Overview
In an Order yesterday, Judge Swain precluded the trial testimony of the plaintiffs’ damages expert in a shareholder class action accusing Pfizer of concealing the cardiovascular risks of two drugs, Celebrex and Bextra. Without a damages expert, it is unclear how the plaintiffs can prove their case at trial, which is currently scheduled for September. The expert, Danied Fischel, had identified (a) seven dates during the Class Period on which public disclosures allegedly revealed the cardiovascular risks of the drugs, causing Pfizer’s stock price to drop, and (b) five dates during the Class Period in which positive information about the drugs allegedly caused Pfizer’s stock price to rise. His calculation of damages was based on the stock loss from the seven “corrective disclosures” offset by the rise on the five instances of stock price “inflation.” In a summary judgment ruling (covered in this post), Judge Swain rejected two of the seven corrective disclosures as grounds for damages. Mr. Fischel then issued a supplemental report that, rather than simply dropping those damages, assumed that there would be an offsetting increase on the inflation days. Judge Swain ruled that this methodology did not meet the standards of Rule 702:
Fischel proffered no explanation of the analytical basis for this parallel adjustment other than the assertion that “[b]ecause eliminating the stock price declines related to Celebrex and Bextra on [the] dates [excluded by the Court] reduces the total residual stock price decline I estimated related to these drugs . . . by 9.7%, I proportionally reduce the stock price increases I measured that are related to these drugs . . . by 9.7%.” No explanation of the relationships among the events triggering the respective price decreases and increases was offered, and no research reference or peer review information is cited in support of Fischel’s parallel adjustment method. Furthermore, Fischer did not make any adjustments or otherwise disaggregate his computations to identify any stock price inflation attributable to the dismissed claims . . . .She concluded that “[f]or these reasons, and for substantially the reasons set forth in Defendants’ opening and reply memoranda in support of their Motion in Limine [see here and here], Defendants’ Motion in Limine . . . is granted and the expert testimony of Daniel R. Fischel is excluded from the trial of this action.”
