Thomas A. Dubbs

The first case came on January 20, 1998. A patient in a clinical trial of a Bristol-Myers Squibb blood-pressure compound called omapatrilat developed angioedema so severe that the airway had to be opened by intubation or tracheotomy. The third and fourth cases, on March 11 and April 3, 1999, were patients in a trial that enrolled only African-American patients and compared omapatrilat with the ACE inhibitor lisinopril. In that trial, twelve of 301 patients on omapatrilat developed angioedema. One of 295 on lisinopril did.

The company had branded the compound Vanlev. On September 13, 1999, its management committee, led by chairman and chief executive Charles Heimbold, reported that a “Blockbuster launch of Vanlev” was a “critical success factor” in the 2000 business plan, a blockbuster being a drug that sells more than $1 billion a year within three years of launch. What the company knew about the four patients, and what it told doctors and investors while it planned that launch, became the record in In re Bristol-Myers Squibb Securities Litigation, the case Dubbs led in the federal court in New Jersey for the LongView Collective Investment Fund of the Amalgamated Bank.

Angioedema in Black Women

People inside the company were writing about the problem before anyone outside heard of it. On December 8, 1998, after the second tracheotomy, Richard Reeves of the clinical team wrote that “this guy appears to have had life-threatening angioedema… one other case was this bad.” Dan MacNeil answered that twenty-three other cases were in the trial database, that eleven of them were Black patients and nine of those eleven were women, and that “Black women may have a greater risk of developing angioedema than others.” On April 26, 1999, Kathleen Moulton reported that investigators had identified angioedema in forty subjects, 0.62 percent of the 6,476 exposed. A junior epidemiologist, Joanna Whyte, wrote on her printed copy that the rate “could be higher,” and in notes produced with the e-mail recorded that the company wanted a position paper on angioedema: “How do we join the two (angio[edema] and [Vanlev]) without saying ‘hey this is a problem.’” A slide for an angioedema meeting on May 5, 1999, attended mainly by marketing staff, read, “We want to find a lower incidence in patients on Omapatrilat… than on other ACE Inhibitors.”

On September 13, 1999, the day the management committee called the launch a critical success factor, senior clinical and regulatory staff met to discuss the lisinopril trial and the intubations and how to report them to the Food and Drug Administration. Michael Mitnick’s notes record that Joel Lasker, the company’s in-house counsel, told the seventeen participants to “be careful in all writings.” A draft safety update dated September 20, 1999, carried the heading “EVENT: Angioedema in Black Women” and reported that 4.27 percent of African-American women on Vanlev had developed angioedema, against 0.63 percent of other women, a rate “almost 7-fold greater than that reported in Caucasians treated with the study drug.” When the company’s final submissions reached the FDA, the four patients had become subjects who “have had airway compromise requiring intervention.” The words intubation and tracheotomy did not appear.

Comparable to Several Leading Hypertension Therapies

What investors heard came in November 1999, at the American Heart Association symposium. One physician investigator told the meeting that omapatrilat had been studied in more than 6,500 patients and “has been generally well-tolerated, with a safety profile comparable to several leading hypertension therapies.” Another called the results “the most compelling we’ve seen with any new cardiovascular agent in the past 15 years.” On November 29, Peter Ringrose, the company’s chief scientific officer, said: “If you asked a cardiologist what the ideal drug would do, VANLEV pretty much ticks all the boxes.”

Bristol-Myers Squibb filed its new drug application on December 20, 1999, and asked for priority review the same day; the FDA granted it on January 3, 2000. At a meeting on February 11, 2000, the agency raised the four hospitalized patients, “We are not aware of similar cases in the ACE inhibitor databases,” and the head-to-head trial in Black patients in which the incidence of angioedema “was 10-fold greater on omapatrilat than on lisinopril.” On April 19, 2000, the company withdrew the application, citing “questions raised recently by the agency regarding the comparative incidence and severity of an infrequent side effect known as angioedema.” The stock fell that day.

9:45 a.m., March 20, 2002

The company tried again. A new trial, OCTAVE, was built around the hypothesis that starting every patient at a 10-milligram dose would hold angioedema to no worse than twice the rate seen with enalapril. Bristol-Myers Squibb learned the unblinded results in early September 2001 and refiled the application on December 14, 2001. Through that winter chief executive Peter Dolan spoke to the market of “five new potential blockbuster compounds” and of “the record number of innovative blockbuster brands” the company was poised to deliver, Vanlev among them.

