July 2012, Judge Swain certified a class led by the Teachers’ Retirement System of Louisiana. The judge denied several motions to dismiss, and although she trimmed the suit in March 2013, she kept most of the investors’ allegations. But in May 2014, she barred University of Chicago law professor Daniel Fischel from testifying on behalf of the investors, then dismissed the case after Pfizer argued that the shareholders could no longer sustain key elements of their claim. The Second Circuit ultimately found that Judge Swain was within reason to find that Fischel improperly adjusted his study of Pfizer’s stock price, but that she should have allowed him to present his findings on loss causation and damages, barring him only from testifying about his adjustment.
It was reported that the settlement is likely among the last major payments Pfizer will make over the two drugs. It has already paid $894 million to settle product liability and consumer fraud suits brought by drug users and state attorneys general, $1 billion to settle civil allegations it fraudulently promoted and marketed Bextra, and a $1.3 billion criminal fine – at the time the largest ever imposed in the U.S. – for the same fraudulent misbranding.
The investors are represented by Gregory P. Joseph, Douglas J. Pepe and Sandra M. Lipsman of Joseph Hage Aaronson LLC, Jay W. Eisenhofer, Richard S. Schiffrin, James J. Sabella, Charles T. Caliendo, Brenda F. Szydlo, Geoffrey C. Jarvis and Mary S. Thomas of Grant & Eisenhofer PA, Jonathan S. Massey of Massey & Gail LLP, and David Kessler, Andrew L. Zivitz, Matthew L. Mustokoff and Michelle M. Newcomer of Kessler Topaz Meltzer & Check LLP.
The case is In re: Pfizer Securities Litigation in the U.S. District Court for the Southern District of New York.
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