Contemporaneous Falsity and Strategic-Review Disclosures Defeat Omission-Based Securities Claims

Introduction

In a non-precedential but instructive decision, the U.S. Court of Appeals for the Third Circuit affirmed dismissal of securities fraud claims against Viatris Inc. and two senior executives arising from alleged omissions about the company’s “commitment” to its biosimilars business during a period of strategic review and eventual divestiture. The case, In re Viatris Inc. Securities Litigation, involved the Eastern Atlantic States Carpenters Pension Annuity and Health Funds (EASC) as the lead plaintiff, which alleged that Viatris misled investors by touting biosimilars as a core growth area while internally reassessing the business and, ultimately, selling it to Biocon Biologics.

The core issues were:

Whether statements expressing commitment to biosimilars were materially misleading by omission, given Viatris’s ongoing strategic review and later sale of that business.
Whether the district court abused its discretion in denying leave to amend when plaintiffs failed to submit a proposed amended complaint or specify proposed new facts.

The Third Circuit affirmed dismissal. It held that plaintiffs failed to plead contemporaneous falsity—that is, facts showing the statements were misleading when made—and that Viatris’s public disclosures about a broad strategic planning process and potential divestitures negated the alleged omissions. The panel also upheld denial of leave to amend for failure to attach or describe a proposed amendment.

Summary of the Opinion

EASC challenged sixteen statements made between March 1 and December 1, 2021 that described biosimilars as “core,” a “key growth driver,” and an area to which Viatris was “committed.” In February 2022, Viatris announced a deal to sell its biosimilars business to Biocon Biologics and disclosed it had been conducting a year-long strategic review, prompting a significant stock drop. EASC argued the earlier “commitment” statements were misleading omissions because Viatris did not concurrently disclose that it was seriously considering whether biosimilars were “noncore,” had “finished or almost finished” its review, or had “concrete plans” to sell to Biocon.

The Court rejected these theories. It reiterated that securities fraud must be assessed at the time of the statement; later events (like a sale) cannot retroactively make earlier statements false. It emphasized that Viatris repeatedly disclosed its multiyear restructuring and a comprehensive, bottom-up strategic review considering all strategic levers, including material divestitures. Those disclosures sufficiently informed investors that portfolio reshaping was on the table, undercutting any claim that additional, plaintiff-preferred wording was required to avoid misleading investors.

The Court further held that an October 2021 confidentiality agreement did not constitute “concrete plans” to sell, and a December 9, 2021 anonymously sourced article about “advanced talks” was both post-dated to the alleged misstatements and insufficiently reliable under the Third Circuit’s pleading standards. Because plaintiffs failed to plead a materially misleading statement or omission, both the Section 10(b) and derivative Section 20(a) claims failed. Finally, the Court found no abuse of discretion in denying leave to amend where plaintiffs neither attached a proposed amended complaint nor explained how they would cure the defects.

Analysis

Precedents Cited and Their Influence

In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410 (3d Cir. 1997): Cited for the basic elements of a Section 10(b) claim and the standard for leave to amend (futility). It frames the requirement that plaintiffs plead a materially false or misleading statement or an omission that renders statements misleading.
Institutional Investors Group v. Avaya, Inc., 564 F.3d 242 (3d Cir. 2009): Central to the PSLRA pleading standard, requiring specificity as to each statement and why it is misleading. Also cited for the reliability concerns with anonymous sources/content; here, it informed the Court’s skepticism of the post hoc article claiming “advanced talks.”
In re NAHC, Inc. Securities Litigation, 306 F.3d 1314 (3d Cir. 2002): Provides the keystone principle that statements must be misleading when made; later events cannot retroactively establish falsity. This principle undercuts plaintiffs’ reliance on the subsequent Biocon sale to infer earlier deception.
Handal v. Innovative Industrial Properties, Inc., No. 24-2829, --- F.4th ----, 2025 WL 2922871 (3d Cir. Oct. 15, 2025): Reinforces that falsity must be evaluated for each statement at the time it was made, aligning with NAHC and anchoring the contemporaneous falsity requirement.
In re Ocugen, Inc. Securities Litigation, 2024 WL 1209513 (3d Cir. 2024) and Fan v. StoneMor Partners LP, 927 F.3d 710 (3d Cir. 2019): Emphasize reading challenged statements in the context of concurrent disclosures and cautionary language. The Viatris court relied on this approach to hold that the company’s many disclosures about strategic review and potential divestitures obviated any alleged omission.
Employees’ Retirement System of Rhode Island v. Williams Cos., 889 F.3d 1153 (10th Cir. 2018); Jackvony v. RIHT Financial Corp., 873 F.2d 411 (1st Cir. 1989); Taylor v. First Union Corp. of S.C., 857 F.2d 240 (4th Cir. 1988): These inter-circuit authorities support the concept that preliminary steps like a confidentiality agreement do not amount to “concrete plans” triggering a duty to disclose. The Third Circuit cites these to reject plaintiffs’ reliance on an NDA as proof of concrete divestiture plans.
In re Allergan ERISA Litigation, 975 F.3d 348 (3d Cir. 2020): Provides the standard of review and, crucially, reiterates that a court does not abuse discretion in denying leave to amend when the plaintiff neither attaches a proposed amendment nor explains how it would cure defects.
Brightwell v. Lehman, 637 F.3d 187 (3d Cir. 2011): Confirms that the appellate court may affirm on any ground supported by the record, underscoring the panel’s leeway in affirming dismissal.