On March 20, 2002, the company planned two releases: the results of a heart-failure study, OVERTURE, at 10:15 in the morning, and the OCTAVE results at 2:30 in the afternoon. The New York Stock Exchange required both at once and halted trading in the stock at 9:45 a.m. The safety profiles of Vanlev and enalapril were similar, the company told investors that morning, “except for a higher risk of a side effect known as angioedema”: 2.17 percent of Vanlev patients over twenty-four weeks against 0.68 percent on enalapril, 5.54 percent among Black patients, and two cases of airway compromise, both in patients on Vanlev. OCTAVE had not proved the company’s safety hypothesis. When trading resumed that afternoon the price fell again. In October the FDA told the company the drug was approvable only after at least one more trial showed an antihypertensive effect “sufficient to off-set the identified risk of angioedema.” Bristol-Myers Squibb never ran that trial, and Vanlev was never sold.

The Tip of the Iceberg

Shareholders sued in April 2000. Judge Garrett Brown consolidated the cases and on July 24, 2000, appointed LongView lead plaintiff, with Labaton Sucharow as lead counsel and Dubbs leading the team. The court certified two classes: investors who bought the stock between November 8, 1999, and the withdrawal of April 19, 2000, and investors who bought between March 22, 2001, and the disclosures of March 20, 2002. Discovery ran past four million pages. The plaintiffs deposed dozens of current and former Bristol-Myers Squibb employees, officers and securities analysts, marked more than 1,500 exhibits, and retained experts in cardiology, epidemiology, drug regulation and securities markets.

Bristol-Myers Squibb moved for summary judgment on every statement in the case. On August 17, 2005, Judge Stanley Chesler sent the case toward trial. The company had argued that its April 19, 2000, statement could not be a corrective disclosure because it said only that the application was being withdrawn. Chesler read the whole statement: “Taken as a whole, however, as it was presented to the market, the disclosure is perfectly congruent to the alleged fraud.” That the stock fell without a fuller account, he wrote, “if anything, only goes to show that the tip of the iceberg was enough [to] cause the loss.” He found that a jury could read Whyte’s 1 percent angioedema figure for captopril, a Bristol-Myers Squibb drug whose own records showed 0.1 percent, as “a simple transcription error,” and that the company’s reliance on a safety summary touting Vanlev as a treatment for Black patients was “of dubious worth” given what its own staff had written about angioedema in that group. The investigators’ claims about the trial results were not puffery, he held, because they referred to those results, “a matter of historical fact.”

Every Drug, in Every Country

With trial approaching, the parties reached agreement in January 2006. Bristol-Myers Squibb reserved $185 million on January 23, and in February Judge Chesler granted preliminary approval of a settlement for investors who bought the stock between October 19, 1999, and March 20, 2002, setting the fairness hearing for May 11, 2006.

The money was the smaller part of what LongView had asked for. Bristol-Myers Squibb agreed to post on its website a description of its clinical trials, the trial results and the safety results, including adverse events, for every drug it markets in the United States or any other country, and to register its trials on a public database. For a drug already approved for at least one use, the company agreed to disclose the results of the covered trials even if the use being studied was not yet approved, wherever those trials were conducted. Dubbs measured the terms against what New York’s attorney general had obtained from GlaxoSmithKline over Paxil: “The drug discovery protocol negotiated with Bristol-Myers Squibb as part of the settlement of this class action goes further than what Attorney General Spitzer obtained for the Glaxo settlement.” The company had harmed investors though the drug never reached a pharmacy, he said: “Even though it was never mass-produced to the public, this arguably propped up its stock price and damaged class members.” The disclosure terms, he said, would be “a deterrent against drug companies failing to disclose negative materials at the same time they are making statements about the financial implications of the drug.”

When Marcia Angell argued in The New York Review of Books that summer that drug makers should be required to register their trials and publish the results, Dubbs answered in a letter the Review printed that November. “In the recent settlement of class action litigation which we brought on behalf of shareholders against Bristol-Myers Squibb, we achieved the disclosure that Dr. Angell urges.” The reforms, he wrote, implemented many provisions of the Fair Access to Clinical Trials Act of 2005, a bill Congress had not passed, and showed “how the class action process can bring about important policy changes as well as providing investor compensation.”

