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COHN LIFLAND PEARLMAN

HERRMANN & KNOPF LLP

PETER S. PEARLMAN

Park 80 Plaza – West One

250 Pehle Avenue, Suite 401

Saddle Brook, NJ 07663

Telephone: 201/845-9600

201/845-9423 (fax)

psp@njlawfirm.com

Attorneys for Plaintiffs

[Additional counsel appear on signature page.]

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

In re JOHNSON & JOHNSON FCPA 

SHAREHOLDER DERIVATIVE 

LITIGATION

This Document Relates To:

ALL ACTIONS.

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Master File No.

 3:11-cv-02511-FLW-TJB

CONSOLIDATED VERIFIED 

SHAREHOLDERS DERIVATIVE 

COMPLAINT FOR BREACH OF 

FIDUCIARY DUTY, 

MISMANAGEMENT, ABUSE OF 

CONTROL, CORPORATE WASTE, 

UNJUST ENRICHMENT AND 

VIOLATIONS OF THE FEDERAL 

SECURITIES LAWS

DEMAND FOR JURY TRIAL

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PREAMBLE

“Corruption was, in effect, a company policy . . . [and the] 

corruption was systemic and long-term . . . .” Mr. Justice Bean, of the 

Southwark Crown Court in London, April 14, 2010.

“‘Today, Johnson & Johnson has admitted that its subsidiaries, 

employees, and agents paid bribes to publicly-employed health care 

providers in Greece, Poland and Romania, and that kickbacks were 

paid on behalf of Johnson & Johnson subsidiary companies to the 

former government of Iraq under the United Nations Oil for Food 

program. . . .’” Mythili Raman, Principal Deputy Assistant Attorney 

General of the Justice Department’s Criminal Division, April 8, 2011.

“‘J&J chose profit margins over compliance with the law by 

acquiring a private company for the purpose of paying bribes, and 

using sham contracts, off-shore companies, and slush funds to cover 

its tracks.’” Robert Khuzami, Director of Enforcement, United States 

Securities and Exchange Commission, April 7, 2011.

OVERVIEW OF THE ACTION

1. By this action, plaintiffs Sandra Wollman (“Wollman”), residing at 5400 

Vantage Point Road, Apt. 615, Columbia, Maryland 21044, Gila Heimowitz 

(“Heimowitz”), residing at 74 Longacre Avenue, Woodmere, New York 11598, 

Joseph Cafaro (“Cafaro”), residing at 207 Bromely Circle, New Smyrna Beach, 

Florida 32168 and Cynthia Diamond (“Diamond”), residing at 2005 Greenwood 

Avenue, San Carlos, California 94070 (together, “plaintiffs”) seek to recover damages 

and equitable relief for nominal defendant Johnson & Johnson (“J&J” or the 

“Company”), against its Board of Directors for breach of fiduciary duty, 

mismanagement, abuse of control, corporate waste, unjust enrichment and violations 

of the federal securities laws.

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2. Defendants are Mary Sue Coleman (“Coleman”), James G. Cullen 

(“Cullen”), Ian E. L. Davis (“Davis”), Michael M.E. Johns (“Johns”), Susan L. 

Lindquist (“Lindquist”), Anne M. Mulcahy (“Mulcahy”), Leo F. Mullin (“Mullin”), 

William D. Perez (“Perez”), Charles Prince (“Prince”), David Satcher (“Satcher”) and 

William C. Weldon (“Weldon”) (together, “defendants” or the “J&J Board”).

3. The directors of a New Jersey corporation are responsible for managing 

its business and owe the corporation an unremitting duty of loyalty. Because of this, 

directors are responsible for managing the corporation lawfully and in accordance 

with the laws applicable to its business. Here, when faced with a known duty to act, 

i.e., ensuring J&J’s compliance with the Foreign Corrupt Practices Act (“FCPA”) at 

its overseas operations, defendants breached their duty of loyalty by failing to cause 

J&J to implement an internal controls system for detecting and preventing bribes to 

public doctors and administrators in Greece, Poland and Romania, and kickbacks to 

officials in Iraq to win business there. As a result, defendants may be held liable to 

the Company for damages, which, to date, exceed $70 million.

4. The J&J Board will not commence litigation against defendants, let alone 

vigorously prosecute such claims, because they face a substantial likelihood of 

liability to J&J for failing to implement controls for compliance with the FCPA at 

J&J’s subsidiaries in Greece, Poland and Romania, as detailed herein. Accordingly, a 

pre-suit demand upon the J&J Board is a useless and futile act, and plaintiffs may 

bring this action to vindicate J&J’s rights against its wayward fiduciaries.

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5. Moreover, the Board has stated publicly its intention to reject the causes 

of action brought by the plaintiffs on the Company’s behalf. The Board’s rejection of 

the claims based on a report by a Special Committee (the “Special Committee”) was 

wrongful for three overarching reasons. First, the Special Committee members suffer 

debilitating conflict of interests that affected their decision. Second, the investigation 

by the Special Committee was not conducted in good faith, and as a result, the Special 

Committee’s report was flawed and incomplete. And third, the Special Committee’s 

decision to reject the claims was unreasonable because it deliberately skirted 

addressing the breach of loyalty claims asserted in the Complaint in favor of knocking 

down strawman claims.

6. Accordingly, plaintiffs should be permitted to bring this action to 

vindicate J&J’s rights against its wayward fiduciaries.

SUMMARY OF THE ALLEGATIONS

7. J&J is a multi-national consumer products, pharmaceutical and medial 

devices company. At all relevant times, the Company operated extensively in Greece, 

Poland and Romania through wholly owned subsidiaries. These subsidiaries regularly 

worked with public doctors and administrators affiliated with state-run hospital 

systems. J&J also competed for lucrative contracts to provide goods to Iraq under the 

United Nations’ Oil-for-Food program.

8. Due to its overseas operations, J&J is subject to the FCPA. The FCPA 

bars publicly traded companies from bribing officials in other countries to get or retain 

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business; it also requires publicly traded companies to implement rigorous internal 

controls systems to detect and prevent bribes and kickbacks. Since even before the 

terrorist attacks of September 11, 2001, and with even more vigor thereafter, the 

enforcement of the FCPA has been a well-publicized, top priority of the U.S. 

Government.

J&J’s Foreign Bribery Scheme

9. On April 7, 2011, J&J shareholders learned for the first time that J&J has 

engaged in a widespread scheme to bribe doctors in Europe and pay kickbacks to 

officials in Iraq in order win contracts to sell drugs, artificial joints and other products. 

According to the United States Securities and Exchange Commission (“SEC”), J&J 

violated the FCPA because the Company “failed to implement internal controls to 

detect or prevent bribery.”

10. According to SEC enforcement director, Robert Khuzami, “‘J&J chose 

profit margins over compliance.’” As a result, J&J paid bribes to public doctors in 

Greece who selected J&J surgical implants for their patients. J&J paid bribes to 

doctors and public hospital administrators in Poland who awarded lucrative tenders 

(contracts) to J&J. J&J paid bribes to public doctors in Romania to prescribe J&J 

pharmaceutical products. And, J&J paid kickbacks to officials in Iraq to win 19 

contracts under the United Nations’ Oil-for-Food program.

11. Moreover, J&J used fake contracts and phony companies to deliver the 

bribes, which were mischaracterized as legitimate “commissions” in J&J’s accounting 

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records. These phony companies, fake contracts and phony descriptions were created 

and adopted for the purpose of – and had the intended effect of – helping conceal the 

illicit payments from J&J shareholders and regulators alike.

12. In total, J&J earned over $24 million in profits by bribing Greek doctors 

to buy surgical implants. The Company earned $4.3 million in Poland as a result of 

bribes, and another $3.5 million through illegal rewards in Romania. J&J also made 

$6.1 million in profits by paying kickbacks to officials in Iraq to win business there.

13. Based on this evidence, the SEC concluded that J&J had, in fact, violated 

the FCPA’s books and records provisions at its operations in Greece, Poland, Romania 

and Iraq. The SEC reached this conclusion after conducting an extensive, multi-year 

investigation, in conjunction with the United States Department of Justice (“DOJ”), 

into J&J’s compliance with the FCPA. That investigation involved a through review 

of J&J’s non-public books and records, witness interviews and other materials and 

sources.

J&J Conceals Its FCPA Violations from Shareholders

14. J&J purportedly self-reported its violations of the FCPA in Greece and 

Poland to U.S. authorities in February 2007. However, the Company’s disclosure 

regarding its violations in Poland came only after Polish authorities had informed J&J 

that they were investigating the Company’s payment of bribes to Polish public 

officials. Moreover, the Company’s self-disclosure did not include its violations of 

the FCPA based on the bribes in Romania or its kickbacks to officials in Iraq.

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15. Further, from when J&J purportedly self-reported some of the violations 

until early 2011, J&J never disclosed to J&J shareholders the details regarding the 

Company’s widespread bribery of doctors in Europe and kickbacks to officials in Iraq. 

Instead, in J&J’s shareholder reports issued between mid-2007 and March 2011, 

defendants merely acknowledged the existence of the on-going FCPA investigations 

and described some of the remedies available to the SEC and DOJ for violations of the 

FCPA.

16. Defendants, and each of them, signed one or more of J&J’s false and 

misleading 2006-2010 Annual Reports on SEC Form 10-K and false and misleading 

2007-2011 Proxy Statements on SEC Form DEF 14 and caused them to be 

disseminated to J&J shareholders, as detailed in ¶¶71-83. In doing so, defendants 

breached their fiduciary duty of loyalty (and candor and good faith) and violated the 

federal securities laws.

