Opinion ID: 175410
Heading Depth: 1
Heading Rank: 9

Heading: Medtronic

Text: DGRS attempts to show collective scienter of Medtronic by pointing out individual pieces of information held within the company that should have (and eventually did) lead to the conclusion there was a problem with the Fidelis leads. However, the complaint fails to allege any one individual or group of individuals had, or even had access to, all those pieces of information collectively at the time the allegedly misleading statements were made. This is not a situation where the falsity was so obvious that anyone familiar with the business of the company would have known the statements to be false at the time they were made. DGRS points to a number of admissions on the part of Medtronic at the time of the recall to show that Medtronic knew the Fidelis leads were failing at unacceptable rates at the time it reassured investors. First, Medtronic's reassurance was qualified at best. Second, the district court is correct that these statements were all cherry-picked and taken out of context. Most of them are snippets of larger conversations and, when placed in context, it is clear the admissions refer to the fact Medtronic was aware of reports of a problem and was investigating during the class period, not that Medtronic knew the Fidelis leads would have to be recalled at that time. DGRS alleges Medtronic had in its possession the data that indicated there was a problem with the Fidelis leads at the time it was still reassuring doctors that the leads were a viable product. That is true. However, mere possession of uncollected data does not indicate Medtronic was aware of the implications of that data. The complaint itself alleges Medtronic was reviewing the tracking data and does not allege the reports were conclusive any earlier than the date on which Medtronic took action with respect to the Fidelis leads. See Teamsters Local 445 Freight Div. Pension Fund v. Dynex Capital Inc., 531 F.3d 190, 196 (2d Cir.2008) (finding no inference of scienter where there was no allegation that raw data in possession of company had been collected into reports that would have contradicted the information released by the company during the class period). The district court did not err in dismissing the complaint for failure to plead the element of scienter with sufficient particularity.