Ontario Teachers' Pension Plan Board v. TEVA Pharmaceutical Industries Ltd.

          STEFAN R. UNDERHILL UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Lead Plaintiff, Ontario Teachers' Pension Plan Board ("Ontario Teachers'"), and Named Plaintiff Anchorage Police & Fire Retirement System ("Anchorage") (together, "the plaintiffs"), individually and on behalf of all others similarly situated ("the Class"), filed this Second Amended Consolidated Class Action Complaint ("the complaint") on June 22, 2018, Doc. No. 226. Their first set of allegations, called "'34 Act Allegations", "34 Act Allegations", or alleged Exchange Act violations, are asserted against the following defendants (together '"34 Act Defendants"): Teva Pharmaceutical Industries, Ltd. ("Teva"); Former Teva President and CEO Erez Vigodman ("Vigodman"); Former Teva CFO Eyal Desheh ("Desheh"); Former Teva America Generics President and CEO Allan Oberman ("Oberman"); Former Teva Global Generics President and CEO Sigurdur Olafsson ("Olafsson"); Former Teva SVP and CAO Deborah Griffin ("Griffin"); Former Teva SVP and COO Maureen Cavanaugh ("Cavanaugh"). Compl., Doc. No. 226 at ¶¶ 24-32. Plaintiffs also allege "Securities Act Allegations" against the following defendants (together "Securities Act Defendants"): Teva; Teva Pharmaceuticals Finance Netherlands III B.V. ("Teva Finance"); Vigodman; Desheh; and Griffin. Id. at ¶¶ 371-77.

         The Defendants moved to dismiss all counts of the Complaint (see Doc. Nos. 238, 239, 240), and the parties have fully briefed the motions. Upon a review of the defendants' numerous motions in light of the plaintiffs' account of facts, which I accept as true, I conclude that some of the defendants' arguments have merit. Thus, for the reasons stated below, the Motion to Dismiss filed by Teva, Vigodman, Desheh, Griffin, and Olafsson (doc. no. 238) and the Motion to Dismiss filed by Teva Finance (doc. no. 239) are denied in substantial part but granted with respect to the plaintiffs' allegations stemming from the defendants' failure to disclose subpoenas from the Department of Justice and Connecticut Attorney General. Further, the Motion to Dismiss filed by Cavanaugh and Oberman (doc. no. 240) is granted.

         II. BACKGROUND

         Plaintiffs securities class action claims "arise[] from the difference between what the Defendants told investors was driving Teva's financial success and the truth behind Teva's performance." Compl, Doc. No. 226 at ¶ 1. Plaintiffs basically allege that the defendants implemented "a strategy to systematically raise generic drug prices across a large swath of Teva's generic drug portfolio, " which the plaintiffs refer to as the "Price-Hike Strategy." Id. According to the plaintiffs, however, the defendants failed to reveal the actual reason for the company's financial success, and attributed the growth to "fundamental business strategies" such as cost-cutting and "good product management." Id. The plaintiffs allege that the reported profits made Teva look more successful than it was, compelling plaintiffs, and others, to invest.

         A. The Parties

         1. Plaintiffs and the Class

         Ontario Teachers' "is the largest single-profession pension plan in Canada, representing roughly 323, 000 active and retired teachers in the Province of Canada." Compl., Doc. No. 226 at ¶ 20. Ontario Teachers' alleges that it purchased and acquired Teva American Depository Shares ("ADS") registered on the New York Stock Exchange ("NYSE") and Preferred Shares in domestic transactions during the class period (February 6, 2015 through August 3, 2017). Id. at ¶ 21. Anchorage "is a public pension fund in Anchorage, Alaska that provides pension, disability, and survivor benefits to active and retired police officers and firefighters and their families." Id. at ¶ 22. Anchorage alleges that it purchased and acquired Teva Notes during the class period. Id. at ¶ 23. The plaintiffs alleged that they "suffered damages as a result of the violations of the federal securities laws alleged herein." Id. at ¶ 21, 23. Ontario Teachers' "brings separate claims under the 34 Act and the Securities Act on behalf of all Class Members." Id. at ¶ 20. Anchorage "brings separate claims under the 34 Act and the Securities Act on behalf of Class members who purchased or otherwise acquired Teva Notes." Id. at ¶ 22.

         2. Defendants

         Teva, "the world's largest generic drug manufacturer", is incorporated in Israel, and has a wholly-owned subsidiary, Teva USA. Id. at ¶ 24. Teva is named in both the '34 Act Allegations and the Securities Act Allegations.