Florida Written All Over It

At 11:07 on the morning of March 29, 2010, Chief Justice Roberts called Morrison v. National Australia Bank, and Dubbs went to the lectern for the petitioners, Australians who had bought shares of National Australia Bank on Australian exchanges. The bank owned HomeSide Lending, a mortgage servicer in Jacksonville, Florida, and in 2001 it had written down HomeSide’s assets by $450 million and then by $1.75 billion after recalculating the value of the company’s mortgage-servicing rights. The investors alleged that HomeSide’s managers had fed false assumptions into the valuation model and that the resulting numbers had traveled to Australia and into the bank’s financial statements.

Justice Ginsburg put the problem to him early: “this case is Australian plaintiff, Australian defendant, shares purchased in Australia. It has ‘Australia’ written all over it.” Dubbs answered: “And we respectfully disagree with the observation that this case has ‘Australia’ written all over it. Indeed, from our point of view it has ‘Florida’ written all over it because Florida is where the numbers were doctored, Florida is where the fraudulent conduct in putting the phony assumptions into the valuation portfolio were done.” When she pressed that the misrepresentation had been communicated in Australia, he said HomeSide’s senior management “created those numbers with the expectation and the knowledge that those would go into the financial statement,” and reached for an old example from the conflict of laws: a jurisdiction that forbids making poison candy keeps its interest in the candy even when it is eaten somewhere else. “We say section 10(b) is like the poison candy statute.”

He put the scale of the Florida conduct before the Court. “This is a $1.75 billion writedown in a portfolio. You have a portfolio of $187 billion worth of mortgages sitting down in Jacksonville, Florida. Those are all mortgages on American homes, 2 million American homes. So, this is not just Australia, Australia, Australia.” George T. Conway III argued for the bank and Matthew D. Roberts for the United States, both for affirmance, and the governments of Australia, the United Kingdom and France had filed briefs. In rebuttal Dubbs told the Court that the Second Circuit itself had read the complaint to allege that HomeSide’s numbers were “mechanically incorporated” in Australia, “That’s as close to ministerial as you get,” and that limiting the statute to transactions on exchanges “takes an eraser to the statute.” The case was submitted at 12:06.

On June 24, 2010, the Court affirmed. Justice Scalia’s opinion established the transaction-based rule that now governs private claims under Section 10(b), and the decision sent public pension funds and other investors with foreign holdings back to the question of where each of their transactions took place. Dubbs went back to the opinion as well. He examined its textual method in “Textualism and Transnational Securities Law: A Reappraisal of Justice Scalia’s Analysis in Morrison v. National Australia Bank,” for the Southwestern Journal of International Law, and has written on the transaction-specific inquiry the decision imposes on institutional investors.

Prevail or Fail in Unison

In 2007 the federal court in Los Angeles appointed Connecticut Retirement Plans and Trust Funds lead plaintiff for investors who had bought Amgen stock between April 22, 2004, and May 10, 2007, and Labaton Sucharow became sole lead counsel. The fund alleged that Amgen and former executives had made misleading statements about the safety and marketing of the anti-anemia drugs Aranesp and Epogen, including statements at odds with clinical studies. In August 2009 the court certified the class. Amgen appealed, lost in the Ninth Circuit on November 8, 2011, and asked the Supreme Court to hold that a securities-fraud class could not be certified until the plaintiffs proved that the misstatements were material.

The Court heard the case on November 5, 2012, with David C. Frederick arguing for the fund and Labaton’s Christopher J. McDonald and Jonathan M. Plasse on the papers, and on February 27, 2013, it affirmed, six to three. Justice Ginsburg wrote that materiality is judged by an objective standard and is therefore common to every class member: “As to materiality, therefore, the class is entirely cohesive: It will prevail or fail in unison.” Amgen and the dissenters, she wrote, “would have us put the cart before the horse,” and the company’s rule “would necessitate a mini-trial on the issue of materiality at the class-certification stage.” Amgen had offered rebuttal evidence, including a Federal Register agenda showing that an FDA advisory committee would discuss safety concerns about one of its drugs, to show that an executive’s statement downplaying the meeting could not have moved the price. The Court held that such evidence belongs at summary judgment or trial, as Basic Inc. v. Levinson had said in 1988.

The case went back to Los Angeles. On August 4, 2014, the district court largely denied Amgen’s motion to dismiss an amended complaint that added further allegations. Discovery produced nearly 23 million pages of documents, 52 depositions taken or defended, and 36 expert reports. With less than a month before trial the parties settled for $95 million, announced on July 20, 2016, and Judge Philip S. Gutierrez approved the settlement on October 25, 2016, in a hearing that took less than five minutes. Dubbs helped carry the case through the Supreme Court and to that settlement.

