Trustees of the Welfare and Pension Funds of Local 464A, The v. Medtronic plc

Case Identification Case: Trustees of the Welfare and Pension Funds of Local 464A — Pension Fund, et al. v. Medtronic PLC, Geoffrey S. Martha, Karen L. Parkhill, Sean Salmon, and Hooman Hakami, No. 22-cv-2197 (LMP/LIB) Court: United States District Court, District of Minnesota Judge: Laura M. Provinzino, United States District Judge Date: September 30, 2025

Parties - Lead Plaintiffs: Phoenix Insurance Company Ltd. and Phoenix Provident Pension Fund Ltd. (collectively 'Phoenix'), representing a putative class of investors who purchased Medtronic common stock between May 23, 2019, and May 26, 2022 (the 'Class Period'). - Defendants: Medtronic PLC, a global healthcare company; Geoffrey S. Martha (President and later CEO); Karen L. Parkhill (Executive Vice President and Chief Financial Officer); Sean Salmon (President of Medtronic's Diabetes Group from October 2019 onward); and Hooman Hakami (President of Medtronic's Diabetes Group until October 2019).

Background Medtronic manufactures the MiniMed line of insulin pumps, all designed and built at its Northridge, California facility (the 'MiniMed Facility'). Beginning in 2016, Medtronic received tens of thousands of complaints about a 'clear retainer ring' component that could cause dangerous over- or under-delivery of insulin. Phoenix alleges Medtronic suppressed this information through flawed internal studies and delayed public action. Separately, Medtronic in 2018 became aware of cybersecurity vulnerabilities in its pump remote controllers and conducted a limited recall that the FDA later found non-compliant. Medtronic eventually issued a Field Safety Notification in November 2019 and, after the FDA reclassified it, a Class I recall (indicating reasonable probability of serious harm or death) in February 2020.

In February 2021, Medtronic submitted its next-generation advanced hybrid closed-loop insulin pump, the MiniMed 780G, for FDA approval. From June 7 to July 7, 2021, the FDA inspected the MiniMed Facility and issued a Form 483 — an official document listing significant objectionable conditions — identifying systemic deficiencies in corrective and preventive action procedures, complaint handling, and adverse event reporting. Medtronic exchanged multiple letters with the FDA attempting to remediate these deficiencies, with completion estimates sliding from January 2022 to as late as January 2023. On December 9, 2021, the FDA issued a formal Warning Letter stating Medtronic's responses were inadequate and that it would not grant approval of Class III devices (including the 780G) until the deficiencies were corrected. Medtronic disclosed the Warning Letter publicly on December 15, 2021, and stock fell 5.8% on May 26, 2022, when Medtronic announced the 780G would not receive approval in fiscal year 2023. The FDA ultimately approved the 780G on April 21, 2023, and lifted the Warning Letter on April 25, 2023.

Procedural History Phoenix filed its first consolidated complaint (FCC) in February 2023. On March 28, 2024, the Honorable Katherine M. Menendez dismissed the FCC, finding Phoenix had not identified actionable misstatements and had not adequately pleaded scienter (the intent to deceive required for securities fraud). Judge Menendez granted Phoenix leave to amend, and Phoenix filed its First Amended Consolidated Complaint (FACC) on April 29, 2024. The case was reassigned to Judge Provinzino on October 28, 2024. Medtronic moved to dismiss the FACC.

Legal Framework Phoenix's claims arise under: - Section 10(b) of the Securities Exchange Act of 1934 (Count I): Prohibits manipulative or deceptive devices in connection with securities transactions. Implemented by SEC Rule 10b-5, which creates liability under two theories: (1) misrepresentation (false statement) liability under Rule 10b-5(b); and (2) scheme liability under Rules 10b-5(a) and (c). - Section 20(a) of the Exchange Act (Count II): Creates 'controlling person' liability, making those who controlled a primary violator jointly liable. This claim is entirely derivative of Count I.

Both claims are subject to heightened pleading standards. Under the Private Securities Litigation Reform Act of 1995 (PSLRA), misrepresentation claims must specify each misleading statement, why it was misleading, and the factual basis for that belief. Scheme liability claims, while not subject to the PSLRA's specific requirements, must still meet Federal Rule of Civil Procedure 9(b), which requires pleading fraud with particularity — specifically, what manipulative acts were performed, which defendants performed them, when, and what effect the scheme had. For both claims, plaintiffs must plead with particularity facts giving rise to a 'strong inference' of scienter.

Holdings

Count I — Misrepresentation Liability The court analyzed three categories of alleged misstatements, all made after the FDA issued its Form 483 on July 7, 2021.

Category 1: Statements about 780G FDA approval process (Statements 1–3 and 6) Four statements by Martha and Salmon (August 24, September 1, and November 23, 2021) characterized FDA conversations as 'really good,' 'very positive,' and reflecting 'excellent progress,' and described the 780G as 'on track as far as we can tell.'

