Altimeo Asset Management v. Qihoo 360 Technology Co. Ltd.
- Paul Engelmayer
- 1:19-cv-10067
- U.S. District Court · Southern District of New York
- 4
Altimeo Asset Management v. Qihoo 360 Technology Co. Ltd., Judge Engelmayer granted a motion to stay all discovery while Zhou’s motion to dismiss remained pending.
The stay applies to all discovery in the action, affecting the plaintiffs and all defendants, while the court considers Hongyi Zhou’s pending motion to dismiss.
What happened
Altimeo Asset Management v. Qihoo 360 Technology Co. Ltd. is a securities lawsuit brought by Altimeo Asset Management and ODS Capital LLC. The defendants asked the court to pause all discovery because defendant Hongyi Zhou had a pending motion to dismiss.
The court interpreted the Private Securities Litigation Reform Act as requiring discovery to stop while any motion to dismiss in the case is pending, even when the motion was filed by only one defendant. The plaintiffs did not show that discovery was needed to preserve evidence or prevent unfair harm; they argued only that the pause would delay the case.
Judge Engelmayer granted the defendants’ motion and stayed all discovery until the court resolves Zhou’s motion to dismiss. The court also adjourned the scheduled case-management conference and said it would set a new schedule afterward.
The detailed version
- Altimeo Asset Management v. Qihoo 360 Technology Co. Ltd. · No. 1:19-cv-10067
- Paul Engelmayer
- May 25, 2022
Background
Altimeo Asset Management, individually and on behalf of others similarly situated, and ODS Capital LLC sued Qihoo 360 Technology Co. Ltd., Hongyi Zhou, Xiangdong Qi, and Eric X. Chen. The opinion describes the case as a putative class action under the securities laws.
Qihoo and Chen asked the court to stay, or pause, all discovery under the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. § 78u-4(b)(3)(B). Zhou supported that request, although he filed the pending motion to dismiss and did not move to stay discovery. The plaintiffs opposed the stay.
The court had previously dismissed the plaintiffs’ amended complaint because it did not plausibly allege an actionable misrepresentation or omission concerning a concrete plan to relist Qihoo. The Second Circuit later vacated that judgment and remanded the case. After remand, Qihoo and Chen answered the amended complaint, while Zhou filed a motion to dismiss arguing that the plaintiffs had not plausibly alleged scienter, reliance, or loss causation.
Issue
The issue was whether the PSLRA requires all discovery to stop while Zhou’s motion to dismiss remained pending, even though Qihoo and Chen had already answered and had not filed a new motion to dismiss.
Court’s analysis
The PSLRA states that “all discovery and other proceedings shall be stayed during the pendency of any motion to dismiss,” unless particularized discovery is necessary to preserve evidence or prevent undue prejudice. The court found this language clear and rejected the plaintiffs’ argument that the statute was ambiguous when only one of several defendants had a pending motion to dismiss.
The court relied on the weight of authority holding that the stay applies to all defendants when a motion to dismiss filed by any defendant is pending. It also found that the plaintiffs had not established either statutory exception. The plaintiffs made no argument that evidence was at risk of disappearing, and their assertion that the stay would delay the litigation did not establish undue prejudice.
Disposition
The court granted the Moving Defendants’ motion and stayed all discovery in the action pending resolution of Zhou’s motion to dismiss. Judge Engelmayer stated that the court would schedule a new case-management conference after deciding that motion. The court also adjourned the conference previously scheduled for August 8, 2022 and directed the clerk to close the motion at Docket 117.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.