J&J’s FCPA Settlement – the Tenth-Largest Ever

17. J&J’s frankly breathtaking violations of the FCPA remained concealed 

from J&J shareholders until early April 2011. Then, on April 7-8, 2011, the SEC and 

DOJ announced that J&J had resolved federal FCPA enforcement actions against the 

Company by admitting to engaging in a scheme to bribe doctors in Europe and pay 

kickbacks to officials in Iraq. The U.S. Government also revealed that J&J had agreed 

to pay $70 million in disgorgement, interest and fines, in addition to entering into a 

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deferred prosecution agreement with the DOJ entailing substantial additional costs to 

the Company.

18. In particular, J&J agreed to pay $48.6 million in disgorgement and 

interest to settle the SEC claims and a $21.4 million fine to settle charges brought by 

the DOJ. Under the deferred prosecution agreement, J&J admitted to bribing doctors 

in Europe and agreed to report on remediation and compliance measures every six 

months for three years.

19. According to press reports, J&J’s FCPA settlement is the tenth-largest 

settlement of its type, and the second-largest FCPA settlement involving a U.S. 

corporation. Regardless of its ranking, defendants’ conscious failure to cause J&J to 

implement an internal controls system to detect and prevent bribery has severely 

damaged J&J and its business, goodwill and reputation. The Company has and is 

likely to suffer additional damages while remediating the compliance violations 

discovered at the Company by the SEC and DOJ.

20. While defendants claimed on April 8, 2011 that the $70 million in FCPA 

settlements “‘are not representative of Johnson & Johnson employees around the 

world who do what is honest and right every day,’” the judge in London who oversaw 

the corruption trial of a former J&J executive thought otherwise. Mr. Justice Bean 

said:

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“Corruption was, in effect, a company policy pre-dating your 

involvement and approved by your superiors. . . . [I]t is likely to have 

involved the knowledge, consent and participation of individuals with 

senior responsibilities in the group of companies in which you 

worked. . . . But it does not justify a suspended sentence in a case where 

corruption was systemic and long-term and involved several million 

pounds in corrupt payments.”

The J&J Board’s Liability

21. As J&J’s directors, the responsibility for causing J&J to implement the 

FCPA rests with defendants. However, despite a known duty to act, i.e., causing J&J 

to implement FCPA-compliant internal controls at its operations in Greece, Poland, 

Romania and Iraq, defendants consciously failed to act, i.e., failed to implement 

FCPA-compliant internal controls, with disastrous consequences for J&J. Defendants 

are therefore liable to J&J for all damages arising from their breach of fiduciary duty, 

mismanagement, abuse of control, corporate waste, unjust enrichment and violations 

of the federal securities laws.

22. Unlike regular J&J shareholders, defendants for the past several years 

have had complete and unfettered access to the facts surrounding J&J’s violations of 

the FCPA. As J&J acknowledges, a random inquiry uncovered facts suggesting 

corruption at J&J’s subsidiaries in Europe. As the inquiry grew into a wider internal 

investigation, and ultimately into the SEC and DOJ federal investigation into J&J’s 

compliances with the FCPA, defendants learned additional facts about the Company’s 

bribery of officials.

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23. Nevertheless, the J&J Board has not commenced legal action against 

persons responsible for the FCPA compliance debacle at J&J: (i) namely defendants 

Coleman, Cullen, Johns, Lindquist, Mullin, Prince, Satcher and Weldon for failing to 

implement internal controls to detect and prevent bribery at J&J’s operations in 

Greece, Poland, Romania and Iraq, in breach of their fiduciary duty of loyalty to 

ensure J&J’s compliance with the FCPA’s books and records provisions; and 

(ii) defendants Coleman, Cullen, Davis, Johns, Lindquist, Mulcahy, Mullin, Perez, 

Prince, Satcher and Weldon for serially withholding adverse, material non-public 

information regarding J&J’s FCPA violations from J&J shareholders, in breach of 

their fiduciary duty of loyalty and candor, and in violation of the federal securities 

laws. The J&J Board is not even willing to commence legal actions against two 

officers that were found to have been participants in the violations of the FCPA.

24. Defendants have also been unjustly enriched in light of the huge foreign 

bribery scheme that occurred at J&J on their watch. That scheme has damaged J&J 

and arose due to defendants’ mismanagement of, and abuse of their control positions 

at, J&J.

25. Absent this shareholders derivative action, J&J’s rights against its 

wayward fiduciaries will not be vindicated, because the J&J Board suffers disabling 

conflicts of interests that preclude them from controlling the Company’s derivative 

claims against defendants. Plaintiffs, by contrast, will adequately protect J&J’s 

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interests, and on that basis seek relief for J&J by way of this shareholders derivative 

action.

JURISDICTION AND VENUE

26. This Court has jurisdiction over this action under 28 U.S.C. §1331, 

because the claims asserted arise under §§14(a) and 29(b) of the Securities Exchange 

Act of 1934 (“Exchange Act”), 15 U.S.C. §§78n(a) and 78cc(b). The Court has 

supplemental jurisdiction over the non-federal claims asserted herein under 28 U.S.C. 

§1367(a).

27. This action is not a collusive action designed to confer jurisdiction on a 

court of the United States that it would not otherwise have.

28. This Court has jurisdiction over each defendant named herein because 

each defendant is either a corporation that conducts business in and maintains 

operations in this District, or is an individual who has sufficient minimum contacts 

with this District so as to render the exercise of jurisdiction by the courts of this 

District permissible under traditional notions of fair play and substantial justice.

29. Venue is proper in this Court under 28 U.S.C. §1391(b) because: (i) J&J 

is incorporated in and maintains its executive offices and principal place of business in 

this District; (ii) one or more of the defendants either resides in or maintains offices in 

this District; (iii) a substantial portion of the transactions and wrongs complained of 

herein, including the defendants’ primary participation in the wrongful acts detailed 

herein, and aiding and abetting and conspiracy in violation of fiduciary duties owed to 

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J&J, occurred in this District; and (iv) defendants have received substantial 

compensation in this District by doing business here and engaging in numerous 

activities that had an effect in this District.

THE PARTIES

30. Plaintiffs Wollman, Heimowitz, Diamond and Cafaro are J&J

shareholders and have been continuously since 1998, 1996, 1982 and prior to 1997, 

respectively. Plaintiffs will fairly and adequately represent J&J’s interests in this 

litigation. Plaintiffs Wollman, Heimowitz, Diamond and Cafaro are citizens of the 

States of Maryland, New York, California and Florida, respectively.

31. Nominal defendant J&J is a New Jersey corporation, with its executive 

offices located at One Johnson & Johnson Plaza, New Brunswick, New Jersey 08933. 

J&J has approximately 114,000 employees worldwide engaged in the research and 

development, and the manufacture and sale of consumer products, pharmaceuticals 

and medical devices. At all relevant times J&J conducted significant business and 

commerce in Greece, Poland, Romania and Iraq. Due to its extensive overseas 

operations, J&J was, at all relevant times, subject to the books and records and antibribery provisions of the FCPA. J&J is a citizen of the State of New Jersey.

32. Defendant Coleman has been a J&J director since 2003. She also served 

on the Audit Committee. Due to J&J’s extensive overseas operations, defendant 

Coleman knew, at all relevant times, that J&J was subject to the FCPA, which bars 

publicly traded companies from bribing officials to get or retain business. Defendant 

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Coleman also knew that, under the FCPA’s books and records provisions, J&J had to 

implement an internal controls system to prevent bribes and kickbacks from occurring 

at its operations, and particularly those located in high-risk, emerging markets where 

the cultures do not discourage requests for bribes, kickbacks and other improper 

payments. Directors of publicly traded companies are generally presumed to know 

that they have a duty to operate the corporation lawfully and in accordance with the 

statutory laws applicable to its business. Therefore, defendant Coleman owed J&J a 

duty of loyalty to implement controls for compliance with the FCPA at J&J’s overseas 

operations in Greece, Poland, Romania and Iraq. But defendant Coleman did not 

discharge her fiduciary duty of loyalty to implement such FCPA-compliant controls, 

and bribery of doctors in Europe and illegal kickbacks to win contracts in Iraq 

flourished. Although the Company purportedly informed the authorities of the bribery 

and kickback scheme in February 2007, defendants steadfastly concealed the details 

surrounding the FCPA violations at J&J’s European subsidiaries until April 2011. 

Accordingly, J&J’s shareholder reports and SEC filings issued before then were 

materially false and misleading because they concealed the details concerning the 

widespread bribery of doctors and administrators in Greece, Poland and Romania, and 

illegal kickbacks to officials in Iraq to obtain business there. By signing J&J’s 2006-

2010 Annual Reports on SEC Form 10-K and issuing J&J’s 2007-2011 Proxy 

Statements, defendant Coleman breached her fiduciary duty of loyalty (and candor 

and good faith) and violated the federal securities laws by making false and 

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misleading statements to J&J shareholders. Defendant Coleman is a citizen of the 

State of Colorado.

33. Defendant Cullen has been a J&J director since 1995. He also served as 

Chairman of the Audit Committee. In addition to the J&J Board, defendant Cullen 

also serves or served on the boards of directors of Bell Atlantic Corporation, Agilent 

Technologies, Inc., NeuStar, Inc. and Prudential Financial, Inc. Due to J&J’s 

extensive overseas operations, defendant Cullen knew, at all relevant times, that J&J 

was subject to the FCPA, which bars publicly traded companies from bribing officials 

to get or retain business. Defendant Cullen also knew that, under the FCPA’s books 

and records provisions, J&J had to implement an internal controls system to prevent 

bribes and kickbacks from occurring at its operations, and particularly those in highrisk, emerging markets where the cultures do not discourage requests for bribes, 

kickbacks and other improper payments. Directors of publicly traded companies are 

generally presumed to know that they have a duty to operate the corporation lawfully 

and in accordance with the statutory laws applicable to its business. Therefore, 

defendant Cullen owed J&J a duty of loyalty to implement controls for compliance 

with the FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. 

