Court Upholds Fraud Claims in Investor Class-Action Lawsuit Against Theranos, CEO Elizabeth Holmes and Other Officers
SAN FRANCISCO – A U.S. District Judge today upheld fraud claims brought in an investor class-action lawsuit against Theranos, Elizabeth Holmes and Ramesh “Sunny” Balwani, allowing the lawsuit to continue for the proposed class of Theranos investors represented by Hagens Berman.
The order given on Apr. 18, 2017, by U.S. Magistrate Judge Nathanael M. Cousins stated, “Here, plaintiffs list the specific newspaper articles that were part of the advertising campaign touting Theranos’ technology. ...The Court finds these allegations to be reasonably specific and plausibly state a claim for fraud.” Defendants have 14 days answer the complaint.
“We’re pleased that the court saw through the smoke and mirrors of Theranos’ extensive marketing tactics that duped investors into placing their bets on Holmes and her company,” said Steve Berman, managing partner of Hagens Berman. “Theranos’ promises were built on false statements, and we look forward to bringing this case on behalf of the thousands of investors who believed what they were told.”
If you purchased Theranos securities, directly or through a third-party, from July 29, 2013 through Oct. 5, 2016, contact Hagens Berman Sobol Shapiro LLP. For more information visit:
or contact Reed Kathrein, one of the firm’s partners on the case, by calling 510-725-3000 or emailing [email protected].
The complaint filed Nov. 28, 2016, in the U.S. District Court for the Northern District of California, states that Theranos and its officers set in motion a publicity campaign to raise billions of dollars for Theranos and themselves, and to induce investors to invest in Theranos, all the while knowing that its “revolutionary” blood test technology was essentially a hoax.
Rather than being ready for commercial use, the finger-prick technology had not passed regulatory or other third-party scrutiny, was inaccurate and could only be run on a few of the hundreds of promised tests, the suit states. Theranos has now shut down all of its laboratories, and Walgreens has severed its ties to the company. As a result, investments of more than half a billion dollars raised since 2013 appear to have been lost, according to the firm.
At the crux of the court’s decision of upholding the investor case against Theranos was a finding that while plainitffs did not directly purchase their securities from defendants, claims made by Theranos, Holmes and Balwani constituted fraud. “The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage,” the order cites.
Learn more about the investor lawsuit against Theranos.
About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in 10 cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List eight times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.