Tutschek v. Schinazi et al, No. 2:2019cv01775 - Document 16 (W.D. Wash. 2019)
Court Description: ORDER granting Parties' 15 Stipulated MOTION and [Proposed] Order Regarding Acceptance of Service of Process and Stay of Proceedings: Except as noted below, all proceedings, including any motion practice, obligation to respond to t he Complaint and any amended complaint, and all discovery and disclosure obligations or deadlines under the applicable local and federal rules or previously-issued Orders of this Court in the Action are hereby stayed until further order of the Cou rt. All pending deadlines, hearings, or conferences are vacated until after the stay is lifted. Within fourteen (14) days after the Securities Class Action is resolved, or a motion to dismiss the Securities Class Action is denied, or by 7/31/2020, whichever occurs earliest, the parties to this Action shall file a Joint Status Report. Signed by Judge Thomas S. Zilly. (MW)
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Tutschek v. Schinazi et al Doc. 16 THE HONORABLE THOMAS S. ZILLY 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 8 MARTIN TUTSCHEK, Derivatively on Behalf of COCRYSTAL PHARMA, INC., 9 No. 2:19-cv-01775 TSZ STIPULATED MOTION AND ORDER Plaintiff, 10 v. 11 12 13 14 15 RAYMOND SCHINAZI, GARY WILCOX, PHILLIP FROST, JANE HSIAO, STEVE RUBIN, DAVID S. BLOCK, ELLIOT MITCHELL MAZA, JEFFREY MECKLER, BRIAN KELLER, TODD BRADY, BARRY HONIG, MICHAEL BRAUSER, JOHN STETSON, and JOHN O'ROURKE, 16 17 Defendants, and 18 COCRYSTAL PHARMA, INC., 19 Nominal Defendant. 20 21 I. 22 STIPULATED MOTION WHEREAS, on November 1, 2019, Plaintiff Martin Tutschek ("Plaintiff") filed in this 23 Court a Verified Stockholder Derivative Complaint (the "Complaint") (ECF No. 1) on behalf of 24 nominal defendant Cocrystal Pharma, Inc. ("Cocrystal"), captioned Tutschek v. Schinazi, et al., 25 Case No. 19-cv-01775-TSZ (the "Action"); 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 1 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 Dockets.Justia.com WHEREAS, the Complaint names as defendants Raymond Schinazi, Gary Wilcox, 1 Phillip Frost, Jane Hsiao, Steve Rubin, David S. Block, Jeffrey Meckler and Todd Brady 2 (collectively, the "Individual Cocrystal Defendants"), who are current or former directors or 3 officers of Cocrystal, and Elliot Mitchell Maza and Brian Keller (collectively with the Individual 4 Cocrystal Defendants, the "Officer/Director Defendants"), who are former officers of Cocrystal's 5 predecessor, BioZone Pharmaceuticals, Inc. ("BioZone"), and generally alleges that these 6 Officer/Director Defendants breached fiduciary duties to shareholders of Cocrystal or BioZone 7 by failing to disclose an alleged scheme to artificially inflate the price of BioZone's stock; 8 WHEREAS the Complaint also names as defendants Barry Honig, Michael Brauser, John 9 Stetson, and John O'Rourke (collectively, the "Shareholder Defendants" and, together with the 10 Officer/Director Defendants and Cocrystal, the "Defendants"), who are alleged to be controlling 11 shareholders of Cocrystal, and generally alleges that these Shareholder Defendants breached 12 fiduciary duties by engaging in a "pump and dump" scheme that artificially inflated the price of 13 BioZone stock, and otherwise engaged in related-party transactions that benefited themselves or 14 entities that were either controlled or affiliated with them; 15 WHEREAS, a related securities class action lawsuit, captioned Pepe v. Cocrystal 16 Pharma, Inc., et al., No. 2:18-cv-14091-KM-JBC, is pending in the United States District Court 17 for the District of New Jersey (the "Securities Class Action"); 18 WHEREAS, the plaintiff in the Securities Class Action asserts federal securities claims 19 against certain defendants who are also named as defendants in this Action—including certain 20 current or former officers of Cocrystal and former officers of BioZone—arising from facts 21 common to those alleged in this Action; 22 WHEREAS, the plaintiff in the Securities Class Action filed an amended complaint (ECF 23 No. 37) on June 25, 2019; 24 WHEREAS, the court in the Securities Class Action entered a stipulated order on 25 October 21, 2019, directing that the "Stipulating Defendants" in that case would not be required 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 2 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 to answer, move to dismiss, or otherwise respond to the plaintiff's amended complaint until after 1 the parties to the Securities Class Action had engaged in mediation of the claims asserted in the 2 Securities Class Action and reported to the District Court on the outcome of the mediation 3 