But defendant Cullen did not discharge his fiduciary duty of loyalty to implement 

such FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks 

to win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

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steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

By signing J&J’s 2006-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 

2007-2011 Proxy Statements, defendant Cullen breached his fiduciary duty of loyalty 

(and candor and good faith) and violated the federal securities laws by making false 

and misleading statements to J&J shareholders. Defendant Cullen is a citizen of the 

State of New Jersey.

34. Defendant Davis has been a J&J director since July 2010. He also served 

on the Audit Committee. Due to J&J’s extensive overseas operations, defendant 

Davis knew, at all relevant times, that J&J was subject to the FCPA, which bars 

publicly traded companies from bribing officials to get or retain business. Defendant 

Davis also knew that, under the FCPA’s books and records provisions, J&J had to 

implement an internal controls system to prevent bribes and kickbacks from occurring 

at its operations, and particularly those located in high-risk, emerging markets where 

the cultures do not discourage requests for bribes, kickbacks and other improper 

payments. After joining the J&J Board in July 2010, defendant Davis joined his 

colleagues in steadfastly concealing the details surrounding the FCPA violations at 

J&J’s European subsidiaries until April 2011. J&J’s shareholder reports and SEC 

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filings were materially false and misleading because they concealed the details 

concerning the widespread bribery of doctors and administrators in Greece, Poland 

and Romania, and illegal kickbacks to officials in Iraq to obtain business there. By 

signing J&J’s 2010 Annual Report on SEC Form 10-K and issuing J&J’s 2011 Proxy 

Statement, defendant Davis breached his fiduciary duty of loyalty (and candor and 

good faith) and violated the federal securities laws by making false and misleading 

statements to J&J shareholders. Defendant Davis is a citizen of the United Kingdom.

35. Defendant Johns has been a J&J director since 2005. Due to J&J’s 

extensive overseas operations, defendant Johns knew, at all relevant times, that J&J 

was subject to the FCPA, which bars publicly traded companies from bribing officials 

to get or retain business. Defendant Johns also knew that, under the FCPA’s books 

and records provisions, J&J had to implement an internal controls system to prevent 

bribes and kickbacks from occurring at its operations, and particularly those located in 

high-risk, emerging markets where the cultures do not discourage requests for bribes, 

kickbacks and other improper payments. Directors of publicly traded companies are 

generally presumed to know that they have a duty to operate the corporation lawfully 

and in accordance with the statutory laws applicable to its business. Therefore, 

defendant Johns owed J&J a duty of loyalty to implement controls for compliance 

with the FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. 

But defendant Johns did not discharge his fiduciary duty of loyalty to implement such 

FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks to 

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win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

By issuing J&J’s 2007-2010 Annual Reports on SEC Form 10-K and J&J’s 2007-

2011 Proxy Statements, defendant Johns breached his fiduciary duty of loyalty (and 

candor and good faith) and violated the federal securities laws by making false and 

misleading statements to J&J shareholders. Defendant Johns is a citizen of the State 

of Georgia.

36. Defendant Lindquist has been a J&J director since 2004. She also served 

on the Public Policy Advisory Committee. Due to J&J’s extensive overseas 

operations, defendant Lindquist knew, at all relevant times, that J&J was subject to the 

FCPA, which bars publicly traded companies from bribing officials to get or retain 

business. Defendant Lindquist also knew that, under the FCPA’s books and records 

provisions, J&J had to implement an internal controls system to prevent bribes and 

kickbacks from occurring at its operations, and particularly those located in high-risk, 

emerging markets where the cultures do not discourage requests for bribes, kickbacks 

and other improper payments. Directors of publicly traded companies are generally 

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presumed to know that they have a duty to operate the corporation lawfully and in 

accordance with the statutory laws applicable to its business. Therefore, defendant 

Lindquist owed J&J a duty of loyalty to implement controls for compliance with the 

FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. But 

defendant Lindquist did not discharge her fiduciary duty of loyalty to implement such 

FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks to 

win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

By signing J&J’s 2006-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 

2007-2011 Proxy Statements, defendant Lindquist breached her fiduciary duty of 

loyalty (and candor and good faith) and violated the federal securities laws by making 

false and misleading statements to J&J shareholders. Defendant Lindquist is a citizen 

of the State of Massachusetts.

37. Defendant Mulcahy has been a J&J director since 2009. In addition to 

the J&J Board, defendant Mulcahy also serves or served on the boards of directors of 

Xerox Corporation, Target Corporation, The Washington Post Company, Citigroup 

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Inc. and Federal National Mortgage Association. Due to J&J’s extensive overseas 

operations, defendant Mulcahy knew, at all relevant times, that J&J was subject to the 

FCPA, which bars publicly traded companies from bribing officials to get or retain 

business. Defendant Mulcahy also knew that, under the FCPA’s books and records 

provisions, J&J had to implement an internal controls system to prevent bribes and 

kickbacks from occurring at its operations, and particularly those located in high-risk, 

emerging markets where the cultures do not discourage requests for bribes, kickbacks 

and other improper payments. After joining the J&J Board in 2009, defendant 

Mulcahy joined her colleagues in steadfastly concealing the details surrounding the 

FCPA violations at J&J’s European subsidiaries until April 2011. J&J’s shareholder 

reports and filings were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business. By 

signing J&J’s 2009-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 2010-

2011 Proxy Statements, defendant Mulcahy breached her fiduciary duty of loyalty 

(and candor and good faith) and the federal securities laws by making false and 

misleading statements to J&J shareholders. Defendant Mulcahy is a citizen of the 

State of Connecticut.

38. Defendant Mullin has been a J&J director since 1999. He also served on 

the Audit Committee. In addition to the J&J Board, defendant Mullin also serves or 

served on the boards of directors of Delta Air Lines, Inc., ACE Limited, Education 

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Management Corporation and Bell South Corporation. Due to J&J’s extensive 

overseas operations, defendant Mullin knew, at all relevant times, that J&J was 

subject to the FCPA, which bars publicly traded companies from bribing officials to 

get or retain business. Defendant Mullin also knew that, under the FCPA’s books and 

records provisions, J&J had to implement an internal controls system to prevent bribes 

and kickbacks from occurring at its operations, and particularly those located in highrisk, emerging markets where the cultures do not discourage requests for bribes, 

kickbacks and other improper payments. Directors of publicly traded companies are 

generally presumed to know that they have a duty to operate the corporation lawfully 

and in accordance with the statutory laws applicable to its business. Therefore, 

defendant Mullin owed J&J a duty of loyalty to implement controls for compliance 

with the FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. 

But defendant Mullin did not discharge his fiduciary duty of loyalty to implement 

such FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks 

to win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

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By signing J&J’s 2006-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 

2007-2011 Proxy Statements, defendant Mullin breached his fiduciary duty of loyalty 

(and candor and good faith) and violated the federal securities laws by making false 

and misleading statements to J&J shareholders. Defendant Mullin is a citizen of the 

State of Georgia.

39. Defendant Perez has been a J&J director since 2007. In addition to the 

J&J Board, defendant Perez also serves or served on the boards of directors of Wm. 

Wrigley Jr. Company, Campbell Soup Company, Whirlpool Corporation, Kellogg 

Company and Nike, Inc. Due to J&J’s extensive overseas operations, defendant Perez 

knew, at all relevant times, that J&J was subject to the FCPA, which bars publicly 

traded companies from bribing officials to get or retain business. Defendant Perez 

also knew that, under the FCPA’s books and records provisions, J&J had to 

implement an internal controls system to prevent bribes and kickbacks from occurring 

at its operations, and particularly those located in high-risk, emerging markets where 

the cultures do not discourage requests for bribes, kickbacks and other improper 

payments. After joining the J&J Board in 2007, defendant Perez joined his colleagues 

in steadfastly concealing the details surrounding the FCPA violations at J&J’s 

European subsidiaries until April 2011. J&J’s shareholder reports and filings issued 

between mid-2007 and March 2011 were materially false and misleading because they 

concealed the details concerning the widespread bribery of doctors and administrators 

in Greece, Poland and Romania, and illegal kickbacks to officials in Iraq to obtain 

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business there. By signing J&J’s 2007-2010 Annual Reports on SEC Form 10-K and 

issuing J&J’s 2008-2011 Proxy Statements, defendant Perez breached his fiduciary 

duty of loyalty (and candor and good faith) and violated the federal securities laws by 

making false and misleading statements to J&J shareholders. Defendant Perez is a 

citizen of the State of Wisconsin.

40. Defendant Prince has been a J&J director since 2006. In addition to the 

J&J Board, defendant Prince also serves or served on the boards of directors of 

Citigroup Inc. and Xerox Corporation. Due to J&J’s extensive overseas operations, 

defendant Prince knew, at all relevant times, that J&J was subject to the FCPA, which 

bars publicly traded companies from bribing officials to get or retain business. 

