March 3, 2011
SHER SPARANO, DERIVATIVELY ON BEHALF OF ARENA PHARMACEUTICALS, INC., PLAINTIFF,
JACK LIEF, DOMINIC P. BEHAN, COUNSEL DONALD D. BELCHER, SCOTT H.BICE, HARRY F. HIXSON, JR., TINA S. NOVA, SCOTT M. SCHNEIDER, CHRISTINE A. WHITE, M.D., AND RANDALL E. WOODS, DEFENDANTS, -AND- ARENA PHARMACEUTICALS, INC., NOMINAL DEFENDANT. VYTUS B. SILIUNAS, DERIVATIVELY ON BEHALF OF ARENA PHARMACEUTICALS, INC., PLAINTIFF,
JACK LIEF, DOMINIC P. BEHAN, ROBERT E. HOFFMAN, WILLIAM R. SHANAHAN, JR., CHRISTEN ANDERSON, DONALD D. BELCHER, SCOTT H. BICE, HARRY F. HIXSON, JR., TINA S. NOVA, CHRISTINE A. WHITE, PHILLIP M. SCHNEIDER, RANDALL E. WOODS, AND J. CLAYBURN LA FORCE, JR., DEFENDANTS, -AND-ARENA PHARMACEUTICALS, INC., NOMINAL DEFENDANT. MARTIN GORE, DERIVATIVELY ON BEHALF OF ARENA PHARMACEUTICALS, INC., PLAINTIFF,
JACK LIEF, DOMINIC P. BEHAN, DONALD D. BELCHER, SCOTT H. BICE, HARRY F. HIXSON, JR., TINA S. NOVA, SCOTT M. SCHNEIDER, CHRISTINE A. WHITE, M.D., AND RANDALL F. WOODS, DEFENDANTS, -AND-ARENA PHARMACEUTICALS, INC., NOMINAL DEFENDANT.
The opinion of the court was delivered by: Honorable Barry Ted MoskowitzUnited States District Judge
ORDER GRANTING MOTIONS TO CONSOLIDATE, DENYING MOTIONS TO APPOINT LEAD PLAINTIFF, AND APPOINTING ROBBINS UMEDA LLP AS LEAD
Plaintiff Vytas B. Siliunas (Case No. 10cv2132) has filed a motion to consolidate these related cases, to appoint himself as lead plaintiff, and to appoint his counsel, Robbins Umeda LLP, as lead counsel. Plaintiffs Sher Sparano (Case No.10cv2079) and Martin Gore (Case No. 10cv2344) have filed a competing motion to consolidate the cases, to appoint Sparano and Gore as lead plaintiffs, and to appoint their attorneys, Douglas J. Campion and Ronald A. Marron, as co-lead counsel. For the reasons discussed below, the Court grants the motions to consolidate, denies the motions to appoint lead plaintiff, grants Siliunas's motion to appoint lead counsel (Robbins Umeda LLP), and denies Sparano and Gore's motion to appoint lead counsel.
All three of these derivative actions are brought on behalf of Arena Pharmaceuticals, Inc. ("Arena"), and seek to hold certain officers and directors accountable for misleading the public with respect to the safety and efficacy of Lorcaserin, an experimental weight loss drug developed by Arena. It is alleged that the defendants knew that clinical trials showed that Lorcaserin caused rats to have increased chances of cancer and that FDA scientists had expressed concern that Lorcaserin produced minimal weight loss while raising cardiovascular and cancer safety risks. Nevertheless, defendants allegedly made positive statements regarding the drug's efficacy, safety, and tolerability. During the relevant time period, millions of dollars of Arena stock were sold in one public and two private stock offerings.
On September 16, 2010, the FDA panel voted against approval of Lorcaserin. Arena's stock value immediately plummeted, resulting in a loss of $668.6 million, or 64% of its market capitalization. A number of shareholder class actions have been filed against Arena, alleging violation of securities laws and seeking damages suffered as a result of the allegedly inflated stock prices.
The Sparano derivative action was filed on October 6, 2010. A week later, Siliunas filed his complaint. The Gore action followed on November 12, 2010. There is substantial overlap among the complaints.*fn1
Consolidation is appropriate when there is a "common question of law or fact . . .
pending before the Court." Fed. R. Civ. P. 42(a). These three actions clearly involve common questions of law and fact, and no party has objected to consolidation. Therefore, the Court grants the motions to consolidate.
B. Appointment of Lead Plaintiff
Siliunas asks the Court to appoint him as lead plaintiff in the consolidated actions.
Sparano and Gore have filed their own motion to be appointed co-lead plaintiffs. The Court denies both of these motions.
In securities fraud actions, the appointment of a lead plaintiff is governed by the Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67 (1995). There is no such statute addressing the ...
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