News & Insights

Sher Tremonte Wins Rare Petition for Interlocutory Appeal before the Third Circuit in IPO Class-Action Fraud Suit

On February 21, 2018, Sher Tremonte LLP won a motion for interlocutory appeal before Judge Michael Vazquez of the United States District Court for the District of New Jersey allowing its client to petition the Third Circuit for immediate relief. Class-action Plaintiffs, shareholders of a publicly-traded company specializing in Tibetan medicine, seek to hold the Company’s non-director, non-voting, board observers (including Sher Tremonte’s client who was appointed as an observer to the Board of Directors) strictly liable for alleged misrepresentations in the Company’s IPO registration documents. Sher Tremonte lawyers Michael Tremonte, Justin Gunnell and Scott Cargill requested the District Court’s permission to present to the Third Circuit the question of whether a non-voting board observer can be held strictly liable under Section 11(a)(3) of the Securities Act of 1933 as a person “named in the registration statement” as “performing similar functions” to a director. In granting Sher Tremonte’s motion, Judge Vazquez found that the “Third Circuit’s resolution of what the correct legal standard is regarding liability of nondirectors under Section 11 would help facilitate the development of law.” Read the District Court’s full opinion here.

On April 4, 2018, over Plaintiff’s opposition, the Third Circuit granted Sher Tremonte’s petition, permitting it to file the interlocutory appeal. Read the Third Circuit order granting the petition here.