Christopher M. Wilson

Acadia Healthcare Co. Inc. and plaintiffs in a securities class action accusing the company of misleading investors about the strength of its United Kingdom operations have reached a settlement in principle, avoiding a trial that was set for later this month. According to an order signed by U.S. District Judge William L. Campbell Jr. on Friday, the jury trial previously set for Nov. 18 has now been canceled, and all deadlines are vacated. The plaintiffs plan to file a motion for preliminary approval of the settlement within 30 days, according to the settlement notice also filed on Friday. Last month, Judge Campbell granted a partial summary judgment motion filed by investors that focused solely on the issue of reliance, or whether there was a causal connection between the defendants' alleged misrepresentation and the investors' injury. Shortly after, Acadia filed a motion to certify the order for immediate appeal and for a stay of the proceedings. Acadia had also filed a cross-motion for summary judgment, arguing that the safe harbor provision of the Private Securities Litigation Reform Act bars the suit's claims related to projected earnings at Acadia's U.K. facilities in 2017 and that the suit lacks evidence of loss causation. The litigation, which dates back to 2018, alleges that in an effort to support a flow of referrals that would fill beds at its inpatient and outpatient residential treatment facilities, "Acadia consistently and repeatedly represented to the public and investors that it provided high-quality patient care." "In reality, and in stark contrast to defendants' public statements, Acadia's tactic of acquiring facilities and then systemically cutting staff generated alarming incidents of abuse, neglect and, on several occasions, death," the investors said. The defendants argued that an outside investment adviser for the lead plaintiff, the Chicago Laborers' Pension Fund, knew of certain risks before purchasing Acadia stock during the class period, did not think the company was engaged in fraud after reviewing the alleged corrective disclosures, and did not sell its stock after related financial guidance was issued. However, Judge Campbell said last month when granting partial summary judgment that the defendants do not explain "how the foregoing shows or supports an inference that the investment advisor would have bought or sold Acadia stock even if it had been aware that the stock's price was tainted by fraud. Nor can the court think of any reason." On whether the defendants had actual knowledge that the challenged statements were false or misleading when made, the judge said circumstantial evidence in the suit including that the defendants made unreasonable performance expectations, ignored monthly results and forecasts, and sold millions of dollars' worth of Acadia stock months before lowering projected earnings guidance, is sufficient to raise a genuine dispute of fact concerning whether the defendants acted with scienter. Representatives for the parties did not immediately respond to requests for comment Monday. The investors are represented by Christopher M. Wood, Jerry E. Martin, Darren J. Robbins, Sam S. Sheldon, Darryl J. Alvarado, J. Marco Janoski Gray, Ting H. Liu and T. Alex B. Folkerth of Robbins Geller Rudman & Dowd LLP, Justin J. Lannoye of Dowd Bloch Bennett Cervone Auerbach & Yokich, and Michael Bauman of Pitta LLP. The defendants are represented by Steven A. Riley, Milton S. McGee III and Elizabeth O. Gonser of Riley & Jacobson PLC, and David L. Balser, Jessica P. Corley, Lisa R. Bugni and Brandon R. Keel of King & Spalding LLP. The case is St. Clair County Employees' Retirement System v. Acadia Healthcare Co. Inc. et al., case number 3:18-cv-00988, in the U.S. District Court for the Middle District of Tennessee.

