One of the more distinctive litigation phenomena over the last several years has been the series of securities lawsuits filed against companies related to the opioid crisis. Plaintiffs’ attorneys have filed securities suits against opioid manufacturers, distributors, and even retailers. While a number of these lawsuits have resulted in settlements, several of them have also been dismissed. In the latest opioid-related securities suit to result in a dismissal, on August 17, 2022, the judge presiding over the opioid-related litigation pending against Endo International in the District of New Jersey granted the defendants’ motion to dismiss with prejudice. Although the dismissal is significant, there is more to be taken into account when assessing the opioid-related corporate and securities lawsuits.



Endo is a pharmaceutical company incorporated in Ireland but based in Pennsylvania. Endo is one of several pharmaceutical companies that engaged in the manufacture of opioids. As a result of these activities, Endo found itself caught up in the massive opioid related litigation filed on behalf of consumers, municipalities, and states, among others.


In June 2021, shareholder plaintiffs filed a securities class action lawsuit in the District of New Jersey against the company and certain of its directors and officers. Among other things, the plaintiffs’ complaint as amended alleged that the defendants made false and misleading statements to investors when they allegedly engaged in a coordinated campaign to obstruct the underlying opioid-related litigation and misrepresented the company’s financial condition by misrepresenting the company’s exposure to the opioid litigation. On August 31, 2021, the Court granted the defendants’ motion to dismiss the plaintiff’s first amended complaint. The court gave the plaintiff leave to file an amended complaint.


In November 2021, the plaintiff filed a second amended complaint (here). The defendants filed a renewed motion to dismiss.


The August 17, 2022 Order

In an August 17, 2022 order, District of New Jersey Judge Evelyn Padin granted the defendants’ motion to dismiss with prejudice. In assessing the plaintiffs’ second amended complaint at the outset, Judge Padin observed that the plaintiff’s second amended complaint “makes nearly identical allegations as those that the Court found deficient in the [first amended complaint].” In granting the defendants’ renewed motion to dismiss, Judge Padin found that the second amended complaint failed to allege both falsity and scienter sufficiently.


In concluding that the plaintiffs had not sufficiently alleged falsity, Judge Padin first rejected the plaintiffs’ suggestion that the defendants had misled investors based on the plaintiffs’ allegation that the defendants had tried to create the impression that it was vigorously defending the underlying litigation when the company was in fact obstructing the litigation. In rejecting these allegations, Judge Padin observed that the plaintiffs had cherry-picked incidents from the underlying opioid-related litigation where defendants were found to have engaged in discovery misconduct and ignore similar opioid-related litigation where the courts issued decisions in favor of Endo. If Endo was not ‘vigorously’ defending the litigation, then it would not have any favorable decisions, which led Judge Padin to conclude that that the plaintiffs had not pled sufficient facts as to why Endo’s disclosures were false and misleading. Judge Padin similarly found that the plaintiffs allegations concerning the company’s disclosures concerning the likely future course of the underlying litigation and the likely impact of the litigation on the company’s finances were also insufficient.


Judge Padin went on to hold that even if the plaintiffs had sufficiently pled falsity, their claims would still be dismissed “due to Plaintiffs’ failure to sufficiently plead facts supporting a strong inference of scienter.” Judge Padin found the plaintiffs’ allegations that individual defendants had signed SOX certifications insufficient to support a finding of scienter, and similarly found the plaintiffs allegations concerning the payment of bonuses and the resignation of executives insufficient. She also found the existence of discovery violations in the underlying litigation insufficient did not support a “sufficient nexus between the Defendants’ state of mind and the allegedly false or misleading statements” resulting in the outcomes of the opioid-related litigation.



Judge Padin made short work of the plaintiffs’ allegations that the defendants had committed securities fraud in their statements about the underlying opioid litigation and the way the defendants conducted the underlying litigation. However, the court’s rejection of the plaintiffs’ theories in this case should not be interpreted to suggest that the securities plaintiffs cannot at all state a claim for opioid-related securities fraud.


Indeed, an earlier opioid-related securities lawsuit against Endo itself was in fact more successful. In August 2017 (that is, four years before this lawsuit was filed) a different set of plaintiffs filed an opioid-related securities suit against the company and certain of its executives. The complaint in that case was based not on the company’s disclosures about the opioid litigation or about the way the conduct the opioid litigation. Rather, the complaint in that case was based on allegations concerning one of its opioid products and its susceptibility for abuse. That earlier lawsuit survived the defendants’ dismissal motion and ultimately settled for $82.5 million.


The settlement of the earlier Endo securities suit notwithstanding, the most significant opioid-related D&O claims have not been securities class action lawsuit; rather, the most significant opioid-related D&O claims have been derivative lawsuits. As I have noted on this site, there have been very significant settlements in opioid-related derivative lawsuits. For example, as discussed here, the opioid related derivative suit filed against the board of McKesson settled for $175 million, one of the largest derivative settlements ever. Similarly, as discussed here, the opioid-related derivative suit pending against Cardinal Health settled for $124 million.


In any event, it is clear that the opioid-related D&O litigation has been significant, notwithstanding the recent dismissal of the second of the Endo opioid-related securities lawsuits. Indeed, the plaintiffs lawyers have continued to file these opioid-related lawsuits, as I noted, for example,  with respect to the opioid-related lawsuit recently flied against Walmart.


For Endo itself, the potential liabilities from the underlying opioid-crisis related litigation continues to weigh on the company. Indeed, earlier this week Endo filed for bankruptcy as part of a $6 billion deal with some of its creditors, as the U.S. drugmaker seeks to settle thousands of lawsuits over its alleged role in the country’s opioid epidemic.