IN RE SESEN BIO, INC. SECURITIES LITIGATION

Background

Nine individuals and groups sought appointment as lead plaintiff and lead counsel in this securities class action. In an October 29, 2021 order, Judge Hellerstein granted the motion of the Sesen Investor Group (SIG) and denied the other applicants’ motions. Maurice Harris later filed a motion for reconsideration. Julio Hernandez sent a letter asking the court to vacate the order appointing SIG but did not file a motion for reconsideration.

Reconsideration Standard

The court explained that reconsideration is an extraordinary remedy that is generally denied. Under the cited federal rules and local rule, relief may be appropriate when there is an intervening change in controlling law, new evidence, or a need to correct a clear legal or factual error or prevent serious unfairness. The moving party must identify controlling decisions or information that the court overlooked and that could reasonably change the result.

Harris’s Arguments

Harris argued that the court should have waited for opposition briefs before appointing SIG and should not have found SIG eligible because it was a group of individuals. The court rejected those arguments. It said the Private Securities Litigation Reform Act did not require the court to wait for opposition filings before appointing a lead plaintiff. It also said the declarations showed that SIG consisted of four individuals who planned to work together, and that this fact had not been overlooked.

The court further stated that Harris was arguing that SIG should not have been appointed in the first place, rather than identifying new facts, a change in controlling law, or overlooked information. It also rejected Harris’s argument that the court was required to expressly apply the factors discussed in Varghese v. China Shenghuo Pharmaceutical Holdings, Inc., because that decision was not binding precedent. The court found no serious unfairness from appointing SIG.

Alternative Review of the Lead-Plain­tiff Appointment

Although the court said it had sufficient grounds to deny the requests without reaching the merits of the appointment arguments, it also considered those arguments as an alternative basis for its ruling. Under the Private Securities Litigation Reform Act, the lead plaintiff should be the member or members of the proposed class most capable of adequately representing the class. The statute generally presumes that the person or group with the largest financial interest, who also satisfies the basic class-representation requirements, is the most adequate plaintiff.

The court explained that courts in the district permit small, cohesive groups of unrelated investors to serve collectively as lead plaintiff when they can cooperate and manage the litigation separately from their lawyers. Even if it applied the factors Harris identified, the court would have found SIG qualified. The court noted that SIG’s members coordinated before forming the group; two members were brothers; the members stated that they had coordinated and planned to continue doing so; and they appeared to be sophisticated investors with relevant medical or investment experience. They also stated that they had contacted counsel rather than being recruited by counsel, and Ryan Bibb filed the first complaint.

SIG’s combined financial interest was approximately $1.8 million, compared with Harris’s approximately $770,000 interest. The court therefore would have found SIG to be the presumptive lead plaintiff. It also found that SIG satisfied the requirements for adequate and typical class representation based on the members’ joint affidavit and their backgrounds. The court noted that SIG and its counsel had ably represented the class after the appointment and appeared to have effectively negotiated a settlement with the defendants.

Disposition

Judge Alvin K. Hellerstein denied Harris’s motion for reconsideration and Hernandez’s letter request to vacate. The court stated that, even after reconsidering the appointment, it would reach the same conclusion as in its October 29, 2021 order. The clerk was directed to terminate docket entries 49 and 52.