(CN) – A federal judge in Manhattan approved a $16.5 million settlement in a class action accusing Warner Chilcott and two of its top executives of making false and misleading statements regarding the company’s top-selling birth control pills.
U.S. District Judge William H. Pauley III said the class satisfied the nine factors identified by the 2nd Circuit to determine whether a settlement is fair. He noted that the absence of any objections by the class “may itself be taken as evidence of the fairness of the ruling.”
Investors filed a complaint in 2006 alleging CEO Roger Boissonneault and CFO Paul Herendeen failed to disclose that the company was discontinuing Ovcon 35 when it launched Ovcon Chewable, thus eliminating a primary revenue stream for the company.
When the news became public, compounded by news of a lawsuit filed against it by the Federal Trade Commission, Warner Chilcott common stock dropped from $15 per share to $12.60, according to the complaint.
Investors won class certification for their suit in 2007, a decision the company and its executives did not oppose. The International Brotherhood of Electrical Workers Local 98 was named lead plaintiff.
The company unsuccessfully tried to get the court to throw out certain class members who attended road shows sponsored by Warner Chilcott, where alleged disclosures about the Ovcon products were made.
The lawsuit was settled in April 2008.
Despite having sifted through more than 1.1 million pages of documents produced by the pharmaceutical company, the plaintiffs’ attorneys won’t be receiving as much in fees as they requested from the court. The class counsel sought an award of 27 percent of the settlement, or $4.5 million.
The judge said the plaintiffs’ lawyers provided “high-quality representation,” but noted “there were more law firms than appropriate for an efficient prosecution.”
Judge Pauley III ruled that “the risk in this litigation significantly depreciated when defendants failed to move to dismiss, and decreased even more when (they) did not oppose class certification.”
“While the review of over a million pages of discovery is a significant undertaking, 7,400 hours appears excessive,” Pauley III wrote. He added that the use of multiple law firms to conduct the document review was “likely an inefficient process and was never authorized by this Court.”
The plaintiffs’ lawyers were awarded 18 percent, or nearly $3 million.