Photo by Laura Barisonzi.
Many excellent lawyers have turned to representing plaintiffs after gaining their initial experience defending companies in complex cases. Few lawyers, however, can say they cut their chops on historic litigation like that arising out of the financial crisis in 2008 – what Austin Van refers to “the World Series of securities litigation.” Van took the skills he developed at New York institution Cravath to Pomerantz in 2017 and became a partner last year. Among his cases, he is now leading class actions against pharmaceutical company Mylan NV and GSX Techedu, a company based in China.
Lawdragon: Can you describe your practice?
Austin Van: My practice focuses on securities class actions on behalf of classes of shareholders who have been damaged through misrepresentations made by publicly traded companies.
LD: How did you first become interested in practicing plaintiffs side securities law?
AV: I worked at Cravath, on the defense side, for six years or so. Some of the most interesting work that I did there was litigation that arose out of the 2008 financial crisis. In particular, litigation brought by the Federal Housing Finance Agency against all the major banks in New York. It was like the World Series of securities litigation. I was put through trial by fire, and I loved it. I became interested in plaintiffs’ side litigation because I wanted to represent the aggrieved parties, rather than defending the parties accused of committing fraud.
LD: What keeps you excited about this kind of work?
AV: It’s intellectually interesting and attracts some of the brightest, most creative legal minds on both sides. And they are very important matters, with massive classes of investors, often with massive losses. It’s rewarding to earn your living litigating cases where genuine fraud has been committed and you are vindicating the rights of defrauded investors.
LD: Could you give an example of a particularly challenging current case?
AV: I’m leading a securities class action lawsuit against Mylan NV, a pharmaceutical company that manufactures and sells the EpiPen, among other medical products. The case consists of three alleged frauds, each of which is complex on its own. We are alleging, first, that Mylan was a central participant in one of the largest, if not the largest, cartels in American history. There was a conspiracy among all the major players in the generic drug industry to fix prices. Second, the company, for many years, intentionally misclassified the EpiPen for the purposes of the Medicaid drug rebate program, so that Mylan wound up overcharging Medicaid by over a billion dollars. In essence, Mylan was overcharging the government based on a blatant misreading of the very simple regulations that govern classification of drugs. Mylan ultimately settled this matter with the Department of Justice, which had been fighting its own battles against Mylan’s EpiPen Medicaid scam, for around $500M. A number of senators called it a sweetheart deal, arguing that half a billion dollars did not begin to address the scale of damages suffered by the government.
And the third fraud relates to a scheme by Mylan to exclude Sanofi Aventis, its primary competitor for epinephrine auto injectors, from the market. Mylan offered anti-competitive rebates to pharmaceutical benefit managers in exchange for their either excluding Sanofi’s Auvi-Q from their formularies or for their placing Auvi-Q on a disadvantageous tier in their formularies. That anti-competitive conduct permitted Mylan to increase the price of EpiPen astronomically, to the point where children and others who needed this lifesaving medicine couldn’t afford it. You had parents who couldn’t buy this drug and couldn’t keep enough of it stored to ensure that they would have it if their child went into anaphylactic shock. The underlying conduct in this action is deeply troubling.
LD: What are the challenges of litigating this case?
AV: A tripartite case like In re Mylan does present special challenges in that you’re basically steering and coordinating three matters. Also, the class period here is very long, so there’s an extensive factual background that we’ve had to uncover to prove our case. We’ve received millions of pages of documents. The volume of information for us to filter through, given how extensive each of these underlying cases is, is immense. Even with a robust document team, it is a large burden. So we are also using technology-assisted review to help us determine, based on reviewer coding, which documents should be prioritized in our review.
LD: What is the current status of the case?
AV: In April 2020, the court certified a class of investors spanning seven years and, in dismissing the defendants’ third motion to dismiss, permitted our uncommon scheme liability claim against a Mylan VP to proceed. With few examples of scheme liability in securities litigation, this opinion sets an important precedent.
LD: Are you working on any cases that touch on new areas of law or knowledge?
AV: In August 2020, Pomerantz was appointed lead counsel in a securities fraud class action against GSX Techedu, a Chinese company that purports to provide online education services. We have reason to believe that about 70 percent of the company’s purported user base of enrolled students is actually fake and being generated through bots.
A bot is software designed to run automated tasks much faster than a human ever could. Research analysts looked at, among other things, user login data and recognized unusual patterns. We hired an expert at Berkeley who is an authority on bots. He has looked at this data from users logging into the GSX platform and determined that the patterns that emerge from this login activity could not have arisen from humans actually logging in. It could only reasonably be explained by automated robots logging in, because humans don’t act with the sort of precision that he was seeing.
There are a number of other reasons to think that this company is a massive fraud. Upon the announcement of an SEC investigation into GSX, the company lost a double-digit percentage of its value. The investigation certainly lends credibility to the concerns of research analysts that are questioning the company’s financials, and to Pomerantz’s allegations.
The Chinese legal system governing the trading of securities and representations to the market is still relatively young. We predict a growing trend of cases that will arise as companies from China – where regulation and supervision of corporations is less developed than in the United States – list their securities to be traded on U.S. exchanges, subjecting themselves to more rigorous oversight.
LD: What pointed you in the direction of law?
AV: I knew from a pretty young age that I wanted to be a lawyer. I liked to reason, to set out clear arguments. In undergrad I was a philosophy major focusing on ethics and political philosophy, and then I completed a Master’s degree in the same areas. I think of law as a form of applied ethics. It’s modern society’s way of addressing actual moral problems that arise in individual disputes.