Backing an Orrick litigation team’s arguments, a Minnesota federal judge today dismissed a securities class action lawsuit against client Cardiovascular Systems Inc. (CSI). U.S. District Judge Donovan Frank found the plaintiffs failed to make the necessary factual showing to sustain the securities fraud allegations against St. Paul, Minn.-based CSI, a medical device company.
Led by partner Rob Stern, our team had urged the judge to dismiss the case because the plaintiffs failed to plead with particularity that CSI had made any material misstatements or omissions concerning its sales practices sufficient to support their securities fraud claims. The judge’s 26-page order agreed with Orrick’s key arguments, dismissing the lawsuit without prejudice.
The plaintiffs sued for securities violations last year, basing their claims on a previously settled qui tam lawsuit and allegations from confidential witnesses. But the judge concluded there was no factual basis to support claims of illegal sales practices or that CSI knowingly misled investors about such sales practices.
“Plaintiffs must plead facts which, if true, would constitute illegal conduct,” the judge wrote. “Here, Plaintiffs have failed to adequately plead that CSI was engaged in illegal conduct.”
In a statement, Rob said of the decision: “We are gratified the court has dismissed the case and, importantly, found the plaintiffs failed to show a factual basis for their claims of illegal conduct. Hopefully, this development puts an end to the litigation, but of course we will continue to vigorously defend against any such claims in the future.”