Tor Gronborg

One week before jury selection, the Robbins Geller trial team got up before sunrise and ran across the Golden Gate Bridge and back. The firm had moved its San Diego trial lawyers to the Bay Area and opened a trial office. The opening statement was written, the witness examinations were drafted, the experts had been met with again and again and the trial witnesses had been subpoenaed. Jury selection in In re Twitter, Inc. Securities Litigation, before Judge Jon S. Tigar in Oakland, was days away. Tor Gronborg, a partner in the San Diego office of Robbins Geller Rudman & Dowd and a lead attorney on the trial team, represented the National Elevator Industry Pension Fund, which pays the retirement benefits of tens of thousands of elevator constructors, and the class of investors who bought Twitter stock in 2015. On September 20, 2021 the parties entered a binding $809.5 million settlement, with jury selection and trial scheduled to begin the following day.

Gronborg is a member of the firm’s Management Committee, and he lectures often on the Federal Rules of Civil Procedure and electronic discovery. As lead or co-lead counsel he has helped recover more than $4.4 billion for investors in matters that span technology, pharmaceuticals, insurance, telecommunications and utilities: $1.21 billion in Valeant, $600 million in Cardinal Health, $200 million in Motorola, $146.25 million in Duke Energy, $131 million in Sprint Nextel and $104 million in Prison Realty, together with Twitter, Puma Biotechnology and Immunomedics. His own one-sentence account of how that is done: “There is no substitute for diligence.”

He has restored investor claims on appeal, helped prepare Twitter for jury selection, helped try Puma Biotechnology to a plaintiffs’ verdict and coordinated pharmaceutical records running to millions of pages from more than twenty-five defendants. The raw material is the same in each matter: the internal records behind a challenged statement, the witnesses who can explain those records, expert analysis, market evidence and, at the end, the administration of a funded recovery. The records have included corporate databases, messages, presentations, scientific materials, regulatory communications, market data and successive reporting documents. Document volume by itself measures nothing. Each alleged misstatement has to be matched to the internal record that contradicts it, a witness has to authenticate and explain that record, and the theory has to connect the disclosure to the investors’ loss; information that cannot be tied to an element of the claim distracts from it. Gronborg’s lectures on civil procedure and electronic discovery address that practical problem, which is preserving, locating, challenging and presenting evidence within the rules that govern its use, so that the pleadings and the evidence stay aligned as a case moves through appeal, electronic discovery, trial preparation, jury presentation, settlement and claims work. Twitter demanded a complete trial presentation by a fixed jury-selection date. Puma demanded statement-by-statement proof that jurors could evaluate and then a claims process that preserved the verdict’s value. Staehr demanded a pleading chronology precise enough for the Second Circuit to restore investor claims.

284 Million to 550 Million

Advertising is Twitter’s main source of revenue, and in 2014 and 2015 the company reported its audience to investors as monthly active users, or MAU, while measuring engagement inside the company through daily active users, DAU. On November 12, 2014, at an all-day Analyst Day meeting, chief executive Dick Costolo and chief financial officer Anthony Noto laid out a plan to double MAU from 284 million to 550 million in the intermediate term and past a billion in the longer term, tied $500 million of projected revenue growth to raising the ratio of daily to monthly users in the top twenty markets from 48 percent to 51 percent, and set an operational goal of building the world’s largest daily audience. The stock rose 6 percent. On the earnings call of February 5, 2015, Costolo reported 288 million monthly active users, up 20 percent for the year, and said that “our MAU trend has already turned around”; Noto, asked about engagement, said there was “no one perfect way” to measure it, put the daily-to-monthly ratio at “50% plus” in the more mature markets and in the “20% range” in emerging ones, and pointed to timeline views per user, up 3 percent. The stock closed that day up 17 percent at $48.01.

The investors’ case rested on what the two men left out. On April 28, 2015, Noto told analysts that the ratios in the quarter were “similar” to what they had been at Analyst Day, that there was “not one metric for engagement” and that a daily-user figure “could be a little bit misleading.” Monthly users had grown 5 percent; the shares fell 18 percent that day and 9 percent the next, to $38.49. On July 28, 2015, after Costolo had been forced out as chief executive on July 1 and Jack Dorsey, the chairman of the board, had returned to run the company, Twitter said that it did “not expect to see sustained meaningful growth in MAUs” for “a considerable period of time.” The stock fell nearly 15 percent, to $31.24, and 40 percent from its class-period high of $52.87 on April 7. A Susquehanna Financial Group chart published two weeks later showed the top-twenty-market ratio at about 48 percent through the first three quarters of 2014 and 44 percent in the first quarter of 2015, and after the class period Noto himself put the decline at 48 to 44 percent. Gabriel Stricker, the head of corporate communications, announced his departure on July 16, Rishi Garg, Christian Oestlien and Todd Jackson followed, and one analyst counted nine of the thirteen executives who had presented at Analyst Day still at the company.

