Court Opinion

ID: 4111620
Source: CourtListenerOpinion
Date Created: 2016-12-28 17:01:05.193561+00
Date Added: 2024-06-11T07:45:44.619199
License: Public Domain

United States Court of Appeals
                           For the Eighth Circuit
                       ___________________________

                               No. 15-3468
                       ___________________________

   West Virginia Pipe Trades Health & Welfare Fund; Employees' Retirement
    System of the State of Hawaii; Union Asset Management Holding AG

                     lllllllllllllllllllll Plaintiffs - Appellants

                                          v.

  Medtronic, Inc.; William A. Hawkins; Gary L. Ellis; Richard E, Kuntz; Julie
                Bearcroft; Richard W. Treharne; Martin Yahiro

                    lllllllllllllllllllll Defendants - Appellees

           Thomas A. Zdeblick; J. Kenneth Burkus; Scott D. Boden

                           lllllllllllllllllllll Defendants
                                   ____________

                   Appeal from United States District Court
                  for the District of Minnesota - Minneapolis
                                 ____________

                          Submitted: October 19, 2016
                           Filed: December 28, 2016
                                ____________

Before GRUENDER, BEAM, and SHEPHERD, Circuit Judges.
                          ____________

GRUENDER, Circuit Judge.
       West Virginia Pipe Trades Health and Welfare Fund, Employees’ Retirement
System of the State of Hawaii, and Union Asset Management Holding AG
(collectively, “Appellants”) appeal the grant of summary judgment to Medtronic, Inc.
in their securities fraud class action. The district court granted summary judgment
to Medtronic after determining that Appellants’ claims are time-barred. For the
reasons discussed below, we vacate the summary judgment order and remand for
further proceedings.

                                           I.

       Appellants are retirement and investment funds who brought a consolidated
class action for securities fraud against Medtronic and several of its officers and
senior managers for actions related to Medtronic’s INFUSE product. INFUSE is the
trade name of rhBMP-2, a bone morphogenetic protein that causes the body to
develop new bone tissue. Medtronic developed INFUSE as an alternative to bone
grafting procedures, and the FDA approved it for use in lower back spinal fusion
surgeries in 2002. In a traditional autograft spinal fusion procedure, the vertebrae are
fused using a bone graft taken from the patient’s hip bone. In the INFUSE procedure,
the vertebrae are fused using a thimble-shaped titanium cage containing an INFUSE-
soaked collagen sponge. INFUSE is a key component of Medtronic’s multi-billion
dollar spinal segment.

       Medtronic sponsored the FDA clinical trials, and all thirteen of the resulting
articles included authoring physicians who had financial interests in INFUSE.
Pharmaceutical companies frequently sponsor the medical research of their products.
However, the FDA specifically considered conflicts of interest during the INFUSE
approval process. The FDA approved INFUSE only for use in lumbar spinal fusion
surgeries, some dental surgeries, and for treating certain shin fractures. However, up
to eighty-five percent of INFUSE use was off-label. In 2008, the FDA issued a public
health notification associating off-label uses of INFUSE with life-threatening throat

                                          -2-
and neck swelling. In 2008, an unrelated party brought a class action against
Medtronic alleging that it violated securities laws by promoting off-label use of
INFUSE. See Minneapolis Firefighters’ Relief Ass’n v. Medtronic, Inc., 278 F.R.D.
454, 456 (D. Minn. Dec. 12, 2011). In 2011, the FDA refused to approve AMPLIFY,
a high-strength version of INFUSE, because of concerns it may cause cancer.

       In 2010, articles in the Milwaukee Journal Sentinel expressed concern that the
doctors authoring the Medtronic-sponsored INFUSE clinical studies had significant
financial ties to Medtronic and reported test results twice as favorable as those of
independent studies. Letters to the editor of the Journal of Bone and Joint Surgery
raised questions about the link between INFUSE and retrograde ejaculation (a
condition that causes male sterility). One of the physicians who authored the
INFUSE clinical studies, Dr. Kenneth Burkus, penned a response denying any link.
On May 25, 2011, the Milwaukee Journal Sentinel published an article stating that
Medtronic and doctors with financial ties to Medtronic were aware of the risk of
retrograde ejaculation but did not disclose it.

