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In re Galena Biopharma, Inc. Derivative Litigation

United States District Court, D. Oregon

October 30, 2014


Christopher A. Slater and Michael J. Ross, SLATER ROSS, Sovereign Hotel, 4th Floor, 710 S.W. Madison Street, Portland, OR 97205; Robert B. Weiser, Brett D. Stecker, Jeffrey J. Ciarlanto, THE WEISER LAW FIRM, P.C., 22 Cassatt Avenue, First Floor, Berwyn, PA 19312; Kathleen A. Herkenhoff, THE WEISER LAW FIRM, P.C., 12707 High Bluff Drive, Suite 200, San Diego, CA 92130; Michael J. Hynes and Ligaya Hernandez, HYNES KELLER & HERNADEZ, LLC, 1150 First Avenue, Suite 501, King of Prussia, PA 19406; William B. Federman and Sara E. Collier, FEDERMAN & SHERWOOD, 10205 N. Pennsylvania Avenue, Oklahoma City, OK 73120. Of Attorneys for Plaintiffs.

Lois O. Rosenbaum and Stephen H. Galloway, STOEL RIVES LLP, 900 S.W. Fifth Avenue, Suite 2600, Portland, OR 97204; Paul R. Bessette, Michael J. Biles, James P. Sullivan, KING & SPALDING LLP, 401 Congress Avenue, Suite 3200, Austin, TX 78701. Of Attorneys for Defendants.


MICHAEL H. SIMON, District Judge.

Before the Court is the motion of nominal defendant Galena Biopharma, Inc. ("Galena") asking the Court to reconsider its opinion denying Galena's motion to stay the pending consolidated derivative actions for 90 days to allow sufficient time for an investigation by a single-member special litigation committee ("SLC") formed by Galena's Board of Directors ("Board"). For the following reasons, Galena's motion for reconsideration is denied.


On October 22, 2014, the Court denied Galena's motion to stay, finding that any decision by Mr. Irving M. Einhorn, the sole member of the SLC, recommending that Galena not pursue litigation would not withstand future judicial scrutiny. On October 28, 2014, Galena filed a motion for reconsideration under Federal Rule of Civil Procedure 54(b), arguing that the Court made clear errors of law and fact. Galena's motion fails because it is based on arguments and evidence that could have previously been raised with the Court and because, even if the arguments and evidence were now properly before the Court, they do not show clear error by the Court.

A. Galena's Motion for Reconsideration is Procedurally Improper

A district court has inherent power, derived from the common law, to rescind, reconsider, or modify an interlocutory order. City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 886 (9th Cir. 2001) ("A district court's power to rescind, reconsider, or modify an interlocutory order is derived from the common law, not from the Federal Rules of Civil Procedure."); United States v. Martin, 226 F.3d 1042, 1049 (9th Cir. 2000) (noting that a district court has the inherent authority to modify, alter, or revoke any non-final order). A district court "possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient'" City of Los Angeles, 254 F.3d at 889 (quoting Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir. 1981))). In addition, Federal Rule of Civil Procedure 54(b) provides that any interlocutory order "may be revised at any time before the entry of a judgment adjudicating all claims and all the parties' rights and liabilities."

Reconsideration may be appropriate where there has been an intervening change in controlling law, new evidence has become available, or it is necessary to correct clear error or prevent manifest injustice. Pyramid Lake Paiute Tribe of Indians v. Hodel, 882 F.2d 364, 369 n.5 (9th Cir. 1989) ("[T]he major grounds that justify reconsideration involve an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." (citation and quotation marks omitted) (alteration in original)). "[R]econsideration is appropriate only in very limited circumstances...." Shalit v. Coppe, 182 F.3d 1124, 1132 (9th Cir. 1999). Raising arguments or providing evidence in a motion for reconsideration that could have been included when litigating the original motion are not proper grounds for reconsideration. See id. (finding no abuse of discretion by district court in denying a motion for reconsideration when movant offered no reason for failure to provide the evidence when litigating the underlying motion); Rosenfeld v. U.S. Dep't of Justice, 57 F.3d 803, 811 (9th Cir. 1995) ("The district court did not abuse its discretion in declining to consider an argument raised for the first time on reconsideration without a good excuse."); Cachil Dehe Band of Wintun Indians of Colusa Indian Cnty. v. California, 649 F.Supp.2d 1063, 1069 (E.D. Cal. 2009) ("In the absence of new evidence or a change in the law, a party may not use a motion for reconsideration to raise arguments or present new evidence for the first time when it could reasonably have been raised earlier in the litigation." (citing Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir.2003))).

Here, Galena raises arguments and offers evidence for the first time in its motion for reconsideration. Galena concedes that new arguments are not appropriate in a motion for reconsideration, but states that the "new points raised in this Motion focus on the factual assumptions and legal conclusions in the Court's Order that reveal clear errors worthy of reconsideration." Galena's contention that it is appropriately raising new arguments in response to the Court's Order is without merit.

Galena's arguments and evidence could have been raised in Galena's reply, but were not. Plaintiffs argued at length in their response to Galena's motion to stay that the single-member SLC was not independent and had prejudged the merits of the investigation as evidenced by the Special Committee report, citing, among other cases, Biondi v. Scrushy, 820 A.2d 1148 (Del. Ch. 2003). Plaintiffs argued the same issues of law and fact upon which the Court based its opinion and against which Galena now provides argument and evidence. But Galena offered only a brief and conclusory response in its reply, stating that the "unique circumstances" of Biondi are "not present here, " without offering evidence or argument. Galena further stated that the Board, not the Special Committee, appointed and empowered the SLC, but did not argue how that fact affects the Court's consideration of the independence of the SLC. Further, Galena failed to discuss the Special Committee report in its reply[1] or respond to Plaintiffs' arguments that Mr. Einhorn cannot now objectively investigate the claims in this lawsuit because he already has concluded in the Special Committee report that there was no wrongdoing by the directors and officers of Galena and that Galena should not pursue any litigation. In its reply, Galena chose not to assert arguments or provide evidence in response to these arguments raised and evidence provided by Plaintiffs in their response. It is inappropriate for Galena now to do so through a motion for reconsideration. Accordingly, Galena's motion for reconsideration is denied.

B. Galena's Motion for Reconsideration Also Fails on the Merits

Even if Galena's motion for reconsideration were procedurally proper, it would fail on the merits. Although Rule 54(b) does not address the standards a district court should apply when reconsidering an interlocutory order, courts have held that:

Motions to reconsider under Rule 54(b), while generally disfavored, may be granted if: (1) there are material differences in fact or law from that presented to the court and, at the time of the court's decision, the party moving for reconsideration could not have known the factual or legal differences through reasonable diligence; (2) there are new material facts that happened after the Court's decision; (3) there has been a change in law that was decided or enacted after the court's decision; or (4) the movant makes ...

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