Doris Shenwick, a shareholder, sued in the Northern District of California in September 2016. The court consolidated the cases on December 22, 2016 and appointed KBC Asset Management NV lead plaintiff, with Motley Rice as lead counsel; the National Elevator Industry Pension Fund, represented by Robbins Geller, came in as a named plaintiff, and the two firms prosecuted the case together for investors who bought Twitter stock between February 6 and July 28, 2015. The investors alleged that Costolo, Noto and the company had made false statements and material omissions on the investor calls in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and they drew on former employees: a senior manager who said DAU was the primary engagement metric tracked inside the company; another who said everyone at the company understood MAU growth was flat; a fourth who described executives reporting at “Tea Time” meetings that the MAU and DAU trends were “flattening out”; a sixth who said fake accounts inflated the metrics and that managers told employees to “do your job and be quiet”; and a seventh who said the advertising load was raised to make up for weak user growth.

Daily Active Users

Twitter, Costolo and Noto moved to dismiss, and on October 16, 2017 Judge Tigar sustained the heart of the case. He held that the investors had plausibly alleged that omitting DAU made the executives’ statements misleading, because disclosure “would have put investors on alert that MAU was not really accelerating in 2015,” that Noto’s “similar” was a statement of fact rather than puffery, and that it “was misleading for Defendants to rely on favorable ad engagement trends to describe or predict user engagement.” On scienter he applied the core-operations doctrine, found a “strong argument” that it would be “absurd” to think Costolo and Noto were unaware of the DAU and MAU trends, quoted Costolo’s own statement that “Our number-one priority is to strengthen the core and make Twitter an increasingly daily use case,” and read the timing of the statements and the resignations and terminations that followed as supporting a strong inference of intent. Twitter’s attacks on the investors’ calculations of the ratio were, he wrote, factual disputes that could not be resolved on a motion to dismiss. The case went into discovery.

Discovery turned at once on where the proof lived. On February 7, 2018, Magistrate Judge Sallie Kim ruled on the investors’ first requests for production. Twitter had agreed to twenty-five custodians and resisted adding Dorsey as a premature search of an apex executive; the court ordered his files searched without any limit of time or scope, because he had chaired the board, become chief executive during the class period and been the one who disclosed the truth on July 28, 2015, and because the other custodians’ files would not necessarily hold what his did. Twitter had proposed searching for “engag*” within five words of some twenty terms; the court set the distance at ten words and let the investors add ten terms of their own. Twitter had been redacting documents for relevance on its own judgment; the court ruled that unilateral relevance redactions are disfavored and that the answer to Twitter’s confidentiality concerns was to move to amend the protective order. And where Twitter had said that it could not reconcile some of its MAU figures “[d]ue to our data retention policies,” the court declined for the moment to order production of the litigation-hold memoranda but pointed the investors to the depositions, where witnesses could be asked what employees had done to preserve data. On July 16, 2018 Judge Tigar certified the class: about 659.2 million shares had traded in the period, KBC and the National Elevator fund were adequate co-representatives and Motley Rice and Robbins Geller adequate co-class counsel, and in-and-out traders stayed in, because “Dura only relates to how loss causation needs to be pled in the complaint” and does not affect the class definition at certification.

After discovery Twitter moved for summary judgment. On April 17, 2020 Judge Tigar denied the motion, holding that a trier of fact could find that four statements on the February 5 and April 28, 2015 calls were securities fraud by material omission. Noto’s “50% plus” figure for the mature markets could have been misleading, the court held, because on Analyst Day the defendants had defined the mature markets to include Twitter’s top twenty, and the ratio there had fallen to 44.4 percent from the 48 percent reported at Analyst Day; a fourth-quarter 2014 earnings binder given to the executives before the February call showed that the ratio had in fact declined in both the top twenty markets and the emerging ones. Costolo’s statement that the MAU trend had “already turned around” suggested a positive trend while the defendants omitted the declining daily figures, and the court rejected the argument that he had been speaking only of emerging markets, because that was not clear from what he said. Twitter asked to redact the key metrics from the published opinion, and Judge Tigar refused. On September 11, 2021, nine days before the settlement, he ruled on the defendants’ motion to exclude the investors’ rebuttal expert Frank Partnoy, letting Partnoy testify that the defense expert Charles Whitehead had reviewed and written materials his report did not discuss.

