GARBER, et al v. PHARMACIA CORP, et al

Filing 348

OPINION filed. Signed by Judge Anne E. Thompson on 5/11/2012. (eaj)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ALASKA ELECTRICAL PENSION FUND,
et al.,
Plaintiffs,

Civ. No. 03-1519

v.

OPINION

PHARMACIA CORPORATION, et al.,
Defendants.
THOMPSON, U.S.D.J.
This matter has come before the Court on Defendants Carrie Cox (“Cox”) and Pfizer,
Inc.’s (“Pfizer”) (collectively, “the Defendants”) Motion for Judgment on the Pleadings [docket
# 322] brought pursuant to Federal Rule of Civil Procedure 12(c). Plaintiffs jointly oppose this
motion [329]. After considering the submissions of the parties and without oral arguments, the
Court has reached a decision pursuant to Federal Rule of Civil Procedure 78(b). For the
following reasons the Defendants’ motion is denied.
I.

BACKGROUND

This class-action dispute arises out of the alleged securities fraud committed by
Defendants when, Plaintiffs’ claim, they failed to properly disclose the entire data-set resulting
from a scientific study of the drug Celebrex. The Court assumes the parties’ familiarity with the
underlying facts of this case.
In an Opinion filed on January 30, 2009, the United States Court of Appeals for the Third
Circuit vacated this Court’s prior decision granting summary judgment in favor of all
Defendants. See Alaska Elec. Pension Fund v. Pharmacia Corp., 554 F.3d 342, 351 (3d Cir.

1

2009).1 In originally granting summary judgment, this Court concluded that Plaintiffs were on
“inquiry notice” as of February 6, 2001. See id. at 346. The Third Circuit, however, concluded
that “[t]he totality of the evidence in the public realm as of February 2001 did not indicate a
possibility of fraud or even hint at any malfeasance or intentional impropriety . . . .” Id. at 350.
“For inquiry notice to take hold[] there must be some indicia of potential malfeasance.” Id. at
351. In this case, the Third Circuit held that “there was no indication that [Defendants]
deliberately withheld data . . . or improperly massaged the data, until the Washington Post article
in August 2001.” Id. at 350. On this basis, the Court’s grant of summary judgment was vacated
and the case was remanded for further proceedings consistent with the appellate court’s opinion.
The Defendants have now moved for judgment on the pleadings, again arguing that
Plaintiffs’ claims are untimely. They contend that, based on the Third Circuit’s holding that
“inquiry notice” occurred in August 2001, Plaintiffs’ claims must have been brought by August
2003. The Amended Complaint [37], which named Cox and Pfizer as Defendants for the first
time, was filed on October 27, 2003.
Plaintiffs, on the other hand, raise three arguments as to why the Defendants’ motion for
judgment on the pleadings should be denied. First, Plaintiffs argue that Defendants’ motion is
barred by “the law of the case” doctrine. Second, Plaintiffs contend that even if the August 2001
Washington Post article was enough to put Plaintiffs on “inquiry notice” as to certain
Defendants, this does not mean that Plaintiffs “discovered” those “facts constituting the
violation”—including both Cox and Pfizer’s “scienter”—as these terms are defined in the
Supreme Court of the United States’ recent decision in Merck & Co. v. Reynolds, --- U.S. ---,
130 S. Ct. 1784 (2010). Finally, Plaintiffs posit that their claims against the Defendants should
1

The Court of Appeals for the Third Circuit upheld this Court’s denial of Defendant’s motion to dismiss, as well as
the Court’s order granting class certification. See id. at 351–52. The Third Circuit, however, reversed the Court’s
order limiting the class period to February 5, 2001 for the same reasons, discussed infra, that the Court’s grant of
summary judgment in favor of the Defendants was vacated. See id.

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relate back to the time of the Original Complaint [1], which was filed in April 2003, well within
the two-year statute of limitations period.
II.