Defendant Prince also knew that, under the FCPA’s books and records provisions, J&J 

had to implement an internal controls system to prevent bribes and kickbacks from 

occurring at its operations, and particularly those located in high-risk, emerging 

markets where the cultures do not discourage requests for bribes, kickbacks and other 

improper payments. Directors of publicly traded companies are generally presumed to 

know that they have a duty to operate the corporation lawfully and in accordance with 

the statutory laws applicable to its business. Therefore, defendant Prince owed J&J a 

duty of loyalty to implement controls for compliance with the FCPA atJ&J’s overseas 

operations in Greece, Poland, Romania and Iraq. But defendant Prince did not 

discharge his fiduciary duty of loyalty to implement such FCPA-compliant controls, 

and bribery of doctors in Europe and illegal kickbacks to win contracts in Iraq

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flourished. Although the Company purportedly informed the authorities of the bribery 

and kickback scheme in February 2007, defendants steadfastly concealed the details 

surrounding the FCPA violations at J&J’s European subsidiaries until April 2011. 

Accordingly, J&J’s shareholder reports and SEC filings issued before then were 

materially false and misleading because they concealed the details concerning the 

widespread bribery of doctors and administrators in Greece, Poland and Romania, and 

illegal kickbacks to officials in Iraq to obtain business there. By signing J&J’s 2006-

2010 Annual Reports on SEC Form 10-K and issuing J&J’s 2007-2011 Proxy 

Statements, defendant Prince breached his fiduciary duty of loyalty (and candor and 

good faith) and violated the federal securities laws by making false and misleading 

statements to J&J shareholders. Defendant Prince is a citizen of the State of New 

York.

41. Defendant Satcher has been a J&J director since 2002. Due to J&J’s 

extensive overseas operations, defendant Satcher knew, at all relevant times, that J&J 

was subject to the FCPA, which bars publicly traded companies from bribing officials 

to get or retain business. Defendant Satcher also knew that, under the FCPA’s books 

and records provisions, J&J had to implement an internal controls system to prevent 

bribes and kickbacks from occurring at its operations, and particularly those located in 

high-risk, emerging markets where the cultures do not discourage requests for bribes, 

kickbacks and other improper payments. Directors of publicly traded companies are 

generally presumed to know that they have a duty to operate the corporation lawfully 

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and in accordance with the statutory laws applicable to its business. Therefore, 

defendant Satcher owed J&J a duty of loyalty to implement controls for compliance 

with the FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. 

But defendant Satcher did not discharge his fiduciary duty of loyalty to implement 

such FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks 

to win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

By signing J&J’s 2006-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 

2007-2011 Proxy Statements, defendant Satcher breached his fiduciary duty of loyalty 

(and candor and good faith) and violated the federal securities laws by making false 

and misleading statements to J&J shareholders. Defendant Satcher is a citizen of the 

State of Georgia.

42. Defendant Weldon has been a member of the J&J Board and J&J’s 

Chairman and Chief Executive Officer (“CEO”) since 2001. Due to J&J’s extensive 

overseas operations, defendant Weldon knew, at all relevant times, that J&J was 

subject to the FCPA, which bars publicly traded companies from bribing officials to 

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get or retain business. Defendant Weldon also knew that, under the FCPA’s books 

and records provisions, J&J had to implement an internal controls system to prevent 

bribes and kickbacks from occurring at its operations, and particularly those located in 

high-risk, emerging markets where the cultures do not discourage requests for bribes, 

kickbacks and other improper payments. Directors of publicly traded companies are 

generally presumed to know that they have a duty to operate the corporation lawfully 

and in accordance with the statutory laws applicable to its business. Therefore, 

defendant Weldon owed J&J a duty of loyalty to implement controls for compliance 

with the FCPA at J&J’s overseas operations in Greece, Poland, Romania and Iraq. 

But defendant Weldon did not discharge his fiduciary duty of loyalty to implement 

such FCPA-compliant controls, and bribery of doctors in Europe and illegal kickbacks 

to win contracts in Iraq flourished. Although the Company purportedly informed the 

authorities of the bribery and kickback scheme in February 2007, defendants 

steadfastly concealed the details surrounding the FCPA violations at J&J’s European 

subsidiaries until April 2011. Accordingly, J&J’s shareholder reports and SEC filings 

issued before then were materially false and misleading because they concealed the 

details concerning the widespread bribery of doctors and administrators in Greece, 

Poland and Romania, and illegal kickbacks to officials in Iraq to obtain business there. 

By signing J&J’s 2006-2010 Annual Reports on SEC Form 10-K and issuing J&J’s 

2007-2011 Proxy Statements, defendant Weldon breached his fiduciary duty of 

loyalty (and candor and good faith) and violated the federal securities laws by making 

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false and misleading statements to J&J shareholders. Defendant Weldon is a citizen 

of the State of Pennsylvania.

THE FIDUCIARY DUTIES OF J&J’S BOARD OF DIRECTORS

43. The directors of a corporation are responsible for managing its affairs. 

They owe the corporation an unremitting duty of loyalty and, therefore, must fulfill 

those functions lawfully and in accordance with the statutes, rules and regulations 

applicable to its business. When faced with a known duty to act, such as in the case of 

requiring the corporation to comply with federal laws, directors who fail to cause the 

corporation to act breach their duty of loyalty and may be held liable to the 

corporation for damages.

44. As fiduciaries, corporate directors must protect the corporation’s assets 

and property against losses, whether actual or threatened. They must avoid avoidable 

losses to the corporation whenever possible or reasonable to do so. This includes, 

among other things, causing the corporation to implement business practices and 

internal controls called for by federal statutes applicable to the corporation’s business.

45. Directors also owe the corporation and its shareholders a duty of candor. 

Whenever directors choose to speak on behalf of the corporation, they have a duty to 

speak the complete, full and unvarnished truth. Directors who make false and 

misleading statements in the corporation’s shareholder reports and/or SEC filings act 

disloyally and may be held liable to the corporation.

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AIDING AND ABETTING

46. In committing the wrongful acts and violations of law detailed herein, 

defendants have pursued or joined in the pursuit of a common course of conduct, and 

have acted in concert with one another in furtherance of their common plan or design. 

In addition to the wrongful conduct particularized herein as giving rise to primary 

liability, defendants further aided and abetted and/or assisted each other in breaching 

their fiduciary duties and violating their legal obligations owed to J&J.

47. Additionally, each of the defendants aided and abetted and rendered 

substantial assistance to others in the wrongs detailed herein. In taking such actions to 

substantially assist the commission of the wrongdoing detailed herein, each defendant 

acted with knowledge of the primary wrongdoing, substantially assisted the 

accomplishment of that wrongdoing and was aware of his or her overall contribution 

to and furtherance of the wrongdoing.

FACTUAL ALLEGATIONS

48. J&J is a global consumer product, pharmaceutical and medical devices 

company. It has approximately 114,000 employees worldwide, and operates 

extensively overseas in high-risk markets where the legal and regulatory systems are 

less developed and/or the cultures do not discourage requests for bribes, kickbacks 

and other illicit payments. At the Company’s operations in Greece, Poland, Romania 

and Iraq, J&J routinely worked with doctors and administrators affiliated with staterun hospital systems and other governmental entities.

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49. Although J&J purportedly had a policy regarding illicit payments to 

officials in other countries, the Company did not have an internal controls system for 

compliance with the books and records and anti-bribery provisions of the FCPA in 

Greece, Poland, Romania and Iraq. Under their fiduciary duty of loyalty, the J&J 

Board was responsible for causing the Company to implement controls for compliance 

with the FCPA. However, as the SEC determined, J&J violated the FCPA because it 

did not have an internal controls system for detecting and preventing bribes to public 

doctors in Europe and kickbacks to officials in Iraq to obtain business there.

Defendants’ Knowledge of the FCPA

50. At all relevant times, defendants knew that, due to J&J’s extensive 

overseas operations, the FCPA, including its anti-bribery and books and records 

provisions, applied to J&J’s business. Their knowledge of the FCPA and its 

application to J&J stem from a myriad of sources. For example, the vigorous 

enforcement of the FCPA has been a well-publicized, top priority for the U.S. 

Government since its enactment into law by Congress in 1977. Since the terrorist 

attacks of September 11, 2001, the SEC and DOJ’s enforcement of the FCPA has only 

intensified. SEC and DOJ enforcement actions, large FCPA settlements and countless 

media reports in the financial and healthcare press regarding the FCPA, all alerted 

defendants to the importance of and need to secure J&J’s full compliance with the 

FCPA.

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51. Defendants’ knowledge of the FCPA and its requirements is also 

illustrated by the fact that several defendants were specifically recommended for 

election, or re-election, to the J&J Board because of their international business 

acumen. For example, J&J’s 2011 Proxy Statement states that defendant Davis was 

nominated to the J&J Board because “[h]aving served as Chairman and Worldwide 

Managing Director of one of the world’s leading management consulting firms, and as 

a consultant to a range of global organizations across the public, private and not-forprofit sectors, Mr. Davis brings considerable global experience, management insight 

and business knowledge to the Company’s Board.”

52. Similarly, J&J’s 2011 Proxy Statement states that “Mr. Mullin’s depth 

and breadth of exposure to complex issues from having served as Chairman and CEO 

of one of the nation’s largest airlines, and his long and distinguished career in the 

banking industry, make him a skilled advisor who provides critical insight into 

organizational and operational management, global business and financial matters.”

53. Likewise, J&J’s 2011 Proxy Statement states that defendant Perez was 

nominated to serve on the J&J Board because, “[w]ith his experience as CEO of 

several large, consumer-focused companies across a wide variety of industries, 

Mr. Perez contributes to the Company’s Board significant organizational and 

operational management skills, combined with a wealth of experience in global, 

consumer-oriented businesses vital to a large public company in the consumer 

products space.”