A Trial Office in the Bay Area

Across five years of litigation, with the pandemic’s delays in the middle, the team completed its witness, exhibit and expert preparation and held multiple mock trials. Gronborg’s electronic-discovery work helped turn the databases, messages, presentations, dashboards, analyses and successive reporting materials into authenticated exhibits, expert analysis and witness examinations, built on exact definitions of the internal user metrics, their comparison with the public descriptions, the timing of the changing trends and the market’s response to the later disclosures. He has described the jury problem the mock trials were meant to solve: “When the case was filed and through much of the litigation, Twitter was Donald Trump’s pulpit. Then Twitter banned him. So it was going to be a challenge identifying what segments of the jury pool had strong feelings about Twitter and how those feelings would impact jurors in a case that, of course, had nothing to do with national politics.” Jurors were almost certain to use social media and to have strong feelings about the companies that run it, and the beliefs people brought into the courtroom were, he said, unlikely to fall along traditional pro-plaintiff or pro-defendant lines. Dorsey was on the potential witness list. Daniel Drosman, who led the trial team, has said that one open question was whether the court would require every juror to be vaccinated, how that would affect each side and whether a mandate would become a ground for appeal if the investors won. Twitter denied that its executives had lied or knowingly misled anyone and disputed that the statements of Costolo and Noto had caused the stock to fall.

Twitter told the Securities and Exchange Commission on September 20, 2021 that it would pay the $809.5 million from cash on hand, take the charge in the third quarter and make the payment in the fourth, and that the agreement was no admission of fault, liability or wrongdoing. Drosman has called the figure extraordinary by any measure, in a case with none of the usual markers of a major fraud: no Justice Department inquiry, no SEC investigation, no restatement. It was the largest securities fraud class action recovery in the Ninth Circuit in twenty years and the second largest ever there, and the largest anywhere since the $1.025 billion American Realty Capital Properties settlement of 2020. The stipulation of settlement was signed on January 5, 2022, with a separate stipulation of dismissal and mutual release for Costolo and Noto; Judge Tigar granted preliminary approval on August 5, 2022, more than 401,000 investors were sent claim forms, and after a hearing on November 17, 2022 he granted final approval and on November 21 entered judgment, finding that Twitter had paid $809,500,000 into the settlement fund, that the plan of allocation was equitable and that twenty investors had opted out. Class counsel asked for 22.5 percent of the fund, $182,137,500, plus $3,570,056 in costs, with service awards of $6,531 for the National Elevator fund and $28,000 for KBC.

After Twitter settled, Gronborg said: “The jury trial is a great equalizer, even for some of the most powerful entities on the planet.” It “levels the playing field and sets the stage for accountability,” he added. A finished witness, exhibit and expert record lets investors present their proof under the same rules that govern the company they are suing, and it gives clients real leverage at the moment when settlement and trial become immediate alternatives. Asked whether part of him had wanted to try the case, he answered: “Yes. After years of litigation, the delays brought on by the pandemic, and intensive trial preparation, including multiple mock trials, you want to see how a jury will react to your case. But that is tempered by our conviction that the settlement is in the best interests of our client and the class – and the recognition that prevailing at trial would likely have been just the beginning of years of post-verdict litigation.” The money, he said, would provide retirement benefits for the elevator constructors, and the fund’s willingness to step up as a class representative plays a critical role in upholding the federal securities laws. Drosman served as lead trial counsel. Gronborg worked with Lucas Olts, J. Marco Janoski Gray, Heather Geiger, Heather Schlesier, Maureen Mueller, Christopher Kinnon, Lance Oliver of Motley Rice, the forensic accountant Terry Koelbl, the pension-fund clients, experts and support staff, while Bill Narwold and Darren Robbins led the settlement decisions. He helped direct a team that was prepared to begin jury selection when the $809.5 million agreement was reached, a resolution priced by the trial the defendants knew the plaintiffs were ready to conduct. What he says he will remember most is the team: “From fellow attorneys to forensic accountants, secretaries, paralegals, and document clerks, it was simply a great group of people to work with and we would not have succeeded in the case without every one of them.” The AmLaw Litigation Daily named Gronborg and Drosman its Litigators of the Week, and in 2022 The American Lawyer named both of them West Trailblazers.

Disease-Free Survival

On July 22, 2014, Puma Biotechnology announced top-line results from ExteNET, a double-blind, placebo-controlled Phase III trial of its only product, neratinib, in 2,821 women in forty-one countries with early-stage HER2-positive breast cancer who had completed surgery and a year of trastuzumab. A year of neratinib, the company said, improved disease-free survival by 33 percent, a hazard ratio of 0.67, and Alan H. Auerbach, its founder and chief executive, called it the first trial of a HER2-targeted agent to show a statistically significant benefit in that setting. The investors who later sued alleged that Auerbach had represented the drug as twice as effective as it really was, and that the stock traded at an inflated price as a result. HsingChing Hsu filed in the Central District of California on June 3, 2015; Norfolk County Council, as administering authority of the Norfolk Pension Fund in England, became lead plaintiff and class representative, and the case went to Judge Andrew J. Guilford in Santa Ana.

