Matrixx Initiatives v. Siracusano

Matrixx (defendant) manufactured the cold remedy Zicam and, starting in 1999, received reports of a possible link between the nasal spray and anosmia (loss of smell); by late 2002 it had received consumer complaints, hired a consultant, gathered case studies, and by late 2003 faced lawsuits from consumers alleging Zicam caused their anosmia, yet during this period Matrixx issued statements projecting strong earnings without disclosing any of the adverse reports or lawsuits, and publicly called anosmia-link allegations unfounded when they surfaced. Investors who bought Matrixx stock during this period sued, alleging Matrixx's nondisclosure was misleading; the district court dismissed for failure to show the adverse reports were statistically significant and for failure to plead scienter, but the Ninth Circuit reversed, and the Supreme Court granted certiorari.