According to Lexology, on December 26, 2023, the U.S. Court of Appeals for the Second Circuit upheld the district court’s decision to dismiss a class action lawsuit. The class action lawsuit alleges that Philip Morris International made false or misleading statements regarding the scientific research supporting its application to the U.S. Food and Drug Administration and the company's prospects for sales growth in the Japanese market.
The district court held that the plaintiffs failed to sufficiently prove falsehood or science. The Second Circuit affirmed the dismissal, holding that plaintiff failed to adequately plead falsehood.
The court ruled on two first impression issues in the Second Circuit, holding that securities fraud defendants' statements that their scientific research conformed to published and internationally accepted methodological standards but were stated in general and inherently subjective terms should properly serve as Statements of opinion rather than statements of fact are analyzed. Furthermore, the court found that, although the securities fraud defendants' statements expressed interpretations of scientific data that were ultimately endorsed by the FDA, the statements themselves were "reasonable" (i.e., supported by a "meaningful investigation") as a matter of law. ).
The plaintiffs allege that Philip Morris International made false statements in securities documents and public statements about the clinical studies it conducted to support its application to the FDA to sell IQOS in the United States and marketed IQOS as a reduced-risk product. The plaintiff also claims that Philip Morris International made misleading statements about its IQOS growth forecast in Japan. The district court found that none of the challenged statements were false or misleading because all of the challenged statements were true, unactionable exaggerations, or unactionable statements of opinion. Furthermore, the district court found that plaintiffs failed to establish the required strong scientific reasoning, either by alleging facts demonstrating motive and opportunity to commit fraud or by strong circumstantial evidence of willful misconduct or reckless conduct. Accordingly, the district court granted defendants’ motion to dismiss plaintiff’s first amended complaint and denied plaintiff’s motion to reconsider. After the district court dismissed the plaintiff's second amended complaint, this time with prejudice, the plaintiff appealed.