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1 August 20223 minute read

DLA Piper client's dismissal of Securities Act claims affirmed by Eleventh Circuit

An Eleventh Circuit panel has affirmed the dismissal of claims under Sections 11 and 12 of the Securities Act of 1933 asserted against DLA Piper client Axogen, Inc., its directors and officers, and several underwriters.


Axogen, a creator of innovative nerve repair products, issued statements in public offerings and financial statements between 2016 and 2018 that it “believe[s] that each year in the U.S., more than 1.4 million people suffer damage or discontinuity to peripheral nerves resulting in over 700,000 extremity nerve repair procedures.”


After a short-seller published an article questioning the size of the estimated market and the number of nerve injuries occurring each year, investors sued asserting claims on behalf of a putative class under both the Securities Exchange Act of 1934 and the Securities Act of 1933.


The district court twice dismissed the complaint. After the second of those decisions, plaintiffs voluntarily abandoned their Exchange Act claims and appealed from the dismissal of the Securities Act claims, arguing that the challenged statements were actionable violations.


In an opinion by Judge Andrew Brasher, the Eleventh Circuit panel affirmed the district court on the ground that the challenged statements were forward-looking statements because they reflected “an ongoing state of affairs that extends from the present into the future, not a historical state of affairs that existed at a particular point in time.” The opinion adds important appellate guidance on the meaning of “forward-looking statements” under the safe harbor added to the securities laws by the PSLRA.


Judge Barbara Lagoa wrote a separate opinion concurring in the judgment and adding that she would have affirmed the district court on the independent basis “that the statements at issue are clear examples of nonactionable statements of opinion under the framework the Supreme Court articulated in Omnicare v. Laborers District Council Construction Indus. Pension Fund, 575 U.S. 175 (2015), without addressing whether the statements constitute forward-looking statements.”


Partner Caryn G. Schechtman (New York), led the firm’s representation, along with partner Ilana Eisenstein (Philadelphia), associates Marc Silverman (New York) and Amy Reagan (Miami), and paralegal Bonny Yang (New York).