Electrical Workers Local 357 Pension v. Clovis Oncology, Inc.

185 F. Supp. 3d 1172, 2016 U.S. Dist. LEXIS 60086, 2016 WL 2592947
CourtDistrict Court, N.D. California
DecidedMay 5, 2016
DocketCase No. 16-cv-00933-EMC
StatusPublished
Cited by3 cases

This text of 185 F. Supp. 3d 1172 (Electrical Workers Local 357 Pension v. Clovis Oncology, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electrical Workers Local 357 Pension v. Clovis Oncology, Inc., 185 F. Supp. 3d 1172, 2016 U.S. Dist. LEXIS 60086, 2016 WL 2592947 (N.D. Cal. 2016).

Opinion

ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

EDWARD M. CHEN, United States District Judge

L INTRODUCTION

In this securities class action, Plaintiff Electrical Workers Local #357 Pension and Health & Welfare Trusts (“Electrical Workers”) filed suit against Defendants Clovis Oncology, Inc., executives Patrick J. Mahaffy, Erie T. Mast, M. James Barrett, Brian G. Atwood, James C. Blair, Paul Klingenstein, Edward J. McKinley, Scott D. Sandell, Forest Baskett, and venture capital firms NEA 13 GP, Ltd., Aberdare Ventures IV, L.P., and underwriters J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, -Stifel, Nicolaus & Company, Incorporated, and Mizuho Securities USAS Inc. (collectively “Clovis”) alleging violations of sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (“Securities Act”). Before this Court is Electrical Workers’ Motion to Remand.

Having considered the parties’ briefs and oral argument presented at the hear[1174]*1174ing on April 18, 2016, the Court hereby GRANTS Electrical Workers’ motion to remand.

II. FACTUAL BACKGROUND

Defendants Clovis Oncology, Inc. is a biopharmaceutical company that focuses on acquiring, developing, and commercializing anti-cancer agents in the United States and abroad. Docket No. 1, Exh. A-2 (Compl.) at ¶¶ 2, 27. Clovis’s product, roci-letinib, or CO-1686, is a “novel, oral, targeted covalent inhibitor of the cancer-causing mutant forms of epidermal growth factor receptor (“EGFR”)” that is in clinical development and is “currently being studied for the treatment of non-small cell lung cancer (“NSCLC”).” Id. at ¶ 27. Around November 16, 2011, Clovis filed its Prospectus for its initial public offering (“IPO”) that formed part of the October 31, 2011 Form S-l/A Registration Statement for the IPO and became effective on November 15, 2011. Id. at ¶29. The IPO was successful as 10,700,000 shares of Clovis’s common stock were sold at $13 dollars per share raising over $129.4 million in net proceeds. Id. at ¶ 30.

On May 19, 2014, Clovis issued a press release announcing that the Food and Drug Administration (“FDA”) had granted “Breakthrough Therapy” designation for rocilentinib. Id. at ¶ 32. The 2012 FDA Safety and Innovation Act created a “Breakthrough Therapy” designation, which expedites the development and review of drugs that treat serious or life-threatening medical conditions as lo.ng .as they have substantial preliminary clinical evidence of success. Id, at ¶ 31.

Around July 9, 2015, Clovis filed its Prospectus for the secondary offering that formed part of the June 11, 2013 Form S-3/A Registration Statement for the secondary offering and became effective on July 8, 2015. Id. at ¶ 33. This secondary offering resulted in at least 3,525,641 shares of Clovis’s common stock sold at $78 per share raising over $259.9 million in net proceeds. Id. at ¶¶ 33-35. On September 17, 2015, Clovis’s stock closed at $114.64 per share. Id. at ¶ 36.

On November 16, 2015, Clovis issued a press release disclosing the FDA’s request for more clinical data for its efficacy analysis of rociletinib due to the insufficient data that Clovis previously submitted in its New Drug Application (“NDA”). Id. at ¶ 37. After the press release, the price of Clovis’s shares decreased to $69.19 per share and ultimately closed at $30.24 per share on the same day — November 16, 2016. Id. at ¶ 38.

On December 15, 2015, Clovis issued another press release announcing that the FDA has extended the Prescription Drug User Fee Act (“PDUFA”) date for Clovis’s NDA for rociletinib by three months with a new goal date of June 28, 2016. Id. at ¶ 39. After this press release, the price of Clovis’s shares decreased $0.89 per share and closed at $32.53 per share the following day on December 16, 2016, representing a 58% decline in the prince of Clovis’s stock from the secondary offering price of $78 per share. Id. at ¶ 40.

On January 22, 2016, Plaintiff Electrical Workers Local #357 Pension and Health & Welfare Trusts 'filed a securities class action in the San Mateo County Superior Court on behalf of all persons who purchased or otherwise acquired Clovis common stock as related to Clovis’s Registration Statement and Prospectus that were issued in connection with its July 8, 2015 secondary offering. Id. at ¶ 1. Electrical Workers ■ asserted claims under sections 11, 12(a)(2), and 15 of the Securities Act, 15 U.S.C. §§■ 77k,-771(a)(2), and 77o. Id. at ¶¶ 49-69. Electrical Workers allege that the following facts were known by Clovis but concealed from the investing public in Clovis’s Registration Statement and Pro[1175]*1175spectus issued in connection with their secondary offering: (1) the NDA that Clovis submitted to the FDA for rociletinib contained data sets based on both unconfirmed response rates and immature confirmed response rates; (2) Clovis’s “Breakthrough Therapy” designation submission contained an immature data set based primarily unconfirmed responses; (3) Clovis presented interim data publicly and at medical meetings that included a data set based primarily on unconfirmed responses; (4) as the efficacy data matured, the number of patients with an unconfirmed response who converted-to a confirmed response was lower than expected; and (5) Clovis’s NDA was,.likely to either be delayed or rejected by the FDA. Id. at ¶ 41(a)-(e).

On February 25, 2016, Clovis removed the action to this-Court pursuant- to 28 U.S.C. § 1441. Docket- No. 1 at 2 (“Notice of Removal”). On the same day, Clovis filed a motion to transfer venue under 28 U.S.C. § 1404(a) to the District of Colorado, asserting that four related class actions with similar,, claipis against Clovis are pending there.1 Docket No. 6. (“Mot. to Transfer”). On March 2, 2016, Electrical Workers filed a motion to remand the action back to state court. Docket No. 13 (“Mot. to Remand”). On March 3, 2016, this Court determined that it would decide the Motion to Remand first. Docket No. 14.

III. DISCUSSION

A. Legal Standard

Under 28 U.S.C § 1441(a), a defendant may remove a civil action filed in state court to federal court if the action could originally have been filed in federal court unless otherwise expressly provided by Congress. 28 U.S.C. § 1441(a). Additionally, if it appears that a district court lacks subject matter jurisdiction over a case previously removed from state court at any time before judgment, then the case must be remanded back to state court. 28 U.S.C. § 1447(c); see Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1065 (9th Cir.1979). Upon a motion to remand, the scope of a removal statute is strictly construed against removal. Luther v. Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1034 (9th Cir.2008).

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Bluebook (online)
185 F. Supp. 3d 1172, 2016 U.S. Dist. LEXIS 60086, 2016 WL 2592947, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electrical-workers-local-357-pension-v-clovis-oncology-inc-cand-2016.