OrthoClear Holdings, Inc. - Securities Class Action

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_______________
Copyright (c) 2001
Stanford Law School

OrthoClear Holdings, Inc. Summary: The original Complaint alleges that the directors and certain officers of OrthoClear deceived investors by failing to disclose that OrthoClear's business was substantially based on patents and other intellectual property stolen from Align Technology, Inc. The Complaint also alleges that investors were misled about the nature and prospects for litigation brought by Align, and that after settling with Align, OrthoClear unlawfully distributed a substantial portion of the settlement funds to venture capital investor, 3i Group PLC.

The Complaint alleges that within weeks of OrthoClear's launch, Align Technology -- OrthoClear's sole competitor -- filed multiple law suits alleging OrthoClear had stolen Align's intellectual property, infringed its patents and used its propriety customer information without consent. OrthoClear Holdings raised $10-20 million from investors in private placements of Class A, B, and C Preferred Convertible Shares, while assuring potential investors that Align's claims and lawsuits were wholly without merit.

On the eve of first trial between Align and OrthoClear (and without warning) OrthoClear abandoned its defense of the Align litigation, announcing that it had entered into a settlement that required it to assign its intellectual property to Align and exit the orthodontic aligner business in return for a payment of only $20 million. In a letter to shareholders in October 2006, OrthoClear admitted for the first time that it was likely to lose the litigation with Align, and further acknowledged that the costs of prosecuting and defending the Align lawsuits were prohibitive.

The Complaint alleges that false and fraudulent statements made in OrthoClear's Purchase Agreements, press releases, and oral presentations assured that the operation of OrthoClear's business did not infringe any patent or other proprietary right of Align. The Complaint further alleges that, instead of using the $20 million for the benefit of all its shareholders, OrthoClear unlawfully refunded all or a significant portion of the $10 million investment made by 3i. It is alleged this distribution violated OrthoClear's own Memorandum of Association and applicable laws governing corporate distributions. It is also alleged this action constituted a breach of fiduciary duty by OrthoClear's current and former directors.

NOTE: The Class consists of investors who purchased Class A, B and C Preferred Convertible Shares between January 2005 and September 2006.

On April 12, 2007, the plaintiffs filed a First Amended Class Action Complaint and later filed a Second Amended Complaint on July 24, 2007. On August 7, 2007, certain defendants filed a motion to dismiss Counts III, V and VIII of Plaintiffs' Second Amended Class Action Complaint. On October 26, 2007, defendants filed a motion to dismiss the Second Amended Complaint. By the Order issued by U.S. District Judge Jeffrey S. White on January 18, 2008, the Court grants Defendants OrthoClear and the D&O Defendants’ motion to dismiss and 3i and Badawi’s motion to dismiss. This ruling is without prejudice to Plaintiffs filing a third amended complaint.

On February 19, 2008, the plaintiffs filed a Third Amended Class Action Complaint. On March 24, 2008, the defendants filed motions to dismiss the Third Amended Complaint. On February 27, 2009, District Court Judge Jeffrey S. White granted the defendants’ motions to dismiss without leave to amend. Judgment was entered in favor of Defendants and against Plaintiffs. The case is now closed.

On March 26, 2009, the plaintiffs filed a Notice of Appeal as to the Judgment and Order dismissing the action. According to the Mandate from the Ninth Circuit Court of Appeals entered on April 23, 2010, the parties have stipulated to the dismissal of this appeal under Fed. R. App. P. 42(b). This appeal is dismissed.

INDUSTRY CLASSIFICATION:
SIC Code: 3842
Sector: Healthcare
Industry: Medical Equipment & Supplies

COMPANY/ISSUER NAME:	OrthoClear Holdings, Inc.
COMPANY/ISSUER TICKER:
COMPANY WEBSITE:	http://www.orthoclear.com/

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Michael B. Eshelman, D.D.S., et al. v. OrthoClear Holdings, Inc., et al.

