The US District Court for the Western District of Texas certified a class of common stock purchasers in an action against Pain Therapeutics, Inc. (PTI) and its directors. The plaintiffs’ complaint alleges that PTI misled investors concerning its efforts to obtain Federal Drug Administration approval for the painkiller REMOXY.
Among the requirements for certifying a class is that the “claims or defenses of the representative parties are typical of the claims or defenses of the class,” and “the representatives will fairly and adequately protect the interests of the class.” PTI argued that the proposed plaintiff class could not meet these elements because the general partner of the lead plaintiff was a sophisticated investor. In rejecting the argument and certifying the class, the court found that Congress, in the Private Securities Litigation Reform Act, expressed a desire for sophisticated plaintiffs in class action securities case. The court found that the plaintiff’s “sophistication makes it more suitable to serve as a lead plaintiff, not less.”
KB Partners I, L.P. v. Barbier, No. A-11-CA-1034-SS, 2013 WL 2443217 (W.D. Tex. 2013).