Gallagher v. Abbott Laboratories
Seventh Circuit
269 F.3d 806 (7th Cir. 2001)
The FDA sent Abbott Laboratories (defendant) a warning letter on March 17, 1999, threatening severe consequences for regulatory noncompliance, eight days after Abbott had filed its annual SEC Form 10-K report that didn't address the issue; Abbott publicly discussed the FDA dispute only on September 29, 1999, and reached a settlement requiring product removal and a civil fine on November 2, 1999. Shareholder Lena Gallagher (plaintiff) sued on behalf of an investor class, alleging Abbott committed securities fraud by delaying public disclosure of the FDA dispute; the district court dismissed the complaint, and Gallagher appealed.
Whether a company has a duty, absent a specific legal requirement, to immediately disclose information material to its stock price as soon as the company learns of it, rather than waiting for its next scheduled periodic filing.