The opinion of the court was delivered by: MARVIN E. ASPEN
MEMORANDUM OPINION AND ORDER
MARVIN E. ASPEN, District Judge:
Plaintiffs bring this class action
against Abbott Laboratories ("Abbott"), Duane L. Burnham ("Burnham"), Lael F. Johnson ("Johnson"), and Joy A. Amundson ("Amundson") (collectively "defendants") pursuant to 28 U.S.C. § 1331, section 27 of the Securities Exchange Act of 1934 ("Exchange Act"). 15 U.S.C. § 78aa. Specifically, plaintiffs allege claims arising under §§ 10(b) and 20(a) of the Exchange Act and under Rule 10b-5 promulgated thereunder. 15 U.S.C §§ 78j(b) & 78t(a), 17 C.F.R. § 240.10b-5. Additionally, plaintiffs allege common law claims of fraud and deceit and negligent misrepresentation. Defendants have moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b), and for Rule 11 sanctions. For the following reasons, we dismiss the complaint in its entirety, but deny defendants' motion for Rule 11 sanctions.
In considering a motion to dismiss, the court accepts the factual allegations of the complaint as true. See Hughes v. Rowe, 449 U.S. 5, 10, 101 S. Ct. 173, 176, 66 L. Ed. 2d 163 (1980) (per curiam) (citing Cruz v. Beto, 405 U.S. 319, 322, 92 S. Ct. 1079, 1081, 31 L. Ed. 2d 263 (1972); Yeksigian v. Nappi, 900 F.2d 101, 102 (7th Cir. 1990). Furthermore, unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief," a court should not grant a motion to dismiss. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957). See also Yeksigian, 900 F.2d at 102 (7th Cir. 1990). Accordingly, the court views the well-pleaded complaint's allegations, as well as all reasonable inferences therefrom, in the light most favorable to the plaintiff. See Balabanos v. North Am. Invest. Group, Ltd., 708 F. Supp. 1488, 1491 n.1 (N.D. Ill. 1988) (citing Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265, 89 L. Ed. 2d 574 (1986)).
For the purposes of this motion, the facts underlying this dispute are as follows:
Abbott is an Illinois corporation known for its diagnostic equipment and hospital supplies. Recently, Abbott has made a concerted effort to heighten its pharmaceutical profile. Burnham is a Director as well as Chairman of the Board and Chief Executive Officer of Abbott, Johnson is Senior Vice-President, Secretary, and General Counsel, and Amundson is Vice President, Corporate Hospital Marketing.
Named plaintiff Enten purchased Abbott stock on April 22, 1992. Leonard Padlovsky purchased Abbott shares on May 18, 1992, and Loretta Johnson bought stock on June 5, 1992.
On January 31, 1992, Abbott issued a press release announcing that the FDA had approved its new drug, Omniflox, an antibiotic in the quinolone family of drugs. Proclaiming that the market for antibiotics was the "largest and most attractive in medicine," and that "with Biaxin and Omniflox, we are well-positioned to compete successfully in this marketplace during the 1990's," Abbott launched Omniflox in the United States.
In February, 1992, Ferid Murad, the head of research and development for pharmaceutical products, ceased working for Abbott. It is not clear whether the researcher was fired or whether he resigned, nor have Abbott executives been permitted to discuss his departure.
On April 8, 1992, Abbott issued another press release noting "record sales and earnings," and stating that one of the highlights of the quarter was the introduction of Omniflox in the United States. Following the announcement, Abbott's stock rose approximately $ 3.00 per share.
These earnings were subsequently reported in a 10-Q filing on May 13, 1992.
During the month of April, 1992, the individual defendants each exercised stock options to acquire Abbott stock. At the same time, each defendant sold Abbott shares totaling approximately one-third of their prior holdings in the company. These transactions were reported in Form 4's.
By the end of May, 1992, the FDA had concluded an additional investigation and review of Omniflox and other quinolone drugs. These conclusions apparently revealed that serious side effects from Omniflox were more frequent than among other quinolones. On the night of June 4, 1992, the FDA told Abbott officials that they were prepared to recommend to Health and Human Services Secretary Louis Sullivan that he suspend sales of Omniflox.
After the close of trading on June 5, 1992, Abbott announced that it would voluntarily and immediately withdraw Omniflox from the worldwide market. According to the FDA, this withdrawal was nearly unprecedented, it having been about twenty years since a ...