09-1156 Matrixx nitiatives, Inc., v. Siracusano

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Securities
Materiality

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

Sotomayor, J.

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