      On the same day, Dr. Eugene Carragee, an independent doctor from the
Stanford University School of Medicine, published a clinical study in The Spine
Journal linking INFUSE with a risk of sterility in men. A commentary on Dr.
Carragee’s study by Dr. James Kang of the University of Pittsburgh School of
Medicine noted that the original Medtronic-sponsored publications did not report any
adverse events despite the incidence of retrograde ejaculation, and Dr. Kang
concluded that the conflict of interest was the only explanation for the difference
between the studies. The New York Times summarized Dr. Carragee’s study and
incorporated a response from one of the authors of a Medtronic-sponsored study, Dr.
Thomas Zdeblick, who implied that the Carragee study was misleading.

     On June 22, 2011, the Senate Finance Committee issued a press release
announcing an investigation into Medtronic and INFUSE. The press release

                                         -3-
expressed concern over Medtronic’s undisclosed financial ties with doctors. The next
day, the Wall Street Journal summarized the Committee press release and reported
the amount of royalties Dr. Burkus and Dr. Zdeblick had received. On June 28, 2011,
The Spine Journal devoted its entire issue to articles concerning INFUSE and
included an article authored by Dr. Carragee that extensively analyzed the Medtronic-
sponsored clinical studies. Dr. Carragee explained that the studies employed
significantly flawed methodologies and failed to report adverse events. However, Dr.
Carragee specifically refrained from drawing any conclusion about the doctors’
motives.

       In October 2012, the Senate Finance Committee released its investigation
report on INFUSE. The Committee found that Medtronic “was heavily involved in
drafting, editing, and shaping the content of medical journal articles authored by its
physician consultants who received significant amounts of money through royalties
and consulting fees from Medtronic.” The Committee also found that Medtronic
employees added language designed to exaggerate the disadvantages of standard
spinal fusion techniques and recommended against publishing a complete list of
adverse events associated with INFUSE. Finally, the committee found that Medtronic
had attempted to adopt weaker safety rules for its clinical trials.

       Appellants filed suit on June 27, 2013 against Medtronic, its officers and senior
managers, and the doctors who authored the Medtronic-sponsored clinical studies.
Appellants alleged a number of securities laws violations, including making false
statements and employing a scheme to defraud the market. The district court initially
dismissed Appellants’ scheme liability claims against the physician-authors and
dismissed some of the false statement claims against Medtronic. However, the
district court did not dismiss one false statement claim, the scheme liability claim, or
the control liability claim against Medtronic. The litigation proceeded, and
Medtronic eventually moved for summary judgment on all claims. The district court
granted the motion, holding that the two-year statute of limitations barred all claims.

                                          -4-
Appellants only appeal the grant of summary judgment on their scheme liability
claim. In addition to the statute of limitations, Medtronic argues alternatively that
Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011), and
Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (2008),
bar Appellants’ scheme liability claim as a matter of law because it attempts to hold
Medtronic secondarily liable for the fraudulent statements of others.

                                          II.

                             A. Statute of Limitations

       The court reviews a grant of summary judgment de novo, viewing the facts in
the light most favorable to the nonmovant. Harris v. Mortg. Prof’ls, Inc., 781 F.3d
946, 948 (8th Cir. 2015). Summary judgment is appropriate when “the movant is
entitled to judgment as a matter of law.” Id. (quoting Fed. R. Civ. P. 56(a)). “We
review the district court’s determination of statute-of-limitations de novo.” In re
ADC Telecomms., Inc. Sec. Litig., 409 F.3d 974, 976 (8th Cir. 2005).

        Section 10b of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), makes
illegal the use of a manipulative or deceptive device in connection with the sale or
purchase of a security by any instrumentality of interstate commerce. 17 C.F.R.
§ 240.10b-5 implements § 10b, see Pub. Pension Fund Grp. v. KV Pharm. Co., 679
F.3d 972, 980 (8th Cir. 2012), and establishes two kinds of liability: false statement
liability (17 C.F.R. § 240.10b-5(b)) and scheme liability (17 C.F.R. § 240.10b-5(a),
(c)). Scheme liability concerns the use of “any device, scheme, or artifice to defraud”
and “any act, practice, or course of business which operates or would operate as a
fraud or deceit upon any person, in connection with the purchase or sale of any
security.” 17 C.F.R. § 240.10b-5(a), (c). 28 U.S.C. § 1658(b) establishes the relevant
statute of limitations:

                                         -5-
      [A] private right of action that involves a claim of fraud, deceit,
      manipulation, or contrivance in contravention of a regulatory
      requirement concerning the securities laws, as defined in section
      3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)),
      may be brought not later than the earlier of—
             (1) 2 years after the discovery of the facts constituting the
      violation; or
             (2) 5 years after such violation.

