Lyman P.Q. Johnson
This major consumer case involves the over-the-counter drug Zicam when it is used as a nasal spray to counteract colds. The manufacturer, Matrixx Initiatives, is trying to head off a series of lawsuits claiming that Zicam in that form has caused a loss of the sense of smell in scores of cases. At issue is whether the drug company violated federal securities laws by failing to disclose reports to investors of patients having adverse reactions to its drugs even though the number of incidents was not statistically significant.
The brief, co-authored with Professors Lisa Casey (Notre Dame Law School), James Cox (Duke Law School), and J. Robert Brown (University of Denver College of Law), argues against adopting a statistically significant risk test as the exclusive way to establish the materiality of a safety risk nondisclosure under federal securities law.
Johnson says the drug company's argument in favor of requiring a statistically significant risk as the exclusive standard of materiality would overturn decades of Supreme Court precedent.
"The issue of materiality is central to federal securities law, and it is a standard focusing on what a reasonable investor would consider significant," says Johnson. "It cannot be reduced to a single numerical test."
Johnson's work on this case follows a busy year of involvement in cases on the 2009 Supreme Court docket. Last year, Johnson co-authored an amicus brief with this same cohort in Merck & Co. v. Reynolds, a case involving a class-action lawsuit by Merck's shareholders alleging the pharmaceutical company provided misleading information about the risks of Vioxx before pulling the pain reliever from the market due to increased risks of heart attack, stroke and death. That brief was cited in Justice Scalia's concurring opinion. In addition, the Court unanimously ruled in favor of investors in Jones v. Harris, a case involving a mutual fund management company and allegations of excessive fees. Johnson served as an expert witness for the investors in the case as it moved through the lower courts.
Lyman P.Q. Johnson is the Robert O. Bentley Professor of Law at the Washington and Lee University School of Law. Professor Johnson teaches and writes about corporate and securities law. His scholarship and expert testimony have been employed in several high profile corporate lawsuits in recent years, including the nation's largest stock options backdating case and a case brought by shareholders of the Walt Disney Company for the way their Board of Directors handled the hiring and firing of Michael Ovitz.