Jury selection began on January 14, 2019 and the trial on January 15. Robbins Geller tried the case for the class, with Jason Forge leading the trial team and Patrick J. Coughlin giving the closing; Gronborg served on the trial team with Forge, Trig Smith, J. Marco Janoski Gray, Ting Liu, Grace Cho and others. The team put the challenged statements beside the documentary and scientific evidence, the proof of state of mind and expert analysis of the inflation, and it confronted Auerbach with digital forensic evidence that the plaintiffs contended showed he had altered an FDA record to remove neratinib data, arguing that the altered record and the statements had been used to raise hundreds of millions of dollars in a stock offering. Coughlin told the jurors what the numbers showed: “This is what was really going on: He doubled or cut down by a third each of these key numbers,” and “It was not the blockbuster drug that Mr. Auerbach led the market to believe.” Andrew B. Clubok of Latham & Watkins, Puma’s lead co-counsel, answered that the plaintiffs “have mixed all the concepts together to try to create the appearance of some materially false or misleading statement,” and on the drug’s side effects: “It turns out, at least the facts have shown, that the diarrhea is manageable. It’s a short-term issue.” Closing arguments came on January 29, the eighth trial day, and the eight jurors deliberated about three days. On February 4, 2019 they returned a unanimous verdict that Puma and Auerbach had knowingly violated Section 10(b) and Rule 10b-5 in the statement about neratinib’s disease-free survival rate, that the correction played a substantial part in the fall of the stock on May 14, 2015, and that the fraud had inflated the price by $4.50 a share. It was only the fifteenth securities class action tried to a jury verdict since the Private Securities Litigation Reform Act was enacted in 1995, the first such verdict since 2011 and the largest securities fraud trial in ten years. Forge said afterward: “Hopefully, the U.S. attorney’s office will take note of that.”

Prejudgment Interest

The verdict fixed a figure per share; the recovery had to be built claim by claim. The class covered purchasers of Puma common stock from July 22, 2014 through May 29, 2015, shareholders had 120 days after the verdict to come forward, proofs of claim were due on January 28, 2020, and Gronborg was the firm’s contact on the claims notice. Gilardi & Co., the court-appointed administrator, validated the claims and computed each claimant’s damages from the $4.50 finding. In its SEC filings Puma had put its exposure at $9 million to $18 million, and kept saying so after the administrator reported that damages would exceed $50 million; more than 4,600 individual and institutional investors had claims confirmed, on more than 11.3 million damaged shares. On September 9, 2019 Judge Guilford awarded prejudgment interest, writing that “prejudgment interest is needed to fully compensate class members for the injury they suffered because of Defendants’ fraud,” that “Class members were deprived of the use and value of their money in the nearly four years since they were damaged by the fraud, and the award of prejudgment interest will right that wrong,” and that “the fair result is to make the victims of Defendants’ fraud whole.” Forge’s view of the company’s estimates: “Puma seems no more able to change its culture than a tiger can change its stripes.”

On October 29, 2021 Judge David O. Carter signed the judgment under Rule 54 in the case Judge Guilford had tried: principal damages of $50,670,968.37, listed claimant by claimant in an exhibit, prejudgment interest of $3,577,405.53 through September 17, 2021, a total of $54,248,373.90 with post-judgment interest until paid, and Puma and Auerbach jointly and severally liable. The parties then settled for $54,248,374.00, the complete amount of the claimed damages and prejudgment interest due on validated claims under the jury verdict, so that every validated claimant received 100 percent of damages and interest less fees and expenses and no one who had filed a validated claim needed to do anything more to be paid; class counsel applied for a fee of 25 percent. Objections were due by March 21, 2022, the settlement hearing was held on April 11, and the court approved the resolution in August 2022. Gronborg’s work ran from the presentation of the securities evidence through the claims, interest, negotiation and approval stages that converted a jury’s finding into a funded class recovery paying class members in full.