LEGAL STANDARD

Under Rule 12(c) of the Federal Rules of Civil Procedure, a court will grant judgment on
the pleadings if, on the basis of the pleadings, no material issue of fact remains and the movant is
entitled to judgment as a matter of law. Fed. R. Civ. P. 12(c); Sikirica v. Nationwide Ins. Co.,
416 F.3d 214, 220 (3d Cir. 2005). The standard governing a Rule 12(c) motion is the same
standard governing motions to dismiss under Rule 12(b)(6). Allah v. Hayman, No. 11-2460,
2011 U.S. App. LEXIS 17860, *8 (3d Cir. Aug. 25, 2011); Spruill v. Gillis, 372 F.3d 218, 223
n.2 (3d Cir. 2004). Therefore, a district court should conduct a three-part analysis. Malleus v.
George, 641 F.3d 560, 563 (3d Cir. 2011). “First, the court must ‘take note of the elements a
plaintiff must plead to state a claim.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)).
Second, the court must accept as true all of a plaintiff’s well-pleaded factual allegations and
construe the complaint in the light most favorable to the plaintiff. Fowler v. UPMC Shadyside,
578 F.3d 203, 210–11 (3d Cir. 2009). But, the court should disregard any conclusory allegations
proffered in the complaint. Id. Finally, once the well-pleaded facts have been identified and the
conclusory allegations ignored, the court must determine whether, on these facts, a party is
entitled to judgment as a matter of law. Sikirica, 416 F.3d at 220.
III.

LAW OF THE CASE DOCTRINE

The law of the case doctrine provides that “when a court decides upon a rule of law, that
decision should continue to govern the same issues in subsequent stages in the same case.”
Farina v. Nokia, Inc., 625 F.3d 97, 117 n.21 (3d Cir. 2010) (quoting Arizona v. California, 460
U.S. 605, 618 (1983)). In other words, “[t]he law of the case doctrine . . . acts to preclude review
of . . . those legal issues that the court in a prior appeal actually decided . . . .” In re City of
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Phila. Litig., 158 F.3d 711, 718 (3d Cir. 1998) (citing Coca-Cola Bottling Co. of Shreveport, Inc.
v. Coca-Cola Co., 988 F.2d 414, 429 (3d Cir. 1993)). This rule extends not only to issues
expressly decided by a court in the same case, but it also extends to issues decided by “necessary
implication.” Bolden v. SEPTA, 21 F.3d 29, 31 (3d Cir. 1994) (citing Doe v. N.Y.C. Dep’t of
Soc. Servs., 709 F.2d 782 (2d Cir. 1983)). There are three limited exceptions to this doctrine that
permit a court to reconsider previously decided issues, but these occur only “in extraordinary
circumstances such as where: (1) new evidence is available; (2) a supervening new law has been
announced; or (3) the earlier decision was clearly erroneous and would create manifest
injustice.” In re City of Phila. Litig., 158 F.3d at 718.
IV.

ANALYSIS

In deciding the Defendants’ pending motion, there are several issues that the Court must
address. First, the Court must determine the scope of Third Circuit’s previous holding in this
case at Alaska Elec. Pension Fund, 554 F.3d 342. Next, the Court must determine whether the
scope of this appellate opinion forecloses either party’s arguments. Finally, because the Court
has determined that the Third Circuit opinion does not mandate a particular result in this pending
motion, as will be explained infra, the Court must determine whether the facts as alleged in
Plaintiffs’ Amended Complaint and viewed in the light most favorable to the Plaintiffs facially
show non-compliance with the statute of limitations. Each of these issues will be addressed in
turn.
A. Scope of the Third Circuit’s Holding
The first issue that the Court must address in deciding Defendant’s motion is the scope of
the Third Circuit’s holding in Alaska Elec. Pension Fund, 554 F.3d 342. Plaintiffs argue that, in
its earlier opinion in this case, the Third Circuit expressly ruled that Plaintiffs’ claims are not

