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O’Melveny’s Successful Defeat of Class Certification in Shareholder Action for China Agritech Reported in BNA, Asian Legal BusinessMay 11, 2012
In what is rarely accomplished in securities litigation actions, O’Melveny’s successfully defeated a motion for class certification in a shareholder action filed in the United States District Court for the Central District of California against client China Agritech, a leading organic compound fertilizer manufacturer and distributor headquartered in China and formerly listed on NASDAQ. In the May 10, 2012, BNA article “Efficient Market Challenge Fells Bid To Certify Class in Suit Against China Entity,” Jeffrey Kilduff, head of the Securities Litigation Practice Group at O’Melveny & Myers, the firm representing China Agritech in the litigation, told BNA “this decision highlights just one more of the many litigation challenges facing plaintiffs seeking to pursue securities litigation against China-based companies listed on U.S. exchange.” Kilduff, a partner in O'Melveny’s Washington office, said that “[u]nlike in most securities class actions against US-based, US-listed companies, proving that the securities trade in an efficient market will be no easy task.” Continuing to explain the significance of the ruling, he stated "Factoring in the challenges certifying a class with the difficulties obtaining discovery and the expense of pursuing a foreign based company, there may be less appetite to pursue these types of cases going forward.”
Beijing partner Bingna Guo, who was part of the team that assisted China Agritech on its victory, commented to reporters at Asian Legal Business the rarity of the defeat in the US court system. In the May 11, 2012, article “OMM helps China Agritech score rare victory in US suit,” Guo noted how instead of facing the challenges of potentially thousands of plaintiffs, the client now only is dealing with four individual plaintiffs, hence a more simplified case. In the article, Guo said that with the recent heightened scrutiny by the US securities regulator on China-based US-listed companies, “this case shows that fighting against class certification is a tactic that Chinese companies facing securities litigation need to seriously consider.”
The O’Melveny team representing China Agritech was led by partners Guo, Los Angeles-based Seth Aronson, and New York-based Abby Rudzin. The case is Dean v. China Agritech Inc., C.D. Cal., No. CV 11-01331-RGK (PJWx), 5/3/12.