COURT: N.D. California	DOCKET NUMBER: 07-CV-1429
JUDGE NAME: Hon. Jeffrey S. White
DATE FILED: 03/12/2007	SOURCE: Notice of Filing
CLASS PERIOD START: 01/01/2005	CLASS PERIOD END: 09/30/2006
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Sparer Law Group 100 Pine Street, 33rd Floor, San Francisco, CA, 94111 (voice) 415.217.7300, (fax) 415.217.7307, info@sparerlaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint - Demand for Jury Trial
Type: Complaint		Date on the document: 03/12/2007

REFERENCE COMPLAINT

Michael B. Eshelman, D.D.S., et al. v. OrthoClear Holdings, Inc., et al.

COURT: N.D. California	DOCKET NUMBER: 07-CV-1429
JUDGE NAME: Hon. Jeffrey S. White
DATE FILED: 02/19/2008	SOURCE: Docket
CLASS PERIOD START: 01/01/2005	CLASS PERIOD END: 09/30/2006
TYPE OF COMPLAINT: Third Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Sparer Law Group 100 Pine Street, 33rd Floor, San Francisco, CA, 94111 (voice) 415.217.7300, (fax) 415.217.7307, info@sparerlaw.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE REFERENCE COMPLAINT
First Amended Class Action Complaint - Demand for Jury Trial
Type: Complaint		Date on the document: 04/12/2007
Stipulation And [Proposed] Order To Reschedule Case Management Conference
Type: Order		Date on the document: 05/25/2007
Stipulation And Order To Reschedule Case Management Conference
Type: Order		Date on the document: 05/29/2007
Certificate Of Service By Mail
Type: Other		Date on the document: 06/01/2007
Order Granting Application For Admission Of Attorney Holly J. Caldwell Pro Hac Vice
Type: Order		Date on the document: 06/05/2007
Order Granting Application For Admission Of Attorney Peter L. Welsh Pro Hac Vice
Type: Order		Date on the document: 06/05/2007
Stipulation Re Date Of Response For Defendants 3i Technology Partners III, L.P. And Paul Badawi
Type: Other		Date on the document: 06/19/2007
Order Granting Application For Admission Of Attorney Randall W. Bodner Pro Hac Vice
Type: Order		Date on the document: 06/20/2007
[Proposed] Order Granting Application For Admission Of Attorney Randall W. Bodner Pro Hac Vice
Type: Order		Date on the document: 06/20/2007
Notice of Appearance
Type: Notice		Date on the document: 06/26/2007
ADR Certification By Parties and Counsel
Type: Other		Date on the document: 07/20/2007
Stipulation And [Proposed] Order Selecting ADR Process
Type: Order		Date on the document: 07/20/2007
Stipulation And Order Selecting ADR Process
Type: Order		Date on the document: 07/23/2007
Second Amended Class Action Complaint
Type: Complaint		Date on the document: 07/24/2007
Clerk's Notice
Type: Notice		Date on the document: 07/25/2007
Clerk's Notice
Type: Notice		Date on the document: 07/25/2007
Stipulation Regarding Filing Of Second Amended Complaint
Type: Other		Date on the document: 07/30/2007
Declaration Of Peter Welsh In Support Of Defendants 3i Technology Partners III, LP And Paul Badawi’s Motion To Dismiss Counts III, V And VIII Of Plaintiffs’ Second Amended Class Action Complaint
Type: Declaration		Date on the document: 08/07/2007
Defendants 3i Technology Partners III, LP And Paul Badawi's Notice Of Motion And Motion To Dismiss Counts III, V And VIII Of Plaintiffs' Second Amended Class Action Complaint; Memorandum Of Points And Authorities
Type: Motion		Date on the document: 08/07/2007
[Proposed] Order Granting Defendants 3i Technology Partners III, LP And Paul Badawi's Motion To Dismiss Counts III, V And VIII Of Plaintiffs' Second Amended Class Action Complaint
Type: Order		Date on the document: 08/07/2007
Clerk's Notice
Type: Notice		Date on the document: 08/08/2007
Declaration Of Marc Haber In Support Of Motion To Shorten Time And In Support Of Motion To Limit OrthoClear's Contacts With Potential Class Members And For Corrective Actions
