The Amsterdam Court of Appeal's Enterprise Chamber on October 10 rejected a request for an investigation filed by the Dutch Investors' Association (VEB) and several individual investors, ruling that there were insufficient grounds to launch a probe into Royal Philips NV (NYSE: PHG) corporate governance in relation to its breathing device recall. The court did not rule on investor damages liability.
The court found there was inadequate basis to justify initiating an investigation. Shareholders questioned Royal Philips NV (NYSE: PHG) internal controls and its oversight of subsidiary Respironics, arguing that management should have identified device problems earlier, taken corrective action, and disclosed risks to investors in a timely manner. After reviewing a large volume of case files and internal documents, the court concluded that the group's internal systems were established in accordance with international standards, regularly audited, and continuously strengthened.
It was not until early 2021 that sufficiently reliable research data emerged indicating health risks associated with the PE-PUR foam used in the devices. There was no indication that management or the supervisory board received relevant information with delay. The court also found no sufficient grounds to conclude that Royal Philips NV (NYSE: PHG) should have intervened earlier, that supervisory board oversight was inadequate, or that company disclosures were delayed, erroneous, or misleading. This ruling examined the grounds for initiating a corporate governance investigation and did not determine whether the device manufacturer was at fault.
Shareholder claims span multiple jurisdictions. A corporate governance investigation allows a court-appointed investigator to independently review corporate management, and the resulting report may provide evidence for securities claims. An October 2 ruling by the U.S. District Court for the Western District of Texas showed that shareholder damages litigation is already pending in the Netherlands, awaiting the Enterprise Chamber's decision on whether to launch an investigation. Another group of institutional investors plans to file securities litigation in the Netherlands and has applied in the United States to obtain documents and testimony from Respironics' former chief medical officer for patient safety. The Texas court in that ruling vacated a previously approved discovery order and quashed the related subpoenas.
Royal Philips NV (NYSE: PHG) disclosed that Dutch investors filed two civil damages lawsuits in 2024 and 2025, and submitted corporate governance investigation requests between late 2025 and early 2026. A separate securities class action is underway in the United States, with some claims previously allowed to proceed.
Recall remediation and compensation arrangements remain separate matters. Respironics initiated a recall of certain sleep and respiratory care devices on June 14, 2021, covering continuous positive airway pressure devices, bi-level positive airway pressure devices, and ventilators. The PE-PUR foam used to reduce noise and vibration may degrade, producing particles or chemicals that users could inhale or swallow. A consent decree approved by a U.S. federal court in April 2024 requires the company to implement a recall remediation plan, helping affected patients by replacing or repairing devices or providing partial refunds for certain devices; it restricts production and sale of new related devices at some U.S. facilities until specified conditions are met, and requires independent experts to participate in testing and compliance assessments.
Royal Philips NV (NYSE: PHG) reached personal injury and medical monitoring settlements in the United States totaling $1.1 billion. Of that amount, the personal injury settlement was $1.075 billion and the medical monitoring fund was $25 million. The company disclosed that the personal injury settlement became final in early 2025 after the participation rate of eligible claimants exceeded 95%, with payments made in the first half of 2025.
Comments