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54. Further, J&J’s 2011 Proxy Statement states that defendant Prince was 

nominated to the J&J Board because “[h]aving served as Chairman and CEO of the 

nation’s largest and most diversified financial institution, Mr. Prince brings to the 

Company’s Board a strong mix of organizational and operational management skills 

combined with well-developed legal, global business and financial acumen critical to 

a large public company.”

55. Defendants’ awareness of the FCPA’s prohibition on bribing officials in 

other countries also springs from most Americans’ shared belief that bribery is simply 

wrong. This common-sense notion permeates our Nation’s corporate laws, which 

presume that corporate directors are aware and conscious of their duty to manage the 

corporation lawfully and in accordance with the laws applicable to its business. To 

underscore the United States’ anti-bribery bias, Congress enacted the FCPA to ensure 

that publicly traded companies put in place internal control systems designed to detect 

and prevent bribery. So, just as with U.S. securities and tax laws, defendants were, at 

all relevant times, conscious of the FCPA’s anti-bribery and books and records 

provisions, and their fiduciary duty to implement the FCPA at J&J’s operations.

J&J’s Foreign Bribery Scheme

56. During the 2000s, J&J’s business grew rapidly, especially overseas in 

high-risk, emerging markets such as Greece, Poland, Romania and Iraq. J&J’s total 

internationalsales increased from $11.8 billion in 2000 to $53.3 billion in 2006. Total 

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corporate profits also grew, increasing from $4.7 billion in 2000 to $11 billion in 

2006.

57. Propelled by these positive results, J&J’s stock price dramatically 

increased, rising from approximately $52.53 per share in 2000 to approximately 

$66.02 per share in 2006. Many defendants received valuable stock-based 

compensation from J&J during this time period. As J&J’s share price increased, so 

did the value of defendants’ personal J&J holdings.

58. J&J’s financial gains were not entirely the product of honest labor, 

however. For years, J&J engaged in a wide-ranging effort to bribe doctors and 

administrators at state-run hospital systems in Greece, Poland and Romania, and pay 

kickbacks to officials in Iraq.

59. In Greece, J&J secretly paid bribes to doctors at state-run hospitals to 

purchase J&J’s surgical implants. Specifically, after an extensive investigation, the 

SEC found:

Rather than cease the bribery that was happening at DePuy prior to 

J&J’s acquisition, J&J through its subsidiaries, employees and agents 

allowed the bribery to continue. They created sham businesses and 

entered into contracts that were merely conduits to allow the bribery to 

flourish. They failed to conduct due diligence on the Greek Distributor. 

The Company also paid its consultant outside of Greece to avoid 

detection of bribery. The Company had two different J&J corporate 

entities make payments to the Greek Agent to conceal the amount of 

money that was being funneled to doctors as bribes.

60. In Poland, J&J secretly bribed doctors and administrators at hospitals in 

exchange for purchasing J&J products or awarding hospital tenders. J&J disguised 

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the bribes as “civil contracts,” purportedly for lectures, workshops or to conduct 

clinical trials, but never asked its sales representatives for proof the services were 

performed. Specifically, after an extensive investigation, the SEC found:

[J&J’s subsidiary] created sham civil contracts with publiclyemployed doctors and hospital administrators to pay them for using 

J&J’s medical devices or for influencing hospitals to award medical 

device tenders to [J&J’s subsidiary] MD&D Poland. Although the 

contracts called for services, the doctors would not provide any, and 

MD&D Poland would pay the doctors based on fictitious activities.

Approximately $775,000 of improper civil contract payments 

were funneled to public doctors from at least January 1, 2000 to June 30, 

2006.

* * *

MD&D Poland also paid for public doctors and hospital 

administrators to travel to medical conventions in Poland and abroad in 

order to influence tender committee decisions in their favor. Sponsored 

doctors were taken on trips in exchange for influencing the doctors’ 

decisions to purchase J&J’s medical products or to award hospital 

tenders to J&J.

* * *

[In total, J&J’s subsidiary] spent approximately $7.6 million on these 

travel sponsorships between 2000 and 2006 that were rolled into the 

books of J&J with an indeterminate amount as bribes due to insufficient 

records.

61. In Romania, the bribes were more straightforward. J&J secretly “worked 

with . . . distributors to deliver [envelopes of] cash” to public doctors and pharmacists 

in exchange for prescriptions, usually between 3% and 5% of the sales value. 

Specifically, after an extensive investigation, the SEC found:

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[J&J’s subsidiary in Romania] bribed publicly-employed doctors 

and pharmacists to prescribe J&J products that the company was actively 

promoting (the “Promoted Products”). The employees worked with [J&J

subsidiary] Pharma Romania’s local distributors to deliver cash to 

publicly-employed doctors who ordered J&J drugs for their patients. 

Pharma Romania also provided travel to certain doctors who agreed to 

prescribe J&J products. [In total,] [f]rom 2000 to 2007, J&J earned 

$3,515,500 in profit from its sales through the bribery.

62. J&J also secretly paid kickbacks in Iraq for 19 contracts under the United 

Nations’ Oil-for-Food program. Specifically, after an extensive investigation, the 

SEC found:

J&J participated in the [Oil-for-Food] Program through two of its 

subsidiaries, Cilog AG International and Janssen Pharmaceutica N.V. 

(collectively “Janssen-Cilag”). During the program, Janssen-Cilag sold 

pharmaceuticals to an arm of the Iraqi Ministry of Health known as 

Kimadia. Janssen-Cilag conducted business with Kimadia in Iraq 

through a Lebanese agent (the “Agent”).

* * *

In total, secret kickback payments of approximately $857,387 

were made in connection with nineteen Oil for Food contracts. The 

payments were made through the Agent to Iraqi controlled accounts in 

order to avoid detection by the U.N. The fee was effectively a bribe paid 

to the Iraqi regime, which were disguised on J&J’s books and records by 

mischaracterizing the bribes as legitimate commissions.

. . . J&J’s total profits on the contracts were $6,106,255.

63. Collectively, J&J earned over $24 million in profits by bribing Greek 

doctors to buy surgical implants, including artificial knees and hips. The Company 

earned $4.3 million in Poland as a result of bribes, and another $3.5 million through 

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illegal rewards in Romania. J&J also made $6.1 million in profits by paying 

kickbacks to officials in Iraq to win business there.

64. In April 2010, the judge overseeing the corruption trial of a former J&J 

executive held “[c]orruption was, in effect, a company policy . . . [and] was systemic 

and long-term.” A year later, in April 2011, the SEC similarly found that “‘J&J chose 

profit margins over compliance,’” as a result, “J&J failed to implement internal 

controls to detect or prevent bribery.”

J&J’s Record-Setting FCPA Settlement

65. Defendants succeeded in concealing the breathtaking scope of J&J’s 

bribery scheme until April 2011. Then, on April 7-8, 2011, the SEC and DOJ 

announced that J&J had admitted to engaging in a scheme to bribe doctors in Europe 

and pay kickbacks to officials in Iraq, to resolve federal FCPA enforcement actions 

against J&J. The U.S. Government also revealed that J&J had agreed to pay $70 

million in disgorgement, interest and fines, in addition to entering into a costly-toadminister deferred prosecution agreement with the DOJ.

66. In particular, J&J agreed to pay $48.6 million in disgorgement and 

interest to settle the SEC claims and a $21.4 million fine to settle charges brought by 

the DOJ. Under the deferred prosecution agreement, J&J admitted to bribing doctors 

in Europe and agreed to report on remediation and compliance measures every six 

months for three years. According to news reports, J&J’s FCPA settlement is the 

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tenth-largest settlement of its type, and the second-largest FCPA settlement involving 

a U.S. corporation.

67. Defendants’ conscious failure to implement an internal controls system to 

detect and prevent bribes and kickbacks in Greece, Poland, Romania and Iraq has 

severely damaged J&J and its business, goodwill and reputation. The Company has 

and is likely to suffer additional damages while remediating the compliance violations 

discovered at the Company by the SEC and DOJ.

68. As J&J’s directors, defendants were responsible for causing J&J to 

implement the requirements of the FCPA at J&J’s operations. However, as the SEC 

concluded, J&J violated the FCPA because it did not have an internal controls system 

for detecting and preventing bribery at its subsidiaries in Greece, Poland, Romania 

and Iraq.

69. As a result, the bribery schemes in these countries continued unabated for 

several years, without any internal controls to detect the bribes or provide a means for 

those individuals within the Company or with knowledge of the bribery schemes to 

bring the violations to light. For example, as early as 1999, attorneys for J&J had 

knowledge of the bribes that were occurring in Greece and, as attorneys, were 

ethically bound to internally report the violations. However, the fact that these 

violations continued for seven more years indicates no such system of internal 

controls existed to which the attorneys could have reported the violations.

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70. When faced with a known duty to act, directors must act to protect the 

corporation’s assets and property. Here, defendants breached their duty of loyalty by 

failing to implement internal controls for compliance with the FCPA at J&J’s 

operations in Greece, Poland, Romania and Iraq. Accordingly, defendants may be 

held liable to the Company for actual damages.

J&J’s False and Misleading Annual

Reports and Proxy Statements

71. Although J&J purportedly informed officials of its FCPA violations in 

February 2007, defendants concealed the true facts pertaining to J&J’s FCPA 

violations until April 2011. Even then, however, defendants still did not reveal the 

complicity of J&J’s directors in the FCPA violations, although their conscious failure 

to implement the FCPA contributed significantly to the widespread bribery at J&J’s 

overseas operations. Instead, defendants concealed the operative facts concerning 

J&J’s FCPA violations, as well as J&J’s directors’ culpability therein, in the 

Company’s shareholder reports.

