O'Melveny Obtains Dismissal of Securities Fraud Class Action Against WellPointSeptember 28, 2010
FOR IMMEDIATE RELEASE
O’Melveny & Myers LLP
O’Melveny & Myers LLP
LOS ANGELES, CA—September 28, 2010—O’Melveny & Myers LLP recently obtained dismissal of a securities fraud class action filed against WellPoint, Inc. in the US District Court for the Southern District of Indiana.
US District Judge Sarah Evans Barker dismissed claims that the company and some of its officials had violated the antifraud provisions of the federal securities laws by issuing inflated financial projections. The court ruled that the plaintiff failed to allege facts showing that any of the defendants knowingly disclosed any inflated projections or any other false or misleading statements. In rejecting the plaintiff’s theories, the court adopted the O’Melveny team’s argument that, applying the pleading standards of the federal securities laws, the plaintiff failed to show, with particularity, that each individual defendant acted knowingly. The judge also took the plaintiff to task for lumping defendants together in her allegations, writing that “[t]here is hardly any accusation directed specifically toward any of the individual defendants.”
“The court’s analysis was thorough and found that plaintiff failed to satisfy the rigorous pleading standards of the Private Securities Litigation Reform Act,” said Seth Aronson, partner and Securities Litigation Practice Chair at O’Melveny.
The plaintiff in Wade v. WellPoint, Inc., et al., had claimed that WellPoint, its CEO, its CFO, and its Chairman knowingly provided inflated financial projections without a factual basis and failed to disclose materially adverse conditions that would impact those forecasts. The plaintiff, Dorothy Wade, relied significantly on steps taken by WellPoint to mitigate business and economic challenges as the basis for claiming that the defendants knew WellPoint’s projections were inflated.
The court also wrote that, although it did not have to reach the issue, WellPoint’s statements likely were protected under the safe harbor provision of the securities laws for forward looking statements because WellPoint disclosed that its projections were subject to the very risks that eventually caused the company to revise downward those projections. The court gave the plaintiff 45 days to amend her complaint to attempt to salvage her claims.
WellPoint was represented by a Los Angeles-based O’Melveny team led by partners Seth Aronson and Michael Maddigan, and including counsel Jorge deNeve, and associates Lindsay Geida and Miguel Bahamon.
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