Nov 10

3 min

A coalition of 21 states and two business groups told the U.S. Supreme Court on Monday that lower courts' allegedly premature certification of collective actions drives up the cost of litigation and forces employers into multimillion-dollar settlements, backing Eli Lilly & Co. in a worker's age bias case. The amicus briefs by a coalition of states and a pair of business groups follow Eli Lilly's October petition seeking Supreme Court review of a Seventh Circuit decision that the company says introduced a new standard for certifying collective actions that clashes with the Fifth and Sixth circuits. (iStock.com/JHVEPhoto) A group led by Ohio Attorney General Dave Yost, including 20 Republican state attorneys general and the Republican-led Arizona Legislature, argued in an amicus brief that conditional certification of a collective action is "a creature of judicial innovation" that imposes massive costs on defendants and that it needs to be undone. The U.S. Chamber of Commerce and the CHRO Association told the Supreme Court in their own amicus brief that, at the very least, it needs to clarify when lower courts can order notice of a proposed collective action to be sent to nonparties. The amicus briefs follow Eli Lilly's October petition seeking high court review of a Seventh Circuit decision that the company says introduced a new standard for certifying collective actions that clashes with the Fifth and Sixth circuits. According to the states, conditional certification in suits under the Fair Labor Standards Act, the Equal Pay Act and the Age Discrimination in Employment Act allows notices to be sent to workers who may want to opt in. However, the states argued that "conditional certification is often the ballgame" because even before employees opt in, the case proceeds with discovery and motion practice. "There exists no other authority — constitutional, historical, traditional, or otherwise — that allows judges to reach beyond the courthouse steps to solicit non-parties into court," the states wrote. "In sum, court-sanctioned plaintiff solicitation sits outside the judicial power." Instead, the states said conditional certification of collective actions comes from the Supreme Court's 1989 decision in Hoffmann-La Roche Inc. v. Sperling , which held that courts can determine that absent employees are likely similarly situated and approve a notice inviting them to join the suit. However, lower courts don't agree about when to send such notices, as the law says nothing about conditional certification, which sows confusion, according to the states. "States, like all defendants staring down multi-million-dollar demands, deserve clear guidance," the states wrote. "Without any clear rule, states will continue to bear the cost of a practice untethered from statutory text, constitutional principles, and history and tradition." Joining Ohio and Arizona in the amicus brief are attorneys general from Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and West Virginia. Similarly, the Chamber and CHRO Association said many courts allow notice of collective actions to be sent out "almost as a matter of course," based on the lack of guidance, allowing plaintiffs "to greatly expand the scope of collective actions at will, creating significant in terrorem settlement pressure." The business groups argued that if the Supreme Court decides not to fully upend Hoffmann-La Roche, it should at least tell lower courts to determine whether employees are "similarly situated" before allowing notices to be sent. According to the amicus brief, the commonality, typicality and predominance requirements that guide certification of class actions could easily be applied to collective actions as well. "And because courts uniformly require plaintiffs to prove the class certification factors by a preponderance of evidence, the same standard should apply to collective actions," the Chamber and CHRO Association wrote. Eli Lilly's petition for certiorari stems from a 2023 lawsuit in which sales worker Monica Richards accused the company of preferring to promote millennials over older employees. An Indiana federal court granted collective certification in 2024, and Eli Lilly subsequently challenged that decision. A Seventh Circuit panel ruled in August that district courts must consider evidence from both sides to determine whether workers are sufficiently similarly situated to proceed together. The majority also concluded that courts may issue notice to potential plaintiffs when the named plaintiffs have raised at least a material factual dispute regarding the similarity of potential plaintiffs. Harold Lichten, who is representing the workers, told Law360 that he was "somewhat surprised that so many states apparently believe that large companies who demonstrate a pattern of discriminating against older workers believe that such workers should not receive fair notice of a pending lawsuit so that they can participate and vindicate their rights." "As for the Chamber of Commerce, I was expecting no less," Lichten wrote. Representatives of Eli Lilly did not immediately respond to requests for comment Monday. Eli Lilly is represented by Jonathan M. Linas, E. Michael Rossman, James R. Saywell, Noel J. Francisco, Chris Pagliarella and Annie M. Wilson of Jones Day. Richards is represented by Harold Lichten of Lichten & Liss-Riordan PC. The states are represented by their respective attorneys general. The U.S. Chamber of Commerce and the CHRO Association are represented by Jennifer B. Dickey and Jonathan D. Urick of the U.S. Chamber Litigation Center, G. Roger King of the CHRO Association, and Scott A. Keller and Drew F. Waldbeser of Lehotsky Keller Cohn LLP. The case is Eli Lilly and Company et al. v. Monica Richards, case number 25-476, in the U.S. Supreme Court.

