Morrison & Foerster Wins 10TH Circuit Dismissal of Securities Class Action Against Medical Device Company

AspenBio Pharma had been accused of misleading investors over prospects for appendicitis test; MoFo partners Raj Chatterjee and Mark Foster follow up 2012 district court win with appeals court affirmation

Morrison & Foerster won the complete dismissal of a securities class action against medical diagnostics company AspenBio Pharma with the ruling on October 17, 2014, at the Tenth Circuit Court of Appeals affirming a district court dismissal in 2012.

Raj Chatterjee

San Francisco-based litigation partners Jim Brosnahan, Raj Chatterjee and Mark Foster led the Morrison & Foerster team, which had represented Castle Rock, Colo.-based AspenBio (renamed Venaxis in 2012) since the suit, Wolfe v. AspenBio, was filed in 2010.

Plaintiffs alleged that AspenBio and certain officers misled investors about preliminary testing results for an appendicitis diagnostic in development, as well as about the viability, uniqueness, and potential applications of the product and its prospects for approval by the Food and Drug Administration. The diagnostic is initially being developed for children, adolescents, and young adults and is designed to assist doctors in ruling out appendicitis without the use of CT scans, particularly in an emergency room setting.

In 2012 Messrs. Chatterjee and Foster filed a successful motion for dismissal in Colorado district court, and had previously obtained a stay of a parallel shareholder derivative lawsuit. The plaintiffs challenged the dismissal on appeal, and Mr. Chatterjee presented oral argument before the Tenth Circuit in September 2013.

“We are thrilled that the Tenth Circuit has upheld the dismissal of this class action against our client Venaxis. We’ve been challenging these cases since 2010 and have obtained dismissals at every stage, beginning at the trial level and now prevailing at the appellate stage,” said Mr. Chatterjee. “With the litigation resolved, Venaxis can continue to focus on growing a company and developing a product that could substantially advance the public health.”