In re ReWalk Robotics Ltd. Stockholder Litigation (Lawyers Weekly No. 12-048-17)

The named plaintiffs in these putative class actions claim that ReWalk Robotics Ltd. and thirteen other defendants are liable under §§ 11, 12(a)(2), and 15 of the federal Securities Act because ReWalk purportedly made false statements in a registration statement and prospectus concerning a public offering of securities. The first of these actions was filed on October 31, 2016. The second was filed on November 30, 2016. They were consolidated on January 9, 2017.
A similar lawsuit making similar Securities Act claims against the same Defendants was filed in the United States District Court for the District of Massachusetts on January 31, 2017. That lawsuit was docketed as Deng v. ReWalk Robotics et al., no. 1:17-cv-10179-FDS, and is pending before Judge Saylor.
Defendants have moved to stay these state court proceedings pending dispositive resolution of this federal lawsuit.1 A trial judge has broad discretion to grant or deny a stay of proceedings pending resolution of the same or similar claims in another forum. Travenol Laboratories, Inc. v. Zotal, Ltd., 394 Mass. 95, 97 (1985). The Court concludes, in the exercise of its discretion, that there is no good reason to stay these actions. It will therefore DENY Defendants’ motion.
1 When Defendants filed their motion to stay, they represented that a second federal class action asserting similar claims had been filed against them in the United States District Court for the Northern District of California, and that Defendants have moved to have the two federal actions consolidated in the District of Massachusetts as a single multidistrict litigation proceeding. In their reply memorandum, however, Defendants report that the California action was voluntarily dismissed on March 23, 2017. As a result, there are currently only two sets of actions asserting similar Securities Act claims against ReWalk and the other Defendants: these two actions in Massachusetts Superior Court and the Deng case filed several months later in federal court in the District of Massachusetts.
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Although Defendants argue that it would be inefficient for these cases and the pending federal action to proceed at the same time, they do not muster any convincing explanation as to why they seek a stay of these actions in Massachusetts court rather than asking the federal judge to stay the later-filed federal action.
The first of these consolidated actions was filed in the Massachusetts Superior Court three months before the pending federal action was filed. Furthermore, the additional factual allegations asserted in the consolidated complaint in these actions suggest that the state court plaintiffs have made more progress in investigating the factual basis for their claims. There is no evidence that the plaintiffs in the federal action have done anything of substance to move their case forward. As a result, and in the absence of any other reason to defer to the federal court, the fact that these actions were filed first weighs heavily against staying these actions. See, e.g., C.D.S., Inc. v. Zetler, 198 F.Supp.3d 323, 332 (S.D.N.Y. 2016). Defendants argue that the federal action should be treated as if it were the first-filed case because those plaintiffs originally asserted the same claims against the same Defendants in an action filed in California state court on September 20, 2016, a month before the first action was filed in Massachusetts. But the California action was dismissed because the California state courts lacked personal jurisdiction over the Defendants. If a judgment had been entered in the California action it would have violated the constitutional requirements of due process and thus been a “nullity.”2 Since the California action was a nullity, it can hardly count as being the first filed action.
The fact that Plaintiffs in these actions are asserted claims under the federal Securities Act has no bearing on whether this action should be stayed until the later-filed federal action is resolved. State and federal courts have concurrent subject
2 “[A] judgment rendered in the absence of personal jurisdiction is a nullity.” Vazquez-Robles v. CommoLoCo, Inc., 757 F.3d 1, 4 (1st Cir. 2014); accord World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292 (1980) (judgment entered by state court with no personal jurisdiction over defendant violates Fourteenth Amendment due process clause and therefore is void); Lamarche v. Lussier, 65 Mass. App. Ct. 887, 889 (2006) (“A judgment is void if the court from which it issues lacked jurisdiction over the defendant.”); see also Securities and Exchange Comm’n v. Ross, 504 F.3d 1130 (9th Cir. 2007) (vacating disgorgement order entered in Securities Act case because district court lacked personal jurisdiction over defendant).
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matter jurisdiction over Securities Act claims. See Fortunato v. Akebia Therapeutics, Inc., 1584CV02665-BLS2, slip op. at 2-16, 2017 WL 716356, *1-*9 (Mass. Sup. Ct. Feb. 21, 2017) (Salinger, J.). As a result, Plaintiffs in these actions are entitled to choose to proceed in State court.
Plaintiffs’ choice of forum should not be disregarded merely because they are asserting federal claims. “State courts are adequate forums for the vindication of federal rights;” this is “a foundational principle of our federal system.” Burt v. Titlow, 134 S. Ct. 10, 15 (2013). The Supreme Court has “consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.” Id., quoting Tafflin v. Levitt, 493 U.S. 455, 458 (1990). Defendants’ arguments to the contrary are without merit.
Defendants have not suggested that they would be unfairly prejudiced by having to litigate in Massachusetts and thus have not moved to dismiss under the doctrine of forum non conveniens. To the contrary, Defendants’s preferred forum is in Massachusetts, albeit in federal rather than state court.
In sum, Defendants have not shown there is any good reason to stay these actions.
Defendants’ motion to stay these consolidated case pending resolution of a parallel civil action in federal court is DENIED.
April 3, 2017
Kenneth W. Salinger
Justice of the Superior Court

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