Allergan Inc Suit Proceeds, To Impact Derivative Cases-Reuters

Reuters reported that the Directors of Allergan Inc must face a lawsuit over $600 million in fines the Company paid for misbranding its Botox treatment to smooth out wrinkles, a Delaware judge ruled, in a decision that could affect securities litigation in that state. The lawsuit stems from a $600 million settlement Allergan reached with the U.S. Department of Justice in 2010, which followed a three-year investigation by several government agencies of the marketing of Botox for unapproved uses. Following the settlement, the Louisiana Municipal Police Employees' Retirement System and U.F.C.W. Local 1776 pension funds brought derivative lawsuits in Delaware's Court of Chancery and several similar lawsuits were filed in California federal court. Derivative lawsuits allow shareholders essentially to step into the shoes of the Company and sue directors for harm. Any recovery from individual directors or their insurers would go to the Company, rather than to shareholders. The California lawsuit was dismissed earlier this year and the directors argued that this meant the Delaware case should also be dismissed. But Laster found that just because the California federal case was weak does not mean it should preclude the Delaware state case from going forward.