On May 2, 2011, a derivative complaint was filed against eleven members of the Board of Directors of Johnson & Johnson alleging breach of fiduciary duty, mismanagement and violations of the federal securities laws based on the company’s recent settlements with the Department of Justice and the Securities Exchange Commission regarding violations of the Foreign Corrupt Practices Act. As Kevin LaCroix’s blog, The D & O Diary, pointed out, this was the "the first civil lawsuit relating to" the Government’s investigations into "whether drug companies paid bribes overseas to increase sales and to obtain regulatory approvals."

On April 8, 2011, DOJ announced that Johnson & Johnson had agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement to resolve improper payments by its subsidiaries to government officials in Greece, Poland and Romania and kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program in violation of the FCPA. The same day, the SEC announced that it had charged Johnson & Johnson with violating the FCPA based on same conduct. The company settled with the SEC by consenting to a court order permanently enjoining it from future violations of certain provisions of the Exchange Act and agreeing to pay over $38 million in disgorgement and $10 million in prejudgment interest. 

In the shareholders’ derivative lawsuit, Wollman v. Coleman, No. 11-cv-02511 (D.N.J. Filed May 2, 2011), plaintiffs alleged that the Board members failed to implement internal controls to detect and prevent the bribery scheme in breach of their fiduciary duty to ensure compliance with the FCPA and concealing those violations from Johnson & Johnson shareholders by signing false and misleading Annual Reports and Proxy Statements while these events occurred. The lawsuit seeks an unspecified amount of damages, plus attorneys fees and costs. 

As Mr. LaCroix points out, "there may be further enforcement actions and settlements in connection with the ongoing pharmaceutical industry bribery probe," and those settlements may result in "a parallel wave of follow on civil litigation."