In re HEXO Corp. Securities Litigation

Background

The court had previously appointed John B. Medley and Timothy Sweeney as lead plaintiffs in this securities class action against HEXO Corp. Chi Fung Wong filed a motion asking the court to reconsider that appointment order.

Legal standard

The court described reconsideration as an extraordinary remedy that should be used sparingly. It generally requires the moving party to identify controlling decisions or important information that the court overlooked. A reconsideration motion cannot be used to relitigate old issues or raise arguments or evidence that could have been presented earlier.

Wong’s arguments

Wong argued that the court committed clear error by finding that he had not shown he was an adequate lead plaintiff. He claimed that a preliminary showing of adequacy required only a statutory certification under the Private Securities Litigation Reform Act, a calculation of damages, and information about his lawyers’ securities-litigation experience.

The court rejected that position. It reasoned that the Act requires the presumptively most adequate plaintiff to also satisfy the requirements of Federal Rule of Civil Procedure 23. The court stated that even a preliminary showing of adequacy requires some information about an individual applicant’s background and sophistication. Wong had not provided enough information about his background or investment experience in his initial motion, and the additional information in his reply declaration did little to address that problem.

Wong also argued that the court had improperly held a “beauty contest” between competing lead-plaintiff applicants. The court said that it first evaluated Wong’s adequacy and questioned whether he could meaningfully oversee and control the litigation. Only afterward did it assess whether Medley and Sweeney had made the required showing. The court further stated that Wong had not identified controlling authority supporting a blanket prohibition on comparing applicants on adequacy.

Court’s ruling

The court concluded that Wong had mischaracterized its earlier ruling and had not shown that reconsideration was warranted. It distinguished the authorities Wong cited because one was not binding on the court and the other applied only after the statutory presumption had been triggered; the court found that the presumption had not been triggered for Wong.

Judge Naomi Reice Buchwald denied Wong’s motion for reconsideration. The clerk was directed to terminate the motion at ECF No. 85 and amend the caption according to the court’s earlier consolidation order.