Vice Chancellor J. Travis Laster dismissed the shareholder derivative lawsuit, saying it was “fatally undermined” by a ruling earlier this year from a federal judge in West Virginia. The West Virginia judge found after a two-month trial that AmerisourceBergan’s leaders had lived up to their legal obligations.
That case was originally part of sprawling multidistrict litigation brought by cities and states over the opioid crisis, but it was cleaved off to serve as a bellwether for allegations against top drug distributors. AmerisourceBergen has so far paid $6 billion to settle, and $1 billion to defend, similar claims.
Laster, writing for Delaware’s Chancery Court, acknowledged that the shareholder suit’s allegations about an “avalanche of investigations and lawsuits without any apparent response” made its claims plausible, all things being equal. But the federal court ruling tipped the scales, the judge found.
“The West Virginia court found on the merits after a lengthy trial that AmerisourceBergen had an adequate anti-diversion program in place,” he wrote. “That finding knocks the stuffing out of the plaintiffs’ claim.”
The ruling came a week after Laster issued a novel decision in favor of the pension funds leading the case, the Lebanon County Employees’ Retirement Fund and the Teamsters Local 443 Health Services & Insurance Plan.
The Dec. 15 ruling found the suit timely, adopting a new framework for evaluating allegations of wrongdoing over a long period of time, such as claims that AmerisourceBergen’s board spent years steering it into legal violations and ignoring red flags about its opioid practices.
Laster’s 45-page opinion a week later devoted considerable space to detailing those alleged red flags. The judge indicated he was sympathetic to the suit’s theory that the board wanted to delay implementing reforms, despite knowing they were sorely needed, to use as “settlement currency.”
“The complaint identifies over seventy examples of subpoenas, settlements, civil litigation, congressional reports, and analyses of regulatory risks that put the directors on notice of problems at the company,” Laster wrote. “The directors did not just see red flags; they were wrapped in them.”
But the issue at the pleading stage is whether the liability theory is plausible absent hard evidence one way or the other, the judge noted. The West Virginia case, on the other hand, involved a two-month trial assessing what actually happened, not merely what seemed plausible, Laster said.
“The findings in the West Virginia decision are not preclusive, but they are persuasive,” he wrote.
The board is represented by Potter Anderson & Corroon LLP; Dechert LLP; and Morgan, Lewis & Bockius LLP.
The pension funds are represented by Prickett, Jones & Elliott PA; Bernstein Litowitz Berger & Grossmann LLP; Kessler Topaz Meltzer & Check LLP; Hach Rose Schirripa & Cheverie LLP; Levi & Korsinsky LLP; and Robbins LLP.
The case is Lebanon Cty. Emp. Ret. Fund v. Collis, Del. Ch., No. 2021-1118, 12/22/22.
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