“‘[D]iscovery’ as used in this statute encompasses not only those facts the plaintiff
actually knew, but also those facts a reasonably diligent plaintiff would have known.”
Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 648 (2010). However, mere inquiry
notice is not sufficient. See id. at 651. The following elements comprise a scheme
liability claim under 17 C.F.R. § 240.10b-5(a) and (c): “the defendant (1) committed
a deceptive act (2) with scienter, (3) that the act affected the market for securities or
was otherwise in connection with their purchase or sale, and (4) that defendants’
actions caused the plaintiffs’ injuries.” In re Parmalat Sec. Litig., 414 F. Supp. 2d
428, 432 (S.D.N.Y. 2006). Although the law is unsettled as to whether all of the
scheme liability elements are “facts constituting the violation” within the meaning of
§ 1658(b)(1),1 at a minimum the commission of a deceptive act and scienter are “facts
constituting the violation.” See Merck, 559 U.S. at 648-49 (quoting 28 U.S.C.
§ 1658(b)(1)). Accordingly, if Appellants did not discover or with reasonable
diligence would not have discovered the particular facts constituting the deceptive act
and the facts showing scienter prior to June 27, 2011, the statute of limitations does
not bar Appellants’ claim.

      1
        In Merck & Co., Inc. v. Reynolds, the Supreme Court specifically left
unresolved whether facts concerning a plaintiff’s reliance, loss, and loss causation are
among the facts constituting the violation that must be discovered in order for the
statute of limitations to begin to run. 559 U.S. at 649.

                                          -6-
       While Appellants may have had reason to be suspicious of Medtronic’s conduct
concerning INFUSE prior to June 27, 2011, we conclude that a reasonably diligent
plaintiff would not have discovered facts sufficient to plead scienter based on public
information existing prior to June 27, 2011.2 To plead scienter adequately, “plaintiffs
must ‘state with particularity facts giving rise to a strong inference that the defendant
acted with the required state of mind.’” Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 313 (2007) (quoting 15 U.S.C. § 78u-4(b)(2)). “To qualify as ‘strong’
within the intendment of § 21D(b)(2) [of the PSLRA, 15 U.S.C. § 78u-4(b)(2)], . . . an
inference of scienter must be more than merely plausible or reasonable—it must be
cogent and at least as compelling as any opposing inference of nonfraudulent intent.”
Id. The Milwaukee Journal Sentinel articles in late 2010 described in detail the
significant financial ties between Medtronic and the physician-authors. These articles
also explained that Medtronic-sponsored studies produced test results twice as
favorable as independent studies and noted that independent doctors attributed
INFUSE’s success largely to the positive findings of Medtronic-affiliated surgeons.
However, the December 26, 2010 article explained that “[t]here is no evidence any
of the surgeons who have published articles on BMP-2 received royalties they did not
deserve.”

       Additionally, Dr. Kang’s commentary on May 25, 2011 characterized the
problem as industry-wide, emphasizing that favorable reported results are a natural
consequence of corporate-sponsored research generally. However, he emphasized
that corporate-sponsored research is “absolutely needed to help advance innovation
and patient care,” but independent studies must check corporate-sponsored research’s
tendency toward bias. Other articles in The Spine Journal and the Milwaukee Journal
Sentinel also discussed the concerns with INFUSE as exemplifying broader problems
in the pharmaceutical industry and the FDA approval process. As a result, on May

      2
     Accordingly, we need not resolve whether any elements other than the
commission of a deceptive act and scienter are facts constituting the violation.

                                          -7-
25, 2011, one could reasonably infer that the problems with Medtronic’s studies were
not due to fraud but due to the nature of corporate-sponsored research. Thus, the
available information did not create the strong inference that Medtronic intended to
employ a scheme to defraud the market by manipulating the clinical studies. That
scienter did not become apparent until October 2012 when the Senate Finance
Committee released its findings that Medtronic had intentionally edited the studies
to omit unfavorable results.

