United States District Court, D. New Jersey
Peter G. Sheridan United States District Judge.
matter comes before the Court on a motion by Plaintiff [ECF
No. 109] for leave to file a second Amended Complaint
("SAC"). The Court decides the matter without oral
argument pursuant to Local Civil Rule 78.1. For the reasons
below, Plaintiffs motion is denied.
a securities fraud action brought pursuant to Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule
10b-5, as well as state statutory and common law. Plaintiffs
claims arise out of alleged misrepresentations made by
Defendants to Plaintiff in connection with the sale of shares
of common stock of Defendant Corinthian Ophthalmic, Inc.
("Corinthian"). Plaintiff purchased a total of 19,
900 shares of Corinthian's common stock for $ 1, 990, 000
in two separate transactions in June of 2012. See
Amended Complaint ¶ 62 at ECF I No. 35. The purchase was
made as part of a private stock offering seeking to raise
approximately $4 million. ECF No. 109-1 at 2. According to
Plaintiff, the price it paid for the shares was improperly
inflated due to alleged misrepresentations made by Defendants
about the status of an ocular medication delivery device
being developed at that time by Corinthian. Plaintiff states
that but for the alleged misrepresentations, it would not
have completed any purchase of Corinthian stock or, if it had
done so, it would only have paid only a fraction of what was
actually paid. ECF No. 35 at ¶63.
after Plaintiffs purchase of Corinthian stock, all assets of
Corinthian were acquired by Defendant Eyenovia, Inc.
("Eyenovia"). ECF No. 35 at ¶ 55. As a result,
shares of Eyenovia were "exchanged" for the stock
of Corinthian. Id. at ¶ 59. According to
Plaintiff, this exchange was finalized in or about October
January 29, 2018, Defendants closed a $27.3 million initial
public offering of stock in Eyenovia (the "IPO"). A
statement dated March 28, 2018 shows that Plaintiff holds 89,
539 shares in Eyenovia, which was valued at that time at
$823, 758.80. ECF No. 109-5.
filed the instant action in September 2014. It filed its
Amended Complaint in November 2015. In December 2016, the
parties advised the Court that fact discovery was complete
and that expert reports had been served. ECF No. 75. The
parties each filed summary judgment motions in April 2017,
which were denied by the Court initially and upon
reconsideration. The Magistrate Judge held a Final Pretrial
Conference in January 2018, and a Final Pretrial Order was
entered on January 23, 2018, scheduling trial for September
10, 2018 (which was later adjourned to September 20, 2018).
ECF No. 108. The instant motion was filed May 23, 2018.
of the present motion, Plaintiff requests leave to file a
second Amended Complaint to add a claim for damages in the
form of the disgorgement of certain monies received by
Defendants from the January 2018 public offering of stock in
Eyenovia. Specifically, Plaintiff seeks to disgorge alleged
"windfall" profits that Plaintiff contends were
obtained by Defendants by way of the IPO. The theory of
Plaintiff s proposed amended claim for relief is as follows:
Princeton was issued 89, 539 shares of Eyenovia stock.
Plaintiff alleges that the price for the Corinthian stock
which Plaintiff purchased was inflated by at least a factor
of ten. As such, Plaintiff claims that Defendants should have
tendered to Plaintiff ten times the number of Corinthian
shares which, presumably, would have led to Plaintiff being
issued ten times the number of shares of Eyenovia stock.
Therefore, according to Plaintiff, instead of being issued
89, 539 shares of Eyenovia, Plaintiff should have been issued
895, 390 shares. Given the number of shares of Eyenovia that
were actually issued to Plaintiff, Plaintiff argues that
Defendants have allegedly "reaped windfall profits"
equal to the market value of the approximately 806, 000
shares of Eyenovia (895, 390 minus 89, 539)
"retained" by Defendants.
argues that it seeks leave to amend "merely ... to
conform the Complaint to newly acquired evidence." ECF
No. 109-1 at 4. Plaintiff states that it does not seek to
assert a new cause of action, but rather to assert the remedy
of disgorgement as an element of damages. According to
Plaintiff, because the motion is made in response to a new
factual development, it is not "grounded in bad faith or
dilatory motive, truly undue or unexplained delay, repeated
failure to cure deficiency by amendments previously allowed,
or futility of amendment." Id. at 5.
oppose Plaintiff's motion, arguing that Plaintiffs motion
is untimely and futile. As to timing, Defendants contend that
Plaintiff should not be permitted to add a new theory of
recovery this late in the case, as the facts underlying the
proposed amendment have been known since the inception of the
case. Further, Defendants contend that under the relevant
legal standard, Plaintiff is not entitled to the disgorgement
remedy it seeks.
to Rule 15(a)(2), leave to amend the pleadings is generally
granted freely "when justice so requires." See
Foman v. Davis, 371 U.S. 178, 182 (1962); Alvin v.
Suzuki, 227 F.3d 107, 121 (3d Cir. 2000). Nevertheless,
the Court may deny a motion to amend where there is
"undue delay, bad faith or dilatory motive on the part
of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, [or]
futility of the amendment." Id. However, where
there is an absence of undue delay, bad faith, prejudice or
futility, a motion for leave to amend a pleading should be
liberally granted. Long v. Wilson, 393 F.3d 390, 400
(3d Cir. 2004).
case is in its latest stages; trial is scheduled for next
month. As such, the Court must necessarily examine the
question of undue delay. Plaintiff filed the instant motion
two and one-half years after filing the first Amended
Complaint, a year and a half after fact discovery was
completed, a year after expert discovery and dispositive
motion practice, five months after the final pretrial order
was entered and less than four months prior to the trial
date. "[W]hile bearing in mind the liberal pleading
philosophy of the federal rules, the question of undue delay
requires that [the Court] focus on the movant's reasons
for not amending sooner." Cure ton v. Nat'l
Collegiate Athletic Ass'n, 252 F.3d 267, 273 (3d
alleges it could not have asserted the remedy of disgorgement
any earlier in this case because Plaintiffs claim is based on
facts that did not occur until early 2018. The Court
disagrees. The central theory of Plaintiff s disgorgement
claim is that, as a result of their alleged fraud, Defendants
were able to "retain" shares of stock that would
have otherwise been sold to Plaintiff had the shares been
valued properly. Plaintiff alleges that because the shares it
received, were overpriced by a factor of 10, Plaintiff should
have received ten times the number of shares it actually
received. This difference between what Plaintiff received and
what Plaintiff alleges it should have received is what
Defendants are alleged to have improperly retained. That
Defendants retained such value would have been known to
Plaintiff at the outset of this case. Yet at no time did
Plaintiff seek any remedy based on this fact. Instead,
Plaintiffs theory of damages from the outset of this case has
been directed toward being reimbursed the monies it paid, not
"disgorging" Defendants of value they allegedly
wrongfully retained. See ECF No. 35 at ¶ 2
("Plaintiff brings this action ... ...