         Vigodman was Teva's President and Chief Executive Officer ("CEO") from January 11, 2014 to February 6, 2017 and a Teva Director from June 22, 2009 to February 6, 2017. Id. at ¶ 26. The plaintiffs allege that Vigodman's liability stems from his signing and certifying certain forms, including Securities and Exchange Commission ("SEC") forms 20-F and 6-K, that included false and misleading statements, and making false statements on conference calls and in notes documents. Id. Vigodman is named in both the '34 Act Allegations and the Securities Act Allegations.

         Desheh was Teva's Chief Financial Officer ("CFO") from July 2008 to June 30, 2017, except from October 30, 2013 to February 11, 2014 when he served as Teva's interim CEO and Interim President. Id. at ¶ 27. The plaintiffs allege that Desheh's liability stems from his signing and certifying certain forms, including SEC forms 20-F and 6-K, that included false and misleading statements, and making false statements on conference calls and in notes documents. Id. Desheh is named in both the '34 Act Allegations and the Securities Act Allegations.

         Oberman was Teva Americas Generics' President and CEO from November 5, 2012 to December 13, 2014. Id. at ¶ 28. The plaintiffs allege that Oberman's liability stems from his false and misleading statements, as well as his approval and control of the false and misleading SEC filings. Id. Oberman is named in both the '34 Act Allegations and the Securities Act Allegations.

         Olafsson was Teva's Global Generic Medicine Group's President and CEO from July 1, 2014 to December 5, 2016. Id. at ¶ 29. The plaintiffs allege that Olafsson's liability stems from his false and misleading statements, as well as his approval and control of the false and misleading SEC filings. Id. Olafsson is named in the '34 Act Allegations only.

         Griffin is the current Teva Senior Vice President ("SVP") and Chief Accounting Officer ("CAO"), and was an authorized representative of both Teva and Teva Finance, who served as Vice President and CFO of Teva USA. Id. at ¶ 30. The plaintiffs allege that Griffin's liability stems from signing the notes and shares statements as well as her approval and control of the false and misleading SEC filings. Id. Griffin is named in both the '34 Act Allegations and the Securities Act Allegations.

         Cavanaugh was Teva USA's SVP and Chief Operating Officer ("COO") for North American Generics. Id. at ¶ 31. The plaintiffs allege that Cavanaugh's liability stems from her approval and control of the false and misleading SEC filings. Id. Cavanaugh is named in the '34 Act Allegations only.

         Teva Finance is Dutch company that is "a shell company that is wholly-owned and controlled special purpose finance subsidiary of Teva." Id. at ¶ 373.

         B. Procedural History

         The original complaint was filed on November 6, 2016 in the Central District of California. Compl., Doc. No. 1. It was transferred to the District of Connecticut on April 4, 2017.^[1] Doc. No. 75. On July 11, 2017, Ontario Teachers' Pension Plan Board was appointed as lead plaintiff. Order, Doc. No. 124. The plaintiffs filed a Class Action Complaint for Violation of the Securities Act of 1933 on August 2, 2017, Compl., Doc. No. 129; and an Amended Class Action Complaint for Violation of the Securities Act of 1933 on September 5, 2017. Compl., Doc. No. 138. Plaintiffs filed an Amended Consolidated Class Action Complaint on September 11, 2017. Compl., Doc. No. 141. The defendants filed multiple Motions to Dismiss, which I granted without prejudice to repleading on April 3, 2018. See Motions to Dismiss, Doc. Nos. 187, 188, 189, 190, and 198; Order, Doc. No. 215. Thereafter, the plaintiffs filed the operative Second Amended Consolidated Class Action Complaint on June 22, 2018. Compl., Doc. No. 226.

         Teva, Vigodman, Desheh, Griffin, and Olafsson filed a Motion to Dismiss on September 14, 2018 (see '34 Act Mot. to Dism., doc. no. 238), which the plaintiffs opposed (see Opp. to '34 Act Mot. to Dism., doc. no. 244), and the Teva defendants filed a reply (see Reply to '34 Act Mot. to Dism., doc. no. 254). Teva Finance also filed a Motion to Dismiss on September 14, 2018 (see Teva Fin. Mot. to Dism., doc. no. 239), which the plaintiffs opposed (see Opp. to Teva Fin. Mot., doc. no. 246), and Teva Finance filed a reply (see Reply to Teva Fin. Mot., doc. no. 255). Lastly, Cavanaugh and Oberman filed a Motion to Dismiss on September 14, 2018 (see C/O Mot. to Dism., doc. no. 240), which the plaintiffs opposed (see Opp. to C/O Mot., doc. no. 247), and Cavanaugh/Oberman filed a reply (see Reply to C/O Mot., doc. no. 256).

