Securities — Statistical Significance Not Subject to Judicial Notice — One-Year Statute of Limitations for § 18 Claims — Market Manipulation Requires More than False or Omissive Statements

From In re Pfizer Inc. Secs. Liti., 2008 U.S. Dist. LEXIS 50923 (S.D.N.Y. July 1, 2008):

No Judicial Notice of Statistical Significance. “The Court declines to take judicial notice of the meaning of statistical significance or of the data interpretations proffered by Defendants in the context of this motion practice. Rule 201 of the Federal Rules of Evidence provides that courts may only take notice of facts "either (1) generally known . . . or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b). While statistical significance may have certain characteristics capable of general abstraction, it. is far beyond the scope of Rule 201 to accept as fact the particular definitions of statistical significance proffered by Defendants as either facts generally known or as drawn from sources whose accuracy cannot reasonably be questioned. It is one thing to take notice of the fact that an author has written that 5% is the threshold for statistical significance. It is quite another thing entirely to use that 5% figure as a basis for rejecting the significance of complicated medical studies.”

Weight of Evidence Not Assessed on Dismissal Motion/Statistical Significance Is Fact Issue. “A motion to dismiss a complaint is not an appropriate vehicle for determination as to the weight of the evidence, expert or otherwise. Clearly, the Court cannot take judicial notice that the three studies show a lack of any statistically significant link between Celebrex/Bextra and adverse cardiovascular events because that supposed fact is neither generally known nor capable of accurate and ready determination by reference to unquestionably accurate sources. Moreover, the Court cannot determine as a matter of law whether such links were statistically insignificant because statistical significance is a question of fact.”

Market Manipulation Not Shown by Misrepresentations and Omissions Alone — PSLRA Pleading Standards Must Be Satisfied. “The Second Circuit has held ‘that where the sole basis for such claims is alleged misrepresentations or omissions, plaintiffs have not made out a market manipulation claim under Rule 10b-5(a) and (c), and remain subject to the heightened pleading requirements of the PSLRA.’" (Citations omitted.)

Section 18 Claims Subject to One-Year Statute of Limitations; Sarbanes Limitations Period Irrelevant. “Although Plaintiffs concede that they have failed to bring their claims within the one-year statute of limitations provided in 15 U.S.C. § 78r(c), they argue that the "discovery" two-year statute of limitations period contained in Section 1658(b) of the Sarbanes-Oxley Act governs. See 28 U.S.C. § 1658(b). *** Which limitations period applies turns on the nature of claims brought under Section 18. By its own terms, Section 1658(b) of the Sarbanes-Oxley Act applies only to actions ‘involv[ing] a claim of fraud, deceit, manipulation, or contrivance.’ 28 U.S.C. § 1658(b). Because fraudulent intent is not part of a plaintiff's prima facie case under Section 18—indeed, good faith is an affirmative defense—the limitations period prescribed by Section 1658(b) of the Sarbanes-Oxley Act does not trump the provisions of 15 U.S.C. § 78r(c). See Alstom, 406 F. Supp. 2d at 420-21. Accordingly, because the one-year limitations period of 15 U.S.C. § 78r(c) controls, Plaintiffs' Section 18 claims are time-barred on their face and thus must be dismissed.”

Dismissal motion granted in part, denied in part.

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