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barred by the statute of limitations. (See Pls.’ Opp. Br. at 6). The Third Circuit’s opinion,
however, was considerably narrower.
As the Defendants correctly point out, the Third Circuit held only that the date of
“inquiry notice” in this case occurred on August 5, 2001, the date on which the Washington Post
article was published. See Alaska Elec. Pension Fund, 554 F.3d at 350. The Third Circuit
concluded that “[f]or inquiry notice to take hold, there must be some indicia of potential
malfeasance. Because no such indicia existed [at least until August 5, 2001], we will vacate the
District Court’s grant of summary judgment.” Id. at 351. The appellate court did not issue a
directive to this Court mandating a holding that the Plaintiffs’ claims fall within the applicable
statute of limitations period. The Third Circuit made its limited, narrow holding clear in a
footnote, in which the court explained: “Here, we merely conclude that, in the absence of any
indication that defendants did not believe the truth of their own statements, investors were not on
inquiry notice of § 10(b) claims.” Id. at 351 n.10. Thus, instead of deciding the larger question
of whether Plaintiffs’ claims are barred by the statute of limitations, the Third Circuit reached the
narrower question of determining at what time the Plaintiffs were put on inquiry notice and
“remand[ed] for proceedings consistent with [its] Opinion.” Id. at 352.
“On remand, a trial court is free to ‘make any order or direction in further progress of the
case, not inconsistent with the decision of the appellate court, as to any question not settled by
the decision.’” Casey v. Planned Parenthood, 14 F.3d 848, 854 (3d Cir. 1994) (quoting Bankers
Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 950 (3d Cir. 1985)) (emphasis added). “In the
absence of specific directions, the question as to what further proceedings can be had consistent
with the opinion of the appellate court must be determined from the nature of the case and the
pertinent statutory provisions.” Bankers Trust Co., 761 F.2d at 950 (holding that district court
erred in construing appellate mandate by failing to consider issues on remand that were not
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addressed in the previous appellate opinion). The “general rule” to be applied when an appellate
court remands for further consistent proceedings is that “the case goes back to the trial court and
there stands for a new determination of the issues presented as though they had not been
determined before, pursuant to the principles of law enunciated in the appellate opinion.” Id.
(citing United States v. Iriarte, 166 F.2d 800, 803 (1st Cir. 1948)). Here, because the ultimate
statute of limitations question was not decided on the previous appeal, a ruling on this issue by
the Court would not be inconsistent with that appellate decision. The law of the case doctrine,
therefore, does not bar the Defendants’ motion.
B. “Inquiry Notice” vs. “Discovery” Standard
The next issue for the Court to address is whether the Third Circuit’s determination that
Plaintiffs were put on inquiry notice as of August 5, 2001 mandates judgment in favor of the
Defendants. As an initial matter, Plaintiffs argue that the Court should not take into
consideration matters outside the pleadings and, as to those facts contained in the pleadings, the
Court must view them in the light most favorable to the Plaintiffs. (Pls.’ Opp. Br. at 4 (citations
omitted)). Although this is, generally speaking, a correct recitation of the law, the Court is also
permitted to take into consideration when deciding a Rule 12(c) motion “items subject to judicial
notice, matters of public record, orders, and items appearing in the record of the case.” Fisher v.
Rite Aid Corp., 764 F. Supp. 2d 700, 702 (M.D. Pa. 2011) (quoting Buck v. Hampton Twp. Sch.
Dist., 452 F.3d 256, 260 (3d Cir. 2006) (internal quotations omitted)) (emphasis added), aff’d in
part and rev’d in part on other grounds, 2012 U.S. App. LEXIS 6216 (3d Cir. Mar. 27, 2012).
Therefore, it is proper to consider those findings made by the Third Circuit on appeal.
Moreover, the law of the case doctrine requires the Court to accept August 5, 2001 as the date
Plaintiffs were put on inquiry notice. This is true regardless of whether the facts contained in the
pleadings, viewed in light most favorable to the Plaintiffs, might otherwise lead to a different
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conclusion. However, even accepting that August 5, 2001 is the date that Plaintiffs were put on
inquiry notice, this does not mandate the conclusion that Plaintiffs’ claims against Cox and
Pfizer are barred by the statute of limitations.
Subsequent to the Third Circuit’s opinion in this case, the United States Supreme Court
issued an opinion in the case Merck & Co. v. Reynolds, --- U.S. ---, 130 S. Ct. 1784 (2010).
There, the Court concluded that “the ‘discovery’ of facts that put a plaintiff on ‘inquiry notice’
does not automatically begin the running of the limitations period.” Id. at 1798. Rather, “the
limitations period [for a § 10(b) claim] begins to run once the plaintiff did discover or a
reasonably diligent plaintiff would have ‘discovered the facts constituting the violation’—
whichever comes first.” Id. at 1798. Importantly, the Court explained,
In determining the time at which “discovery” of those “facts” occurred, terms
such as “inquiry notice” and “storm warnings” may be useful to the extent that
they identify a time when the facts would have prompted a reasonably diligent
plaintiff to begin investigating. But the limitations period does not begin to run
until the plaintiff thereafter discovers or a reasonably diligent plaintiff would have
discovered “the facts constituting the violation,” including scienter—irrespective
of whether the actual plaintiff undertook a reasonably diligent investigation.
Id.
Prior to the Supreme Court’s decision in Merck, the prevailing standard in the Third
Circuit was that the statute of limitations period in securities fraud cases begins to run on the date
of inquiry notice. See, e.g., Benak v. Alliance Capital Mgmt. L.P., 435 F.3d 396, 400 (3d Cir.
2006); see also Alaska Elec. Pension Fund, 554 F.3d at 351 n.10 (“We note that inquiry notice—
in securities fraud suits and otherwise—is alive and well in this Court.”). In the intermediate
appellate decision that preceded the Supreme Court’s decision in Merck, the Third Circuit
clarified its then-existing standard for inquiry notice in securities fraud cases as follows: “[A]
probability, in the sense of a nearly certain likelihood, of wrongdoing is not necessary to trigger
storm warnings in this circuit. Therefore, we reaffirm that ‘whether the plaintiffs, in the exercise
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of reasonable diligence, should have known of the basis for their claims depends on whether they
had sufficient information of possible wrongdoing to place them on inquiry notice or to excite
storm warnings of culpable activity.’” See In re Merck & Co., Inc. Sec., Derivative & ERISA
Litig., 543 F.3d 150, 164 (3d Cir. 2008) (emphasis added), invalidated by, 130 S. Ct. 1784
(2010).
After granting Merck & Co.’s petition for certiorari, the Supreme Court affirmed the
ultimate conclusion that the plaintiff’s claims were not barred by the statute of limitations but
abrogated the “inquiry notice” standard employed by the Third Circuit. Merck, 130 S. Ct. at
1796–99. As the Supreme Court explained, “If the term ‘inquiry notice’ refers to the point where
the facts would lead a reasonably diligent plaintiff to investigate further, that point is not
necessarily the point at which the plaintiff would already have discovered facts showing scienter
or other ‘facts constituting the violation.’” Id. at 1797. The “inquiry notice” standard was
rejected “[b]ecause the [securities fraud] statute contains no indication that the limitations period
should occur at some earlier moment before ‘discovery,’ [such as] when a plaintiff would have
begun investigating.” Id. (emphasis in original).
Besides determining when the Plaintiffs were put on “inquiry notice,” an alternative way
of viewing the Third Circuit’s decision in this case is that the court held that the statute of
limitations began running as of August 5, 2001. Viewed in this light, under the law of the case
doctrine, such a holding would be dispositive of Plaintiffs’ claims against Cox and Pfizer.
However, a district court may reconsider prior determinations from an appellate court when “a
supervening new law has been announced.” In re City of Phila. Litig., 158 F.3d at 718.
Therefore, to the extent that the Third Circuit’s opinion in this case can be read as holding that
the statute of limitations began to run on August 5, 2001, this determination is no longer binding

