Supreme Court Allows Investor Lawsuit Over Zicam to Proceed
Supreme Court Allows Investor Lawsuit Over Zicam to
Proceed
The US Supreme Court ruled on Tuesday that a class-actions lawsuit filed against Matrixx Initiatives over its Zicam cold medication. The court made the decision after the company failed to disclose initial reports of adverse effects caused by the drug. Justice Sonia Sotomayor wrote the court's unanimous opinion, noting that investors have stated a sufficient claim under federal securities law so that the lawsuit will be allowed to proceed.
The investors who filed the suit claim that Matrixx, which has been acquired by a private equity firm since the suit was filed, violated securities laws by failing to disclose early reports of as many as 23 people losing their sense of smell after using Zicam. Matrixx was ordered to pull two intranasal forms of the drug off of shelves in 2009, after 130 similar reports surfaced. The company pulled those two products off the shelf, but continued to dispute claims that its flagship product was unsafe.
The lawsuit filed by investors in the company was initially dismissed by a judge, but an appeals court decided the plaintiffs had shown enough of a case for it to move forward. The nation's highest court on Tuesday upheld that ruling. Matrixx argued that the initial reports were not statistically significant enough to require the company to disclose them, an argument the court dismissed as flawed.
The US Supreme Court ruled on Tuesday that a class-actions lawsuit filed against Matrixx Initiatives over its Zicam cold medication. The court made the decision after the company failed to disclose initial reports of adverse effects caused by the drug. Justice Sonia Sotomayor wrote the court's unanimous opinion, noting that investors have stated a sufficient claim under federal securities law so that the lawsuit will be allowed to proceed.
The investors who filed the suit claim that Matrixx, which has been acquired by a private equity firm since the suit was filed, violated securities laws by failing to disclose early reports of as many as 23 people losing their sense of smell after using Zicam. Matrixx was ordered to pull two intranasal forms of the drug off of shelves in 2009, after 130 similar reports surfaced. The company pulled those two products off the shelf, but continued to dispute claims that its flagship product was unsafe.
The lawsuit filed by investors in the company was initially dismissed by a judge, but an appeals court decided the plaintiffs had shown enough of a case for it to move forward. The nation's highest court on Tuesday upheld that ruling. Matrixx argued that the initial reports were not statistically significant enough to require the company to disclose them, an argument the court dismissed as flawed.
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