72. For example, in J&J’s 2006 Annual Report on SEC Form 10-K, dated 

February 21, 2007, defendants stated:

On February 12, 2007, Johnson & Johnson voluntarily disclosed to 

the U.S. Department of Justice (DOJ) and the U.S. Securities and 

Exchange Commission (SEC) that subsidiaries outside the United States 

are believed to have made improper payments in connection with the 

sale of medical devices in two small-market countries, which payments 

may fall within the jurisdiction of the Foreign Corrupt Practices Act. 

The Company will provide additional information to DOJ and SEC, and 

will cooperate with the agencies’ reviews of these matters.

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73. Similarly, in J&J’s 2007 Annual Report on SEC Form 10-K, dated 

February 26, 2008, to further conceal the operative facts about the FCPA violations at 

the Company’s overseas operations, as well as J&J’s directors’ culpability therein for 

consciously failing to implement FCPA controls, defendants stated:

In February 2007, Johnson & Johnson voluntarily disclosed to the 

DOJ and the SEC that subsidiaries outside the United States are believed 

to have made improper payments in connection with the sale of medical 

devices in two small-market countries, which payments may fall within 

the jurisdiction of the Foreign Corrupt Practices Act (FCPA). In the 

course of continuing dialogues with the agencies, other issues potentially 

rising to the level of FCPA violations in additional markets have been 

brought to the attention of the agencies by the Company. The Company 

has provided and will continue to provide additional information to DOJ 

and SEC, and will cooperate with the agencies’ reviews of these matters.

74. Likewise, in J&J’s 2008 Annual Report on SEC Form 10-K, dated 

February 20, 2009, to further conceal the operative facts about the FCPA violations at 

the Company’s overseas operations, as well as J&J’s directors’ culpability therein for 

consciously failing to implement FCPA controls, defendants stated:

In February 2007, Johnson & Johnson voluntarily disclosed to the 

DOJ and the SEC that subsidiaries outside the United States are believed 

to have made improper payments in connection with the sale of medical 

devices in two small-market countries, which payments may fall within 

the jurisdiction of the Foreign Corrupt Practices Act (FCPA). In the 

course of continuing dialogues with the agencies, other issues potentially 

rising to the level of FCPA violations in additional markets have been 

brought to the attention of the agencies by the Company. The Company 

has provided and will continue to provide additional information to DOJ 

and SEC, and will cooperate with the agencies’ reviews of these matters. 

Law enforcement agencies of a number of other countries are also 

pursuing investigations of matters voluntarily disclosed by the Company 

to DOJ and SEC. Discussions are underway in an effort to resolve these 

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matters, and the Iraq Oil for Food matter referenced above, but whether 

agreement can be reached and on what terms is uncertain.

75. Further, in J&J’s 2009 Annual Report on SEC Form 10-K, dated 

March 1, 2010, to conceal the operative facts about the FCPA violations at J&J’s 

overseas operations, as well as J&J’s directors’ culpability therein, defendants stated:

In February 2007, the Company voluntarily disclosed to the DOJ 

and the SEC that subsidiaries outside the United States are believed to 

have made improper payments in connection with the sale of medical 

devices in two small-market countries, which payments may fall within 

the jurisdiction of the Foreign Corrupt Practices Act (FCPA). In the 

course of continuing dialogues with the agencies, other issues potentially 

rising to the level of FCPA violations in additional markets have been 

brought to the attention of the agencies by the Company. The Company 

has provided and will continue to provide additional information to the 

DOJ and SEC, and will cooperate with the agencies’ reviews of these 

matters. Law enforcement agencies of a number of other countries are 

also pursuing investigations of matters voluntarily disclosed by the 

Company to the DOJ and SEC. Discussions are underway in an effort to 

resolve these matters, and the Iraq Oil for Food matter referenced above, 

but whether agreement can be reached and on what terms is uncertain.

76. And, in J&J’s 2010 Annual Report on SEC Form 10-K, dated 

February 25, 2011, to conceal the operative facts about J&J’s FCPA violations, as 

well as J&J’s directors’ culpability therein for consciously failing to implement FCPA 

controls, defendants stated:

In February 2007, the Company voluntarily disclosed to the DOJ 

and the SEC that subsidiaries outside the United States are believed to 

have made improper payments in connection with the sale of medical 

devices in two small-market countries, which payments may fall within 

the jurisdiction of the Foreign Corrupt Practices Act (FCPA). In the 

course of continuing dialogues with the agencies, other issues potentially 

rising to the level of FCPA violations in additional markets have been 

brought to the attention of the agencies by the Company. The Company 

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has provided and will continue to provide additional information to the 

DOJ and SEC, and will cooperate with the agencies’ reviews of these 

matters. Law enforcement agencies of a number of other countries are 

also pursuing investigations of matters voluntarily disclosed by the 

Company to the DOJ and SEC. Discussions are underway in an effort to 

resolve these matters, and the Iraq Oil for Food matter referenced above, 

but whether agreement can be reached, and on what terms, is uncertain.

77. To J&J’s detriment, defendants never disclosed, as the SEC concluded, 

that for nearly a decade “J&J failed to implement internal controls to detect or prevent 

bribery,” and that such “conduct was widespread in various markets, Greece, Poland, 

Romania, and Iraq.” On the contrary, defendants concealed, among other things, that: 

(i) in Greece, J&J secretly paid bribes to doctors at state-run hospitals to purchase 

J&J’s surgical implants; (ii) in Poland, J&J secretly bribed doctors and administrators 

at hospitals in exchange for purchasing J&J products or awarding hospital tenders; 

(iii) in Romania, J&J secretly bribed public doctors and pharmacists to prescribe J&J 

products that J&J was promoting; and (iv) in Iraq, J&J secretly paid kickbacks to 

officials to secure 19 contracts under the United Nations’ Oil-for-Food program.

78. Defendants’ failure to implement such an internal controls system 

resulted, among other things, in materially false and misleading financial statements 

being filed with the SEC and disseminated to the public, including the Company’s 

shareholders. The deferred prosecution agreement with the DOJ set forth various 

facts which J&J admits are “true and correct,” most of which are also contained in the 

complaint filed by the SEC. In addition to admitting the factual allegations are true, 

J&J has “expressly agree[d] that it shall not, through present or future attorneys, 

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directors, officers, employees, agent, or any other person authorized to speak for J&J 

make any public statement, in litigation or otherwise, contradicting” the following 

facts, among others: 

In order to conceal the payments to the Greek, Polish, and 

Romanian [health care providers] on the books and records of J&J and 

its subsidiaries, the payments were misrepresented as, among other 

things, “commissions,” “civil contracts,” “travel,” “donations,” and 

“discounts.”

In order to conceal the kickback payments made to the Iraqi 

government . . . for contracts under the [Oil for Food Program] on the 

books and records of Janssen and Cilag, the payments were 

misrepresented as “commissions.”

At the end of J&J’s fiscal year from in or around 1998 to in or 

around 2007, the books and records of DePuy International, DuPuy 

Hellas, J&J Poland, J&J Romania, Janssen, and Cilag, including those 

containing false characterizations of kickbacks and bribe payments given 

to the Iraqi government and Greek, Polish, and Romanian officials, were 

incorporated into the books and records of J&J for purposes of preparing 

J&J’s year-end financial statements, which were filed with the Securities 

and Exchange Commission in Washington D.C.

79. Defendants owed J&J a duty of candor. Whenever they spoke on J&J’s 

behalf, defendants had a duty to speak the complete, full and unvarnished truth. 

However, as demonstrated above, defendants breached this duty when they issued 

J&J’s Annual Reports on SEC Form 10-K to J&J shareholders without disclosing the 

adverse, material non-public facts about the FCPA set forth above in ¶¶77-78. The 

issuers of J&J’s false and misleading 2006-2010 Annual Reports are set forth below:

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Date Report Authors

02/21/07 2006 Annual Report Defendants Coleman, Cullen, 

Lindquist, Mullin, Prince, Satcher

and Weldon

02/26/08 2007 Annual Report Defendants Coleman, Cullen, Johns, 

Lindquist, Mullin, Perez, Prince, 

Satcher and Weldon

02/20/09 2008 Annual Report Defendants Coleman, Cullen, Johns, 

Lindquist, Mullin, Perez, Prince, 

Satcher and Weldon

03/01/10 2009 Annual Report Defendants Coleman, Cullen, Johns, 

Lindquist, Mulcahy, Mullin, Perez, 

Prince, Satcher and Weldon

02/25/11 2010 Annual Report Defendants Coleman, Cullen, Davis, 

Johns, Lindquist, Mulcahy, Mullin, 

Perez, Prince, Satcher and Weldon

80. Between 2007 and 2011, defendants also used J&J’s Proxy Statements to 

conceal the operative facts concerning the FCPA violations at J&J’s overseas 

operations, as well as J&J’s directors’ culpability therein for consciously failing to 

implement FCPA controls. Consequently, J&J’s Proxy Statements for 2007-2011 

never disclosed that for nearly a decade “J&J failed to implement internal controls to 

detect or prevent bribery,” and that such “conduct was widespread in various markets, 

Greece, Poland, Romania, and Iraq.” Nor did the Proxy Statements disclose that: 

(i) in Greece, J&J secretly paid bribes to doctors at state-run hospitals to purchase 

J&J’s surgical implants; (ii) in Poland, J&J secretly bribed doctors and administrators 

at hospitals in exchange for purchasing J&J products or awarding hospital tenders; 

(iii) in Romania, J&J secretly bribed public doctors and pharmacists to prescribe J&J 

products that J&J was promoting; and (iv) in Iraq, J&J secretly paid kickbacks to 

officials to secure 19 contracts under the United Nations’ Oil-for-Food program.