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on this Court pursuant to the supervening new law announced in the Supreme Court’s decision in
Merck.
C. Did the Statute of Limitations Start to Run in August 2001?
Having determined that the Third Circuit’s opinion in this case does not mandate
judgment on the pleadings in favor of Cox and Pfizer, the Court must next determine whether
Defendants are otherwise entitled to the relief they seek. As explained above, in deciding a Rule
12(c) motion, the Court must accept all of the well-pleaded factual allegations contained in the
Plaintiffs’ Amended Complaint and view these facts in the light most favorable to the Plaintiffs.
See, e.g., Fowler, 578 F.3d at 210–11. On a Rule 12(c) motion, a district court may take into
consideration an affirmative defense if such a defense “presents an insuperable barrier to
recovery by the plaintiff.” Flight Sys. v. Elec. Data Sys. Corp., 112 F.3d 124, 127 (3d Cir. 1997)
(citing Cont’l Collieries v. Shober, 130 F.2d 631, 635–36 (3d Cir. 1942)). This defect in the
plaintiff’s claim, however, must “appear on the face of the pleading.” Cont’l Collieries, 130
F.2d at 635–36; see also Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir.
1997); Brody v. Hankin, 145 F. App’x 768, 771 (3d Cir. 2005) (stating that this requirement is
“critical”). Plaintiffs argue that, drawing all reasonable inferences in their favor from the facts
alleged in the Amended Complaint, the Defendants cannot establish that Plaintiffs discovered, or
reasonably should have discovered, facts constituting the element of scienter by August of 2001.
The Court agrees.
As explained above, the statue of limitations in a securities fraud case does not begin to
run until “discovery of the facts constituting the violation.” 28 U.S.C. § 1658(b)(1). “Facts” that

