District Court did not Err in Dismissing Securities Class Action Without Leave to Amend because Second Amended Class Action Complaint Failed to Adequately Plead Scienter Third Circuit Holds
Plaintiff filed a putative class action against Bio-Technology General Corp. (now known as Savient Pharmaceuticals) and three of its officers and directors for violations of federal securities laws by allegedly “making false and misleading statements about the corporation’s financial performance in 1999, 2000, and 2001.” In re Savient Pharmaceuticals, Inc. Securities Litig., Case No. 06-4864 (3d Cir. July 2, 2008) [Slip Opn., at 2]. The district court had dismissed the original class action complaint on the grounds that it failed to plead scienter with the specificity required under the Private Securities Litigation Reform Act (PSLRA), but granted plaintiff leave to amend; the district then granted a motion by defense attorneys to dismiss the second amended class action complaint on the same grounds, but this time the dismissal was without leave to amend. Id., at 2-3. In an unpublished opinion, the Third Circuit affirmed.
While the opinion is unpublished, we believe it noteworthy for its glowing praise of the district court. The Circuit Court noted that the main issue on appeal was “whether the District Court erred in finding that the Second Amended Complaint failed to adequately plead scienter.” In re Savient, at 3. The Third Circuit noted that it had reviewed the “extensive” record, as well as “the thorough, thoughtful and, in a word, superb opinions of the District Court,” id. The Court noted that “the [district court’s] first opinion comprehensively analyz[ed] the numerous allegations of the initial consolidated class action complaint in light of the applicable law and [laid] out a road map for plaintiff to follow,” id. Despite this guidance, the second amended class action complaint suffered from the same defects. Id. The Court concluded at page 3, “This is a case in which we need do no more than recognize the excellence of the District Court’s opinions; indeed, it would make little or no sense to even attempt to match the quality of that work. And so, substantially for the reasons set forth by the Honorable Harold A. Ackerman, we will affirm.”
A copy of the unpublished Third Circuit opinion in In re Savient Pharmaceuticals may be found here.
A copy of the district court’s order may be found here.