efforts; 4 WHEREAS, the parties to the Securities Class Action engaged in mediation on 5 November 22, 2019, before the Honorable Jose Linares (Ret.); 6 WHEREAS, the parties to the Securities Class Action did not achieve a settlement on 7 November 22, 2019, but are continuing to work with the mediator in an attempt to reach an 8 agreed resolution; 9 WHEREAS, on January 16, 2019, Plaintiff Susan S. Church filed a Verified Stockholder 10 Derivative Complaint (the "Church Complaint") (ECF No. 1) on behalf of nominal defendant 11 Cocrystal, captioned Church v. Maza, et al., No. 2:19-cv-00080-TSZ (the "Church Derivative 12 Action"); 13 WHEREAS, the Church Complaint alleges claims against some of the same individuals 14 who are defendants in this Action based on the same alleged misconduct; 15 WHEREAS, on April 9, 2019, this Court entered a stipulated order in the Church 16 Derivative Action pursuant to which all proceedings, including any motion practice, obligation to 17 respond to the Church Complaint and any amended complaint, and all discovery and disclosure 18 obligations or deadlines under the applicable local and federal rules or previously-issued Orders 19 of the Court were stayed until (1) the Securities Class Action is dismissed, with prejudice, and all 20 appeals related thereto have been exhausted; (2) any defendant's motion to dismiss the Securities 21 Class Action is denied in whole or in part; or (3) the stay is modified by stipulation of the parties 22 to the Church Derivative Action as ordered by the Court, or by the Court pursuant to a motion; 23 WHEREAS, counsel for Plaintiff and counsel for Defendants Raymond Schinazi, Gary 24 Wilcox, Jane Hsiao, Steve Rubin, David S. Block, Jeffrey Meckler and Todd Brady, and 25 Nominal Defendant Cocrystal Pharma, Inc. (collectively with Plaintiff, the "Stipulating Parties"), 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 3 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 who are all the parties who have appeared in the Action, have conferred regarding the status of 1 the Action, the Securities Class Action, the Church Derivative Action, and the appropriate next 2 steps; 3 WHEREAS, the Stipulating Parties agree, as did the stipulating parties in the Church 4 Derivative Action, that resolution of the related Securities Class Action will have a bearing on 5 the claims asserted in this Action; 6 WHEREAS, based on the overlapping parties and factual allegations in the Action and in 7 the Securities Class Action and the likely impact of the resolution of the Securities Class Action 8 on the claims in the Action, and to avoid the unnecessary expenditure of judicial and party 9 resources, the Stipulating Parties have agreed, subject to this Court's approval, as did the 10 stipulating parties in the Church Derivative Action, to a limited stay of the Action until (1) the 11 Securities Class Action is dismissed, with prejudice, and all appeals related thereto have been 12 exhausted; (2) any defendant's motion to dismiss the Securities Class Action is denied in whole 13 or in part; (3) the stay is modified by stipulation of the parties to the Action as ordered by the 14 Court, or by the Court pursuant to a motion; or (4) in the event a related derivative action is not 15 stayed, plaintiff may lift the stay upon thirty (30) days’ notice, by email, to defendants’ counsel; 16 WHEREAS, such a stay in this Action is consistent with the terms of the Stay Order in 17 the Church Derivative Action; 18 WHEREAS, counsel for the Stipulating Parties have conferred with out-of-state counsel 19 for defendant Brauser, who has not yet appeared in the Action, and counsel for defendant 20 Brauser acknowledges that defendant Brauser has been served with the complaint in this action, 21 reserving all rights and defenses, and consents to the relief requested in this Stipulation and 22 Proposed Order; 23 WHEREAS, defendant Brian Keller was served with the Complaint on November 20, 24 2019 and an affidavit of service was filed with the Court on November 26, 2019 (ECF No. 11), 25 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 4 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 and Mr. Keller has not yet appeared in the Action, and the Stipulating Parties do not know his 1 opinion on the relief requested in this Stipulation and Proposed Order; 2 WHEREAS, counsel for the Stipulating Parties have conferred with out-of-state counsel 3 for defendant John O’Rourke, who has not yet appeared in this Action, and counsel for Mr. 4 O’Rourke has agreed to the relief requested in this Stipulation and Proposed Order; 5 WHEREAS, counsel for the Stipulating Parties have conferred with out-of-state