Legal Reasoning

The Court’s reasoning proceeds in three main steps.

Contemporaneous falsity and the limits of hindsight. The Court reaffirmed that a 10(b) claim lives or dies on whether a statement was false or misleading when made. Plaintiffs’ theory depended on the eventual sale to Biocon (announced February 28, 2022) and a general assertion that during 2021 Viatris had concluded or nearly concluded a strategic review and already identified biosimilars as “noncore.” But the mere fact of later sale does not retroactively render the earlier “commitment” statements false. Absent particularized allegations that, at the time of each statement, Viatris had already decided biosimilars were noncore or had formed concrete plans to sell, the omission theory fails.
Context and the company’s robust contemporaneous disclosures. Throughout 2020–2021, Viatris publicly disclosed that it was engaged in integration and restructuring, and that material divestitures were possible and could shrink the company. On investor calls during the class period, Viatris further disclosed an extensive, bottom-up strategic planning effort “looking at all the strategic levers” and how its portfolio would evolve. Taking the challenged “commitment” statements together with these disclosures, the Court held there was no material omission. Investors were informed that portfolio reshaping—including potentially divesting noncore assets—was under active consideration. Demanding the exact plaintiff-preferred phrasing (“actively and seriously considering whether biosimilars were core or noncore”) is not required when the substance is already disclosed.
No “concrete plans” plausibly alleged; unreliable post hoc reporting. The panel found the October 26, 2021 confidentiality agreement insufficient to constitute “concrete plans” to sell, aligning with other circuits that treat NDAs and preliminary negotiations as inadequate to trigger a duty to disclose. The December 9, 2021 media report of “advanced talks” was post-dated to the alleged misstatements, anonymously sourced, and lacked indicia of reliability under Avaya, making it inadequate to support falsity at the time of earlier statements.

Because the Court resolved the case at the falsity/omission stage, it did not reach alternative defenses: the PSLRA safe harbor for forward-looking statements, whether the statements were non-actionable puffery, or whether they were protected opinions. The Section 20(a) control-person claim fell with the failure to plead a primary violation.

On amendment, the Court applied well-settled Third Circuit practice: a plaintiff seeking leave to amend should attach a proposed amended complaint or at least explain the new facts to be pled. EASC did neither, and the Court affirmed the denial of leave as a proper exercise of discretion.