Seventeen Articles and Four Lawsuits

On October 14, 2004, New York’s attorney general sued Marsh and specifically accused Hartford of paying undisclosed commissions and submitting inflated bids; Eliot Spitzer said publicly that The Hartford was involved in the scheme. Hartford then disclosed $145 million in broker commissions for 2003 alone and stopped paying them. Steve Staehr filed the investor action the next day. The investors alleged that The Hartford Financial Services Group had paid brokers contingent commissions, kickbacks tied to the volume, growth, retention and profitability of the business steered to it, running as high as $150 million a year, and that insurers and brokers had rigged bids to eliminate competition and raise prices, with Marsh and Aon the dominant brokers. The class ran from August 6, 2003 through October 13, 2004, under Section 10(b) and Rule 10b-5 against the company and its officers and Section 20(a) against the officers; the Alaska Laborers Employers Retirement Fund, the Communication Workers of America pension plan and David Wexler joined as plaintiffs. Gronborg, then at Lerach Coughlin Stoia Geller Rudman & Robbins, was on the pleading and the appeal with William S. Lerach, Eric Alan Isaacson, Debra Wyman and Tami Falkenstein Hennick, and with David R. Scott and Erin Green Comite of Scott & Scott.

Judge Droney in Connecticut dismissed the complaint as time-barred in 2006. He took judicial notice of four earlier lawsuits against brokers, seventeen articles, four of them in mainstream publications and thirteen in the insurance trade press and newsletters, and regulatory filings including insurance expense exhibits and a 10-K excerpt, and found that an investor had been on inquiry notice by July 25, 2001, the filing date of a suit called Turner II, so that the two-year limitations period had run in July 2003, before the class period began. Hartford’s lawyers at Morrison & Foerster and Wiggin and Dana defended that reasoning in the Second Circuit: contingent commissions had been litigated and written about for years, and the company’s own filings referred to the payments. The question, argued on June 19, 2008 before Circuit Judges Peter W. Hall and Debra Ann Livingston and District Judge Colleen McMahon, sitting by designation, was whether any of that public material would have told an investor of ordinary intelligence that The Hartford had probably defrauded her.

Judge McMahon’s opinion for the court, issued November 17, 2008, vacated the dismissal and sent the case back. Judicial notice of the materials was proper, the court held, for what they said and not for their truth, and considering them did not convert the motion into one for summary judgment. But “Storm warnings in the form of company-specific information probative of fraud will trigger a duty to investigate,” and the test is whether the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded. “None of the articles from mainstream publications so much as mentioned The Hartford.” “The Hartford was neither named as a party nor mentioned in any of the complaints.” Turner II “apparently flew under both industry and press radar screens.” One National Underwriter story of February 14, 2000 mentioned the company in passing, and the court concluded “that, on the record before us, that article was not sufficient to trigger inquiry notice as a matter of law.” It set out a sliding scale under which the more widespread and prominent the public information disclosing the facts underlying a fraud, the less company-specific it needs to be, and it distinguished the Shah case, where Fortune had reported on the issuer itself. The district court’s inference that The Hartford was likely involved was not clearly shown by the press accounts and was not an inference to draw on a motion to dismiss, and the regulatory filings did not reveal fraud. The ruling left Hartford free to raise timeliness again at summary judgment or trial, and the investors’ claims went forward. Gronborg’s chronology and public-information analysis contributed to the appellate rule that now governs when a securities claim may be dismissed as untimely, a rule that requires close attention to the content, timing and entity identified in public information before that material can trigger inquiry notice, and that keeps meritorious claims alive when generalized press coverage is mistaken for actual notice.

Percentage of Completion

Three times federal appellate courts have upheld pleadings Gronborg helped write: Broudo v. Dura Pharmaceuticals in the Ninth Circuit in 2003, In re Daou Systems in the Ninth Circuit in 2005 and Staehr in 2008. Daou Systems built, installed and supported computer networks for hospitals and health systems and recognized revenue on its contracts by the percentage-of-completion method, under which revenue is supposed to track the labor actually spent against the labor estimated for the job. The investors, a class that bought Daou stock between February 13, 1997 and October 28, 1998, alleged that the company instead booked 20 percent of a contract’s revenue when it was signed, 40 percent once the equipment was ordered and 50 to 60 percent once the equipment was configured and tested, whatever the labor; that at Centura Health, field-service employees were offered $100 to plug in and switch on the equipment and bill eight hours so that 30 to 40 percent of the project’s revenue could be recognized in the second quarter of 1997; and that about $1 million to $1.5 million was booked on a Candler Health contract in the third quarter of 1997 before any contract was signed, and none ever was. Third-quarter 1997 revenue, properly stated, would have been $5.9 million rather than the $11.3 million reported, an overstatement of 48 percent, while work in progress rose $5.4 million from one quarter to the next. During the class period the company acquired eleven businesses, and insiders and their families sold nearly 2.5 million shares for about $54.67 million; the stock had peaked at $34.375 in September 1997. Numbered former employees described monthly project reports that showed the actual labor and completion percentages, which top executives adjusted upward.

