In re Facebook, Inc., IPO Securities & Derivative Litigation
2014 U.S. Dist. LEXIS 33800
S.D.N.Y.2014Background
- Pursuant to an MDL Panel transfer order, 41 Facebook IPO-related actions are before this SDNY case for pretrial consolidation.
- Lead Plaintiffs allege federal securities claims under Sections 11, 12(a)(2) and 15 of the Securities Act against Facebook, certain directors/officers, and underwriters.
- Consolidated Class Action Complaint (CAC) was filed February 28, 2013; securities actions were previously consolidated with NASDAQ actions and derivative actions remained separate.
- Defendants asked to amend and certify the December 12, 2013 Opinion (denying dismissal) for interlocutory appeal under 28 U.S.C. § 1292(b).
- The court previously denied the § 1292(b) request; Defendants renewed the motion in 2014, arguing two questions under Item 303 and misrepresentation theories warranted certification.
- The court here denies certification, preserving final-judgment review as the appropriate path.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is § 1292(b) certification appropriate for Item 303 questions? | Lead Plaintiffs contend certification is warranted due to controlling legal questions with substantial grounds for difference of opinion. | Facebook argues exceptional circumstances exist because early resolution could dismiss the case or avoid protracted discovery in MDL litigation. | Denied; no exceptional circumstances shown. |
| Does certification of a misrepresentation issue present a controlling question of law? | Plaintiffs assert misrepresentation and cautionary statements raise a pure legal issue suitable for interlocutory review. | Defendants contend misrepresentation rulings are fact-specific and not a pure legal question suitable for immediate appeal. | Denied; not a controlling question of law. |
| Would oral review materially advance termination of the litigation? | Immediate review would streamline MDL proceedings by resolving threshold issues early. | Interlocutory review would at best lead to remand for repleading and delay, not substantially shorten the case. | Denied; would not materially advance termination. |
| Does Item 303 entail a substantial ground for difference of opinion or the opinion’s misrepresentation ruling? | Item 303 interpretation is unsettled post-Litwin/Panther Partners, creating genuine doubt. | Disagreement does not amount to a substantial ground; rulings are highly fact-specific and not suitable for immediate review. | Denied for Item 303; substantial ground exists only for misrepresentation, but not enough for certification. |
Key Cases Cited
- Casey v. Long Island R.R., 406 F.3d 142 (2d Cir. 2005) (three-part § 1292(b) test requires all criteria; strict construction urged)
- Transp. Workers Union of Am., Local 100 v. NYC Transit Auth., 358 F. Supp. 2d 347 (S.D.N.Y. 2005) (emphasizes the third factor of 1292(b) and efficiency concerns)
- In re NASDAQ Mkt. Makers Antitrust Litig., 938 F. Supp. 232 (S.D.N.Y. 1996) (consideration of efficiency and whether interlocutory review will aid, not hinder)
- Westwood Pharm., Inc. v. Nat’l Fuel Gas Dist. Corp., 964 F.2d 85 (2d Cir. 1992) (courts should avoid piecemeal appeals; cert should not be used to relitigate law-to-fact determinations)
- In re Manhattan Inv. Fund Ltd., 288 B.R. 52 (S.D.N.Y. 2002) (interlocutory appeal not appropriate to replead; threshold issues emphasized)