United States District Court, N.D. California
BRADLEY COOPER, Individually and on Behalf of all Others Similarly Situated; TODD LABAK, Plaintiffs,
THORATEC CORPORATION; GERALD F. BURBACH; TAYLOR C. HARRIS; and DAVID SMITH, Defendants.
ORDER GRANTING MOTION FOR CLASS
CLAUDIA WILKEN, UNITED STATES DISTRICT JUDGE
Bradley Cooper and Todd Labak are investors in Thoratec
Corporation, a medical device company that manufactures the
HeartMate II. They allege that Thoratec and certain of its
officers, Gerhard F. Burbach, Taylor C. Harris, and David V.
Smith, made various misrepresentations in order to hide from
its investors and the public that the HeartMate II's
rates of thrombosis were increasing, which would have
adversely affected the stock price of Thoratec. They bring
this suit for damages on behalf of themselves and a putative
class, alleging violations of Sections 20(a) and 10(b) of the
Securities Exchange Act, 15 U.S.C. § 78j(b), and Rule
10b-5 promulgated thereunder. Now before the Court is
Plaintiffs' Motion for Class Certification. For the
reasons stated below, the Court grants Plaintiffs'
is a medical device company that manufactures and markets a
Ventricular Assist System (VAS), the HeartMate II. Second
Amended Complaint (SAC) (Dkt. No. 49) ¶¶ 34-35.
During the relevant period between May 11, 2011 and August 6,
2014 (the Class Period), Thoratec's common stock traded
on the NASDAQ Global Market under the ticker symbol
“THOR.” Id. ¶ 29. Individual
defendants Burbach, Harris, and Smith were directors or
officers of Thoratec during the Class Period.
April 21, 2008, HeartMate II received approval from the FDA
for certain applications. SAC ¶ 41. The FDA published a
summary of safety and effectiveness data for the HeartMate
II, which demonstrated a two percent rate of thrombosis for
all patients as of September 14, 2007. Id.
was the sole manufacturer of VAS until the HeartWare VAS came
on the European market in 2009, and reported thrombosis rates
as low as 3.1 percent. SAC ¶¶ 48, 50. HeartWare
earned FDA approval on November 12, 2012. Id. ¶
52. It represented a serious threat to Thoratec's
monopoly, especially because HeartWare had been disclosing
decreasing rates throughout the Class Period. Id.
¶¶ 50-56. Defendants thus “knew that if they
did not maintain thrombosis rates at the clinical trial rate
of 2% that HeartWare would end up with the lion share of the
market.” Id. ¶ 57.
2011, Thoratec became aware of problems with rising
thrombosis rates in patients receiving the HeartMate II.
See, e.g., SAC ¶¶ 8, 88, 92, 142, 145,
165. Despite this, Defendants made various false and
misleading statements regarding the HeartMate II's
thrombosis rates. On May 11, 2011, for example, Smith spoke
at a health care conference and stated that HeartMate
II's rates of thrombosis were between 0.02 and 0.03, the
clinical trial rates, despite knowledge at that time that
they had risen well above that level. Id.
¶¶ 90-92. The individual Defendants continued to
make similar statements throughout the Class Period.
November 27, 2013, external studies and articles published,
including a study by the New England Journal of Medicine
(NEJM), concluded that the occurrence of thrombosis
associated with the HeartMate II had significantly increased,
causing Thoratec stock to drop by approximately six percent.
Id. ¶¶ 128-29. Thoratec hid from its
investors its own internal data confirming such reports and
the related financial risk, and did not correct its prior
disclosures. Id. ¶ 129. Thoratec did not
disclose the extent of the impact that the reported increases
had on HeartMate II's commercial viability until August
6, 2014, causing its stock to drop some twenty-five percent.
Id. ¶¶ 166- 68.
Cooper and Labak are investors in Thoratec stock who
purchased shares on July 15, 2013 and August 2, 2013,
respectively. See Goldberg Decl. Ex. B (Movant
Certification) (Dkt. No. 12-2); SAC ¶ 27. They move for
certification of the following class:
all persons or entities that purchased or otherwise acquired
the common stock of Thoratec Corporation between May 11, 2011
and August 6, 2014, both dates inclusive. Excluded from the
Class are any parties who are or have been Defendants in this
litigation, the present and former officers and directors of
Thoratec and any subsidiary thereof, members of their
immediate families and their legal representatives, heirs,
successors or assigns and any entity in which any current or
former Defendant has or had a controlling interest.
Mot. at ii.
seeking to represent a class first must satisfy the threshold
requirements of Rule 23(a). Rule 23(a) provides that a case
is appropriate for certification as a class action if:
(1) the class is so numerous that joinder of all members is
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are
typical of the claims or ...