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A long-running shareholder battle over alleged quality control deception has reached a pivotal moment, as investors in the former drugmaker Mylan seek court approval of a mylan investor $60m settlement they say offers meaningful recovery after years of high-stakes litigation.

In a filing Wednesday, investors told a federal court that they struck a $60 million agreement with Mylan NV — now operating as Viatris Inc. — and several of its executives following a December mediation session.

Allegations of Manipulated Quality Controls

The investors, led by the Public Employees' Retirement System of Mississippi, accused the company of manipulating quality control measures at a West Virginia manufacturing facility and misleading shareholders about the integrity of those systems.

According to their brief seeking preliminary approval, the proposed $60 million settlement balances the steep risks and costs of continuing litigation.

“Considering the foregoing risks as well as the time and expense of continued litigation, the $60 million settlement provides a favorable result for the settlement class and represents a meaningful percentage of the settlement class's potential recoverable damages,” the filing stated, citing estimates from the lead plaintiff’s damages expert.

The investors have asked the U.S. District Court for the Western District of Pennsylvania to grant preliminary approval and certify a settlement class so that notice can be sent to potentially hundreds or thousands of affected shareholders.

The proposed class would encompass all individuals and entities who purchased or otherwise acquired publicly traded Mylan common stock between Feb. 16, 2016, and May 7, 2019, and allegedly suffered financial losses.

Stock Collapse and Narrowed Claims

The lawsuit, filed in late 2020, alleged that Mylan’s stock plunged roughly 50% after reports surfaced claiming the company had manipulated quality controls at its West Virginia facility. Investors said executives and company representatives misled the market about those practices.

In 2023, U.S. District Judge J. Nicholas Ranjan significantly trimmed the case, leaving only one actionable claim intact: a 2019 statement by a Mylan spokesperson asserting that “at any point in time,” allegations that employees bypassed quality control systems were untrue.

The plaintiffs acknowledged in Wednesday’s filing that the court’s earlier rulings exposed the case to further narrowing, making settlement a pragmatic choice.

They conceded that risks loomed large — including the possibility the court might eliminate the remaining “scheme” claim on grounds that it was not sufficiently communicated to the market. The investors also faced challenges in proving falsity and scienter, meaning whether the defendants knowingly or recklessly misled shareholders.

In addition, Mylan was poised to argue that any stock price drop stemmed from unrelated negative news or general market volatility, rather than the alleged misstatements. The company could also have revived arguments that the quality control allegations were not widely public and thus did not meaningfully inflate the stock price.

Still, in July, Judge Ranjan denied Mylan’s motion for judgment on the pleadings, keeping the surviving claim alive.

Damages Estimates and Attorneys’ Fees

The $60 million fund represents a wide range — between 4.5% and 70% — of potential damages, based on plaintiffs’ calculations. The variation stems from differing interpretations of the class period and whether corrective disclosures or unrelated information might offset alleged stock inflation.

Estimated damages ranged from $86 million to as high as $1.3 billion.

Lead counsel from Bernstein Litowitz Berger & Grossmann LLP and Kessler Topaz Meltzer & Check LLP said they will seek no more than 25% of the settlement fund in attorneys’ fees.

“In light of lead counsel's efforts over more than five years on a fully contingent basis, a fee of up to 25% is reasonable and falls well within the range of fee awards in this circuit,” the filing said.

The investors are represented by Katherine M. Sinderson and Salvatore J. Graziano of Bernstein Litowitz, and Andrew L. Zivitz, David A. Bocian, Nathaniel C. Simon and Jennifer L. Joost of Kessler Topaz.

Mylan and its executives are represented by Gregory L. Watts, Sheryl Shapiro Bassin and Evan L. Seite of Wilson Sonsini Goodrich & Rosati PC.

Representatives for the parties and for Viatris did not immediately respond to requests for comment Thursday.

If approved, the mylan investor $60m settlement would mark a significant chapter’s end in a case that once threatened far steeper financial consequences for the pharmaceutical giant.