Schering-Plough Corporation Case - 02/16/2001

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Company Name(s): 
Schering-Plough Corporation
Case Name: 
Schering-Plough Corporation Case - 02/16/2001
Case Status: 
Lawsuit Filed
Case Status: 
Judgment Issued
Case Status: 
Settlement Proposed
Case Status: 
Settlement Approved
Affected Securities
NYSE: SGP
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
02/16/2001
Class Period Begin: 
05/09/2000
Class Period End: 
02/15/2001
Court of Filing: 
U.S. District Court for the District of New Jersey
Date Settled: 
02/12/2009
Settlement Amount: 
$165,000,000
Deadline to Participate in Settlement: 
06/18/2009
Summary: 

Motions for partial and total summary judgment were filed on December 7, 2007. In September 2008 the motions were administratively dismissed with no official ruling on the summary judgment. Parties then filed a Stipulation of Settlement with the court February 12, 2009. The agreement outlines a deal to drop all claims against the defendants in exchange for a cash payment of $165 million. Preliminary approval was granted on February 19.

According to a press release dated July 20, 2007, the Court has determined that the Action may proceed as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure. You may be a member of the Class. Excluded from the Class are Defendants, members of the immediate family of the individual defendants, any subsidiary, affiliate or control person of such person or entity, officers and directors of Schering- Plough, and the legal representatives, heirs, successors, or assigns of each such excluded party.

As summarized by the Company’s Form 10-Q for the quarterly period ended June 30, 2006, several lawsuits were filed against the Company and certain named officers. These lawsuits allege that the defendants violated the federal securities law by allegedly failing to disclose material information and making material misstatements. Specifically, they allege that the Company failed to disclose an alleged serious risk that a new drug application for CLARINEX would be delayed as a result of these manufacturing issues, and they allege that the Company failed to disclose the alleged depth and severity of its manufacturing issues. These complaints were consolidated into one action in the U.S. District Court for the District of New Jersey, and a consolidated amended complaint was filed on October 11, 2001, purporting to represent a class of shareholders who purchased shares of Company stock from May 9, 2000 through February 15, 2001. The complaint seeks compensatory damages on behalf of the class. The Court certified the shareholder class on October 10, 2003. Discovery is ongoing.

The original Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. During the Class Period, Schering-Plough issued three earnings releases highlighting the Company's success and continued growth. These releases contained statements that were materially false and misleading because they failed to disclose certain material facts, including, inter alia: (a) that the Company was experiencing manufacturing difficulties at its plants in Union, N.J., Kenilworth, N.J., Manati, Puerto Rico and Las Piedras, Puerto Rico, such that it was distracted from producing products at the levels budgeted for the respective plants; (b) that the Company's manufacturing policies and procedures at its plants in Union, N.J., Kenilworth, N.J., Manati, Puerto Rico and Las Piedras, Puerto Rico, did not comply with applicable FDA regulations regarding the manufacture of pharmaceutical products; (c) that the Company's manufacturing problems were more widespread and severe than the previously-announced problems at the aerosol plant; (d) given the Company's manufacturing difficulties, the risk that the FDA would force the Company to curtail its operations and delay FDA approval of desloratadine so that the Company could correct the problems was much greater than defendants had disclosed; and (e) that based on past practices and policies of the FDA and the nature and extent of the identified deficiencies, it was certain that the FDA would conduct a follow-up inspection of the New Jersey facilities. The Complaint further alleges that defendants' failure to disclose the extent of its exposure to its manufacturing problems, falsely implied that there were no known impediments to receiving approval for its most-important new drug, desloratadine, which was in the final stage of the FDA's review process. Desloratadine, which is to be marketed as Clarinex, is scheduled to be the successor drug to Claritin, once the patent for Claritin expires in December 2002.