Partners Doug Greene, Genevieve York-Erwin, Marissa Peirsol and Zachary Taylor, and Associates Juan Gascon, Kayla Prieto and Alexandra Karambelas earned Am Law Litigation Daily Litigator of the Week honors for their complete dismissal on summary judgment of a securities class action brought against COVID-19 test manufacturer Co-Diagnostics, Inc. in Gelt Trading Ltd. v. Co-Diagnostics, Inc.
At issue was Co-Diagnostics’ May 1, 2020, press release that disclosed, among other things, that its Logix Smart COVID-19 test demonstrated “100% sensitivity and 100% specificity” – well-defined scientific metrics – across independent evaluations. Gelt Trading alleged that the press release was false and/or misleading because it conveyed to investors that the Logix Smart test was “100% accurate,” allegedly inflating Co- Diagnostics’ stock price. Gelt Trading claimed that this artificial inflation was removed, and investors suffered losses, when Co-Diagnostics’ stock price dropped on May 15, 2020, following three disclosures that allegedly revealed the press release to be false.
BakerHostetler was retained to replace prior counsel after the initial motion to dismiss was denied and the case was in the early phases of discovery. On summary judgment, BakerHostetler argued that Plaintiff could not establish any genuine issue of material fact supporting liability as to any element of a Section 10(b) claim—falsity, scienter, reliance, loss causation, or damages. BakerHostetler also argued that Plaintiff’s experts’ testimony—which related to clinical testing and loss causation—should be excluded on summary judgment under Daubert.
On March 4, 2025, after oral argument, the Court granted defendants’ Daubert motion to exclude the testimony of Plaintiff’s loss causation expert and granted summary judgment for Defendants, concluding that Plaintiff could not demonstrate loss causation.
With respect to the motion to exclude, the Court found that Plaintiff’s loss causation expert’s testimony was not admissible evidence for two reasons: (1) Plaintiff’s expert failed to subscribe his report under penalty of perjury as required under 28 U.S.C. § 1746, and (2) Plaintiff’s expert failed to account for obvious alternative explanations for the May 15 stock price drop. As for the motion for summary judgment, the Court concluded that none of the three alleged corrective disclosures “corrected” the May 1 press release, either because they did not discuss the Company’s Logix Smart Test, or because the allegedly contradictory information was long known to the market and already incorporated in the Company’s stock price. Accordingly, Plaintiff could not establish that the May 1 press release was the cause of Plaintiff’s or the class’s losses. Having reached this conclusion, the Court declined to address the other summary judgment arguments or Daubert motions.
Original source can be found here.