Corey Rosen
Plaintiffs Lose Again in Johnson & Johnson Case
In Perrone v. Johnson & Johnson, No. 3:19-cv-00923, (D. N.J., Feb. 26, 2021), a district court rejected a lawsuit alleging that Johnson & Johnson executives breached their fiduciary duties when they did not reveal problems with its talcum powder that were linked to cancer cases. Plaintiffs argued that the defendants “could have directed the Plans to hold incoming ESOP assets in cash until Johnson & Johnson stock was no longer artificially inflated.” The court ruled, however, that such an action arguably would have required disclosure and could have harmed the stock price. Plaintiffs also argued that by incorporating J&J’s securities filings “into plan-related documents,” such as the Summary Plan Description, corrective disclosures are now both corporate and fiduciary acts. The court disagreed, saying that the individuals involved had to pay attention to their “two hats” and that issuing a corrective securities disclosure was purely a corporate act, not a fiduciary requirement. Finally, the court said the plaintiff’s alternative course of action could not have been shown to do more good than harm.
