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OPKO Health, Inc. v. Lipsius

Florida Court of Appeals, Third District

September 11, 2019

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

          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.

         ON MOTION FOR REHEARING

          GORDO, J.

         Upon considering Respondents' Motion for Rehearing, this Court withdraws its previous opinion filed June 19, 2019, and substitutes the following opinion in its place:

         FACTUAL & 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. The first action initiated in Florida, Steinberg v. OPKO Health, Inc. ("Federal Securities Action"), was filed on September 14, 2018, in the Southern District of Florida.[3] This class action suit was brought on behalf of a class of OPKO investors alleging that OPKO, Frost and other officers made false or misleading statements and failed to disclose alleged market manipulation at issue in the SEC Action.

         On September 27, 2018, the first of the Florida derivative suits was filed in the Circuit Court for the Eleventh Judicial Circuit of Florida by Frank Lipsius, on behalf of OPKO, seeking damages caused by a breach of fiduciary duties by OPKO's directors. Service was not perfected until November 9, 2018. Meanwhile, on November 2, 2018, Louis Alexander filed an almost identical derivative complaint in the Florida circuit court. The Florida derivative suits allege the OPKO directors breached their fiduciary duties by allegedly allowing there to be misstatements and misrepresentations made in OPKO's SEC filings and failing to disclose their involvement in the "pump and dump" scheme.

         Additionally, multiple derivative suits were filed in Delaware court. Tunick v. Frost ("Delaware Derivative Action"), the first Delaware derivative suit, [4] was filed on October 15, 2018, in the Delaware ...


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