Question(s) Presented. 2000). v. Allstate Insurance Co.,12 the Court held, respectively, that a first class certification denial does not preclude a second class, and that states may not single out claims unworthy of class treatment.13 To Frederick, the principle from these cases was clear: Rule 23 provides exclusive answers to questions about its application, and a class certification decision does not affect the rights of absent class members.14 Any discrimination against claims because they are class claims, rather than individual claims, would therefore violate this principle. . May 21, 2013) Laster, V.C. No. at 7 (U.S. June 11, 2018). James Hannaway is an Articles Editor of The George Washington Law Review. In Re China Agritech, Inc. American Pipe & Constr. U.S. Supreme Court. He writes here in his personal capacity. Through a reverse merger with an inactive corporation, the Company accessed public listing through NASDAQ. Following this decision, multiple members of the Special Committee and Audit Committee resigned. op. Servs., Inc. v. INS, 232 F.3d 1139, 1149 (9th Cir. Senior Production Editor | Benjamin Whitlow No. Regarding the Defendants’ Rule 12(b)(6) argument, the Court held that the operative standard is “reasonable conceivability.” Because a majority of the board members faced a substantial threat of liability on the Plaintiff’s claims for purposes of Rule 23.1 on demand futility, it follows that the Complaint states a claim under the less stringent Rule 12(b)(6) standard. | Argued March 26, 2018. In analyzing demand futility, the Court applied the Aronson test for the five directors who remained on the board since the time of the disputed decisions and the Rales test for the two directors who were not on the board at the time of the decisions. In re China Agritech, Inc. S'holder Deriv. It was the third successive class action against the company, alleging essentially the same fraud cause of action alleged in the first two.3 The first class action was filed in February 2011 and failed because the plaintiffs did not have sufficient evidence of fraud on a class-wide basis.4 The second class action, filed in October 2012, fixed the evidentiary problem but was refused class certification on typicality and adequacy grounds.5. Jan 22 2018: Joint appendix filed. The auditor firing 8K is a gem. At the same time, Lucas McGee (“McGee”), a consultant and private investor, authored a report disclosing multiple problems within the Company, including the complete absence of any manufacturing activity, the absence of a license to manufacture one of the Company’s lead products, no distribution centers (which raised questions about the use of the proceeds from the Offering), and anomalies in the Company’s financial reports to the SAIC and SEC. China Agritech, Inc. ( China Agritech or the Company ) purportedly operates a fertilizer manufacturing business in China. (U.S. June 11, 2018). Yang v. Odom, 392 F.3d 97, 112 (3d Cir. China Agritech is incorporated in Delaware and operates primarily in Beijing, China. In October 2012, the SEC revoked the registration of China Agritech stock. Four years later, in 2009, China Agritech reported a threefold increase in net revenue. The company represented that it manufactured and sold organic compound fertilizers and other agricultural products to farmers in over two dozen provinces throughout China. While China Agritech has aided in the dismissal of meritless successive class actions, courts of appeal are elevating the import of that ruling. Senior Notes Editor | Summer Flowers May 21, 2013) (Laster, V.C.) Litig., C.A. 1800 Supreme Court of the United States CHINA AGRITECH, INC., Petitioner v. Michael H. RESH, et al. Shortly after the report was issued, the Company posted rebuttal press releases and letters denying the allegations. NASDAQ has suspended the stock and there is no indication of when it will trade again. Yesterday, in China Agritech, Inc. v. Resh, the U.S. Supreme Court ruled that, under its prior decision in American Pipe & Constr.