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Cooper v. Thoratec Corp.

United States District Court, N.D. California

May 8, 2018

BRADLEY COOPER, Individually and on Behalf of all Others Similarly Situated; TODD LABAK, Plaintiffs,



         Plaintiffs 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' motion.


         Thoratec 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.[1]

         On 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.

         Thoratec 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.

         By 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.

         On 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.

         Plaintiffs 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.


         Plaintiffs 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 impracticable;
(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 ...

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