         C. Factual Allegations

         The allegations in the Second Amended Consolidated Class Action Complaint stem mostly from three categories of alleged misrepresentations/omissions by Teva relative to: (1) the source of its profit success; (2) the competitive nature of the generics market; and (3) the investigations in which Teva was involved. See generally, Compl, Doc. No. 226. The plaintiffs allege that those misrepresentations/omissions were perpetuated by Teva officials in order to inflate profits to make Teva appear more successful and attractive in the market and, therefore, attract more investors to raise money to acquire a competitor company. Id. The plaintiffs allege generally that the defendants consistently misrepresented to investors and the market that their financial success was due to good business decisions, and not because of pricing, when, in fact, they were consistently raising prices of many of their generic drugs and were concealing information from investors, analysts, and the public. Id. Further, the plaintiffs allege generally that the defendants consistently misrepresented that the generics market was highly competitive when, in fact, the defendants and its competitors were engaged in a collusive agreement to raise prices, further inflating Teva's profits. Id. The plaintiffs refer to that as the price-fixing conspiracy. The plaintiffs also allege that Teva was the subject of numerous investigations into its pricing and profits but concealed that information from the public and investors. Id. The plaintiffs base their allegations "on Lead Counsel's investigation, which included interviews with numerous former employees of Teva[.]" Id. at ¶ 33.

         The plaintiffs allege that the class period began on February 6, 2014 when Teva "announced its fourth quarter 2013 and full year 2013 financial results in a press release", because those reported profits resulted from the undisclosed price-hike strategy. Id. at ¶ 46. The plaintiffs allege that before the class period began, "Teva's generics segment was struggling and [its] share price had dropped from the $60s in 2010 into the $30s by 2013." Id. at ¶ 34. Teva's then-CEO planned to focus on branded drugs but was abruptly fired and Desheh, then CFO, became the interim-CEO in November 2013. Id. Desheh and then-CEO Vigodman announced that Teva would make a "major acquisition." Id. at ¶ 35. Plaintiffs allege, though, that in early 2013 Teva adopted the price-hike strategy, which was "a non-public strategy to systematically increase prices across dozens of drugs in its generic drug portfolio." Id. at ¶ 36. The plaintiffs allege that, as part of this strategy, Teva raised the prices of 18 of its generic drugs on July 3, 2013 and August 9, 2013, some as much as an 812% increase, which led to $875 million in price-related profit. Id. at ¶ 42-43. Further, the plaintiffs allege that fifteen of those increases were "implemented together with Teva's competitors who also made price increases on the same drugs." Id.

         Plaintiffs allege that Teva's financial results announcement on February 6, 2014, which started the class period, revealed a 14% increase in generics revenue for 2013 fourth quarter, and attributed that increase to '"higher sales' volume, reduced expenses, and 'exclusive launches' of new generic drugs." Id. at ¶ 47. The plaintiffs allege that the defendants omitted that, although those reasons may have had some influence, the real reason for the increase was the price-hike strategy. Id. The plaintiffs allege that the defendants perpetuated this misrepresentation/omission in calls with investors and analysts. Id. at ¶ 48. The news of Teva's financial success in 2013 led to increased share prices on the stock market, and by March 2014, it was trading at $48. Id. at ¶ 50. By April 2014, the share price had increased to $54.06. Id. at ¶ 52. The plaintiffs allege that in April 2014, as part of the price-hike strategy, Teva increased the prices of another twelve generic drugs, eight of which were done in collaboration with competitors. Id. at ¶ 56. On May 1, 2014, Teva announced that its continued financial success was due to "lower expenses, a changed composition of revenues, and 'new product launches.'" Id. at ¶ 53. The plaintiffs allege, though, that the price-hike strategy had generated $120 million that quarter, making it the actual cause of the financial success. Id. The success gained Teva more positive press. Id. at ¶ 55.

         On July 31, 2014, Teva announced that it was seeing continued financial success due to "the growth of [its] global generic business, primarily in the U.S." Id. at ¶ 59. The plaintiffs allege that the price-hike strategy was the actual reason for the financial success, generating as much as $160 million in profit. Id. at ¶ 61. On July 1 and August 28, 2014, Teva increased the prices of another 20 drugs, twelve of which were done in collaboration with competitors. Id. at ¶ 63. The plaintiffs allege that those increases generated as much as $50 million in profit. Id.

         The generic drug market came under scrutiny in summer of 2014 and the Connecticut Attorney General began a "non-public investigation into the companies that manufactured digoxin" and issued subpoenas to many of Teva's competitors. Id. at ¶ 58, 62. Congress also started looking into the generic drug market and sent Teva a letter in October 2014 seeking information on its recent price increases, to which Teva never responded. Id. at ¶ 62. Teva also refused to testify in a November 20, 2014 Senate Subcommittee of Primary Health and Aging hearing. Id. at ¶ 70.

