Investor Suit over Disclosure of Zicam Side Effects Gets Green Light by Supreme Court

The U.S. Supreme Court is allowing an investor lawsuit that claims the makers of Zicam should have disclosed reports that the cold remedy caused a loss of smell, even though the reported incidents weren’t statistically significant.

Justice Sonia Sotomayor wrote the opinion (PDF) for a unanimous court. The manufacturer, Matrixx Initiatives Inc., had argued there was no material misrepresentation supporting a suit under federal securities laws.

“We conclude that the materiality of adverse event reports cannot be reduced to a bright-line rule,” Sotomayor wrote. The decision affirms a ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals.

The case is Matrixx Initiatives v. Siracusano.