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In re OvaScience Inc. Stockholder Litigation (Lawyers Weekly No. 09-050-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss SUPERIOR COURT CIVIL ACTION NO. 2015-3087-BLS2 (Consol. with 16-0645) IN RE OVASCIENCE INC. STOCKHOLDER LITIGATION MEMORANDUM OF DECISION AND ORDER ON PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION This is a putative class action arising under Sections 11, 12, and 15 of the Securities Act of 1933. Plaintiffs Westmoreland County Employee Retirement System, Phillip Hofmann, Carlos Rivas, and Cesar Castellanos are investors who purchased stock in the defendant OvaScience, Inc. (OvaScience). They allege that a Registration Statement and Prospectus issued in connection with a secondary offering of OvaScience stock on January 8, 2015 contained false statements and material omissions of fact concerning an experimental fertility treatment that OvaScience was in the process of developing. The case is now before the Court on the plaintiffs’ Motion for Class Certification pursuant to Mass R. Civ. P. 23. The plaintiffs seek to certify a nationwide class that consists of all persons who purchased OvaScience stock “pursuant and/or traceable to” the January 8 2015 secondary offering.1 Alternatively, they seek statewide class certification consisting of the Massachusetts-based purchasers. This Court concludes that the plaintiffs’ Motion must be DENIED. 1 Excluded from the proposed class are each of the defendants, past and current officers and directors of OvaScience, J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, and Leerink Partners LLC, their affiliates or sponsors, the members of their families, and any entity which any defendant has or had a controlling interest, and the legal representatives, heirs, successors, or assigns of any such excluded party. 2 Certification of this class requires this Court to exercise personal jurisdiction over absent class members who are not residents of Massachusetts. Whether that can be done consistent with due process was first addressed by the Supreme Court in Phillips Petroleum Co v. Stutts, 472 U.S. 797 (1985) (Stutts). The Court reasoned that, “[b]ecause a state places fewer burdens upon an absent class plaintiff than it does upon an absent defendant in a nonclass suit, the Due Process Clause need not and does not afford the former as much protection from state-court jurisdiction as it does the latter.” 472 U.S. at 811. The Court went on to hold that the forum state may exercise jurisdiction over the absent class member even in the absence of minimum contacts so long as it provides certain basic due process protections. Id. At a minimum, that means that the absent plaintiff must have the opportunity to remove himself from the class. Because the case before it was brought in a state (Kansas) that permitted absent class members to opt out, the Supreme Court held that the state court could properly assert personal jurisdiction over nonresident class members. Massachusetts, of course, does not […]

In re OvaScience Inc. Stockholder Litigation (Lawyers Weekly No. 09-051-17)

