Where plaintiffs alleged that the defendant failed to disclose a possible link between a product and a side effect, they sufficiently alleged materiality.
Applying Basic ’s “total mix” standard here, respondents adequately pleaded materiality. The complaint’s allegations suffice to “raise a reasonable expectation that discovery will reveal evidence” satisfying the materiality requirement, Bell Atlantic Corp. v. Twombly , 550 U. S. 544 , and to “allo[w] the court to draw the reasonable inference that the defendant is liable,” Ashcroft v. Iqbal , 556 U. S. ___, ___. Assuming the complaint’s allegations to be true, Matrixx received reports from medical experts and researchers that plausibly indicated a reliable causal link between Zicam and anosmia. Consumers likely would have viewed Zicam’s risk as substantially outweighing its benefit. Viewing the complaint’s allegations as a whole, the complaint alleges facts suggesting a significant risk to the commercial viability of Matrixx’s leading product. It is substantially likely that a reasonable investor would have viewed this information “ ‘as having significantly altered the “total mix” of information made available.’ ” Basic , supra, at 232. Assuming the complaint’s allegations to be true, Matrixx told the market that revenues were going to rise 50 and then 80 percent when it had information indicating a significant risk to its leading revenue-generating product. It also publicly dismissed reports linking Zicam and anosmia and stated that zinc gluconate’s safety was well established, when it had evidence of a biological link between Zicam’s key ingredient and anosmia and had conducted no studies to disprove that link.
585 F. 3d 1167, affirmed.
09-1156 Matrixx nitiatives, Inc., v. Siracusano