The court held these statements were inactionable for several independent reasons: - Statements that dialogue was 'good' or 'positive' are inherently subjective opinions, not objective statements of fact, and no reasonable investor would rely on them. Two of these statements were already rejected by Judge Menendez on the same grounds. - To show such opinions were false, Phoenix would need to allege concrete facts showing the FDA dialogue about the 780G itself was actually not positive. Phoenix acknowledged at oral argument that it did not know whether the 780G approval process stalled between July and December 2021 and that no allegation existed that the FDA told Medtronic that everything was paused. - The Form 483 addressed unrelated MiniMed Facility manufacturing deficiencies and made no mention of the 780G. Inferring that the 780G dialogue was negative because of the Form 483 is speculation. - Statements that approval was 'on track' constitute inactionable puffery — vague, unverifiable promotional phrases that no reasonable investor relies upon. The court cited multiple circuit court and district court decisions reaching the same conclusion about similar language. - Read in context, each allegedly misleading phrase was paired with explicit cautionary language about FDA busyness with COVID-19 and timing uncertainty, making them 'exactly the kind of hopeful statements, tinged with caution' that cannot found securities liability. - Phoenix failed to allege any specific approved timeline that Medtronic promised. Analyst optimism about an April 2022 approval could not be imputed to Medtronic absent allegations that Medtronic had 'sufficiently entangled' itself with analyst forecasts. - The court distinguished West Virginia Pipe Trades Health & Welfare Fund v. Medtronic, Inc. (W. Va. Pipe Trades I), where the FDA had directly and unambiguously told Medtronic a specific product would not be approved but Medtronic continued to tell the public it was working on that very approval. No such direct FDA communication regarding the 780G was alleged here.

Category 2: Statements about FDA compliance in the October 2021 Integrated Performance Report (Statements 4 and 5) Medtronic's IPR stated that it 'adhere[s] to regulatory requirements' and reported a metric of '0.02 findings per FDA inspection' in FY21. These statements were new to the FACC and not previously evaluated by Judge Menendez.

The court held these statements were not actionable because: - The general rule is that a company has no duty to disclose a Form 483 absent other disclosures creating a duty. Duty to disclose arises only where a company also affirmatively represents compliance with FDA regulations and the Form 483 conditions are 'numerous, severe, and pervasive' (citing KV Pharmaceutical, 679 F.3d 972). - The IPR was a 121-page company-wide document, not a formal SEC filing. The compliance language was a general statement of principle applicable to all FDA-regulated entities, not an unequivocal affirmation of 'material compliance' as in KV Pharmaceutical's five consecutive Form 10-K filings. - The Form 483 here covered only one facility for one of Medtronic's four business groups, unlike the company-wide, multi-year violations in KV Pharmaceutical. - The FY21 inspection metric statement was not false when made: FY21 ended April 30, 2021 — before the FDA's inspection even began on June 7, 2021.

Category 3: Risk factor statements in Form 10-Q filings (Statements 7 and 8) Medtronic's September and December 2021 quarterly reports contained boilerplate disclosures that the FDA could issue Form 483s, warning letters, and deny product approvals if Medtronic were found noncompliant.

The court held these were inactionable forward-looking statements because: - They explicitly identified the salient risks, including potential FDA delay or denial. - Forward-looking statements accompanied by meaningful cautionary language are protected under the PSLRA's safe harbor provision unless made with actual knowledge of falsity. - As previously held by Judge Menendez, Phoenix had not plausibly alleged that at the time of these statements Medtronic knew the risk had already materialized — i.e., that the Form 483 had definitively imperiled the 780G approval.

Count I — Scheme Liability Phoenix alleged a scheme running from May 23, 2019 to December 15, 2021, consisting of four types of deceptive acts: (1) releasing small-scale studies touting product safety while concealing known defects; (2) commissioning internally flawed risk studies that understated harm to justify non-recall; (3) failing to report cybersecurity malfunctions to the FDA; and (4) using 'half-measures' to downplay the scope of product problems after they became public.

The court dismissed the scheme claim because Phoenix failed to satisfy Rule 9(b)'s particularity requirement: - The FACC attributed all deceptive acts collectively to 'the Diabetes Group' or 'the Scheme Defendants' rather than identifying which specific individual did what specific act. - Group or 'unit' pleading does not satisfy Rule 9(b). Each defendant must be informed of the nature of their specific alleged participation. - At most, the FACC alleged that deceptive acts occurred during Hakami's or Salmon's 'leadership' of the Diabetes Group — not that they personally committed or directed the acts. - The court distinguished Mart v. Tactile Systems Technology (where specific executives were alleged to have directed specific fraudulent programs), In re Galena Biopharma (where the complaint detailed fifteen or more specific actions by each named executive), In re Able Laboratories (where executives were alleged to have personally falsified data and instructed chemists to do the same), and W. Va. Pipe Trades I (where named consulting physicians were alleged to have written specific false articles and Medtronic personnel were alleged to have edited and concealed payments for them). None of that specificity exists in Phoenix's FACC. - General awareness of company operations by management does not establish participation in a fraud scheme under the heightened pleading standard.

Count II — Controlling Person Liability Because both the misrepresentation and scheme liability theories under Count I failed, Count II's derivative controlling-person claims against the individual defendants also failed as a matter of law.

Dismissal With Prejudice Because Phoenix had already amended its complaint once after Judge Menendez's dismissal and still could not cure the deficiencies, Judge Provinzino dismissed the FACC with prejudice — meaning Phoenix may not refile. The court cited Eighth Circuit precedent allowing dismissal with prejudice where a plaintiff has had multiple opportunities to plead adequate claims.

Disposition 1. Medtronic's Motion to Dismiss (ECF No. 108) — GRANTED 2. First Amended Consolidated Complaint (ECF No. 99) — DISMISSED WITH PREJUDICE 3. Judgment to be entered accordingly.