         On October 30, 2014, Teva again reported financial success, with a $160 million increase in generic drug profits. Id. at ¶ 65. The plaintiffs allege that defendants again misrepresented and omitted the truth about the profits in both written statements and on calls with investors and analysts. Id. at ¶ 66-67, 72. Teva continued to receive positive press on the basis of those financial results. Id. at ¶ 68. Amidst public scrutiny of the generic market as a whole, Teva again announced positive financial results on February 5, 2015, including a $480 million generic segment profit increase from 2013 to 2014. Id. at ¶ 74. The plaintiffs allege that Teva reported $693 million of profit for the year 2014. Id. at ¶ 76. The plaintiffs allege that the defendants again misrepresented and/or omitted the real reason for the financial success in written statements and on calls with investors and analysts, which gained Teva positive press. Id. at ¶ 76-77.

         In January 2015, Teva increased the prices of another 14 drugs, nine of which were done in collaboration with competitors. Id. at ¶ 79. The plaintiffs allege that this generated as much as $48 million in profits, and the overall price-hike strategy generating as much as $228 million in the first quarter of 2015. Id. The plaintiffs allege that the defendants continued to misrepresent/omit the real reason for their financial success in written statements and on calls with investors and analysts, gaining Teva more positive press. Id. at ¶ 83-86. Teva shares started trading at almost $60 per share, which led the media to speculate about a possible acquisition. Id. at ¶ 80. Teva unsuccessfully tried to acquire Allergan and Mylan. Id. at ¶ 81-82. Teva's shares then increased to $72 per share. Id. at ¶ 87.

         With high stock prices, on July 27, 2015, Teva announced that it would acquire Actavis, Allergan's worldwide generics business, for $40.5 billion in cash and equity. Id. Plaintiffs allege that the defendants now needed to raise $30 billion to complete the deal and, therefore, Teva's motivation for raising capital shifted from acquisition to payment. Id. at ¶ 89. Plaintiffs allege that Teva, on July 30, 2015, again reported financial success due to "reduced expenses and new product launches" in the generics segment, and continued to perpetuate that misrepresentation/omission in calls with media and investors. Id. at ¶ 90. In July 2015, Teva implemented a price increase of another seven drugs, four of which were done in collaboration with competitors. Id. at ¶ 91. The plaintiffs allege that Teva again, on October 29, 2015, reported financial success and misrepresented/omitted that the real reason was the price-hike strategy, and falsely stated that it was due to lower expenses, again gaining Teva continued positive press. Id. at ¶ 92-94. Amidst growing public and political scrutiny of the generics market, Teva denied any exposure to legislation that would penalize manufacturers who increased prices more than inflation and concealed the price-hike strategy, gaining more positive press for Teva. Id. at ¶ 95-98.

         The plaintiffs allege that the cash to complete the Actavis deal would come from three offerings: (1) a $7 billion secondary public offering of depository shares in December 2015; (2) an initial public offering of Preferred Shares in December 2015; and (3) a $15 billion offering of bonds in 2017. Id. at ¶ 89. In November and December 2015, Teva filed a registration statement with the SEC and two prospectus supplements for the two share offerings, all of which "included numerous false [and] misleading statements attributing Teva's profits to sources other than the price-hike strategy." Id. at ¶ 101. The two shares offerings were issued and raised roughly $7.2 billion. Id.

         Amidst even more public scrutiny in the generics sector, Teva continued to misrepresent and omit the real reasons for its increased financial success. Id. at ¶ 103. On February 11, 2016, Teva again reported financial success, in which the plaintiffs allege they concealed $848 million in profits from the price-hike strategy. Id. at ¶ 105. The plaintiffs allege that Teva continued to perpetuate the misrepresentation/omission about the reasons for their financial success, which led to continued positive press for Teva. Id. at ¶ 106-10. In the face of even more public scrutiny of the sector, Teva continued to "deny any vulnerability to pricing pressure." Id. at ¶ 113. The plaintiffs allege that the price-hike strategy began to falter and Teva, on April 6, 2016, increased the prices on only five generic drugs, all of which Teva had increased before. Id. at ¶ 114. Teva also, on May 9, 2016, reported negative financial results-$215 million less in first quarter 2016 than in first quarter 2015-which it attributed to "higher expenses, lower sales, lower European profit, and fewer product launches." Id. at ¶ 116. Teva continued to report that pricing pressure had nothing to do with their financial results. Id. at ¶ 117. The plaintiffs allege that, contrary to its public statements, Teva was indeed being substantially damaged by price deflation, and its price increase related profit had "plummeted." Id. at ¶ 118. Teva continued to issue statements perpetuating the omission/misrepresentation that it was not subject to pricing pressure, and the media therefore continued to report as such. Id. at ¶ 119-20.