Judge M. James Lorenz in San Diego dismissed the third amended complaint with prejudice as conclusory, unquantified and a matter of business judgment, without reaching scienter. On February 2, 2005 a Ninth Circuit panel of Judges Betty B. Fletcher, Harry Pregerson and Melvin Brunetti, in an opinion by Judge Brunetti, with Eric A. Isaacson for the investors, reversed on the revenue-recognition, training and turnover claims. “Certainly, prematurely recognizing millions of dollars in revenue is not minor or technical in nature,” the court wrote, and at least some of the allegations showed that the revenue Daou recognized was “completely unrelated to the amount of labor incurred to date.” The former employees were specific enough under the Reform Act, and “specific allegations of deliberate accounting misfeasance create a strong inference of scienter” as to every defendant but one. On loss causation the court found that the stock “fell precipitously after defendants revealed figures vastly different than those reported in a press conference two weeks prior,” which, if true, was “sufficient to show that the drop in Daou’s stock price was the direct result of their financial misstatements and, in turn, caused plaintiffs’ damages”; one analyst had asked whether the company was manufacturing earnings. The Section 11 claims survived against every defendant, and the Section 12(a)(2), 15 and 20(a) claims went back for reconsideration. His related work in Daou addressed the pleading of alleged misstatements, corrective disclosures and investor loss.

Dura went on to the Supreme Court. The Ninth Circuit had upheld the Broudo pleading in 2003 on the view that investors establish loss causation by showing that the price on the date of purchase was inflated. The Court heard argument on January 12, 2005, with Patrick J. Coughlin arguing for the investors and Isaacson, Sanford Svetcov and Joseph D. Daley among those on the briefs, and William F. Sullivan for Dura, and on April 19, 2005 Justice Breyer wrote for a unanimous Court that an inflated purchase price will not by itself constitute or proximately cause the economic loss a securities plaintiff must plead. Every securities complaint since has had to plead the drop as well as the inflation, and Judge Tigar cited Dura when he certified the Twitter class thirteen years later.

$262 to $8.50

Valeant Pharmaceuticals International, now Bausch Health Companies, traded as high as $262 a share during the class period and fell as low as $8.50. The 280-page complaint, filed in the District of New Jersey against more than twenty-five defendants, alleged that the price had been inflated by two concealed practices: buying existing drugs, some of them life-saving, and raising their prices dramatically, and running a secretly controlled distribution network that used questionable practices to push sales. Media and regulatory scrutiny followed, several Valeant executives were subpoenaed to testify before Congress, and a former employee and the owner of an affiliated distributor were convicted of an illegal kickback scheme and sent to prison. Robbins Geller, sole lead counsel with James E. Barz leading the case, defeated seven motions to dismiss, including those of the directors and of a board member and his hedge fund who sought to escape insider-trading claims, after nearly 400 pages of initial briefing and a lengthy hearing; Judge Michael A. Shipp substantially denied the motions on April 28, 2017, and the investors later prevailed on the defendants’ motions to appeal that denial and on the discovery motions. The complaint was amended twice to add claims. The litigation generated roughly eleven million pages of documents from the defendants and material from approximately 150 third parties, and it took dozens of attorneys, forensic accountants and staff more than five years.

The team divided responsibility across pleadings, document review, experts, motion practice, witness preparation, trial planning and negotiation, and Gronborg’s work included coordinating the electronic evidence and the case assignments within that record. More than a year of negotiation, including two in-person mediations, produced a $1.21 billion settlement, which the court approved on January 31, 2021: the ninth-largest securities class action settlement ever, the largest against a pharmaceutical manufacturer and among the largest securities recoveries ever obtained in the pharmaceutical industry. The sum exceeded Valeant’s last reported cash balance of $825 million, so the payments run over time with interest. Large cases succeed when custodians, search terms, productions, testimony and expert opinions remain tied to the same factual theory and client objective, and Gronborg’s management role puts him in the work of allocating lawyers and resources so that those separate streams mature on the schedule the case requires.

Morris Plains

Immunomedics, a biopharmaceutical company developing cancer treatments, submitted its biologics license application for sacituzumab govitecan, an antibody-drug conjugate for metastatic triple-negative breast cancer, to the FDA on May 18, 2018, and in June 2018 sold a follow-on offering of common stock. That year the company discovered a serious data-integrity breach at its manufacturing plant in Morris Plains, New Jersey: personnel had deliberately manipulated bioburden samples, misrepresented an integrity-test procedure in the batch records and backdated batch records, including the dates of analytical results. The FDA’s inspection produced a thirteen-observation Form 483 in August 2018, and the agency could not determine whether earlier batches were affected because the company had questioned plant personnel under attorney-client privilege and no other documentation existed. The breach became public at the end of 2018, and in January 2019 the company announced that the FDA had refused approval because of unresolved issues at the facility; chief executive Michael Pehl called the complete response letter unexpected. The stock fell more than 20 percent across the disclosures between November 7, 2018 and January 17, 2019, and the company lost more than $1 billion in market value. Investors who bought between February 9, 2018 and January 17, 2019 alleged that the company and its executives had made false and misleading statements, in investor calls, press releases and SEC filings including the June 2018 prospectus, to inflate the stock and launch the offering while concealing the breach.

