Johnson & Johnson (JNJ), the world’s largest health products company, must defend a lawsuit claiming it misled investors about quality control-failures at manufacturing plants that led to recalls, a judge ruled.
U.S. District Judge Freda Wolfson in Trenton, New Jersey, ruled Dec. 19 that the securities fraud suit against J&J, Colleen Goggins, the former head of its consumer group, and another executive may go forward. She dismissed claims against Chief Executive Officer William Weldon and Peter Luther, president of the McNeil Consumer Healthcare division. The judge didn’t rule on the merits of the class-action, or group, lawsuit.
The case focuses on recalls of over-the-counter drugs made at McNeil plants in Las Piedras, Puerto Rico, and Fort Washington, Pennsylvania. Investor Ronald Monk said that J&J and its executives made misleading statements about details of the recalls and that he suffered stock losses after the true reasons for the recalls became public. As part of a so-called phantom recall, J&J even hid its recall of a batch of Motrin tablets, Monk said.
Wednesday, December 21, 2011
J&J Must Defend Securities-Fraud Lawsuit Over Drug Recalls, Judge Rules - Bloomberg