         In June and July 2016, Teva received subpoenas from both the Department of Justice ("DOJ") and the Connecticut Attorney General, seeking information about its generics pricing. Id. at ¶ 122. One day after receiving the Attorney General's subpoena, on July 13, 2016, Teva announced that its $20 billion debt offering, scheduled for September, would be accelerated, and filed a Registration Statement with the SEC that day. Id. at ¶ 123. In conjunction with the offering, Teva continued to report that it had "stable" pricing and "saw no change" in generics pricing, which the media reported, and Teva did not report the receipt of the subpoenas. Id. at 124-26. Teva launched its $20 billion bond offering on July 18, 2016 pursuant to the Notes Offering Materials, "which incorporated several of the false and misleading quarterly and full year financial disclosures", and did not disclose the subpoenas from the DOJ or Connecticut Attorney General. Id. at¶ 127.

         On August 4, 2016, Teva disclosed the subpoenas and reported negative financial results from the second quarter of 2016-$115 million less in profits than in the second quarter of 2015-which Teva attributed to "increased expenses, the loss of exclusivity on certain products, and lower sales on products for which Teva had not taken price increases." Id. at ¶ 128. The plaintiffs allege that the defendants concealed that Teva had earned $122 million less in price-based profit. Id. With the negative financial results and disclosure of the subpoenas, the price of securities declined. Id. The plaintiffs allege that the defendants continued to perpetuate the misrepresentations and omissions about their pricing practices to investors, analysts, and the media. Id. at¶ 129-34.

         On November 3, 2016, Bloomberg released an article about the DO J and Connecticut Attorney General probes into generic drug manufacturers, and specifically stated that Teva was being investigated, which led to Teva securities immediately dropping 9%. Id. at ¶ 135-36. On November 15, Teva reported negative financial results from the third quarter of 2016-a $277 million decline from the third quarter of 2015-which Teva attributed to "causes such as divestments and lost sales from certain drugs." Id. at ¶ 137. The plaintiffs allege, though, that the decline was "attributable to a ... decline in inflated profit as the price-hike strategy collapsed" but that Teva repeatedly and fraudulently disclaimed that was the reason. Id. at ¶ 137-38. CEO Olafsson abruptly "retired" shortly thereafter, but the plaintiffs allege that he was actually fired. Id. at ¶ 140. Soon after that, the DOJ announced that it charged, via an information, two executives of a Teva competitor, Heritage, with conspiring to fix prices, rig bids, and manipulate the market for Glyburide, for which, the plaintiffs allege, Teva controlled 75% of the market. Id. at ¶ 142. On December 15, the Connecticut Attorney General announced that it, and other Attorneys General, were charging Teva and others with antitrust violations regarding Glyburide (more drugs have since been added, id. at ¶ 144). Id. at ¶ 143. The plaintiffs allege that the AG complaint "cited emails, calls, and documents that evince explicit collusion between Teva and Heritage's principals" who had been criminally charged. Id.

         On January 6, 2017, Teva again reported negative financial results and continued to falsely attribute the reasons. Id. at ¶ 145-48. One month later, Vigodman was terminated as President and CEO, and that news, in tandem with the negative financial reports, caused Teva securities to drop. Id. at ¶ 145, 149. Shortly thereafter, Teva reported its financial results for 2016 and reported that without Actavis, it would have had a $1.4 billion decline, which Teva attributed to "loss of exclusivity, lower sales of certain drugs, and then loss of revenues from divested product." Id. at ¶ 151. On August 3, 2017, Teva "took a $6.1 billion charge against its U.S. generics business, a permanent reduction in the entire business's valuation and a dollar-for-dollar hit to [its] bottom line." Id. at ¶ 153. The plaintiffs allege that this was a "direct result of the complete collapse of the price-hike strategy, and evaporation of the inflated profits." Id. Credit rating agencies downgraded Teva's debt rate to just above "junk" and the price of Teva securities "fell dramatically." Id. at¶ 154.