       In finding to the contrary, the district court emphasized three conclusions: (1)
Dr. Carragee’s May 25, 2011 Spine Journal article and the subsequent news reports
were sufficient to demonstrate scienter because they “showcase[d] early revelations
of Medtronic’s drive to dominate the marketplace with INFUSE;” (2) the Minneapolis
Firefighters litigation provided facts sufficient to plead scienter; and (3) the October
2012 Committee report fell outside the class period and was not tied to a drop in
Medtronic stock, so it does not bear on the statute of limitations. We disagree. First,
a desire to dominate the marketplace does not constitute scienter to perpetrate fraud
on the market. Rather, it is a mainstream corporate goal companies regularly achieve
by legitimate means. That some companies may use fraudulent means to accomplish
that goal does not provide a strong inference that Medtronic intended to defraud the
market. Second, none of the allegations in the Minneapolis Firefighters litigation
would provide sufficient information to plead scienter in this case. Minneapolis
Firefighters concerned Medtronic’s alleged promotion of off-label INFUSE use. It
did not provide relevant information that would have allowed Appellants to assert a
claim that Medtronic intentionally perpetrated a scheme to defraud the market by
paying doctors to conceal INFUSE’s on-label use risks. See Minneapolis
Firefighters’ Relief Ass’n, 278 F.R.D. at 456. Finally, whether the Committee report
caused any market reaction concerns the element of loss causation, not scienter.
Accordingly, the content of the report remains relevant to establishing when
Appellants could have first pleaded scienter.

                                          -8-
       As a result, because Appellants could not have discovered with reasonable
diligence sufficient information to plead scienter with the particularity necessary to
survive a motion to dismiss prior to June 27, 2011, Appellants brought their
complaint within the two-year statute of limitations. The district court did not reach
the five-year statute of repose, and we decline to reach it now in the first instance.

                              B. Secondary Liability

       In the alternative, Medtronic argues that Appellants’ scheme liability claim is
barred as a matter of law by Janus Capital Group, Inc., 564 U.S. 135 (2011), and
Stoneridge Investment Partners, LLC, 552 U.S. 148 (2008). Medtronic initially
raised this question in a motion to dismiss. The district court denied the motion as
to this issue and allowed the scheme liability claim to proceed. The summary
judgment proceedings did not address this argument. We review the questions of law
de novo, taking the Appellants’ pleadings as true for this purpose. See Schmidt v. Des
Moines Pub. Sch., 655 F.3d 811, 815 (8th Cir. 2011); Frey v. City of Herculaneum,
44 F.3d 667, 671 (8th Cir. 1995).

       As a threshold matter, Appellants contend that the law of the case doctrine
prevents this court from considering this argument. Appellants’ law of the case
argument is incorrect. While the district court rejected Medtronic’s Janus and
Stoneridge arguments at the motion to dismiss stage, this court is not bound by the
district court’s determination. “The law of the case doctrine prevents the relitigation
of a settled issue in a case and requires courts to adhere to decisions made in earlier
proceedings . . . .” United States v. Bartsh, 69 F.3d 864, 866 (8th Cir. 1995).
However, the law of the case doctrine provides that once an appellate court has
decided an issue in a case, the district court cannot revisit that determination on
remand. See In re Raynor, 617 F.3d 1065, 1068 (8th Cir. 2010). It does not stand for
the reverse proposition “that superior courts are bound by the decisions of inferior
courts.” Id. It is well established that this court may affirm on any basis the record

                                         -9-
supports. Christiansen v. W. Branch Cmty. Sch. Dist., 674 F.3d 927, 934 (8th Cir.
2012).

       Medtronic’s argument involves two related but distinct questions. The first
involves a line of precedent rejecting implied private causes of action for aiding and
abetting a violation of § 10b. In Central Bank of Denver, N.A. v. First Interstate
Bank of Denver, N.A., the Supreme Court refused to extend the text of § 10b to
encompass a private cause of action against actors that aid and abet other actors’
violations of § 10b. 511 U.S. 164, 191 (1994). After Central Bank, Congress passed
the Private Securities Litigation Reform Act, which declined to create a private cause
of action for aiding and abetting and instead placed the authority to prosecute claims
against aiders and abetters with the Securities and Exchange Commission.
Stoneridge, 552 U.S. at 158. Janus followed, and the Supreme Court reinforced
Central Bank’s rejection of aiding and abetting liability by holding that a private
claim brought under Rule 10b-5 for making false statements may only be brought
against the “person or entity with ultimate authority over the statement, including its
content and whether and how to communicate it.” 564 U.S. at 142. The Court
explained: “Such suits—against entities that contribute ‘substantial assistance’ to the
making of a statement but do not actually make it—may be brought by the SEC but
not by private parties.” Id. at 143 (citation omitted).

