Deveny v. Entropin

In Deveny v. Entropin (2006) 139 Cal.App.4th 408, the class plaintiffs asserted the defendant drug company failed to disclose adverse test results. In the original complaint, plaintiffs alleged that "'defendants withheld scientific and clinical knowledge that Esterom was not detected in the blood or urine of patients' and that 'when Plaintiffs discovered that Entropin had omitted to disclose material information concerning the absorption of Esterom, Plaintiffs contacted counsel and began an investigation.'" (Id. at p. 423.) After the defendant's motion for summary judgment on statute of limitations grounds based on the existence of publicly available information on its website regarding the outcome of the blood and urine tests, the plaintiffs amended their complaint, alleging that the information on the website, while accurate, "did not provide plaintiffs or other investors with any reason to believe that Esterom was not absorbed or was not effective," and was thus insufficient to trigger the statute of limitations. (Id. at p. 417.) The drug company asserted the sham pleading doctrine, contending the plaintiffs' change in theory of liability from "you didn't tell us about the tests," to "okay, you did tell us about the tests, but you didn't explain their significance" was an instance of sham pleading. The Deveny court noted that plaintiff's counsel had offered an explanation for the change, namely, that while he had initially been unaware of information that was publicly available, after speaking with experts, he realized the data provided on defendant's website was simply insufficient to put potential investors on notice of the drug's problems. Thus, Deveny concluded this effort was sufficient to avoid the sham pleading doctrine, stating that "the sham pleading doctrine does not apply because plaintiff's counsel offered a plausible explanation for the amendment, i.e., that he had erred in relying on the failure to disclose the blood and urine data as the basis for the complaint because further discovery and consultation with experts had shown that such data was inconclusive." (Id. at p. 426.)