Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Polarityte, Inc. Securities Litigation

United States District Court, D. Utah, Central Division

January 16, 2019

IN RE POLARITYTE, INC. SECURITIES LITIGATION, THIS DOCUMENT RELATES TO: All Actions

          MEMORANDUM DECISION AND GRANTING LAWI'S MOTION TO APPOINT LEAD PLAINTIFF AND ORDERING SUPPLEMENTAL BRIEFING ON MOTION TO APPOINT LEAD COUNSEL

          JILL N. PARRISH, UNITED STATES DISTRICT JUDGE

         This matter is before the court on the Motions of Yedid Lawi for Appointment as Lead Plaintiff and Approval of Counsel and the Motions for Appointment of Movant Michael A. Motto as Lead Plaintiff and Approval of Counsel.

         BACKGROUND

         Plaintiff Jose Moreno filed this private federal securities class action complaint on June 26, 2018, alleging violations by defendant PolarityTE, Inc. (“PolarityTE”) of section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, promulgated by the SEC at 17 C.F.R. § 240.10b-5, as well as violations of section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a), by Denver Lough, M.D., Ph.D. and Jeff Dyer (the “Individual Defendants”). PolarityTE is a biotechnology and regenerative biomaterials company incorporated in Delaware with its principal place of business in Salt Lake City, Utah. PolarityTE is listed on the NASDAQ under ticker symbol “COOL.” The parties allege that PolarityTE's misconduct occurred over the period from March 31, 2017 to June 22, 2018 (the “Class Period”) in the following manner. First, on April 7, 2017, PolarityTE purchased a patent from Dr. Denver Lough (the “Lough Patent”), which had been rejected by the U.S. Patent and Trademark Office (“USPTO”) one week prior. Then, on May 29, 2018, PolarityTE filed an S-8 registration but failed to disclose the rejection of the Lough Patent. On June 4, 2018, the USPTO issued a final rejection of the Lough Patent, which PolarityTE also failed to disclose. On June 25, 2018, Citron Research published a report on the Lough Patent and PolarityTE's failures to disclose. PolarityTE's stock price fell sharply from closing at $38.97 on Friday, June 22, 2018 to opening at $25.60 on Tuesday, June 26, 2018. The stock closed at $28.14 on Tuesday, June 26, 2018.

         On June 26, 2018, Moreno filed this suit in the United States District Court for the District of Utah on behalf of a purported class of all persons or entities that purchased shares of PolarityTE during the Class Period. In compliance with 15 U.S.C. § 78u-4 (a)(3)(A), on June 27, 2018, Moreno's counsel, Block & Leviton LLP, published an announcement that it had filed a securities fraud class action against PolarityTE, giving other shareholders until August 27, 2018 to file motions to be appointed lead plaintiff (the “Notice”). On July 6, 2018, Yedid Lawi filed a nearly identical class action complaint, also in this court, alleging the same facts and alleged violations during the same Class Period. On August 27, 2018, Michael A. Motto moved for appointment as lead plaintiff in this action. Also on August 27, 2018, Yedid Lawi moved for consolidation of the two competing class actions and for appointment as lead plaintiff in this action. On September 7, 2018, Motto filed a notice of Non-Opposition to Lawi's motion. On November 28, 2018, the court granted the motion to consolidate the related cases and gave all parties fourteen days to oppose Lawi's motion (until December 12, 2018). No. parties opposed Lawi's motion. The court now rules on the motions for appointment as lead plaintiff and for appointment of lead counsel.

         ANALYSIS

         A. Lead Plaintiff

         In a private securities class action, the court must “appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members.” Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4 (a)(3)(B)(i). This person is known as the “most adequate plaintiff.” Id. The court must “adopt a [rebuttable] presumption that the most adequate plaintiff in any private action arising under this chapter is the person” that:

(aa) has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i);
(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

15 U.S.C. § 78u-4 (a)(3)(B)(iii).

         Three parties in this action meet the initial qualification for lead plaintiff. First, Jose Moreno who filed the complaint. Second, Michael Motto and third, Yedid Lawi, both of whom made motions in response to the Notice. Michael Motto, however, filed a Notice of Non-Opposition to Lawi's appointment as lead plaintiff, and the court accordingly DENIES his motion as moot. The court will therefore compare the financial interests of Jose Moreno and Yedid Lawi.

         1. Largest Financial Interest

         The PLSRA does not instruct the court how to determine the plaintiff with the largest financial interest. Various district courts in the Tenth Circuit have applied the “retention method, ”[1]while others have looked only to the “largest monetary loss, ” to determine the largest financial interest.[2] Meanwhile, many courts apply the “Lax-Olsten” Factors, first articulated in Lax v. First Merchants Acceptance Corp., 1997 WL 461036, at *5 (N.D. Ill. 1997) and adopted in In re Olsten Corp. Sec. Litig.,3 F.Supp.2d 286, 295 (E.D.N.Y.1998). See In re Crocs, Inc. Sec. Litig., 2008 WL 4298316, at *2 (D. Colo. 2008) (discussing various methods). The Lax-Olsten method compares four factors: “(1) the No. of shares purchased; (2) the No. of net shares purchased; (3) the total net funds expended by the plaintiffs during the class period; and (4) the approximate losses suffered by the plaintiffs.” Lax at *5. Here, Moreno does not propose a method for calculating financial interest. Lawi asserts that the court should look mainly to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.