       The broader scope of scheme liability under Rule 10b-5(a) and (c) potentially
offers plaintiffs a means to circumvent Janus—a situation we encountered in Public
Pension Fund Group v. KV Pharmaceutical Co., 679 F.3d 972 (8th Cir. 2012). In
that case, investors asserted false statement claims against a pharmaceutical company
for misrepresenting its compliance with FDA regulations in its SEC filings. The
investors also attempted to assert a scheme liability claim against two of the
pharmaceutical company’s officers, alleging only that the officers had knowledge of
the company’s misrepresentations. We rejected the scheme liability claim,
emphasizing that “a scheme liability claim must be based on conduct beyond

                                         -10-
misrepresentations or omissions actionable under Rule 10b-5(b).” Id. at 987.
Otherwise, plaintiffs could simply recast false statement claims barred under Janus
as scheme liability claims. See id. Without alleging that the officers engaged in
conduct beyond misrepresentations, allegations that the officers simply knew about
the company’s misrepresentations were insufficient to support a scheme liability
claim. Id. Accordingly, a plaintiff cannot support a scheme liability claim by simply
repackaging a fraudulent misrepresentation as a scheme to defraud. Rather, a plaintiff
must allege some deceptive act other than the fraudulent misrepresentation.

        In coming to this conclusion, this court relied on two cases from our sister
circuits. KV Pharm. Co., 679 F.3d at 987. These cases provide good examples of the
kinds of scheme liability claims that do not allege separate deceptive conduct. In
WPP Luxembourg Gamma Three Sarl v. Spot Runner, Inc., the Ninth Circuit
explained that the plaintiff had not alleged facts separate from those of its Rule 10b-
5(b) omission claim because “[t]he fraudulent scheme allegedly involved the
Defendant-Appellees planning together to not disclose the Founders’ sale of
securities in the secondary offering, and then not disclosing those sales;
fundamentally, this is an omission claim.” 655 F.3d 1039, 1058 (9th Cir. 2011). The
Ninth Circuit distinguished a Massachusetts case where the defendant allegedly
worked to boost the company’s market price through activities other than omissions
in investor reports. Id. (citing Swack v. Credit Suisse First Boston, 383 F. Supp. 2d
223, 237 (D. Mass. 2004)). Likewise, in Lentell v. Merrill Lynch & Co., the Second
Circuit rejected a scheme liability claim where the only market-manipulating conduct
alleged was making a number of misrepresentations. 396 F.3d 161, 177 (2d Cir.
2005). District courts relying on KV Pharmaceutical have likewise adhered to this
distinction in evaluating scheme liability claims. See, e.g., Cotter v. Gwyn, 2016 WL
4479510 at *7-8 (E.D. La. Aug. 25, 2016) (sustaining a scheme liability claim where
plaintiff alleged that defendant company approved and facilitated self-interested
transactions in addition to failing to report them); In re Smith Barney Transfer Agent
Litig., 884 F. Supp. 2d 152, 161 (S.D.N.Y. 2012) (sustaining a scheme liability claim

                                         -11-
where plaintiff alleged that defendants not only misleadingly disclosed fees but also
channeled cost savings away from the mutual fund to which they properly belonged);
William L. Thorp Revocable Trust v. Ameritas Inv. Corp., 57 F. Supp. 3d 508, 527
(E.D.N.C. 2014) (rejecting a scheme liability claim where the only alleged deceptive
acts were the oral misrepresentations of an investment agent to his client).

       Here, Appellants allege conduct beyond mere misrepresentations or omissions
actionable under Rule 10b-5(b). Appellants’ scheme liability claim alleges that
Medtronic shaped the content of medical journals by “pa[ying] physicians . . . to
induce their complicity in concealing adverse events and side effects associated with
the use of INFUSE and overstating the disadvantages of alternative bone graft
procedures.” Although the scheme liability claim also includes allegations that
Medtronic edited language in the clinical studies that the physicians ultimately
published, the act of paying physicians to induce their complicity is the allegation at
the heart of the scheme liability claim. Paying someone else to make a
misrepresentation is not itself a misrepresentation. Thus, Appellants do not merely
repackage allegations of misrepresentation as allegations of a scheme.3 Janus and KV
Pharmaceuticals require some conduct other than a misrepresentation to support a
scheme liability claim. They do not hold that the alleged scheme can never involve
any misrepresentation in order for the scheme liability claim to survive. See, e.g., In
re Smith Barney, 884 F. Supp. 2d at 161 (sustaining scheme liability claim where
alleged conduct included but was not limited to misleadingly disclosing fees).
Accordingly, because Medtronic’s alleged deceptive conduct goes beyond mere
misrepresentations or omissions, Janus does not bar Appellants’ scheme liability
claim.

