ODS Capital LLC v. JA Solar Holdings Co. Ltd

Background

ODS Capital LLC and Altimeo Asset Management brought a securities action against JA Solar Holdings Co. Ltd, Baofang Jin, and Shaohua Jia. On November 30, 2020, the court granted the defendants’ motion to dismiss and terminated the action. The plaintiffs later moved under Federal Rule of Civil Procedure 60(b)(2), which allows relief from a judgment based on newly discovered evidence.

After the plaintiffs appealed, the Chinese Securities Regulatory Commission issued a decision on March 8, 2021, concerning JA Solar’s relisting. The decision stated that, since the end of 2017, Tianye Tonglian had contacted Baofang Jin about acquiring all of JA Solar’s equity. It also described a February 2018 letter of intent between Tianye Tonglian and JA Solar concerning a proposed restructuring transaction, followed by continued negotiations.

Court’s analysis

Rule 60(b)(2) requires the moving party to show that the evidence concerns facts existing when the earlier proceeding occurred, could not reasonably have been discovered earlier despite diligence, is admissible and important enough probably to change the result, and is not merely repetitive or intended only to attack credibility.

The defendants did not dispute the first two requirements. They argued that the new evidence was repetitive and would not change the court’s prior conclusions. The court disagreed. It found that the regulatory decision strengthened the inference that a plan to relist JA Solar existed before the February 1, 2018 proxy materials, in which defendants stated that there were no current plans or proposals to relist.

The court had previously found that the plaintiffs had not plausibly alleged that defendants concealed an actual, concrete relisting plan. The court concluded that the new evidence changed that conclusion and provided sufficient support, at the motion-to-dismiss stage, for an allegation that defendants failed to disclose the plan. The court also stated that the new evidence affected its earlier analysis of loss causation, meaning the required connection between an alleged misrepresentation and the plaintiffs’ loss.

Ruling and effect

Judge Andrew L. Carter, Jr. granted the plaintiffs’ motion for relief from judgment. The Clerk of Court was directed to reopen the case and close the motion at docket entry 89. The plaintiffs were directed to file a motion for leave to amend the complaint and a proposed amended complaint within 30 days of the order. The order therefore revived the case for the next pleading step; it did not resolve the ultimate merits of the securities claims.

Note on the opinion’s wording

The opinion says both that the plaintiffs moved for relief and, in its procedural history, that the defendants filed the motion at issue. Its conclusion clearly states that the plaintiffs’ motion was granted.