Judge says medical device maker didn’t intentionally mislead investors

A San Francisco federal judge has dismissed a shareholder class action against a medical device maker, finding it did not intentionally mislead investors about alleged patent infringement.

The Nevro Corp. is not liable for allegedly false statements to shareholders over its nonexistent competitive advantage because the assertions did "not follow from the revelation" that its technology enjoyed no intellectual property protection, ruled U.S. District Judge Vince Chhabria.

"Not even close," he wrote in an order issued Aug. 23.

Shareholders sued the medical device maker after the Boston Scientific Corp. sued Nevro for allegedly violating at least nine patents. The news caused the company's stock to plunge by roughly $450 million, according to plaintiffs' attorney David R. Stickney, who accused company officers of "concealing [its] business practices and prospects."

While shareholders argued Boston Scientific's trade secret lawsuit revealed Nevro's patent infringement, Chhabria found the allegations were actually disclosed months earlier in other litigation.

The lawsuit "undercuts its own allegation," the judge ruled, citing a reference to the prior revelation in the complaint. Oklahoma Police Pension and Retirement System v. Nevro Corp., 18-cv-05181 (N.D. Cal., filed Aug. 23, 2018).

Plaintiffs' attorneys did not file an amended complaint after Chhabria initially dismissed the lawsuit on Aug. 1.

The defense was represented by Matthew Rawlinson of Latham & Watkins LLP.

-- Winston Cho