Buried among the reports of the Weldon mea culpa and the Rep. Darrell Issa slam of the FDA over the Tylenol manufacturing quality meltdown is finally a glimmer that J&J investors may have a conscience. They've filed a class-action lawsuit alleging that the healthcare giant tried to hide a Motrin recall through "soft market withdrawal" tactics and that the company made misleading statements before its recent raft of recalls, says AboutLawsuits.com.
It's the first concrete investor action since J&J's troubles began. They remained silent through the multiple recalls and in spite of the many press reports describing manufacturing quality violations at several plants and questionable recall tactics. Even as the stock began to underperform last summer, investors were silent.
As a group, the J&J investors appear slower, more aloof and less concerned than their counterparts at other drugmakers that have been cited for GMP violations, most notably Genzyme, which withstood an investor-driven board takeover attempt. Add to the list of drugmakers that have earned investor scorn on top of regulatory action Sun Pharma/Caraco, Mylan and KV Pharma, among others.
J&J investor Ronald Monk filed the class-action suit against the company in late September in U.S. District Court in Newark. The filing occurs while the company is under criminal investigation surrounding the phantom Motrin recall that the FDA may or may not have known about, according to recent congressional testimony. The suit charges additional misleading statements prior to the company's admission of contamination problems at its Fort Washington, PA, and Puerto Rico plants.
The complaint seeks class action status for all investors who purchased J&J shares between October 2008 and July 2010.