Type: Declaration		Date on the document: 08/20/2007
Motion To Limit OrthoClear' S Contacts With Potential Class Members And For Corrective Actions
Type: Motion		Date on the document: 08/20/2007
[Proposed] Order Granting Motion To Limit OrthoClear's Contacts With Potential Class Members And For Corrective Actions
Type: Order		Date on the document: 08/20/2007
Request For Judicial Notice In Support Of Motion To Limit OrthoClear's Contacts With Potential Class Members And For Corrective Actions
Type: Other		Date on the document: 08/20/2007
Stipulated Request And [Proposed] Order Shortening Time
Type: Order		Date on the document: 08/20/2007
Stipulated Request And Order Shortening Time
Type: Order		Date on the document: 08/21/2007
Notice of Appointment of Mediator
Type: Notice		Date on the document: 08/22/2007
Corrected – Defendant OrthoClear Holdings, Inc. Memorandum Of Points And Authorities In Opposition To Plaintiffs' Motion To Limit Contacts With Potential Class Members And For Corrective Actions
Type: Memorandum		Date on the document: 08/27/2007
Corrected Declaration Of Dorothy L. Fernandez In Support Of Opposition To Plaintiffs' Motion To Limit Contacts With Potential Class Members And For Corrective Actions
Type: Declaration		Date on the document: 08/27/2007
Declaration Of Dorothy L. Fernandez In Support Of Opposition To Plaintiffs' Motion To Limit Contacts With Potential Class Members And For Corrective Action
Type: Declaration		Date on the document: 08/27/2007
Defendant OrthoClear Holdings, Inc. Memorandum Of Points And Authorities In Opposition To Plaintiffs' Motion To Limit Contacts With Potential Class Members And For Corrective Actions
Type: Memorandum		Date on the document: 08/27/2007
[Proposed] Order Re Plaintiffs' Motion To Limit OrthoClear's Contacts With Potential Class Members And For Corrective Actions
Type: Order		Date on the document: 08/27/2007
Reply In Support Of Motion To Limit OrthoClear's Contacts With Potential Class Members And For Corrective Actions
Type: Other		Date on the document: 08/29/2007
Notice of Supplemental Authority In Support Of Motion To Limit Orthoclear's Contacts With Potential Class Members And For Corrective Actions
Type: Notice		Date on the document: 8/30/2007
Minute Order
Type: Order		Date on the document: 08/31/2007
Order Denying Plaintiffs’ Motion To Limit OrthoClear’s Contacts With Potential Class Members And For Corrective Action
Type: Order		Date on the document: 09/04/2007
Notice Of Appearance As Counsel For Ocumenta Capital Holdings, Inc., Ocumenta, Inc., Muhammad Ziaullah Chishti, Huafeng "Charles" Wen, Peter Riepenhausen, Arthur T. Taylor, Saiyed Atiq Raza, And Joseph Breeland
Type: Notice		Date on the document: 09/07/2007
Declaration Of Marc Haber In Support Of Motion To Extend Time
Type: Other		Date on the document: 9/10/2007
Stipulated Request And Proposed Order Extending Time
Type: Other		Date on the document: 9/10/2007
Stipulated Request And Order Extending Time
Type: Order		Date on the document: 09/11/2007
Declaration Of Charles R. Rice In Support Of Motion To Dismiss Second Amended Complaint
Type: Declaration		Date on the document: 10/26/2007
Defendant Christopher Kawaja's Joinder In Motion To Dismiss Second Amended Complaint (Under F.R.C.P. 12(b)(6))
Type: Other		Date on the document: 10/26/2007
Notice Of Motion And Motion To Dismiss Second Amended Complaint; Memorandum Of Points And Authorities
Type: Motion		Date on the document: 10/26/2007
[Proposed] Order Granting Motion To Dismiss Second Amended Complaint
Type: Order		Date on the document: 10/26/2007
Request For Judicial Notice In Support Of Motion To Dismiss Second Amended Complaint
