Gilead Sciences Inc. must turn over $1.8 million in legal costs and fees to the investors who sued it for records involving its blockbuster HIV drugs, a Delaware judge ruled Thursday, saying Gilead crossed the “fine line between glaringly egregious conduct and an aggressive litigation position.”
After the pharmaceutical company “declined to produce a single document to any of the five plaintiffs thereby forcing them to commence litigation,” it “took a series of positions during litigation that, when viewed collectively, were glaringly egregious,” Chancellor Kathaleen S. McCormick wrote.
The ruling for Delaware’s Chancery Court comes about eight months after McCormick—then a vice chancellor—ruled for the shareholders, slamming Gilead’s “overly aggressive” strategy, “peripheral” arguments, “semantic sleight of hand,” and “curveball” attacks on the plaintiffs.
The judge announced at the time that she would hit Gilead with fees in an effort to shut down a “trend” of companies using “abusive litigation tactics” to fight shareholder records bids, “with the apparent belief that there is no real downside.”
The state’s top court cited her statements when it ruled for the first time in December that investors seeking files under Delaware’s corporate inspection statute can access records relating to any “proper purpose,” even if they fall outside the scope of potential fiduciary breach claims.
The lawsuits against Gilead, filed and consolidated last year, were brought by shareholders looking to investigate the antitrust, patent, and fraud schemes alleged in a wave of litigation over Truvada and related breakthrough HIV prevention drugs that earn the company billions a year.
The ongoing suits accuse Gilead of, among other things, conspiring to delay generic competition through licensing agreements with rivals after they developed other drugs that pair well with Truvada’s active ingredient.
The drugmaker has also faced allegations that it wrongly profited off of government patents related to Truvada, violated the False Claims Act through kickbacks, withheld critical safety data, and kept safer medications off the market in an effort extend its monopoly.
After a one-day trial in June 2020, McCormick ruled in November that the tsunami of allegations against Gilead—even if they’re still unproven—more than satisfies the standard in records cases, which impose “the lowest possible burden of proof.”
She dismissed the company’s attempt to portray the plaintiffs as “a passive conduit in a purely lawyer-driven” endeavor. That argument and other attacks on the plaintiffs’ motives raised “more questions about Gilead’s purposes” than theirs, the judge wrote.
The shareholders were represented by Cooch & Taylor PA; Robbins LLP; Heyman Enerio Gattuso & Hirzel LLP; Pomerantz LLP; Bernstein Litowitz Berger & Grossmann LLP; Bottini & Bottini Inc.; Cotchett, Pitre & McCarthy LLP; and Klausner, Kaufman, Jensen & Levinson.
Gilead was represented by Potter, Anderson & Corroon LLP and Cooley LLP.
The case is Pettry v. Gilead Scis. Inc., Del. Ch., No. 2020-0132, 7/22/21.