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constitute a securities fraud “violation” include those facts establishing the element of scienter.
Merck, 130 S. Ct. at 1796.2
Although the Supreme Court in Merck unquestionably rejected the “inquiry notice”
standard that had previously existed in the Third Circuit, the Court did not fully articulate the
outer bounds of the “discovery” rule. While the now-defunct “inquiry notice” standard required
the known facts to show a mere “possibility” of scienter, see In re Merck & Co., Inc. Sec.,
Derivative & ERISA Litig., 543 F.3d at 164, the “discovery” standard requires a more compelling
showing. The Court does not believe, however, that “discovery” standard requires the known
facts to show scienter with absolute certainty. Cf. Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 324 (2007) (in pleading scienter, the inference drawn from the facts “need not be
irrefutable”). Such a rule would be unworkable. See Alaska Elec. Pension Fund, 554 F.3d at
350 n.8 (“Corporations are, of course, unlikely to admit to culpable conduct . . . .”). Rather, the
“discovery” rule provides that the statute of limitations will begin to run when a reasonably
diligent plaintiff should have discovered facts permitting it to successfully plead a cause of
action under the § 10(b) of Securities Exchange Act.3 See Merck, 130 S. Ct. at 1796–97; see also
Steamfitters Local 499 Pension Fund v. Alter, No. 09-4730, 2011 U.S. Dist. LEXIS 112499, at
*16–17 (D.N.J. Sept. 30, 2011) (finding that, because plaintiff was unable to state a claim until it
had evidence of scienter, the court could not hold as a matter of law that plaintiff’s claims were
barred by the statute of limitations on a motion to dismiss).
2

Scienter refers to the “mental state embracing intent to deceive, manipulate, or defraud, and requires a knowing or
reckless state of mind.” Institutional Investors Grp. v. Avaya, Inc., 564 F.3d 242, 252 (3d Cir. 2009) (internal
quotation marks and citations omitted).
3
The Court notes that this issue has not been addressed by the Third Circuit or any district court within this circuit.
However, the standard that the Court adopts today has been adopted by the United States Court of Appeals for the
Second Circuit. See City of Pontiac Gen. Emps. Ret. Sys. v. MBIA, Inc., 637 F.3d 169, 175 (2d Cir. 2011).
Moreover, this standard is fully consistent with the Third Circuit’s decision in William A. Graham Co. v. Haughey,
646 F.3d 138 (3d Cir. 2011), in which the court discussed the difference between the accrual of a cause of action and
the “discovery rule.” See id. at 147–51. The “discovery rule” is “grounded in the notion that it is unfair to deny
relief to someone who has suffered an injury but who has not learned of it and cannot reasonably be expected to
have done so,” and it “operates in applicable cases to toll the running of the limitations period.” Id. at 150–51.