         From the above allegations, the plaintiffs assert that the defendants "made four types of false and misleading statements or omissions on conference calls with investors and in SEC filings": (1) Item 5 non-disclosure-the plaintiffs allege that the defendants "violated their statutory duty to disclose material trends under Item 5 of Form 20-F" when they "failed to disclose the material trend of generating profit as part of the concealed price-hike strategy" and they also "concealed the trend of declining inflated profit, and that they could no longer make price increases as the strategy unraveled"; (2) False statements regarding competition-the plaintiffs allege that the defendants' statements "falsely indicated that Teva was participating in competitive and functioning markets for generic drugs" when, actually, "[t]o the contrary, Teva made dozens of price increases in tandem with its competitors" and Teva and the cooperating companies "deliberately did not compete on price"; (3) False and misleading pricing statements-the plaintiffs allege that the defendants' statements "concealed Teva's price-hike strategy and the profits it generated" and then later "concealed that the price-hike strategy fell apart as Teva was unable to make more price increases or sustain inflated profit" and the statements "were particularly misleading as the 34 Act Defendants touted, and investors were highly attuned to, the sources of the generic segment's purported success"; and (4) Concealed receipt of subpoenas-the plaintiffs allege that the defendants "failed to disclose in the Notes Offering Materials Teva's receipt of subpoenas from the DOJ and the State Attorneys General in connection with their antitrust investigations into the generics industry." Id. at ¶ 155. The plaintiffs lay out the alleged false and misleading statements and omissions in more detail, along with their allegations about why each statement was fraudulent. Id. at ¶ 155-239.

         D. Legal Claims

         1. '34 Act (Exchange Act) Allegations^[2]

         Count One alleges a violation of Section 10(b) of the Exchange Act and Rule 10b-5, promulgated thereunder, by the '34 Act Defendants. Compl., Doc. No. 226 at ¶ 342. Plaintiffs assert, inter alia, that the '34 Act Defendants "made, disseminated, or approved the false and misleading statements ... which they knew or recklessly disregarded were false and misleading in that the statements contained material misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading." Id. Plaintiffs allege that they, and the class, "suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for Teva Securities." Id. at ¶ 344.

         Count Two alleges a violation of Section 20(a) of the Exchange Act by the '34 Act Defendants. Id. at ¶ 347. Plaintiffs assert that the defendants "had the power and ability to control the actions of Teva and its employees" and are therefore liable under Section 20(a). Id.

         2. Securities Act Allegations^[3]

         Count Three alleges a violation of Section 11 of the Securities Act by the Securities Act Defendants. Id. at ¶ 397. Plaintiffs assert that this count "does not sound in fraud" and liability is "predicated on the participation of each defendant in the ... Offering Materials, which contained untrue statements and omissions of material fact." Id. Count Three is brought against all Securities Act Defendants with respect to the ADS/Preferred Offerings "on behalf of the class who purchased or otherwise acquired Teva ADS or Preferred Shares pursuant and/or traceable to the ADS/Preferred Offerings[.]" Id. at ¶ 398. Count Three is brought against all Securities Act Defendants, except Teva Finance, with respect to the Notes Offerings "on behalf of members of the class who purchased or otherwise acquired Notes pursuant and/or traceable to the Notes Offering[.]" Id. at ¶ 399. Plaintiffs allege that the ADS/Preferred and Notes Offerings "contained ... untrue statements of material fact or omitted to state [material facts] ... required to be stated therein or necessary to make the statements therein not misleading." Id. at ¶ 400.

         Count Four alleges a violation of Section 12(a)(2) of the Securities Act by the Securities Act Defendants. Id. at ¶ 406. Plaintiffs assert that Count Four is solely based in negligence and not fraud. Id. Count Four is brought "on behalf of all persons who purchased securities in/ pursuant to, and/or traceable to the Offerings", offered by means of prospectus or oral communications which "included ... untrue statements of material fact and/or omitted to state ... material facts necessary in order to make the statements, in light of the circumstances under which they were made, not misleading." Id. at ¶¶ 407, 410.

         Count Five alleges a violation of Section 15(a) of the Securities Act by Teva, Vigodman, Desheh, and Griffin; all in connection with the Notes Offering, and against all but Teva in connection with the ADS and Preferred Offerings. Id. at ¶¶ 415-16. Plaintiffs assert that Count Five is solely based in negligence and not fraud. Id. Plaintiffs assert that the defendants "acted negligently in that none of them exercised reasonable care to ensure, or had reasonable grounds to believe, that the Offering Materials were true and not misleading as to all material facts and did not omit to state any material fact required to be stated therein or necessary to make ... the statements therein not misleading." Id. at ¶ 421.

         III. DISCUSSION

         A. Pleading Standards: Rule 12(b)(6). Rule 8(a). Rule 9(b). and the PLSRA

         Rule 12(b)(6) permits dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed "merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980)). When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the material facts alleged in the complaint as true, draw all reasonable inferences in favor of the plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).

         Under Twombly, "[f]actual allegations must be enough to raise a right to relief above the speculative level, " and assert a cause of action with enough heft to show entitlement to relief and "enough facts to state a claim to relief that is plausible on its face." 550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 6 79 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to "provide the grounds of his entitlement to relief through more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (quotation marks omitted). Plausibility at the pleading stage is nonetheless distinct from probability, and "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the claims] is improbable, and . . . recovery is very remote and unlikely." Id. at 556 (quotation marks omitted). Federal Rule of Civil Procedure 8(a) requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2).

