Northwest Biotherapeutics, Inc. v. Canaccord Genuity LLC

Background

Defendants asked the court to compel Northwest Biotherapeutics to identify the “Baiting Orders” and cancellations of those orders underlying the second amended complaint. The complaint alleged spoofing episodes involving trading activity around purchases. The court’s order states that the complaint described baiting orders as being placed during two-minute windows, but did not specify when particular orders were placed or identify their quantity or price.

Northwest opposed the application. It argued that defendants already possessed, or would receive, the underlying trading data and could perform their own calculations. Northwest also argued that the requested calculations and methodology were protected work product from non-testifying consulting experts, that the information was irrelevant because Northwest had disclaimed reliance on the limited data used for the complaint, and that similar discovery arguments had been rejected in a later order in a related case.

The Court’s Ruling

The court granted defendants’ application. Relying on the reasoning of Judge Schofield in the related Harrington proceeding, the court concluded that defendants were entitled to identification of the orders on which the second amended complaint was based. The court found Northwest’s argument that its complaint was more detailed than the complaint in Harrington insufficient to eliminate defendants’ right to know the basis for the allegations against them.

The court also rejected Northwest’s reliance on the later Harrington order, explaining that the plaintiff there had already complied with the original identification order and represented that it had no more specific information. Here, the court noted, Northwest admitted it had not yet produced all the trading data. The court therefore found no basis to excuse Northwest from identifying the baiting orders in the first instance.

Disposition and Effect

Northwest was ordered to identify the baiting orders and cancellations alleged in the second amended complaint, but only for the spoofing episodes that survived the motion-to-dismiss proceedings. The court stated that whether Northwest adequately complied could be addressed later if necessary. Judge Gary Stein also directed the Clerk of Court to close the open motion at Docket No. 233. This was a discovery ruling; the order did not decide whether the underlying market-manipulation allegations were true.