Impact

Although non-precedential, the decision has clear practical and persuasive significance in the Third Circuit:

For issuers: Companies may express confidence or “commitment” to a business line while simultaneously conducting a strategic review—including consideration of divestitures—without automatically creating an omission-based 10(b) risk, provided they disclose the existence and breadth of the review and the possibility of portfolio reshaping. Careful, specific disclosures about ongoing strategic processes can blunt later claims that investors were misled by optimistic statements.
For plaintiffs: Post hoc events (like a sale) and preliminary steps (such as NDAs) will not, standing alone, establish contemporaneous falsity or “concrete plans.” To advance an omission-based theory, plaintiffs will need particularized contemporaneous facts: internal documents reflecting board decisions, binding term sheets, executed letters of intent, definitive agreements, or other indicia that a decision had been made or plans were concrete at the time the challenged statements were uttered. Anonymous media reports, especially if post-dated, carry little weight without corroboration.
Pleading discipline under the PSLRA: The opinion reinforces the Third Circuit’s insistence on statement-by-statement pleading and contemporaneous facts. It also spotlights procedural rigor: requests for leave to amend should include a proposed pleading or a clear proffer of new facts.
Strategic-review disclosure practice: The case encourages public companies to maintain and update disclosures about the scope of ongoing strategic reviews, integration, and restructuring, including the potential for material divestitures, thereby contextualizing optimistic remarks about particular segments.

Complex Concepts Simplified

Materially misleading by omission: Even if a statement is literally true, it can be misleading if it omits facts necessary to make what was said not misleading. But the omitted facts must be significant enough that a reasonable investor would consider them important, and the omission must render the statement misleading at the time it was made.
Contemporaneous falsity: Securities fraud is judged at the moment of the statement. A later event (like a divestiture) cannot retroactively make an earlier statement false. Plaintiffs must allege facts showing that, when the statement was made, it was misleading in light of what the speaker then knew or had decided.
“Concrete plans” vs. preliminary negotiations: There is generally no duty to disclose early-stage or preliminary deal talks. Steps like signing an NDA or holding exploratory discussions do not, without more, become “concrete plans” necessitating disclosure. Indicative of concreteness are binding term sheets, board approvals, definitive agreements, or a firm decision to sell.
PSLRA pleading standards: The Private Securities Litigation Reform Act requires plaintiffs to specify each allegedly misleading statement and explain why it is misleading, with particularized facts. Vague attributions to later events or anonymous reports typically do not satisfy these standards.
Puffery and opinions: General statements of corporate optimism or commitment often constitute non-actionable “puffery.” Opinions are actionable only if they omit facts that make the opinion misleading to a reasonable investor or if the speaker did not actually hold the opinion. The Court did not need to reach these doctrines here.
Section 20(a) derivative liability: Control-person claims under Section 20(a) require an underlying primary violation (here, under Section 10(b)). If the primary claim fails, the control-person claim fails as well.
Non-precedential disposition: A non-precedential opinion is not binding authority within the Circuit, but it can be persuasive and often signals how the court is likely to analyze similar issues.

Practical Takeaways

Pair optimistic statements about a business segment with clear, specific disclosures about ongoing strategic reviews, restructuring, and the possibility of material divestitures.
Maintain a documented disclosure record that shows investors were told the company was “looking at all strategic levers,” including decisions about what is “core” versus “noncore.”
Do not assume that entering an NDA or engaging in early-stage talks creates a duty to disclose. Monitor for events that may cross the line into “concrete plans” (e.g., board approvals, signed LOIs with binding terms).
If seeking leave to amend a dismissed securities complaint in the Third Circuit, attach a proposed amended complaint or spell out the new facts you will add and how they cure defects.
For plaintiffs, build contemporaneous evidence: internal documents, minutes, communications, or binding transactional milestones. Avoid overreliance on after-the-fact media reports, especially if anonymously sourced.

Conclusion

The Third Circuit’s decision in In re Viatris Inc. Securities Litigation underscores a disciplined application of the contemporaneous falsity requirement and the importance of contextual reading of challenged statements under the PSLRA. It clarifies that an issuer’s expressions of “commitment” to a business line are not misleading by omission when the issuer simultaneously discloses a broad strategic review and the possibility of material divestitures. Preliminary steps such as confidentiality agreements do not establish “concrete plans,” and later events cannot retroactively transform earlier statements into fraud.

On procedure, the case reiterates that plaintiffs must attach or describe a proposed amendment to secure leave to replead. While non-precedential, the opinion dovetails with recent Third Circuit guidance, signaling that robust, specific strategic-review disclosures and a focus on contemporaneous facts can be dispositive in omission-based securities suits. For issuers, it validates a best practice of pairing optimism with transparent process disclosures; for plaintiffs, it raises the bar for pleading falsity grounded in the facts known and decisions made at the time statements are made.