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Case 3:17-cv-00558-SRU Document 689 Filed 01/22/21 Page 1 of 57 UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT ___________________________________ IN RE TEVA SECURITIES LITIGATION No. 3:17-cv-558 (SRU) ___________________________________ THIS DOCUMENT RELATES TO: No. 3:19-cv-192 (SRU) ___________________________________ No. 3:19-cv-449 (SRU) No. 3:19-cv-513 (SRU) No. 3:19-cv-543 (SRU) No. 3:19-cv-655 (SRU) No. 3:19-cv-656 (SRU) No. 3:19-cv-657 (SRU) No. 3:19-cv-923 (SRU) No. 3:19-cv-1167 (SRU) No. 3:19-cv-1173 (SRU) No. 3:20-cv-83 (SRU) No. 3:20-cv-588 (SRU) ORDER Numerous plaintiffs have sued Teva Pharmaceutical Industries, Ltd. (“Teva”), and several current and former employees and officers of that company. The plaintiffs allege that Teva violated federal securities laws1 by misrepresenting the reasons for its financial success. More specifically, the plaintiffs allege that Teva publicly attributed its success to good business decisions when, in fact, Teva was thriving because it was artificially and collusively inflating the prices of certain generic drugs that it manufactured. I have consolidated the over two-dozen cases pending before me related to the same subject matter. See Consolidation Ruling, Doc. No. 341;2 Consolidation Order, Doc. No. 352. 1 As discussed further below, several of the actions include ancillary claims, such as state law claims and Israeli law claims. 2 My consolidation ruling is also available at: Ontario Teachers’ Pension Plan Bd. v. Teva Pharm. Indus., Ltd., 2020 WL 1181366 (D. Conn. Mar. 10, 2020). Case 3:17-cv-00558-SRU Document 689 Filed 01/22/21 Page 2 of 57 The consolidated case consists of four putative class actions3 consolidated for all purposes and twenty-one “direct” actions consolidated for all pre-trial purposes (the “Direct Actions”4), in which the plaintiffs have indicated that they will “opt out” of any class eventually certified. Although there is substantial overlap, there is not total overlap of the defendants named and claims raised in all the actions. Defendants in twelve of the Direct Actions have made limited motions to dismiss. More specifically, the defendants in those twelve Direct Actions ask me to dismiss two groups of claims: (1) those that fall outside applicable statutes of repose, and (2) those that assert claims under Israeli law. See Mot. to Dismiss on Repose Grounds, Doc. No. 449; Mot. to Dismiss Israeli Law Claims, Doc. No. 450. For the reasons that follow, I grant the Defendants’ motion to dismiss on repose grounds and deny the Defendants’ motion to dismiss Israeli law claims. I. Standard of Review A. Motion to Dismiss for Failure to State a Claim Upon Which Relief May Be Granted 3 Those are: (1) Ontario Teachers’ Pension Plan Bd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:17- cv-558; (2) Huellemeier v. Teva Pharm. Indus., Ltd., et al., No. 3:17-cv-1938; (3) Grodko v. Teva Pharm. Indus., Ltd., et al., No. 3:18-cv-800; (4) Emps.’ Ret. Sys. of the City of St. Petersburg, Fla. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-1768. 4 Those are: (1) OZ ELS Master Fund, Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:17-cv-1314; (2) Nordea Investment Mgmt. AB v. Teva Pharm. Indus., Ltd., et al., No. 3:18-cv-1681; (3) Revenue, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:18-cv-1721; (4) Pacific Funds Series Tr., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:18-cv-1956; (5) Public School Teachers Pension and Ret. Sys. of Chicago v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-175; (6) Schwab Capital Tr., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-192; (7) Phoenix Ins. Co., Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-449; (8) Mivtachim The Workers Social Ins. Fund, Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-513; (9) Clal Ins. Co., Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-543; (10) Highfields Capital I LP, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-603; (11) Migdal Ins. Co., Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-655; (12) Harel Pension and Provident, Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-656; (13) Oregon v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-657; (14) Migdal Mut. Funds, Ltd. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-923; (15) Psagot Mut. Funds, Ltd., et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-1167; (16) Stichting PGGM Depositary, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:19-cv-1173; (17) Internationale Kapitalanlagegesellschaft mbH v. Teva Pharm. Indus., Ltd., et al. (“INKA”), No. 3:20-cv-83; (18) Boeing Co. Emp. Ret. Plans Master Tr. v. Teva Pharm. Indus., Ltd., et al., No. 3:20-cv-588; (19) Fir Tree Value Master Fund, LP, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:20-cv-683; (20) Franklin Mut. Series Funds, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:20-cv-1630; (21) BH Invs. Funds, LLC, et al. v. Teva Pharm. Indus., Ltd., et al., No. 3:20- cv-1635. 2 Case 3:17-cv-00558-SRU Document 689 Filed 01/22/21 Page 3 of 57 A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed “merely to assess the legal feasibility of the complaint, not to assay the weight of evidence which might be offered in support thereof.” Ryder Energy Distrib. Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)). When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). Under Twombly, “[f]actual allegations must be enough to raise a right to relief above the speculative level,” and assert a cause of action with enough heft to show entitlement to relief and “enough facts to state a claim to relief that is plausible on its face.” 550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to “provide the grounds of his entitlement to relief” through more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555 (cleaned up). Plausibility at the pleading stage is nonetheless distinct from probability, and “a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and . recovery is very remote and unlikely.” Id. at 556 (cleaned up). “When reviewing a motion to dismiss, the court may consider only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings and matters of which judicial notice may be taken.” Turner v. Boyle, 116 F. Supp. 3d 58, 68 (D. 3 Case 3:17-cv-00558-SRU Document 689 Filed 01/22/21 Page 4 of 57 Conn. 2015) (quoting Samuels v. Air Transp. Local 504, 992 F.2d 12, 15 (2d Cir. 1993)) (cleaned up). II. Background In general,5 the plaintiffs claim that, beginning in 2013, Teva adopted a concerted and secret strategy of raising prices on certain drugs in its generic drug portfolio. Between July 3, 2013 and April 6, 2016, Teva raised prices for its generic drugs 76 times. See Second Am. Compl. (the “SAC”), Doc. No. 310, at ¶¶ 2, 40, 120, 128, App’x A. The plaintiffs allege that Teva undertook many of those price increases in tandem with competitors in the generic drug market. See id. at ¶¶ 46, 174–81, App’x A, App’x B. As a result of those price increases, Teva’s business boomed, as reflected both in profits and in stock price. See id. at Figure 1 (inflated profit), Figure 2 (stock price). Indeed, by July 27, 2015, Teva’s stock price had soared to an all- time high of $72 per share. See id. at ¶ 277. In August 2016, Teva was able to leverage its stock price to help finance a $40 billion purchase of Actavis, which was Allergan’s worldwide generics business. Id. at ¶¶ 8, 93. To aid in that acquisition, Teva made a stock offering in December 2015 and a notes offering in July 2016. See id. at ¶¶ 407–08. In the middle of 2015, the plaintiffs claim that Teva’s house of cards began to come crashing down. See id. at ¶ 279. Around that time, investigations into the generic drug industry picked up pace and pressure grew on Teva to explain its financial success.