1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss SUPERIOR COURT CIVIL ACTION NO. 2015-3087-BLS2 (Consol. with 16-0645) IN RE OVASCIENCE INC. STOCKHOLDER LITIGATION MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGEMENT This is a putative class action alleging violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 ( the Securities Act). Plaintiffs Westmoreland County Employee Retirement System (Westmoreland), Phillip Hofmann, Carlos Rivas, and Cesar Castellanos are investors who purchased stock in the defendant OvaScience, Inc. (OvaScience).1 They allege that a Prospectus and Prospectus Supplement issued in connection with a secondary offering of OvaScience stock contained false statements and material omissions of fact concerning an experimental fertility treatment that OvaScience was in the process of developing. In addition to suing OvaScience, plaintiffs have also named as defendants certain of the company’s officers and directors as well as the three investment banks who served as the underwriters. The defendants now move for summary judgment against Castellanos, Hofmann, and Rivas (the Individual Plaintiffs). This Court concludes that the Motion must be ALLOWED. 1 Heather Carlson was also a plaintiff in the action. However, on August 1, 2017, the parties filed a joint stipulation voluntarily dismissing her from the action without prejudice. Judgment was entered on the docket pursuant to Mass. R. Civ. P. 58(a) on August 3, 2017. 2 BACKGROUND On January 8, 2015, OvaScience conducted a secondary public stock offering in which it sold 2,645,000 shares at $ 50 per share (the January 8 Offering). J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, and Leerink Partners LLC served as the Underwriters. The offering closed on January 13, 2015, at which point there were over 27 million OvaScience shares outstanding. At various points in 2015, the Individual Plaintiffs made purchases of OvaScience stock through online brokers E*Trade and Capital One Investing. On January 8, 2015, Castellano purchased 350 shares at $ 50.488. He made four more purchases between January 12 and February 3, 2015 for a price per share that ranged from $ 40.0899 up to $ 48.1799. Rivas made seven purchases between March 2015 and August 2015 for a price per share ranging from $ 24.32 to $ 41.49. Hoffman made three purchases between February and April 2015 for a price per share that ranged from $ 31.83 to $ 42.107485. In October 2015, plaintiffs Hofmann and Rivas filed a lawsuit against the defendants; Castellanos filed a separate complaint based on the same allegations five months later, and the two actions were consolidated. In August 2016, Westmoreland intervened as plaintiff in the consolidated actions. After this Court denied a motion to dismiss, discovery proceeded on a bifurcated basis. Phase I of the discovery was limited to […]

In re Ovascience, Inc. Stockholder Litigation (Lawyers Weekly No. 12-177-16)

1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIV. NO. 15-03087 BLS 2 (Consol. With 16-0645) IN RE OVASCIENCE, INC. STOCKHOLDER LITIGATION MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION TO DISMISS This is a putative class action brought pursuant to Sections 11, 12 and 15 of the Securities Act of 1933. Plaintiffs are investors who purchased stock in the defendant Ovascience, Inc. (Ovascience or the Company). They allege that a Registration Statement issued in connection with a secondary offering of Ovascience stock on January 8, 2015 (the January 8 Offering), contained false statements and material omissions of fact concerning an experimental fertility treatment (AUGMENT) that Ovascience was in the process of developing. In addition to suing Ovascience, plaintiffs have also named as defendants certain of the Company’s officers and directors (collectively, the Ovascience defendants) as well as three investment banks, J.P. Morgan, Credit Suisse and Leerink Partners, which were the underwriters in the January 8 Offering (the Underwriters). The case is now before the Court on the defendants’ Motion to Dismiss pursuant to Rule 12(b) (6), Mass.R.Civ.P. After careful review of the parties’ submissions, the Court concludes that the Motion should be DENIED. This memorandum sets forth a brief explanation of the reasons for that decision. The defendants makes two argument in support of their motion. First, they contend that the Complaint fails to allege sufficient facts, under the standard set forth in Iannachino v. Ford Motor Co., 451 U.S. Mass. 623 (2008), that the Registration Statement contained material 2 misrepresentations.1 This Court disagrees. The Complaint sets forth detailed allegations that the Registration Statement contained misleading statements or failed to include material facts regarding: 1) the science behind AUGMENT; 2) the success rate; 3) the reason why the Company undertook its studies outside of the United States; and 4) the profitability of the Company. Plaintiffs allege that, as a result of the falsely optimistic picture the Registration Statement painted regarding AUGMENT’s prospects as a fertility treatment, stocks prices for Ovascience briefly shot up (with certain of the individual defendants profiting from that rise), then sharply declined when the facts regarding AUGMENT emerged just a few months later – facts that were known at the time the Registration Statement issued. This more than satisfies the requirement that the Complaint set forth facts “plausibly suggesting (not merely consistent with) an entitlement to relief…” Iannacchino, supra, quoting Bell Atl. Corp. v. Twombly, 550 Mass. 544, 555 (2007). The second argument concerns the issue of standing. The claims are brought pursuant to Section 11, 12 and 15 of the Securities Act. In order to have standing to bring a claim under Section 11, a plaintiff must have purchased shares either in the offering […]