Gronborg was one of the lead attorneys for the investors, with Trig Smith, Debra J. Wyman, Jennifer N. Caringal and Joseph J. Tull of Robbins Geller and with Block & Leviton as co-lead counsel, against Immunomedics, Pehl, Michael R. Garone, Usama Malik, Behzad Aghazadeh and four other directors, defended by Gibson, Dunn & Crutcher. On July 31, 2020 Judge Madeline Cox Arleo denied the motion to dismiss by letter order. The risk disclosures in the SEC filings were themselves “material misrepresentations because they contained [risk disclosures] which framed a data breach as a potential risk when such a risk had already materialized,” she wrote, and the breach and the Form 483 issues were “core matters of central importance to” the company. The evidence ran to the facility records, the regulatory communications, the public disclosures and the market proof. With class certification pending, the parties mediated before Bruce A. Friedman of JAMS on November 30, 2022 and settled for $40 million; the stipulation was filed on January 20, 2023 before Judge Evelyn Padin, and the court granted final approval in August 2023. The defendants denied violating the securities laws. Gronborg’s words at the end of it: “Corporate misconduct harms the company and its investors,” and “We are grateful to represent clients who are committed to holding pharmaceutical companies and their executives accountable.” Puma, Valeant and Immunomedics added pharmaceutical evidence, multiple defendants, large discovery systems and regulatory records to his securities practice.

Cardinal Health to Prison Realty

Cardinal Health, Ohio’s largest drug distributor, buys from manufacturers and resells to pharmacies such as CVS and Walgreens. The investors alleged that by 2000 insiders knew the company’s run of double-digit growth was ending and reclassified zero-margin bulk transactions as profitable operating revenue, carrying the stock as high as $74, until the company disclosed in May 2004 a formal SEC investigation of the classification and the resignation of chief financial officer Richard Miller, followed by a restatement; the stock fell about 40 percent, to $44, and investors lost about $3 billion. Gronborg and Trig Smith litigated the case for Amalgamated Bank as trustee of the LongView funds, the California Ironworkers Field Trust Funds, the New Mexico State Investment Council and the PACE Industry Union-Management Pension Fund, and the $600 million settlement approved in October 2007 was then the tenth-largest in the history of securities fraud litigation and remains the largest securities fraud recovery in the Sixth Circuit. In Silverman v. Motorola, Gronborg was lead partner on the litigation team for the Macomb County Employees’ Retirement System and the City of St. Clair Shores Police and Fire Retirement System. The investors alleged that Freescale Semiconductor, Motorola’s vendor for 3G chips, could not deliver working chips in commercial quantities, so that Motorola could not ship its new 3G handsets to key customers in the fourth quarter of 2006, and that in the third quarter Motorola entered two sham intellectual-property transactions, with Freescale and Qualcomm, in violation of GAAP, to hide the financial effect. Judge Amy J. St. Eve denied the defendants’ second motion for summary judgment in its entirety on July 25, 2011, and in December 2011, after four years, Motorola, certain former officers and its former chairman paid $200 million in cash, the third-largest securities class action settlement in the history of the Seventh Circuit, in a case with no restatement and no SEC investigation. Gronborg said the result showed “how a dedicated team of Robbins Geller attorneys, paralegals and support staff painstakingly dedicated their work to bringing relevant evidence to bear concerning defendants’ liability, which led to the delivery of remarkable results for our clients and injured class members.” Trig Smith said the team had been looking forward to trying the case before Judge St. Eve and had kept preparing up to the eve of settlement.