         Further, plaintiffs claiming securities fraud under the Exchange Act are "subject to heightened pleading requirements that [they] must meet to survive a motion to dismiss. First, a complaint alleging securities fraud must satisfy Rule 9(b) ... which requires that 'the circumstances constituting fraud ... shall be stated with particularity.'" ATSI Communications, Inc. v. ShaarFund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007) (quoting Fed.R.Civ.P. 9(b)). "Securities Acts claims that 'are premised on allegations of fraud' also must satisfy Rule 9(b)'s particularity requirement." In re MF Global Holdings Limited Securities Litigation, 982 F.Supp.2d 277, 302 (S.D.N.Y. 2013) (quoting Rombach v. Chang, 355 F.3d 164, 171 (2d Cir. 2004)). The heightened pleading standard set by Rule 9(b) "serves to provide a defendant with fair notice of a plaintiff s claim, safeguard [its] reputation from improvident charges of wrongdoing, and protect [a defendant] against strike suits." ATSI Communications, 493 F.3d at 99; Rombach, 335 F.3d at 171.

         In addition to the heightened requirements under Rule 9(b), Exchange Act complaints must also meet the pleading requirements of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). See ATSI Communications, 492 F.3d at 99; In re MF Global Holdings, 982 F.Supp.2d at 302. "The PSLRA requires that a complaint 'specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.'" In re MF Global Holdings, 982 F.Supp.2d at 302 (quoting 15 U.S.C. § 78u-4(b)(1)).

         1. Exchange Act Claims - Counts One and Two

         The '34 Act Defendants argue that the plaintiffs failed "to adhere to the[] exacting standards" under the PSLRA and Rule 9(b). '34 Act Mot. to Dism., Doc. No. 238-1 at 12-13. They argue that the complaint "tries to make up for in length what it lacks in particularity" and the plaintiffs "fail to plead with particularity facts demonstrating that Teva engaged in ... a '[price-hike] strategy' or that Teva's overall pricing increased if one includes drugs for which there were price declines." Id. at 13. The defendants argue that the plaintiffs asserted only "unwarranted inferences and unsupported conclusions [that] do not constitute well-pleaded facts for purposes of a motion to dismiss under Rule 12(b)(6), and they fall far short of providing the particularity Rule 9(b) and the PSLRA require." Id. (internal quotation marks omitted). Further, the '34 Act Defendants argue that the complaint "never states with particularity how any specific statement was false or misleading on its own or through the alleged omission of information." Id. at 14 (emphasis in original). They argue that the plaintiffs instead just "print quotations from every quarterly and annual financial release and then conclusorily allege that the financial disclosures were misleading based on Plaintiffs' speculation about supposed price increases." Id. The plaintiffs argue that they met the required standard for pleading with specificity to survive this threshold argument. Opp. to '34 Act Mot. to Dism., Doc. No 244 at 12. I agree with the plaintiffs.

         Courts in this Circuit have held that the length of a complaint does not, alone, satisfy the requirement that it be sufficiently particular, nor is it enough for a plaintiff to assert generic and/or identical allegations after each quotation or section, setting forth the reasons why the statement is allegedly false. See In re Alcatel Securities Litigation, 382 F.Supp.2d 513, 534 (S.D.N.Y. Feb. 28, 2005); Endovasc Ltd., Inc. v. J.P. Turner & Co., 2004 WL 634171, at *6, *9 (S.D.N.Y.Mar. 30, 2004) (dismissing a plaintiffs complaint where the plaintiff "provided a laundry list of alleged false statements, " but supported the alleged misstatements "only by sweeping conclusory allegations that lack[ed] particularity as to how the statements were untrue"), aff'd, 169 F.App'x 655 (2d Cir. 2006). It is not up to the courts to play "connect-the-dots in order to identify the facts and trends upon which plaintiffs base their claim." In re Alcatel, 382 F.Supp.2d at 534 (citing In re PetSmart, Inc. Sec. Litig., 61 F.Supp.2d 982, 991 (D. Ariz. 1999)).