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81. J&J’s false and misleading Proxy Statements also regularly sought the 

election, or re-election, of defendants to the J&J Board. Although J&J’s Proxy 

Statements for 2007-2011 contained biographical and other information about each 

defendant and his/or her qualifications for service on the J&J Board, the Proxy 

Statements did not disclose any of the adverse, material non-public facts set forth 

above in ¶¶77-78. Instead, the Proxy Statements routinely recommended that 

defendants be elected, or re-elected, to the J&J Board, and each year they were elected 

or re-elected to the J&J Board.

82. Had the true facts pertaining to J&J’s FCPA violations been known, 

including J&J’s directors’ complicity in them for consciously failing to implement the 

FCPA at J&J’s overseas operations, defendants would not have been elected or reelected to the J&J Board. Defendants violated §14(a) of the Exchange Act by 

disseminating false and misleading Proxy Statements to J&J shareholders between 

2007 and 2011. In doing so, defendants also breached their fiduciary duty of candor.

83. The false and misleading Proxy Statements, along with the defendants 

responsible for their publication, are set forth below:

Date Report Authors

03/14/07 2007 Proxy Statement Defendants Coleman, Cullen, 

Johns, Lindquist, Mullin, Prince, 

Satcher and Weldon

03/12/08 2008 Proxy Statement Defendants Coleman, Cullen, 

Johns, Lindquist, Mullin, Perez, 

Prince, Satcher and Weldon

03/11/09 2009 Proxy Statement Defendants Coleman, Cullen, 

Johns, Lindquist, Mullin, Perez, 

Prince, Satcher and Weldon

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Date Report Authors

03/17/10 2010 Proxy Statement Defendants Coleman, Cullen, 

Johns, Lindquist, Mulcahy, 

Mullin, Perez, Prince, Satcher and 

Weldon

03/16/11 2011 Proxy Statement Defendants Coleman, Cullen, 

Davis, Johns, Lindquist, Mulcahy, 

Mullin, Perez, Prince, Satcher and 

Weldon

DAMAGES TO J&J

84. J&J business, and its goodwill and reputation have been badly damaged 

by the long-running bribery scheme at the Company’s subsidiaries in Greece, Poland 

and Romania, and the kickbacks to Iraq. On April 7, 2011, J&J agreed to pay $70 

million to resolve FCPA enforcement actions brought by the SEC and DOJ – the 

tenth-largest FCPA settlement in history.

85. Notably, however, the $70 million settlement does not include the tens of 

millions of dollars in damages stemming from investigative costs and expenses 

already incurred by the Company or its costs, including legal fees, incurred in 

defending the SEC and DOJ investigations. Nor does the settlement figure include the 

Company’s damages arising from remediation costs incurred by J&J to implement 

internal controls at its subsidiaries in Greece, Poland and Romania, and/or the 

damages to J&J’s goodwill and reputation arising from the foreign bribery scheme and 

huge FCPA settlement.

86. Although J&J has suffered substantial damage, defendants have not fared 

nearly so badly. While J&J was engaged in a widespread bribery scheme which 

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temporarily benefited the Company’s bottom line, defendants collectively pocketed 

more than $42.7 million in incentive compensations and fees that were not justified in 

light of the rampant lawlessness that occurred at J&J’s European subsidiaries while 

under defendants’ stewardship.

87. Nevertheless, the J&J Board has not commenced legal action or taken 

other steps against defendants for their failure to implement internal controls and 

systems for compliance with the FCPA’s books and records provisions at the 

Company’s operations in Greece, Poland and Romania. By this action, plaintiffs seek 

to vindicate J&J’s rights against its wayward fiduciaries.

DERIVATIVE AND DEMAND FUTILITY ALLEGATIONS

88. Plaintiffs incorporate ¶¶1-87.

89. Pursuant to Rule 23.1 of the Federal Rules of Civil Procedure, plaintiffs 

bring this action for the benefit of J&J to redress injuries suffered, and to be suffered, 

by J&J as a result of defendants’ misconduct.

90. Plaintiffs properly commenced this action without making a pre-suit 

demand upon the J&J Board. Each member of the J&J Board is compromised from 

fairly evaluating the derivative claims, let alone vigorously prosecuting them, because 

they are each responsible for damages suffered by J&J as a result of the FCPA debacle 

at the Company’s operations in Europe and Iraq, and for making false and misleading 

statements to J&J shareholders after the J&J Board had determined that J&J had likely 

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violated the FCPA. Accordingly, a pre-suit demand upon the J&J Board is a useless 

and futile action, and therefore, excused.

91. Specifically, a pre-suit demand is excused because the entire J&J Board 

breached its fiduciary duty of loyalty by failing to cause J&J to implement an internal 

controls system for compliance with the FCPA at J&J’s operations in Greece, Poland, 

Romania and Iraq. As a result, bribery of officials to obtain or retain business 

flourished in those markets. Defendants were aware that the FCPA’s books and 

record provisions required J&J to have an internal controls system to detect and 

prevent bribery. Nevertheless, defendants did not cause J&J to put such internal 

controls in place, and, as a result, breached their duty of loyalty to J&J. Defendants’ 

utter failure to act when faced with a known duty to act cannot be indemnified by J&J. 

As a result, defendants face substantial likelihood of liability and therefore, a pre-suit 

demand on the J&J Board is excused.

92. Moreover, aside from not being disinterested and independent, the Board 

already has stated wrongfully and unreasonably that it will reject and seek to dismiss 

the causes of action brought by the plaintiffs on the Company’s behalf. 

93. The investigation by the Special Committee, upon which the Board 

purports to rely, was not conducted in good faith, and as a result, the Special 

Committee report was flawed and incomplete. Members of the Special Committee 

were not interested in conducting a thorough investigation because they suffered from 

a debilitating conflict of interest and were primarily concerned with relieving 

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themselves of any potential liability. Indeed, only a small portion of the report 

actually addresses J&J’s violations of the FCPA (and then only under an incorrect 

failure to supervise and inadequate controls theories). The majority of the report 

focuses on other compliance issues in which J&J has been implicated, including its 

alleged violations of the False Claims Act, the Federal Anti-Kickback Statute and 

various Unites States Food and Drug Administration (“FDA”) regulations. The 

limited attention the report pays to the FCPA allegations demonstrates the extent to 

which the Special Committee failed to perform a thorough and focused investigation 

of plaintiffs’ claims based on the FCPA.

94. The Special Committee report, upon which the J&J Board purports to 

rely, contends that pursuing the claims underlying this action against defendants could 

create the risk that statements made by the Company or its representatives in this 

litigation could be deemed admissions and used in collateral litigation; require J&J to 

advance all the individual defendants’ expenses (including legal fees), judgments, 

fines, penalties and settlements paid or reasonably incurred in this litigation; and 

require J&J to devote substantial time and resources to the litigation. Thus, according 

to the Special Committee, even if this action was properly brought – which it was –

prosecuting it would be detrimental to J&J’s defenses in relation to the ongoing 

investigations and/or other actions.

95. This and other extraneous factors considered by the Special Committee 

resulted in the creation of a biased and incomplete report, which lacked crucial details 

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concerning what controls for compliance with the books and records provisions of the 

FCPA, if any, were allegedly in place at J&J’s operations in Greece, Poland, Romania 

and Iraq during the relevant period. For example, the Special Committee report 

concludes that, because an alleged email from a “whistleblower” in 2006 raised the 

issue of improper payments in Greece, the Company must have had sufficient internal 

controls for J&J’s operations in Greece, Poland, Romania and Iraq. Despite the 

opportunity to do so, the report fails to bolster this conclusion with details regarding 

what FCPA controls were in place at the time in these countries. Considering the fact 

the FCPA violations occurred over a span of several years before the first 

“whistleblower” email was allegedly received, the facts in the report actually support 

the conclusion that no such FCPA complaint controls were in place in Greece, let 

alone in Poland, Romania and Iraq.

96. Moreover, the Special Committee’s report inaccurately portrayed the 

complaints as having alleged “J&J had inadequate procedures” to prevent the bribery 

scheme and kickbacks, instead of the complaint’s actual allegations regarding the 

Company’s lack of controls for compliance with the FCPA in Greece, Poland, 

Romania and Iraq. The Special Committee’s mischaracterization of the allegations 

contained in plaintiffs’ shareholder derivative complaints illustrates the 

unreasonableness of the Special Committee’s conclusions, and the Special Committee 

members’ hostility toward the Company’s causes of action and inability to present the 

allegations to the Board in an impartial manner. This mischaracterization by the 

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Special Committee ultimately prevented the Board from intelligently applying the 

relevant legal standards to the allegations.

97. Moreover, the Special Committee and the Board have made clear they 

require an extremely unreasonable amount of evidence in order to allow the derivative 

claims to move forward. Based on the Special Committee’s recommendation, the 

Board has determined it will not pursue claims against two officers who the Special 

Committee found had knowledge of the FCPA violations in Greece and appear to 

have violated their fiduciary duties owed to J&J. Thus, according to the Board, not 

even evidence of knowledge of the violations or breach of a fiduciary duty would 

suffice for the Board to allow the claims to proceed. 

