Glazing Employers and Glaziers Union Local #27 Pension and Retirement Fund v…

Background

The plaintiff brought a proposed class action under the Private Securities Litigation Reform Act against iRhythm Technologies, Inc. and its CEO, Quentin Blackford. The complaint alleges that defendants made false or misleading statements about the Zio AT, a device that transmits heart-event data for physician monitoring.

In an earlier order, the court granted in part and denied in part defendants’ motion to dismiss. The court rejected claims concerning statements describing the Zio AT as a mobile cardiac telemetry device because the plaintiff had not adequately alleged those statements were false. The court allowed other allegations to proceed concerning the device’s near-real-time reporting, suitability for high-risk or at-risk patients, and accuracy.

The earlier order also held that the plaintiff had adequately alleged Blackford’s scienter, meaning knowledge of or disregard for the alleged falsity, beginning in July 2022. The court relied on allegations concerning his involvement with Food and Drug Administration communications and investigations, his signatures on company filings, and his knowledge of transmission-limit issues. The court also held that the plaintiff adequately alleged loss causation, meaning a connection between the alleged misstatements and the investors’ losses.

Defendants’ Motion

Defendants moved for judgment on the pleadings. A motion for judgment on the pleadings asks whether the complaint’s alleged facts, accepted as true, state a legally sufficient claim. Defendants argued that the plaintiff still had not adequately alleged Blackford’s scienter regarding statements about timely transmission, high-risk patients, and accuracy. They also argued that the plaintiff had not adequately alleged loss causation for statements about the device’s lag time.

Defendants pointed to company disclosures about the device’s transmission limit and argued that those disclosures undermined an inference that they intended to deceive investors. They also argued that the complaint did not connect Blackford to information from confidential witnesses or to certain customer complaints described in an FDA document.

Court’s Reasoning

The court held that the law-of-the-case doctrine barred defendants from rearguing scienter and loss causation. That doctrine generally means that a court’s ruling on a legal issue continues to govern later stages of the same case unless the ruling is properly reconsidered.

The court stated that defendants had already raised the same issues in their motion to dismiss and that the earlier order had expressly ruled that the complaint adequately alleged Blackford’s scienter and loss causation. Defendants had not sought permission to file a motion for reconsideration. The court also concluded that the defendants’ arguments did not rely on newly discovered facts, a change in law, or a manifest failure by the court to consider relevant facts or legal arguments.

The court rejected defendants’ reliance on Federal Rule of Civil Procedure 12(h)(2). It explained that the rule concerns defenses and did not permit defendants to reassert the same failure-to-state-a-claim defense based on the same complaint allegations merely by labeling the filing a motion for judgment on the pleadings.

Disposition

The court denied defendants’ motion for judgment on the pleadings. The order states that it disposes of Docket No. 88.