         In Alcatel, the plaintiffs asserted claims similar to those in Count One here, violations of Section 10(b) and Rule 10b-5, in a 250-paragraph, 102-page complaint. Id. The court dismissed those claims because the complaint, although long, stated "very little with particularity." Id. In addition, the court highlighted the fact that the plaintiffs, in making allegations under those sections, set forth lengthy quotations made by the defendants and followed each quotation "with a similar (in most cases identical) laundry list of 'specific' reasons why the statements were allegedly false." Id. The court held that the plaintiffs neglected to "make it clear what portion of each quotation constituted] a false representation or which statements link up with which issues in the laundry list." Id. The court held that was deficient under the pleading standards for all those reasons and because it "plac[ed] the burden on the Court to sort out the alleged misrepresentations and match them with the corresponding adverse facts." Id. Courts have found, however, that a complaint meets the particularity requirement when it "specifically identifies] the date, publication, and speaker of each of the alleged misstatements or omissions and contain[s] facts supporting the existence and materiality of these problems" and highlights in some way the "particular aspects of the statements alleged to be misleading." In re MF Global Holdings, 982 F.Supp.2d at 309 (internal quotation marks omitted); see also In re NTL, Inc. Securities Litigation, 347 F.Supp.2d 15, 22-23 (S.D.N.Y. 2004).

         Here, the plaintiffs separated into four categories the alleged misleading statements and omissions by the defendants: (1) pricing trends; (2) competition; (3) pricing; and (4) subpoenas. Compl., Doc. No. 226 at pp. 45-86. With respect to the section regarding the alleged misleading statements that Teva operated in a competitive market regarding price, the complaint is further separated into subsections, detailing the false statements made on conference calls, and those made in SEC filings. See Id . at ¶¶ 164-71. With respect to the section regarding the alleged false and misleading statements and omissions regarding pricing, the complaint is further separated into subsections, detailing the alleged false and misleading financial disclosures for each quarter and full year throughout the class period. See Id . at ¶¶ 172-237. In each subsection, the plaintiffs identify the allegedly misleading statement or omission, the date it was made, the forum/publication in which it was made, and the speaker of the alleged misstatements or omissions. As an example, in the subsection regarding Third Quarter 2014 Financial Results, the plaintiffs cite to an October 30, 2014 statement by Vigodman on a conference call in which he stated that Teva's revenue was because of "the new launches this year" which have "been very significant contributors to the year." Id. at ¶ 182. The plaintiffs allege that the statements were "false and misleading because, having attributed the source of the profit increase, the 34 Act Defendants had a duty to disclose but concealed the full truth that the price-hike strategy ... contributed materially to the results." Id. The plaintiffs used this layout and format throughout all of its allegations of misleading statements and omissions, and after each statement or omission, the plaintiffs allege why it was false or misleading. Here, the plaintiffs provide the required particularity for the heightened standard under Rule 9(b) and the PSLRA.^[4]

         Here, the complaint is not "so '[v]ague and disorganized' as to fail to satisfy Rule 9(b) and the PSLRA." In re MF Global Holdings, 982 F.Supp.2d at 309 (quoting In re ITT Educ. Servs., Inc. Sec. & Shareholder Derivatives litig, 859 F.Supp.2d 572, 578 (S.D.N.Y.2012)). The purpose of the heightened pleading requirements under Rule 9(b) and the PSLRA is "to provide a defendant with fair notice of a plaintiff s claim, safeguard his reputation from improvident charges of wrongdoing, and protect him against strike suits." ATSI Communications, 493 F.3d at 99. The complaint here sufficiently achieves those purposes. If nothing else, the defendants' briefs, in which the defendants thoroughly and directly rebut the allegations in the Complaint, prove that the defendants were on notice of the claims against them. See In re MF Global Holdings, 982 F.Supp.2d at 310 (relying on defendants' motions to dismiss to find that the complaint put the defendants on notice of the claims against them).

         Although Rule 9(b) and the PSLRA place heavy requirements on plaintiffs who bring fraud allegations, they "do not require such an extreme level of particularity" and, in especially complex cases, allow for some flexibility. In re MF Global Holdings, 982 F.Supp.2d at 311. Accordingly, the complaint satisfies the particularity requirements of Rule 9(b) and the PSLRA with respect to the pricing claims brought under the Exchange Act claims in Counts One and Two.

         2. Securities Act Claims - Counts Three, Four, and Five

         "While Exchange Act claims require proof of fraud and must always be pled with particularity, Securities Act claims must be pled with particularity only where 'the gravamen of the complaint is plainly fraud.'" In re MF Global Holdings, 982 F.Supp.2d at 310 (quoting Rombach, 355 F.3d at 172)). Here, the plaintiffs distinguish their Securities Act claims, which they allege do not sound in fraud but only negligence, from their Exchange Act claims, which they allege do sound in fraud. As such, the Complaint states, in each count brought under the Securities Act, that the count does not sound in fraud and/or that any allegations of fraud are expressly excluded from the count. See Compl., ¶ 397 (Count Three: "This count does not sound in fraud."); ¶ 406 (Count Four: "Plaintiffs ... expressly exclude from this count any ...