8th Circuit tosses ERI SA appeal over employees’ stock losses -Westlaw Journal

8th Circuit tosses ERI SA appeal over employees’ stock losses

1/10/2011 COMMENTS (0)
The 8th U.S. Circuit Court of Appeals has upheld a 2009 ruling against employees who alleged they lost
money in medical-device maker Medtronic Inc.’ s stock option plan because of corporate mismanagement.
Lead plaintiff Mark Brown sued Minnesota-based Medtronic and its directors in 2008, seeking class status
on behalf of current and former employees who suffered significant financial losses when the value of the
company's common stock fell 11 percent following the October 2007 recall of its Sprint Fidelis implantable
defibrillator leads.
Brown alleged enrollees in the employee stock plan were financially victimized by corporate
mismanagement and imprudent investment decisions by Medtronic executives.
He also said employees who invested in the plan suffered financial losses because the company's stock
value was inflated through misrepresentations and omissions by its corporate leadership about the success
of Sprint Fidelis leads.
The Medtronic executives continued to sell the device even though they allegedly knew by February 2007
of an excessive fracture rate and put off a recall for another eight months.
Brown sought recovery under the Employee Retirement Income Security Act for all current and former
Medtronic employees who held common stock from February 2007 to December 2008.
U.S. District Judge Richard H. Kyle of the District of Minnesota granted Medtronic's motion to dismiss the
action.
The judge said Brown failed to meet his burden of showing a constitutional standing to sue as he did not
explain how he and other prospective class members suffered the "requisite injury in fact caused by the
defendants' actions" as outlined in Pucket v. Hot Springs School District, 526 F.3d 1151 (8th Cir. 2008).
Brown, who sold his Medtronic stock in May and June 2008, and other prospective class members actually
gained financially from the alleged wrongdoing, Judge Kyle said. Brown and others who sold shares
during the class period did so at a price greater than would have been possible without the defendants'
alleged deception.
The judge dismissed the action for lack of subject matter jurisdiction.
Brown appealed to the 8th Circuit, which affirmed.
The appeals court explained that a critical component of standing is “ redressibility,” or whether

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