Mylan and Executives Win Dismissal of Putative Class Action Suit Arising from Acquisition of Abbott’s Generic Drug Business

On August 12, 2016, Judge Mark R. Hornak of the United States District Court for the Western District of Pennsylvania granted Cravath’s motion to dismiss a consolidated putative class action lawsuit against Mylan N.V. and its Executive Chairman and CEO brought by purported Mylan shareholders. Plaintiffs alleged breach of fiduciary duty and breach of contract with respect to Mylan’s $5.6 billion acquisition of Abbott Laboratories’ non‑U.S. generic drug business, in which Mylan reincorporated as a Dutch company.

Judge Hornak adopted the May 2016 recommendation by United States Magistrate Judge Cynthia Reed Eddy to dismiss the case with prejudice for failure to state a claim and to deny plaintiffs’ motion for partial summary judgment as moot. According to the Magistrate’s opinion, plaintiffs failed to adequately plead that the merger proxy statement constituted a contract between Mylan and its shareholders by the mere fact that the shareholders voted to approve the merger. Additionally, the Magistrate’s opinion stated that plaintiffs’ breach of fiduciary duty claim brought directly against the individual defendants must fail because directors of a Pennsylvania corporation do not have a fiduciary duty to individual shareholders, only to the corporation.

The Cravath team included associates Justin C. Clarke, Nick Friedman and John I. Karin. The case is City of Riviera Beach General Employees Retirement System, et al. v. Mylan N.V., et al., No. 15‑cv‑00821 (W.D. Pa.).