Arena Pharmaceuticals — Ninth Circuit

Kaplan Fox & Kilsheimer LLP
Type of Engagement
Subject Matter
Securities Law
Ninth Circuit

The Challenge

Reversing a district court decision that excused a pharmaceutical company and its executives from fraud that cost investors over $100 million.

The Engagement

Investors in Arena Pharmaceuticals lost more than $100 million when they were misled about the prospects for regulatory approval of a new weight loss drug. Defendants sought dismissal on the theory that their misleading conduct was not actionable because they legitimately disagreed with the Food & Drug Administration about the relevant carcinogenic science, and because much later the FDA approved the drug. After the district court dismissed the case, leading plaintiffs’ firm Kaplan Fox & Kilsheimer LLP retained Stris & Maher to brief and argue for reversal. Our position is that misleading the market about the existence of a significant scientific disagreement with the FDA is actionable under well-established principles. This appeal would clarify the pleading standard in the Ninth Circuit for a wide range of securities fraud cases.


The Ninth Circuit ruled 3-0 in our favor, reversing the district court’s decision and remanding the case for further proceedings. In April 2018, the district court approved a settlement agreement that would pay $24 million in cash and stock to the proposed class.

Key Case Materials

Opinion (October 26, 2016)

Ninth Circuit Oral Argument Video (May 4, 2016)

Reply Brief of Lead-Plaintiff/Appellant (December 5, 2014)

Arena’s Opposition Brief (October 24, 2014)

Brief of Lead-Plaintiff/Appellant (August 27, 2014)

Media Coverage

Arena Pharma, Investors Strike $24M Deal In Diet Drug Suit (Law360, November 8, 2017) (subscription required)

9th Circuit to corporations: Once you open your mouth, you can’t lie (Reuters, October 27, 2016)

9th Circ. Revives Shareholder Suit Over Arena's Diet Drug (Law360, October 26, 2016) (subscription required)

Ninth Circuit Backs Shareholders in Suit Against Pharma Firm (The Recorder, October 26, 2016) (subscription required)