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In pleading scienter, the Private Securities Litigation Reform Act (PSLRA) requires that
a plaintiff state “with particularity facts giving rise to a strong inference that the defendant acted
with the required state of mind.” Avaya, 564 F.3d at 252–53 (internal quotation marks, citations,
and footnote omitted) (emphasis added). Therefore, whether the “discovery” of a scienterrelated fact or scienter-related facts is sufficient to “constitute the violation,” and thus whether
discovery of those facts starts the running of the statute of limitations in this case, depends on
whether those fact gives rise to a strong inference that the defendant acted with scienter.
Determining whether there is a strong inference of scienter requires a court to “weigh the
plausible nonculpable explanations for the defendant’s conduct against the inferences favoring
the plaintiff. A strong inference of scienter is one that is cogent and at least as compelling as any
opposing inference of nonfraudulent intent.” Avaya, 564 F.3d at 267. “The inference of scienter
must be more than merely reasonable or permissible but need not be irrefutable.” City of
Roseville Emps. Ret. Sys. v. Horizon Lines, Inc., 442 F. App’x 672, 675 (3d Cir. 2011) (quoting
Tellabs, Inc., 551 U.S. at 324) (internal quotations omitted). In determining whether a plaintiff
has “discovered facts constituting the violation,” each individual fact need not be looked at in a
vacuum. See Tellabs, Inc., 551 U.S. at 323. “The pertinent question is whether all of the facts . .
., taken collectively, give rise to a strong inference of scienter, not whether any individual [fact],
scrutinized in isolation, meets that standard.” Avaya, 564 F.3d at 267–68 (quoting Tellabs, Inc.,
551 U.S. at 323) (internal quotations omitted).
Viewed in light most favorable to Plaintiffs, the Washington Post article published in
August of 2001 does not meet this standard. Although, as the Third Circuit held, this article
showed the possibility that Defendants acted with scienter, this article did not raise a strong
inference that Defendants had the necessary state of mind. At best, the Washington Post article
shows facts indicating that Defendants made a materially false statement by withholding data
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from the Journal of the American Medical Association (“JAMA”). Simply showing that a
defendant has made a materially false statement is not alone sufficient to start the running of the
statute of limitations in every case. As the Supreme Court has explained, “certain statements are
such that, to show them false is normally to show scienter as well.” Merck, 130 S. Ct. at 1797.
In the context of a securities fraud allegation, however, “the relation of factual falsity and state of
mind is more context specific.” Id. Because this determination is context-specific, any pertinent
fact may be taken into consideration by a court in deciding when the line was crossed from
“inquiry notice” of scienter (i.e., when the facts would alert a reasonably diligent plaintiff of
possible fraudulent intent) to actual “discovery” of scienter (i.e., when a reasonably diligent
plaintiff should have discovered facts giving rise to a strong inference of fraudulent intent
necessary to plead a valid claim).
Several factors militate against a finding that those facts contained in the Washington
Post article show a strong inference of scienter on the part of the Defendants—especially when
viewed in the light most favorable to the Plaintiffs for purposes of this motion. First, the article
provided Pharmacia’s alleged reason for withholding the entire data-set by proposing a
seemingly legitimate scientific reason for withholding the data—i.e., after six months, more
patients withdrew from the comparison group, which biased the second half of the data. (See
Hynes Decl., Ex. 45) [324-1]. Moreover, Defendant Steven Geis is quoted as saying, “The
intention really was not to be deceptive in any way. People thought that six months was the
appropriate analysis.” (Id.). It is well-established in the Third Circuit that reassurances can
dissipate investor’s fear of malfeasance “if an investor of ordinary intelligence would reasonably
rely on” those reassurances. Benak, 435 F.3d at 402 n.16 (citation, alteration, and internal
quotation marks omitted); see also Avaya, 564 F.3d at 267 (quoting Tellabs, Inc., 551 U.S. at
324) (determining whether facts give rise to a strong inference of scienter “obliges courts to
12

