Zicam Lawsuit Filed in 2004 Over Hiding Smell Problems Reinstated on Appeal

A Zicam class action suit that was originally filed in 2004 was wrongly dismissed and should be reinstated, according to a federal appeals court. The lawsuit claimed that Matrixx Initiatives, Inc. hid evidence from investors that certain types of Zicam Cold Remedy could cause people to lose their sense of smell.

The Zicam lawsuit was reinstated on Wednesday by the 9th U.S. Circuit Court of Appeals, which ruled that U.S. District Judge Mary Murguia was wrong to dismiss the case. Judge Murguia determined at the trial court level that the plaintiffs did not have enough evidence to move forward. The appeals court disagreed, and will allow the case to move forward.

Allegations raised in the Zicam class action claim that the company withheld material information about research that linked loss of smell, known as anosmia, to use of Zicam. The complaint was filed on behalf of investors who purchased shares of Matrixx Initiatives stock over a three and a half month period in late 2003 and early 2004.

The claims made in the 2004 lawsuit are similar to allegations raised in Zicam class action suits filed this year, after the company issued a recall for Zicam nasal swab and gel products. The recall came after the FDA warned consumers to stop using the products due to reports of at least 130 people losing their ability to smell. FDA inspectors later determined that Matrixx Initiatives improperly withheld 800 reports of Zicam problems, which should have been turned over to the federal regulatory agency.

New Zicam class actions were filed this year against Matrixx Iniatives on behalf of investors who purchased stock during months prior to the recall, alleging that the company should have disclosed the 800 reports of problems with loss of smell from Zicam. Investors claim that they were deprived of the opportunity to make an informed investment decision about the company’s future earnings potential as a result of the withheld information.

According to the FDA, Matrixx Initiatives was required by federal law to report adverse reactions to their product and failed to do so. Inspectors estimate that approximately 3.6 out of every 100,000 users have experienced smell problems with Zicam nasal gel, with reports peaking at 6.7 users per 100,000 units sold in 2007. The Securities Exchange Commission has also initiated an informal inquiry of the reporting problems.

Matrixx also faces a number of new Zicam loss of smell lawsuits filed by consumers who have suffered permanent problems after using the product. Earlier this month, the federal Zicam litigation was consolidated and centralized in the U.S. District Court for the District of Arizona for pretrial litigation as part of a multidistrict litigation (MDL).

All of the injury lawsuits contain allegations that Zicam side effects can damage tissues inside the nose and cause damage to the users ability to smell, detect odors or taste. As additional consumer cases are filed in federal courts throughout the United States by Zicam recall lawyers, they will be transferred to the MDL for coordinated handling.