counsel 6 for defendant Maza, who has not yet appeared in the Action, and counsel for defendant Maza has 7 executed a waiver of service on behalf of defendant Maza, reserving all rights and defenses other 8 than insufficient service of process, and consents to the relief requested in this Stipulation and 9 Proposed Order; 10 WHEREAS, counsel for the Stipulating Parties have conferred with out-of-state counsel 11 for defendant Phillip Frost, who has not yet appeared in the Action, and counsel for Dr. Frost has 12 agreed to accept service of the Complaint on behalf of Dr. Frost, reserving all rights and defenses 13 other than insufficient service of process, and consents to the relief requested in this Stipulation 14 and Proposed Order; 15 WHEREFORE, the Stipulating Parties, through their undersigned counsel, hereby agree, 16 stipulate, and respectfully request that the Court enter an Order as follows: 17 1. Undersigned counsel for Defendants who are parties to this Stipulated Motion 18 agree to accept service of the Complaint in the Action on behalf of each of the Defendants they 19 represent, but each such Defendant expressly reserves all rights and defenses other than 20 insufficient service of process. 21 2. Except as noted below, all proceedings, including any motion practice, obligation 22 to respond to the Complaint and any amended complaint, and all discovery and disclosure 23 obligations or deadlines under the applicable local and federal rules or previously-issued Orders 24 of this Court in the Action are hereby stayed until further order of the Court. 25 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 5 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 3. Defendants shall promptly notify Plaintiff's undersigned counsel of any related 1 shareholder derivative actions filed nominally on behalf of Cocrystal of which they become 2 aware. 3 4. Defendants shall promptly notify Plaintiff's undersigned counsel if any such 4 related derivative action is not stayed. In the event that any such related derivative action is not 5 stayed, Plaintiff may move to lift the stay of this Action upon thirty (30) days' notice, by email, 6 to Defendants' undersigned counsel. 7 5. During the stay, Plaintiff may file an amended complaint, but Defendants need 8 not answer, move to dismiss, or otherwise respond to any amended complaint during the 9 pendency of the stay. 10 6. Either during the stay, or shortly after termination of the stay, the parties to this 11 Action and the Church Derivative Action may move to consolidate this Action with the Church 12 Derivative Action. 13 7. All pending deadlines, hearings, or conferences are vacated until after the stay is 8. Within fourteen (14) days after the Securities Class Action is resolved, or a 14 lifted. 15 16 motion to dismiss the Securities Class Action is denied, or by July 31, 2020, whichever occurs 17 earliest, the parties to this Action shall file a Joint Status Report. 18 DATED: December 11, 2019. 19 20 21 22 23 24 25 s/ Roger Townsend____________________ Roger Townsend, WSBA #25525 Breskin Johnson Townsend, PLLC 1000 Second Avenue, Suite 3670 Seattle, WA 98104 Tel: (206) 652-8660 rtownsend@bjtlegal.com s/ Ronald L. Berenstain Ronald L. Berenstain, WSBA No. 7573 RBerenstain@perkinscoie.com s/ David C. Katz______________________ David C. Katz (admitted pro hac vice) dkatz@weisslawllp.com s/ Joseph E. Bringman Joseph E. Bringman, WSBA No. 15236 JBringman@perkinscoie.com s/ Sean C. Knowles Sean C. Knowles, WSBA No. 39893 SKnowles@perkinscoie.com 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 6 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000 1 2 3 WeissLaw LLP 1500 Broadway, Suite 1600 New York, NY 10036 Telephone: (212) 682-3025 Facsimile: (212) 682-3010 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Telephone: 206.359.8000 Facsimile: 206.359.9000 Attorneys for Plaintiff Martin Tutschek Attorneys for Defendants Raymond Schinazi, Gary Wilcox, Jane Hsiao, Steve Rubin, David S. Block, Jeffrey Meckler and Todd Brady, and Nominal Defendant Cocrystal Pharma, Inc. 4 5 6 7 8 9 10 II. 11 12 13 14 15 ORDER The parties’ stipulated motion, docket no. 15, is GRANTED as amended, without prejudice to the right of any defendant who has not yet appear to oppose the relief granted herein. IT IS SO ORDERED. DATED this 17th day of December, 2019. A 16 17 Thomas S. Zilly United States District Judge 18 19 20 21 22 23 24 25 26 27 28 STIPULATED MOTION AND ORDER (Case No. 2:19-cv-01775 TSZ) – 7 91004-1113/146478493.1 Perkins Coie LLP 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 Phone: 206.359.8000 Fax: 206.359.9000
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