$7.04 to $0.73

On September 7, 2008, the Federal Housing Finance Agency placed Fannie Mae in conservatorship. On the next trading day the stock fell from $7.04 to $0.73. The State-Boston Retirement System and the Massachusetts Pension Reserves Investment Management Board, appointed lead plaintiffs for common shareholders in the Southern District of New York, alleged with the Tennessee Consolidated Retirement System, lead plaintiff for the preferred class, that Fannie Mae and its officers had misled investors between November 8, 2006, and September 5, 2008, about the company’s internal controls and risk management for Alt-A and subprime mortgages, and about its core capital, deferred tax assets and loss reserves. Dubbs led the Labaton team for the Boston system.

On September 30, 2010, the court allowed the internal-controls and risk-management claims to proceed against Fannie Mae, former chief executive Daniel Mudd and former chief risk officer Enrico Dallavecchia. On December 16, 2011, the Securities and Exchange Commission sued Mudd, Dallavecchia and a third former executive, alleging among other things that Fannie Mae had classified as prime mortgages that its own information showed performed as badly as subprime and Alt-A loans, and the company accepted responsibility for its conduct in a non-prosecution agreement. The plaintiffs filed a second amended complaint on March 2, 2012, incorporating the SEC’s allegations; on August 30, 2012, the court denied the defendants’ motions to dismiss it in their entirety.

The $170 million settlement, filed with the court in October 2014, was approved on March 3, 2015. A similar suit against Freddie Mac had been dismissed, and the dismissal affirmed. “Unlike the plaintiffs in the Freddie Mac case,” the Boston system’s chairman, Daniel J. Greene, said, “we were able to successfully allege that investors’ losses were caused by Fannie Mae’s statements and actions rather than by the financial crisis.” Dubbs said the “risks were indeed substantial.”

Generic Statements and Price Impact

Goldman Sachs presented a different certification question: whether statements about managing conflicts of interest and business integrity, which the bank called too generic to affect its share price, could maintain price inflation, and how that question bears on the Basic presumption of reliance. Dubbs served as lead counsel for the investor team through repeated certification orders and appeals. In 2020 he described the Second Circuit’s affirmance as clearing the way toward trial. After the Supreme Court held that courts must weigh the generic character of a statement against the evidence of price impact, the district court again certified the class.

First Chair at Kidder, Peabody

Dubbs was admitted in New York in 1976 and spent his first decades on the other side of these cases. As head of the litigation department at Hall, McNicol, Hamilton & Clark he was the principal partner for Thomson McKinnon Securities in the Petro Lewis and Baldwin-United class actions. At Kidder, Peabody & Co., as senior vice president and senior litigation counsel, he represented the firm in the First Executive and Orange County litigation, among many class actions, and sat first chair in securities trials. He had defended issuers and brokerages against claims of scienter, causation and class treatment before he brought those claims for pension funds.

At Labaton Keller Sucharow he represents public pension funds and other institutional investors in domestic and multinational securities cases. He has served as lead or co-lead counsel in the actions against American International Group, Bear Stearns, Facebook, Fannie Mae, Broadcom and WellCare, and was among the lawyers who secured the settlements in AIG, which produced more than $1 billion; Bear Stearns, $275 million from the company and $19.9 million from its auditor, Deloitte & Touche; HealthSouth, $671 million; WellCare, more than $200 million; Broadcom, $160.5 million from the company and $13 million from Ernst & Young; St. Paul Travelers, $144.5 million; and Vesta Insurance, $78 million. He has argued ten securities or commodities appeals in the federal courts of appeals, is admitted in the Second, Third, Fourth, Ninth and Eleventh Circuits and the Southern District of New York, and was admitted to the Supreme Court bar in 2010, the year he argued Morrison.

He took his bachelor’s and law degrees at the University of Wisconsin–Madison and a master’s degree at the Fletcher School of Law and Diplomacy at Tufts. He serves as a FINRA arbitrator, sits on the advisory board of the Institute for Transnational Arbitration and on the board of the Sidney Hillman Foundation, lectures to the Government Finance Officers Association, the National Conference on Public Employee Retirement Systems and the Council of Institutional Investors, and is an adviser to the American Law Institute on the Restatement of the Law Third, Conflict of Laws, the field whose question he had put to the Court in Morrison: when conduct crosses a border, which jurisdiction’s rule governs the people who committed it.