Matrixx Initiatives v. Siracusano (09-1156)

argument 09-1156

Matrixx Initiatives v. Siracusano

Supreme Court of the United States 1h 0m 5 speakers 8 chapters transcribed 6 days ago official recording ↗

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What is the central legal question about materiality in Matrixx Initiatives v. Siracusano?

John G. Roberts 0:01

We'll hear argument first this morning in case 09-1156, Matrix Initiatives v. James Siracusano. Mr. Hacker.

Michael J. Hocker 0:14

Mr. Chief Justice, and may it please the Court, all drug companies receive, on an almost daily basis, anecdotal hearsay reports about alleged adverse health events following the use of their products. Those incident reports do not themselves establish any reliable facts about the drug's performance or its safety, especially where, as here, there are only a handful of reports out of millions of products sold over a four-year period.

Elena Kagan 0:40

Mr. Hacker, do we know that from this record? I mean, we know that the plaintiffs were able to identify some dispute, whether it's 12 or 23. But — Do you represent that there were no other complaints made so that, let's say, there had been discovery — now we're just at the pleading stage — the company would have said, that's it, we didn't have any more?

Michael J. Hocker 1:09

MR. All I can speak for is what's alleged in the complaint. And the complaint, no matter how read, doesn't allege any more than 23 —

Elena Kagan 1:16

JUSTICE SOTOMAYOR But they might have been able, through discovery, to find that there were many more.

Michael J. Hocker 1:20

MR. That's true. But there's no allegation that what they know about or what they could find would have been a statistically significant difference between the rate of reported events and the

Elena Kagan 1:32

background of — JUSTICE SOTOMAYOR Why shouldn't that determination be deferred until there's discovery and then we can know how many reports there really were?

Michael J. Hocker 1:41

MR. Because it's incumbent on a plaintiff to come to court with a case, to plead the facts necessary to establish all of the elements of a claim. And a securities fraud claim, of course, requires both materiality and scienter. And neither of those is established unless the company has knowledge of facts establishing a reliable basis for inferring that the drug itself is the cause of the reported event. Absent information like that, there is neither materiality nor scienter under the securities laws because neither the company nor an investor, until there's reliable evidence of a causal link between the two products, Neither a company, excuse me, a link between the product and the event, neither a company nor an investor would have any reason to think that an adverse event report actually indicates a problem with the product as opposed to- Can there be

Samuel A. Alito 2:28

some situations in which statistically significant evidence would not be necessary? For example, suppose some very distinguished physicians concluded based on clinical trials that there was a connection between a drug and a very serious- side effect. Could that establish materiality?

Michael J. Hocker 2:49

Well, I think a distinguished physician would not conclude that there's a connection unless the clinical trials reveal a statistically significant difference between what they've seen and what they would expect to see where there are no associations. So there's that point, Your Honor. But the second point I would make is we acknowledge there are a very narrow, limited number of circumstances under which a claim can be pled absent statistically significant evidence, but that's because doctors and researchers will conclude that there may be causation under narrow circumstances. For example, I think the most common set of criteria, the Bradford Hill criteria, but nothing like that is pled here, Your Honor.

Michael J. Hocker 3:26

Mr.

Unknown 3:27

Hacker, the complaint did not rely exclusively upon these adverse incidents, but also on referred to a study, a report by researchers at the American Rhinologic Society, which asserted that there was a connection. So is the question before us simply whether in isolation the adverse incidents would be enough, or is not the question whether those adverse incidents placed next to this study

Michael J. Hocker 4:06

Well, two points, Your Honor. First, the plaintiffs have, throughout this litigation, framed their case as one based on the failure to disclose adverse event reports. It's the number of adverse event reports that they say is the problem. And they're not saying that there was a study out there and that we failed to disclose the study.