Robbins Geller Defeats Inovalon Statute of Limitations Challenge
On July 28, 2017, the Honorable Victor Marrero of the Southern District of New York issued a 24-page order in Xiang v. Inovalon Holdings, Inc., denying in full defendants’ motions for reconsideration and to certify for interlocutory appeal.
Lead plaintiff Roofers Local No. 149 Pension Fund asserts claims under §§11, 12(a)(2) and 15 of the Securities Act of 1933 (“Securities Act”), all arising out of the false and misleading registration statement and prospectus (the “registration statement”) issued in connection with Inovalon Holdings, Inc.’s February 2015 initial public offering (“IPO”). Specifically, lead plaintiff alleges the registration statement failed to disclose that Inovalon derived significant revenues from New York-based customers and, as a result of recent New York tax law changes, would be subject to substantially increased taxes and decreased earnings.
Previously on May 23, 2017, Judge Marrero issued an opinion denying defendants’ motion to dismiss, in particular rejecting defendants’ statute of limitations arguments as “unavailing.” Defendants moved for reconsideration, arguing that Judge Marrero erred by applying the Merck discovery standard, instead of the pre-Merck inquiry notice standard, to lead plaintiff’s Securities Act claims.
With today’s order, Judge Marrero meticulously rejected defendants’ arguments as “meritless,” denied reconsideration, and affirmed both that the Merck discovery standard applies to Securities Act claims and that lead plaintiff’s claims suffice. Further, Judge Marrero held that lead plaintiff’s claims would suffice even under the pre-Merck inquiry notice standard and thus denied defendants’ request to certify for interlocutory appeal.
Xiang v. Inovalon Holdings, Inc., No. 1:16-cv-04923-VM, Decision and Order (S.D.N.Y. July 28, 2017).