Duke Energy’s $26 billion merger with Progress Energy took effect on July 2, 2012, and the registration statement and prospectus had assured investors that William D. Johnson, the Progress chief executive, would lead the combined company. Less than two hours after the closing the new board voted to demand Johnson’s resignation and reinstall Duke’s James Rogers; Johnson was paid $44 million to leave quietly, and the next day Duke announced that he had resigned. The stock fell, the North Carolina Utilities Commission and the state Department of Justice opened investigations, and John Mullin III, the former lead director of Progress, called the ouster an “incredible act of bad faith” and “one of the greatest corporate hijackings in U.S. business history.” Shareholders sued on July 24, 2012 under the Securities Act of 1933 and the Exchange Act for a class that bought between June 11 and July 9, 2012, including Progress holders who exchanged their shares in the merger; Gronborg was on the Robbins Geller team with Paul J. Geller, Elizabeth A. Shonson, Andrew T. Rees and Kathleen B. Douglas for Amalgamated Bank as trustee of the LongView funds, Gerald and Carolyn Friesen and the Janice and Craig Bacino Trust. In July 2013 Judge David S. Cayer rejected the defendants’ initial liability arguments, finding “ample facts, many supported by documentation and/or testimony,” that the statements about Johnson’s role were false and that the plan to remove him had been concealed. On March 10, 2015, after more than a year of negotiation, Duke agreed to pay $146.25 million in cash, the largest securities fraud recovery ever in North Carolina and one of the five largest in the Fourth Circuit; Duke said that insurance would cover most of it and that shareholders, not customers, would pay the rest. Judge Max O. Cogburn, Jr. gave final approval on November 2, 2015, saying that the plaintiffs’ lawyers had achieved “the big success early,” calling the result “excellent” and the settlement “extraordinary,” and Professor James Cox of Duke University called it “off the charts.” In Bennett v. Sprint Nextel, over the 2005 merger of Sprint and Nextel Communications, Gronborg worked for five years with James E. Barz, Lea M. Bays and Hillary B. Stakem; Judge Eric F. Melgren of the District of Kansas approved the $131 million settlement on August 12, 2015 and told the lawyers that their work “really does signal that the best is yet to come for your clients and for your prodigious labor as professionals.” The Prison Realty recovery of $104 million came from the global settlement of the stockholder class and derivative suits against Corrections Corporation of America and its predecessors, which received final court approval in February 2001: 46,900,000 shares of CCA common stock, a $29 million subordinated note at 8 percent due January 2, 2009 and about $47.5 million in cash from insurance. By 2017 the cases he had led or co-led had recovered nearly $2 billion, Intercept Pharmaceuticals’ $55 million among them; the total has since passed $4.4 billion.

Torrey Pines, Lancaster, Boalt Hall

Gronborg went to Torrey Pines High School, where he founded the school’s chapter of the Junior State of America, served as its president and was later elected Mayor of the organization’s Southern Empire Region; he attended its summer schools at Stanford and Georgetown in 1985 and 1986, came back to Georgetown as a counselor, and now sits on its board of trustees. He took his B.A. at the University of California, Santa Barbara in 1991 on an AFL-CIO History Scholarship, spent 1992 at the University of Lancaster in England on a Rotary International fellowship doing graduate work in international relations and strategic studies, and earned his law degree at the University of California, Berkeley’s Boalt Hall in 1995, where he served on the Moot Court Board. He is admitted in California, in the Northern, Central and Southern Districts of California and in the Third, Seventh and Ninth Circuits. The National Law Journal named him a Plaintiffs’ Lawyer Trailblazer in 2019, and The American Lawyer a West Trailblazer in 2022. He teaches and speaks on civil procedure and electronic discovery.

His practice combines appellate pleading, electronic discovery, pharmaceutical evidence, jury presentation, post-verdict calculation, class administration, negotiation and court approval, and it joins responsibility for investor cases with instruction on procedure and discovery. The two are one subject in his cases: they determine which evidence can be found, which witnesses can explain it and whether the case is ready when an appeal, a mediation or a jury date arrives. In Staehr, Twitter and Puma he worked at successive points in the life of a securities case, investigating the allegations, locating the systems and custodians that held the proof, preserving a loss-causation theory, briefing the appellate questions, preparing witnesses and carrying a jury result into claims administration, while Valeant and Immunomedics added pharmaceutical evidence, multiple defendants and large discovery systems. Each matter required the factual theory to stay stable while the procedural demands changed. His roles have included the detailed chronology used to restore the claims in Staehr, trial-team leadership in Twitter, trial work in Puma and the coordination of large pharmaceutical records. As a partner and Management Committee member he works with lawyers, clients, experts and support teams at each of those stages. A large litigation team depends on accurate connections among each lawyer’s assignment, the client’s authority, the expert opinions, the discovery rulings and the changing posture of the case, and his management work includes allocating lawyers to defined stages, maintaining the discovery systems, matching expert subjects to the evidentiary record and keeping client decisions current as a matter moves from pleading to trial preparation or settlement.

Over twenty years, he said in 2017, his clients have ranged “from individuals trying to recover their life savings to large pension funds supporting workers and communities,” and those relationships are among the most rewarding parts of the work. “My clients know that my only incentive is to achieve the best possible result for them,” which has left him free to litigate aggressively and to commit the resources a case needs. Asked what skill matters most, he named tenacity: “You will lose when you think you should win, and you will need to push on despite those losses.”