Type: Other		Date on the document: 10/26/2007
Clerk's Notice
Type: Notice		Date on the document: 10/30/2007
Clerk's Notice Re: Failure To File Electronically And/Or Register As An E-Filer
Type: Notice		Date on the document: 10/30/2007
Declaration Of James S. Nabwangu In Opposition To Defendant OrthoClear's Motion To Dismiss
Type: Declaration		Date on the document: 11/09/2007
Declaration Of James S. Nabwangu In Opposition To Defendants 3i's And Badawi's Motion To Dismiss
Type: Declaration		Date on the document: 11/09/2007
Exhibit A
Type: Other		Date on the document: 11/09/2007
Plaintiffs' Opposition To Defendant OrthoClear's Motion To Dismiss
Type: Other		Date on the document: 11/09/2007
Plaintiffs' Opposition To Defendants 3i's And Badawi's Motion To Dismiss
Type: Other		Date on the document: 11/09/2007
[Proposed] Order Denying Defendant OrthoClear's Motion To Dismiss
Type: Order		Date on the document: 11/09/2007
[Proposed] Order Denying Defendants 3i's And Badawi's Motion To Dismiss
Type: Order		Date on the document: 11/09/2007
Request For Judicial Notice In Support Of Plaintiffs' Opposition To Defendant OrthoClear's Motion To Dismiss
Type: Other		Date on the document: 11/09/2007
Request For Judicial Notice In Support Of Plaintiffs' Opposition To Defendants 3i's And Badawi's Motion To Dismiss
Type: Other		Date on the document: 11/09/2007
Corrected Declaration Of James S. Nabwangu In Opposition To Defendant OrthoClear’s Motion To Dismiss
Type: Declaration		Date on the document: 11/13/2007
Corrected Declaration Of James S. Nabwangu In Opposition To Defendants 3i's And Badawi's Motion To Dismiss
Type: Declaration		Date on the document: 11/13/2007
Defendant Christopher Kawaja's Joinder In Reply To Opposition To Motion To Dismiss Second Amended Complaint
Type: Motion		Date on the document: 11/16/2007
Defendant Patricia H. Seifert's Joinder In Defendants' Reply To Opposition To Motion To Dismiss Second Amended Complaint
Type: Other		Date on the document: 11/16/2007
Reply Brief Of Defendants 3i Technology Partners, LP And Pauld Badawi In Support Of Motion To Dismiss
Type: Other		Date on the document: 11/16/2007
Reply To Opposition To Motion To Dismiss Second Amended Complaint
Type: Other		Date on the document: 11/16/2007
Certification And Notice Of Interested Parties (Civil L.R. 3-16)
Type: Other		Date on the document: 12/26/2007
Certification Of Interested Entities Or Persons
Type: Other		Date on the document: 12/26/2007
Certification And Notice Of Interested Parties (Civil L.R. 3-16)
Type: Other		Date on the document: 12/27/2007
Certification Of Non-Interested Entities Or Persons
Type: Other		Date on the document: 12/28/2007
Joint Case Management Statement And [Proposed] Order
Type: Order		Date on the document: 12/28/2007
Notice Of Tentative Ruling And Questions
Type: Notice		Date on the document: 01/03/2008
Plaintiffs' Notice Of Intent To Rely On Authorities Not Cited In Oppositions To Defendants' Motions To Dismiss
Type: Notice		Date on the document: 01/03/2008
Defendants 3i Technology Partners III, LP And Paul Badawi's Notice Of Intent To Rely On Authorities Not Cited In Defendants' Motion To Dismiss
Type: Notice		Date on the document: 01/04/2008
Minute Order
Type: Order		Date on the document: 01/04/2008
Order Granting Motions To Dismiss
Type: Order		Date on the document: 01/18/2008
Third Amended Class Action Complaint
Type: Complaint		Date on the document: 02/19/2008
Declaration Of Jason P. Lee In Support Of Stipulated Request And [Proposed] Order Extending Time
Type: Declaration		Date on the document: 02/28/2008
Stipulated Request And [Proposed] Order Extending Time
Type: Order		Date on the document: 02/28/2008
Stipulated Request And Order Extending Time
