In re BioMarin Pharmaceutical Inc. Securities Litigation

Background

The case is a proposed securities class action. In an earlier order, the court denied BioMarin’s motion to dismiss. Among other things, the court held that 13 challenged statements were not protected by the Private Securities Litigation Reform Act’s (PSLRA) safe harbor. The plaintiffs alleged that BioMarin and several executives misled investors about the progress of a new hemophilia therapy and their interactions with the Food and Drug Administration.

The PSLRA safe harbor can protect certain forward-looking statements when they are identified as such and accompanied by meaningful warnings about important factors that could cause actual results to differ materially. It can also apply when the plaintiff cannot prove that the statement was made with actual knowledge that it was false or misleading. In the earlier order, the court found that the challenged statements were not accompanied by meaningful cautionary language and were not shown to have been made without actual knowledge of their falsity.

Motion for Leave to Seek Reconsideration

BioMarin asked for permission to file a motion for reconsideration of the earlier order. It argued that the court had applied an overly demanding standard to the cautionary-language part of the PSLRA safe harbor. In BioMarin’s view, the court improperly relied on legal principles that predated the PSLRA and that the statute had displaced. BioMarin contended that, under the correct standard, five of the 13 challenged statements would have been protected by the safe harbor.

The court rejected that argument. It explained that the PSLRA codified the common-law “bespeaks caution” doctrine, which allows sufficiently specific warnings to protect defendants from securities-fraud claims based on forward-looking statements. The court held that its earlier requirement—that cautionary language precisely and directly address the alleged misrepresentations—was consistent with the PSLRA, Supreme Court precedent, and Ninth Circuit precedent.

The court also rejected BioMarin’s argument that later Ninth Circuit decisions adopted a less demanding standard. It concluded that those decisions did not overrule or reject the principles requiring cautionary language to be sufficiently targeted to make the alleged misrepresentation non-material. The motion for leave to file a motion for reconsideration was denied.

Motion to Certify an Interlocutory Appeal

BioMarin alternatively asked the court to certify the safe-harbor issue for an interlocutory appeal. Such certification requires a controlling legal question, substantial grounds for disagreement, and a determination that an immediate appeal may materially advance the end of the litigation.

The court declined to certify the issue. It found that BioMarin’s argument largely rested on a misreading of Ninth Circuit law and that BioMarin had not shown substantial disagreement within the circuit. The court further explained that, even assuming BioMarin’s position were correct, an appeal would affect only five of the 13 challenged statements. The other statements would remain in the case, and the appeal would not materially advance the litigation’s termination. The motion for leave to certify the issue for interlocutory appeal was denied.

Disposition

The court denied the motion for leave to file a motion for reconsideration or certify the issue for interlocutory appeal.