WILMINGTON, Del. — A company that has a facility in Bloomington is being sued by its shareholders after they claimed the company breached its fiduciary duties and began “cutting corners” on safety procedures at various facilities.

According to a lawsuit, filed earlier this month in the United States District Court for the District of Delaware, shareholders claim that Catalent, a global pharmaceutical manufacturer, intentionally made and permitted the dissemination of “materially false and misleading statements and omissions” of the company’s business and finances between Aug. 30, 2021 through Oct. 31, 2022.

The lawsuit also claimed the defendants, which include current and former officers of the company and members of the company’s board, also made false and misleading statements on the company’s adherence to regulatory rules at its facilities, including the company’s Bloomington facility.

According to previous reports, Catalent expanded its Bloomington facility in April 2022. The company announced at the time that they invested $350 million into the facility and would hire around 1,000 new employees. In December 2022, the company announced it was cutting more than 400 jobs in Bloomington to “match current demands.”

Catalent, a global provider of drug manufacturing and development, experienced “rapid growth” during the COVID-19 pandemic. According to the lawsuit, the company worked on more than 100 COVID-19-related projects for more than 60 customers, including filling COVID-19 vaccines into syringes for customers like Moderna and AstraZeneca.

The lawsuit said that Catalent misrepresented or failed to disclose various facts about the company, including:

  • Catalent prematurely recognized, and materially overstated, revenues and earnings in violation of the Generally Accepted Accounting Principles;
  • Catalent had undisclosed material weaknesses in its internal controls over financial reporting relating to revenue recognition;
  • Catalent falsely represented demand for its products while it knowingly sold more product to its direct customers than those direct customers could provide to healthcare providers and end customers.

“By reason of their positions as officers and/or directors of Catalent, and because of their ability to control the business and corporate affairs of Catalent, the individual defendants owed Catalent and its shareholders fiduciary obligations of trust, loyalty, good faith and due care, and were and are required to use their utmost ability to control and manage Catalent in a fair, just, honest and equitable manner,” the lawsuit read.

“The conduct of the individual defendants complained of herein involves a knowing and culpable violation of their obligations as directors and/or officers of Catalent, the absence of good faith on their part or a reckless disregard for their duties to the company and its shareholders that the individual defendants were aware or should have been aware posed a risk of serious injury to the company,” the lawsuit continued.

During the pandemic, the company grew by more than 100%, the lawsuit said. Because of this expansion, the lawsuit said it led to problems at its plants, including the Bloomington plant, which is a drug product filling and finishing facility.

“On September 1, 2022, following an inspection of the Bloomington facility,” the lawsuit read, “the FDA issued a Form 483 identifying several problems at the facility including finding foreign matter, particular matter and foreign objects and pieces in vials produced at the facility, as well as control procedure problems.”

The charges filed against the defendants in this particular lawsuit include:

  • Violations of the Exchange Act and Rule 10b-5;
  • Breach of fiduciary duty;
  • Aiding and abetting breach of fiduciary duty;
  • Unjust enrichment;
  • Waste of corporate assets.

Some of the relief the plaintiffs seek in this particular lawsuit directs Catalent to “take all necessary actions to reform and improve its corporate governance” to protect the company from something like this happening again.

This relief includes strengthening the board’s supervision of operations and compliance with federal laws and regulations, strengthening how the company reports its financial disclosure and implementing procedures for greater shareholder input.

No responses have yet been filed in this lawsuit, according to court records. FOX59/CBS4 has reached out to Catalent and this story will be updated if they return the request for comment.