Nov 17

4 min

A Pennsylvania federal judge granted final approval Friday for a $200 million deal resolving employee benefits plans' claims against Sun Pharmaceutical and Taro Pharmaceuticals in the sprawling price-fixing litigation against generic-drug makers, while again ensuring the claims from dozens of state attorneys general remain untouched by the settlement. U.S. District Judge Cynthia M. Rufe said the latest deal in the multidistrict litigation, between Sun and Taro and end payor plaintiffs, bears all the hallmarks required for final approval. She said class action treatment was appropriate for the "thousands, if not millions, of class members," who she said shared common issues and were adequately represented by the named plaintiffs and class counsel now set under the order for one-third of the settlement. "There has been extensive motion practice and discovery through which the parties have learned of the claims. Sun/Taro have denied liability, and in the absence of the settlement, [end payor plaintiffs] would be required to litigate issues of liability, damages, and class certification," Judge Rufe said. "Sun/Taro faces many other cases and claims in this MDL, and settlement at this time assures a fair payment to [end payor plaintiffs] on their claims against Sun/Taro." According to Judge Rufe's order, no class members objected to the settlement. The judge heard, however, from state attorneys general who asked for the same consideration the court gave to a deal between the end payor plaintiffs and Sandoz, ensuring that the MDL agreement doesn't affect their ability to pursue sovereign claims in Connecticut federal court. "The amici states ask this court to mirror its ruling on [end payor plaintiffs]' settlement with Sandoz Inc. and Fougera Pharmaceuticals. That request is approved," Judge Rufe said. "As it has previously, the court stresses that there is no question that the state attorneys general have played a key role in the litigation over the prices of generic pharmaceuticals, and that their lawsuits could also result in meaningful relief in some form to some of the class members here." Judge Rufe did, however, repeat her findings that the enforcers haven't shown that their authority to sue on behalf of their citizens can supplant the ability of consumers to seek damages. "Further, once again, this court determines that any requests for the reporting of claims data, anti-suit injunctions, and potential offsets are premature at this stage," she said. The amicus brief filed in early December represented nearly four dozen enforcers from states including Alaska, California, Colorado, Georgia, Illinois, Kentucky, Maryland, Michigan, Mississippi, Nebraska, New Jersey, North Carolina, Oklahoma, Rhode Island, Vermont and Virginia, along with the District of Columbia, Puerto Rico, the U.S. Virgin Islands and the Northern Mariana Islands. Both the MDL and the Connecticut case target dozens of drugmakers accused of fixing the prices of a range of generic drugs. Multiple settlements have already been inked while other parts of the litigation move forward. In Friday's order, Judge Rufe also imposed the same requirements for opting out of the deal that she previously put in place for insurers seeking to exclude their administrative services to only customers, who have signed over their ability to sue to the insurers. A pair of Blue Cross Blue Shield units said they shouldn't have to submit declarations attesting to their ability to opt out of the agreement on behalf of their customers. Judge Rufe on Friday stood by a mandate to show contract language attesting to the opt-out authority for specific clients, which she also said had been met by Health Care Services Corp. for its list of 504 entities. In a separate decision Thursday, Judge Rufe granted a bid from the wider group of generic-drug makers seeking to again dismiss the state law claims she tossed in February 2019 under the laws of Illinois, South Carolina, Montana, Rhode Island, Georgia and West Virginia. According to the ruling, the drugmakers sought the dismissal of the claims from end payor plaintiffs, indirect reseller plaintiffs and direct action plaintiffs because the MDL had expanded since the 2019 decision. Judge Rufe held that nothing in the law has changed in the intervening years that would make those claims now live. Representatives for the parties did not immediately respond to request for comment Friday. The states are represented by their respective attorneys general. The end payor plaintiffs are represented by Roberta Liebenberg of Fine Kaplan & Black. The indirect reseller plaintiffs are represented by Christian Hudson of Cuneo Gilbert & Laduca LLP. Sun and Taro are represented by John M. Taladay, Christopher P. Wilson, Edward W. Duffy, JoAnna B. Adkisson and Michael A. Munoz of Baker Botts LLP and Lauri A. Kavulich and Lindsay S. Fouse-Hopkins of Clark Hill PLC. The case is In re: Generic Pharmaceuticals Pricing Antitrust Litigation, MDL number 2724, in the U.S. District Court for the Eastern District of Pennsylvania.

Jan 23

4 min

Sun Pharmaceutical and Taro Pharmaceuticals can use their $200 million settlement with the "end payors" for generic drugs in an alleged price-fixing scheme as a defense in a similar lawsuit brought by 47 states and territories, the Connecticut federal judge overseeing the case ruled Wednesday. In an order posted only to the case's docket, U.S. District Judge Michael P. Shea said Sun and Taro could amend their list of affirmative defenses in the Connecticut case to reflect the settlement and release in a sprawling, Pennsylvania-based multidistrict litigation, though he said the defense would not give the drugmakers a do-over on past motions practice. "I express no opinion on whether Sun and Taro can sustain their new defenses, but I note that I am not going to reopen summary judgment practice in this case," the judge's order said. "I set the schedule for summary judgment motions long ago, and there are many such motions still pending, including those of Sun and Taro. Sun and Taro may prosecute their defenses at trial, either through motions in limine or a motion for directed verdict." The judge pointed back to a similar order he'd granted for Sandoz on Feb. 17, after the drugmaker and its subsidiaries signed a $275 million deal last year. Sun, Taro, Sandoz and others face a raft of antitrust litigation over claims that the companies conspired to keep the prices of certain generic drugs artificially inflated. While consumers' litigation has proceeded in the Pennsylvania MDL, cases brought by state and territorial attorneys general were consolidated in Connecticut and have been proceeding separately, with the judge overseeing the MDL only allowing the attorneys general to join her cases as amici. In that capacity, the states have asked the MDL court to ensure the various settlements there do not preclude them from pursuing their own cases, and have used the possibility that the drugmakers could point to the settlements as defenses in their unsuccessful objections to the deals. The states are represented by their respective attorneys general. The defendants are represented by John Taladay, Christopher Wilson, Edward William Duffy, JoAnna B. Adkisson and Michael Anthony Munoz of Baker Botts LLP, Jennifer L. Morgan of Harris Beach Murtha Cullina PLLC, Dorothea Allocca of Clifford Chance LLP, and Jeffrey Mueller of Day Pitney LLP. The case is Connecticut et al. v. Sandoz et al., case number 3:20-cv-00802, in the U.S. District Court for the District of Connecticut.

Feb 26

2 min