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Opko Health, Inc. v. Lipsius

Florida Court of Appeals, Third District

June 19, 2019

OPKO Health, Inc., et al., Petitioners,
v.
Frank Lipsius, etc., and Louis T. Alexander, etc., Respondents.

         Not final until disposition of timely filed motion for rehearing.

          Writs of Certiorari to the Circuit Court for Miami-Dade County Lower Tribunal Nos. 18-32843 and 18-37190.

          Akerman LLP, and Gerald B. Cope, Jr.; King & Spalding LLP, and Rebeca M. Ojeda (Atlanta, GA), for petitioners.

          Hernandez Lee Martinez, LLC, and Eric A. Hernandez and Jermaine A. Lee; The Weiser Law Firm, P.C., and James M. Ficaro and Brett D. Stecker (Berwyn, PA); RM Law PC, and Richard A. Maniskas (Berwyn, PA), for respondents.

          Before SALTER, MILLER, and GORDO, JJ.

          GORDO, J.

         PROCEDURAL BACKGROUND

         OPKO Health, Inc. ("OPKO"), petitions this Court for certiorari review of the trial court's order denying their motion to stay proceedings in Lipsius v. Frost, and Alexander v. Frost.[1] The undisputed facts are set out as follows by the lower court in its Order on Defendants' Motion to Dismiss, and/or Stay the Case:[2]

On September 7, 2018, the U.S. Securities and Exchange Commission ("SEC") filed a complaint against OPKO, the Company's Chief Executive Officer ("CEO") and Chairman of the Board of Directors (the "Board"), defendant Frost, and a myriad of others, alleging that these defendants participated in an elaborate "pump and dump" insider stock selling scheme, netting Frost and his co-conspirators millions of dollars (the "SEC Action"). The SEC Action alleged that Frost and his associates executed a scheme whereby they used Frost's reputation as a successful healthcare investor in order to artificially inflate the stock prices of companies in which they had invested, and then liquidated their own positions in those stocks. After the filing of the SEC Action, OPKO's stock price tumbled by nearly 30% and trading in OPKO stock was temporarily halted.
On December 27, 2018, the Company announced the settlement of the SEC Action. In connection with the settlement, the Company announced that it had "agreed to an injunction from certain violations of the Securities Exchange Act of 1934 (the "Exchange Act"); a $100, 000 penalty; and will perform certain undertakings related to the Exchange Act." Defendant Frost, meanwhile, agreed "to injunctions from certain violations of the Securities Act of 1933 and the Exchange Act; approximately $5.5 million in penalty, disgorgement, and prejudgment interest; and a prohibition, with certain exceptions, from trading in penny stocks."

         Following the SEC Action, multiple federal securities class actions and derivative actions were filed in federal and state courts. On September 14, 2018, Steinberg v. OPKO Health, Inc. ("Federal Securities Action"), was initiated on behalf of a class of OPKO investors in the Southern District of Florida. The Federal Securities Action claimed defendants made misleading statements of material fact by failing to disclose the alleged market manipulation at issue in the SEC Action. On September 27, 2018, Frank Lipsius, on behalf of OPKO, filed a derivative action in the Circuit Court for the Eleventh Judicial Circuit of Florida seeking damages caused by a breach of fiduciary duties. On October 15, 2018, Tunick v. Frost ("Delaware Derivative Action"), [3] was filed in the Delaware Supreme Court. On November 2, 2018, Louis Alexander filed a derivative complaint in the Florida circuit court which was virtually identical to Lipsius.

         OPKO filed a motion to stay the two Florida derivative suits pending the resolution of the Federal Securities Action and the Delaware Derivative Action involving substantially similar parties and issues. The lower court denied the motion. These petitions followed.

         STANDARD OF REVIEW

         Certiorari review is warranted when the petitioning parties demonstrate the contested order constitutes "(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case[, ] (3) that cannot be corrected on postjudgment appeal." Bd. of Trs. of Internal Improvement Trust Fund v. Am. Educ. Enters., LLC, 99 So.3d 450, 454 ...


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