weigh the ‘plausible nonculpable explanations for the defendant’s conduct’”). Nothing in Merck
casts doubt upon the continued validity of taking reassurances into consideration, so long as a
reasonable investor would do so. Second, the article noted that Pharmacia’s decision was
approved by a three-member executive committee, composed of authors of the study who were
not Pharmacia employees.
Third, in a motion for summary judgment filed concurrently with this motion for
judgment on the pleadings, Defendants themselves argue that the Washington Post article does
not in any way show facts indicating Defendants’ scienter. Specifically in relation to Defendant
Geis, who is both one of the authors of the study and quoted in the August 2001 article,
Defendants argue: “The presentation of the CLASS results reflect Dr. Geis’s opinion and belief .
. . that an analysis of the data . . . using six months worth of unconfounded data . . . would yield
the most scientifically and clinically meaningful results.” (Defs.’ Mot. for Summary Jmt. Br. at
37) [324]. As Defendants put it, “a disagreement over the proper interpretation of the CLASS
results”—which Defendants argue (by implication) is all that the Washington Post article
shows—“cannot, as a matter of law, establish scienter.” (Id.). In addition, regardless of what the
article does or does not show as it relates to Geis, the article makes no mention of either Pfizer or
Cox or whether either of these Defendants were aware of the misleading use of data.
Finally, according to Plaintiffs’ Amended Complaint, “the market discounted The
Washington Post article and Dr. Wright’s claims such that Pharmacia’s stock continued to trade
at artificially inflated prices.” (Am. Compl. ¶ 10). Courts in the Third Circuit have consistently
taken market reaction into account when determining whether plaintiffs are put on notice of
malfeasance. See, e.g., In re Merck & Co., Inc. Sec., Derivative & ERISA Litig., 543 F.3d at
167–68 (3d Cir. 2008) (collecting cases). The Supreme Court’s decision in Merck does not
change this.
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In sum, viewed in light most favorable to the Plaintiffs, the Washington Post article may
have raised the possibility that Defendants acted with scienter, thus prompting a reasonable
person to begin investigating. But, the facts contained in this article do not establish a strong
inference that Defendants acted with the requisite intent. Defendants’ argument that Plaintiffs
were fully aware of all of the Defendants’ actions at some earlier date misses the point, (see
Defs.’ Reply Br. at 6); the relevant consideration is whether Plaintiffs were aware (or reasonably
should have been aware) of facts implicating Cox’s and Pfizer’s state of mind. Therefore,
Defendants’ motion must be denied. As noted earlier, the Washington Post article need not be
looked at in isolation. In this case, however, the Third Circuit has already concluded that “[t]he
totality of the evidence in the public realm as of February 2001 did not indicate a possibility of
fraud or even hint at any malfeasance or intentional impropriety . . . .” Alaska Elec. Pension
Fund, 554 F.3d at 350; see also id. at 349 (“Neither, in our view, does the content of the FDA
staff reports [in February 2001] suggest fraud.”). Consequently, even viewing the Washington
Post article along with those facts that reasonably should have been known to Plaintiffs prior to
the article’s publication does not change the Court’s determination. Plaintiffs’ final argument—
i.e., that their claims against Cox and Pfizer should relate back to the Original Complaint—need
not be addressed.
V.

CONCLUSION

For the reasons stated above, Defendants’ Motion for Judgment on the Pleadings will be
denied. An appropriate Order will follow.

/s/ Anne E. Thompson
ANNE E. THOMPSON, U.S.D.J.
Date: May 11, 2012
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