      3
        Notably, the Appellants did not assert a false statement claim based on the
clinical trials.

                                         -12-
        The second part of Medtronic’s argument concerns whether Appellants have
sufficiently pleaded that the market relied on Medtronic’s conduct as a matter of law.
In Stoneridge, Charter Communications and its suppliers engaged in sham
transactions designed to enable Charter to falsify its financial statements. 552 U.S.
at 152-55. Investors sued the suppliers, asserting both a false statement claim and a
scheme liability claim. While the investors argued that the suppliers’ participation
in the sham transactions enabled Charter to falsify its statements, the Supreme Court
held that the investors could not demonstrate that they relied on the suppliers’
conduct. Id. at 159. “Reliance by the plaintiff upon the defendant’s deceptive acts
is an essential element of the § 10(b) private cause of action. It ensures that, for
liability to arise, the ‘requisite causal connection between a defendant’s
misrepresentation and a plaintiff’s injury’ exists as a predicate for liability.” Id.
(quoting Basic Inc. v. Levinson, 485 U.S. 224, 243 (1988)). The Court rejected the
false statements claim, concluding that the causal connection between the suppliers
and the falsified financial statements was too attenuated to support a finding of
market reliance where the suppliers’ conduct did not satisfy any presumption of
reliance and the investing public did not have knowledge of the suppliers’ deceptive
acts. Id.

       The Court also rejected the scheme liability claim, emphasizing that “this
[scheme liability] approach does not answer the objection that petitioner did not in
fact rely upon respondents’ own deceptive conduct.” Id. at 160. Since Charter filed
the fraudulent financial statements, the suppliers did not make a misrepresentation
that the public relied on. The suppliers’ participation in sham transactions did not
reach the public and “nothing respondents did made it necessary or inevitable for
Charter to record the transactions as it did.” Id. As a result, the causal link between
the false financial statements and the suppliers’ conduct was too remote to
demonstrate reliance. Id. at 161. Instead, the Court determined that allowing the
scheme liability claim against the suppliers would “revive in substance the implied
cause of action against all aiders and abettors except those who committed no

                                         -13-
deceptive act in the process of facilitating the fraud.” Id. at 162-63. As a result,
under Stoneridge, a plaintiff asserting a scheme liability claim must demonstrate that
the causal connection between the defendants’ alleged deceptive act and the
information on which the market relied is not too remote to support a finding of
reliance.

       Unlike the conduct at issue in Stoneridge, the causal connection between
Medtronic’s alleged deceptive conduct and the information on which the market
relied is not too remote to support a finding of reliance. Medtronic’s alleged
deceptive conduct consists of manipulating the clinical trials by paying the physician-
authors to conceal adverse effects and to overstate the disadvantages of alternative
procedures. Appellants alleged in their complaint that investors directly relied on the
resulting favorable clinical trials. Indeed, according to the Appellants’ amended
complaint, in speaking with potential investors, Medtronic’s CEO specifically
emphasized that the company’s products’ strong clinical trial performance
undergirded Medtronic’s competitiveness and sustainability. As a result, taking the
allegations as true, Medtronic’s deceptive conduct directly caused the production of
the information on which the market relied. Unlike the suppliers’ conduct in
Stoneridge, Medtronic’s purported conduct would not merely assist or enable the
physician-authors to deceive the market. Rather, Medtronic’s alleged conduct would
deceive the market with the assistance of the physician-authors. A company cannot
instruct individuals to take a certain action, pay to induce them to do it, and then
claim any causal connection is too remote when they follow through. In this way,
Medtronic’s alleged manipulative conduct directly caused the biased clinical trial
results that the market relied upon. This alleged causal connection is sufficient to
support a finding of reliance. Thus, Stoneridge’s concern about resurrecting private
aiding and abetting claims does not arise here. Accordingly, we decline to adopt
Medtronic’s alternate ground for affirmance.

                                         -14-
                                      III.

      For the reasons discussed above, we vacate summary judgment and remand for
proceedings not inconsistent with this opinion.
                       ______________________________

                                      -15-