98. Additionally, a pre-suit demand on defendant Weldon is excused because 

his primary employment is as CEO of J&J. Between 2000 and 2006 alone, defendant 

Weldon pocketed more than $38.3 million in incentive compensation, including stock 

awards. During this period, J&J lacked FCPA-compliant internal controls. Therefore, 

defendant Weldon financially benefitted from the misconduct particularized in this 

Complaint and, therefore, is disabled from considering a pre-suit demand.

COUNT I

Against All Defendants for Breach of Fiduciary

Duty of Loyalty (and Good Faith)

99. Plaintiffs incorporate ¶¶1-98.

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100. Defendants owed J&J a fiduciary duty of loyalty (and good faith). This 

duty includes an obligation, of which defendants were fully aware, to manage J&J’s 

business and affairs lawfully and in accordance with the laws applicable to J&J’s 

operations, including the FCPA’s books and records and anti-bribery provisions.

101. Defendants, however, did not have J&J implement an internal controls 

system for compliance with the FCPA’s books and records provisions at J&J’s 

operations in Greece, Poland, Romania and Iraq, and bribery flourished. Defendants’ 

failures to implement internal controls at J&J’s overseas operations were conscious, 

and contrary to their fiduciary duty to act to implement internal controls at J&J’s 

overseas operations.

102. J&J has been severely injured by defendants’ disloyal and faithless acts. 

Accordingly, J&J should be awarded damages and equitable relief.

COUNT II

Against All Defendants for Breach of

Fiduciary Duty of Loyalty (Candor)

103. Plaintiffs incorporate ¶¶1-98.

104. Defendants owed J&J a fiduciary duty to speak the full truth whenever 

they undertook to speak for J&J. Defendants, however, breached their duty of candor 

when they disseminated materially false and misleading information to J&J 

shareholders about J&J’s violations of the FCPA. They also breached their duty of 

candor by concealing the fact that, although J&J’s directors knew that J&J needed to 

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have internal controls for compliance with the FCPA at J&J’s operations in Greece, 

Poland, Romania and Iraq, J&J’s directors did not cause J&J to implement them.

105. Defendants also did not correct their false and misleading statements in 

J&J’s 2006-2010 Annual Reports on SEC Form 10-K and 2007-2011 Proxy 

Statements regarding the nature of, and responsibility for, the FCPA debacle at J&J. 

These actions were not a good faith exercise of business judgment to protect and 

promote J&J’s legitimate corporate interests.

106. J&J has been severely injured by defendants’ disloyalty and lack of 

candor. Accordingly, J&J should be awarded damages and equitable relief.

COUNT III

Against All Defendants for Mismanagement

107. Plaintiffs incorporate ¶¶1-98.

108. By causing J&J to operate without an internal controls system for 

compliance with the FCPA, defendants mismanaged J&J’s business and affairs. 

Defendants were aware of the FCPA’s ban on bribing officials in other countries to 

get or retain business. They also knew that J&J needed to implement internal controls 

for compliance with the FCPA. Instead, defendants mismanaged J&J’s business by 

ignoring the Company’s obligations under the FCPA.

109. J&J has been severely injured by defendants’ mismanagement. 

Accordingly, J&J should be awarded damages and equitable relief.

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COUNT IV

Against All Defendants for Abuse of Control

110. Plaintiffs incorporate ¶¶1-98.

111. By causing J&J to operate without an internal controls system for 

compliance with the FCPA, defendants abused their control of J&J’s business and 

affairs. Defendants were aware of the FCPA’s ban on bribing officials in other 

countries to get or retain business. They also knew that J&J needed to implement 

internal controls for compliance with the FCPA. Instead, defendants abused their 

control of J&J by ignoring the Company’s obligations under the FCPA.

112. J&J has been severely injured by defendants’ abuse of control. 

Accordingly, J&J should be awarded damages and equitable relief.

COUNT V

Against All Defendants for Corporate Waste

113. Plaintiffs incorporate ¶¶1-98.

114. While under the stewardship of J&J’s directors, J&J violated the FCPA 

in Europe and Iraq and has been forced to, among other things, pay $70 million to 

resolve federal FCPA charges. Additionally, J&J has and will incur tens of millions in 

additional damages in the form of FCPA investigative costs and remediation efforts. 

Therefore, any temporary benefits that J&J may have obtained through bribery have 

been eclipsed by the damages arising from defendants’ failure to cause J&J to 

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implement internal controls for compliance with the FCPA. In short, defendants 

wasted J&J’s valuable corporate assets.

115. J&J has been severely injured by defendants’ waste of corporate assets. 

Accordingly, J&J should be awarded damages and equitable relief.

COUNT VI

Against All Defendants for Unjust Enrichment

116. Plaintiffs incorporate ¶¶1-98.

117. Defendants have been unjustly enriched at the expense of and to the 

detriment of J&J. While breaching their fiduciary duty, defendants received incentive 

compensation and fees from J&J that were not justified nor in the best interest of J&J.

118. J&J has been severely injured by defendants’ unjust enrichment. 

Accordingly, J&J should be awarded damages and equitable relief.

COUNT VII

Against Defendants for Violation of 

§14(a) of the Exchange Act

119. Plaintiffs incorporate ¶¶1-98.

120. Rule 14a-9, promulgated pursuant to §14(a) of the Exchange Act, 

provides that no proxy statement shall contain “any statement which, at the time and 

in the light of the circumstances under which it is made, is false or misleading with 

respect to any material fact, or which omits to state any material fact necessary in 

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order to make the statements therein not false or misleading.” 17 C.F.R. §240.14a9(a).

121. J&J’s 2007-2011 Proxy Statements violated §14(a) and Rule 14a-9 

because they omitted material facts, including details surrounding the events giving 

rise to J&J’s violations of the FCPA, facts which most of the defendants were first 

aware of by no later than 2006. In the exercise of reasonable care, defendants should 

have known that the Proxy Statements were materially false and misleading.

122. The misrepresentation and omissions in the 2007-2011 Proxy Statements 

were material. The Proxy Statements were an essential link in the accomplishment of 

the continuation of the unlawful foreign bribery scheme, as revelations of the truth 

would have immediately thwarted a continuation of J&J shareholders’ endorsement of 

the directors’ positions and/or executive compensation and fees.

123. J&J has been severely injured by defendants’ misconduct. Accordingly, 

J&J should be awarded damages and equitable relief.

COUNT VIII

Against All Defendants for Violation of

§29(b) of the Exchange Act

124. Plaintiffs incorporate ¶¶1-98.

125. Defendants each received incentive compensation and fees, including 

stock awards, while engaging in conduct that violates §14(a) of the Exchange Act. 

Defendants’ incentive compensation and fees should be rescinded under §29 of the 

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Exchange Act because defendants violated §14 by issuing false and misleading reports 

to J&J shareholders regarding the nature of, and responsibility for, the FCPA 

violations at J&J’s operations in Greece, Poland, Romania and Iraq. All of the 

payments defendants received are therefore voidable by J&J under §29(b) of the 

Exchange Act.

126. J&J is in privity with the defendants with respect to the incentive 

compensation and fees provided by J&J to defendants. Defendants have engaged in 

prohibited conduct in violation of the securities laws as alleged herein.

127. J&J has been severely injured by defendants’ misconduct. Accordingly, 

J&J is entitled to damages, i.e., rescission of the incentive compensation and fees 

granted to defendants.

PRAYER FOR RELIEF

WHEREFORE, plaintiffs demand judgment in favor of J&J against all 

defendants as follows:

A. Declaring that plaintiffs may maintain this action on behalf of J&J and 

that plaintiffs are adequate representatives of J&J;

B. Declaring that defendants have breached, among other things, their 

fiduciary duty of loyalty (and good faith and candor) owed to J&J, and violated the 

federal securities laws;

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C. Determining and awarding to J&J the damages sustained by it as a result 

of the breaches of fiduciary duty and securities laws violations set forth above from 

each of the defendants, jointly and severally, together with interest thereon;

D. Determining and awarding to J&J exemplary damages in an amount 

necessary to punish defendants and to make an example of defendants to the 

community according to proof at trial;

E. Awarding plaintiffs the costs and disbursements of this action, including 

reasonable attorneys’ and experts’ fees, costs and expenses; and

F. Granting such other and further equitable relief as this Court may deem 

just and proper.

JURY DEMAND

Plaintiffs demand a trial by jury.

DATED: August 29, 2011 COHN LIFLAND PEARLMAN

HERRMANN & KNOPF LLP

PETER S. PEARLMAN

s/Peter S. Pearlman

PETER S. PEARLMAN

Park 80 Plaza – West One

250 Pehle Avenue, Suite 401

Saddle Brook, NJ 07663

Telephone: 201/845-9600

201/845-9423 (fax)

Email: psp@njlawfirm.com

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ROBBINS GELLER RUDMAN

& DOWD LLP

DARREN J. ROBBINS

TRAVIS E. DOWNS III

BENNY GOODMAN III

LAURIE L. LARGENT

CHRISTOPHER D. STEWART

655 West Broadway, Suite 1900

San Diego, CA 92101

Telephone: 619/231-1058

619/231-7423 (fax)

LAW OFFICE OF DEBRA S. 

GOODMAN P.C.

DEBRA S. GOODMAN

1301 Skippack Pike, Suite 7A#133

Blue Bell, PA 19422

Telephone: 610/277-6057

484/231-1922 (fax)

LAW OFFICE OF ALFRED G.

YATES, JR., P.C.

ALFRED G. YATES, JR.

GERALD L. RUTLEDGE

519 Allegheny Building

429 Forbes Avenue

Pittsburgh, PA 15219

Telephone: 412/391-5164

412/471-1033 (fax)

Attorneys for Plaintiffs

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