United States District Court, D. Massachusetts
WANG YAN, individually and on behalf of all other similarly situated parties, Plaintiff,
REWALK ROBOTICS LTD., LARRY JASINSKI, KEVIN HERSHBERGER, AMI KRAFT, AMIT GOFFER, JEFF DYKAN, HADAR RON, ASAF SHINAR, WAYNE B. WEISMAN, YASUSHI ICHIKI, ARYEH DAN, GLENN MUIR, BARCLAYS CAPITAL INC., JEFFERIES LLC, and CANACCORD GENUITY INC., Defendants.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO
DISMISS FOR INSUFFICIENT SERVICE OF PROCESS
DENNIS SAYLOR IV UNITED STATES DISTRICT JUDGE.
a putative class action alleging violations of the Securities
Act of 1933 and Exchange Act of 1934. Plaintiffs purchased
common stock of ReWalk Robotics, Ltd. between September 12,
2014 (the date of its initial public offering
(“IPO”)) and February 29, 2016. The consolidated
amended complaint alleges that ReWalk, its officers and
directors, and the IPO underwriters concealed material
information leading up to the IPO about ReWalk's failure
to comply with FDA regulations. It also alleges that after
the IPO, ReWalk and certain officers continued to make
material false statements.
have moved to dismiss the complaint under Fed.R.Civ.P.
12(b)(5) for failure to complete service of process and
Fed.R.Civ.P. 12(b)(6) for failure to state a claim. For the
reasons stated below, the Court finds that lead plaintiff has
shown good cause why service was not completed within 90 days
under Rule 4(m), and defendants' motion to dismiss
pursuant to Rule 12(b)(5) will accordingly be denied. A
memorandum and order addressing the motion to dismiss for
failure to state a claim will be issued at a later date.
Relevant Procedural Background
lawsuit was filed on January 31, 2017. The original
plaintiffs were Qian Dian, David Hershlikovitz, Jackie888,
Inc., Michael Kemmerling, Narbeh Nathan, and Paul Sislin
(collectively, the “Investor Group”). The initial
complaint only alleged violations of the Securities Act, 15
U.S.C. § 77a et seq.
February 6, 2017, counsel filed the statutory notice pursuant
to the PSLRA announcing the filing of a securities class
action and advising investors that they had until March 27,
2017, to file a motion to be appointed as lead plaintiff.
March 27, 2017, Wang Yan moved to be appointed as lead
plaintiff. In his memorandum in support, Yan contended that
he had the largest financial interest of any prospective lead
March 27, the Investor Group moved to be appointed as lead
plaintiff. In its memorandum in support, the Investor Group
indicated that it was unaware of “any other applicant
or applicant group that has sustained greater financial
losses.” (Docket No. 8, Ex. 1 at 11). On April 10,
2017, upon learning that Yan had a larger financial interest,
the Investor Group withdrew its motion to be appointed lead
1, 2017, the 90-day period under Fed.R.Civ.P. 4(m) for
service of the complaint expired.
10, 2017, counsel for Yan filed affidavits of service of
process. The affidavits stated that on May 5, 2017,
ReWalk and the underwriter defendants were served with the
summons and original complaint. The service on the corporate
entities was four days late.The affidavits stated that the
individual defendants (both domestic and foreign) were served
by simply mailing the summons and complaint to ReWalk's
corporate offices. The purported service on the individual
defendants was ineffective, regardless of the timing, because
mailing to a person's place of work is not one of the
proper methods of service under Rule 4.
9, 2017, the Court entered an order appointing Yan as lead
plaintiff, finding that he appeared to satisfy the
requirements for lead plaintiff designation under §
21D(a)(3)(B)(iii) of the Securities Exchange Act of 1934 (15
U.S.C. § 78u-4(a)(3), as amended by the Private
Securities Litigation Reform Act of 1995
point after June 9 (“within days”), an attorney
for lead plaintiff, Leigh Smollar, called defendants'
lead counsel, Douglas Baumstein, to ask whether he would
accept service of process on the individual defendants'
behalf. (Pl. Ex. A at 1). Smollar's declaration states
that Baumstein orally responded that he would accept service
of process for certain individual domestic defendants, but
not the individual foreign defendants. (Id.).
Although there is no contemporaneous evidence supporting that
claim, there is also no affidavit from Baumstein denying the
claim. In any event, no actual service was effected at that
plaintiff filed a consolidated amended complaint on August 9,
2017. That amended complaint added a new domestic individual
defendant, Kevin Hershberger, and claims under the Exchange
Act, 15 U.S.C. § 78a et seq.
appears that the individual domestic defendants (Hershberger,
Jasinski, Weisman, and Muir) ultimately consented to service
by e-mail on August 22, 2017. (Defs. Mem. in Supp at 11 n.6;
Defs. Ex. E). Service of the individual domestic defendants
was finally accomplished that day, 203 days after the filing
of the complaint.
individual foreign defendants (Kraft, Goffer, Dykan, Ron,
Shniar, Dan, and Ichiki) had to be served pursuant to the
Hague Convention on the Service Abroad of Judicial and
Extrajudicial Documents. See Fed. R. Civ. P.
4(f)(1). Under the Hague Convention, countries are required
to “establish a Central Authority to receive requests
for service of documents from other countries and to serve
those documents.” Zhang v. Baidu.com, Inc.,
932 F.Supp.2d 561, 565 (S.D.N.Y. 2013). (citing Hague
Convention arts. 2-6). The relevant Central Authority is
responsible for completing service of process. Affidavits of
service were filed by counsel for lead plaintiff on November
6, 2017, indicating that the Israeli individual defendants
(that is, all foreign defendants other than Ichiki) were
served pursuant to Hague Convention protocol in October 2017.
(Docket Nos. 67-72). Counsel has represented that defendant
Ichiki has not yet been served because the Japanese Central
Authority takes a significant amount of time to complete
service of process. (Pl. Ex. B).
have moved to dismiss for failure to complete service of
process within 90 ...