Type: Order		Date on the document: 02/28/2008
Declaration Of Edith R. Matthai In Support Of Motion To Dismiss Third Amended Complaint
Type: Declaration		Date on the document: 03/24/2008
Declaration Of Joseph V. Mauch In Support Of Motion To Dismiss Third Amended Complaint
Type: Declaration		Date on the document: 03/24/2008
Declaration Of Peter Welsh In Support Of Defendants 3i Technology Partners III, LP And Paul Badawi's Motion To Dismiss Plaintiffs' Third Amended Class Action Complaint And Request For Judicial Notice
Type: Declaration		Date on the document: 03/24/2008
Defendant Patricia H. Seifert's Notice Of Motion And Motion To Dismiss Third Amended Complaint; Memorandum Of Points And Authorities
Type: Motion		Date on the document: 3/24/2008
Defendant Patricia H. Seifert's Request For Judicial Notice In Support Of Motion To Dismiss Third Amended Complaint
Type: Other		Date on the document: 3/24/2008
Defendants 3i Technology Partners III, LP And Paul Badawi's Notice Of Motion And Motion To Dismiss Plaintiffs' Third Amended Class Action Complaint; Memorandum Of Points And Authorities
Type: Motion		Date on the document: 3/24/2008
Notice Of Motion And Motion To Dismiss Third Amended Complaint; Memorandum Of Points And Authorities
Type: Motion		Date on the document: 3/24/2008
[Proposed] Order Granting Defendants 3i Technology Partners III, LP And Paul Badawi's Motion To Dismiss Plaintiffs' Third Amended Class Action Complaint
Type: Order		Date on the document: 3/24/2008
[Proposed] Order Granting Motion To Dismiss Third Amended Complaint
Type: Order		Date on the document: 3/24/2008
[Proposed] Order Re: Defendant Patricia H. Seifert's Motion To Dismiss Third Amended Complaint
Type: Order		Date on the document: 3/24/2008
Request For Judicial Notice In Support Of Motion To Dismiss Third Amended Complaint
Type: Other		Date on the document: 3/24/2008
Declaration Of James S. Nabwangu In Opposition To Defendants' Motions To Dismiss
Type: Declaration		Date on the document: 4/18/2008
Plaintiffs' Opposition To Defendant 3i's Motion To Dismiss Third Amended Complaint
Type: Other		Date on the document: 4/18/2008
Plaintiffs' Opposition To Defendant Orthoclear's Motion To Dismiss Third Amended Complaint
Type: Other		Date on the document: 4/18/2008
Plaintiffs' Opposition To Defendant Patricia H. Seifert' S Motion To Dismiss Third Amended Complaint
Type: Other		Date on the document: 4/18/2008
[Proposed] Order Denying Defendants'motions To Dismiss Plaintiffs' Third Amended Complaint
Type: Order		Date on the document: 4/18/2008
Request For Judicial Notice In Opposition To Defendants' Motions To Dismiss
Type: Other		Date on the document: 4/18/2008
Declaration Of James S. Nabwangu In Support Of Plaintiffs' Request For Leave To File Supplemental Declaration Of Alan W. Sparer
Type: Declaration		Date on the document: 8/18/2008
Plaintiffs' Request For Leave To File Supplemental Declaration Of Alan W. Sparer
Type: Other		Date on the document: 8/18/2008
[Proposed] Order Granting Plaintiffs' Request For Leave To File Supplemental Declaration Of Alan W. Sparer
Type: Order		Date on the document: 8/18/2008
Order
Type: Order		Date on the document: 02/04/2009
Third Amended Class Action Complaint (Red-Line)
Type: Complaint		Date on the document: 02/05/2009
Judgment
Type: Other		Date on the document: 02/27/2009
Notice Of Appeal
Type: Notice of Appeal		Date on the document: 03/26/2009
U.S. District Court Civil Docket
Type: Docket		Date on the document: 04/23/2010

OTHER DOCUMENTS
Order
Case Name and/or Number: Michael B. Eshelman, D.D.S., et al. v. OrthoClear Holdings, Inc., et al.
Type: Order		Date on the document: 04/19/2010

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