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Tutschek v. Schinazi

United States District Court, W.D. Washington

December 17, 2019

MARTIN TUTSCHEK, Derivatively on Behalf of COCRYSTAL PHARMA, INC., Plaintiff,
v.
RAYMOND SCHINAZI, GARY WILCOX, PHILLIP FROST, JANE HSIAO, STEVE RUBIN, DAVID S. BLOCK, ELLIOT MITCHELL MAZA, JEFFREY MECKLER, BRIAN KELLER, TODD BRADY, BARRY HONIG, MICHAEL BRAUSER, JOHN STETSON, and JOHN O'ROURKE, Defendants, and COCRYSTAL PHARMA, INC., Nominal Defendant.

          Roger Townsend, WSBA #25525 Breskin Johnson Townsend, PLLC David C. Katz (admitted pro hac vice) WeissLaw LLP Attorneys for Plaintiff Martin Tutschek

          Ronald L. Berenstain, WSBA No. 7573 Sean C. Knowles, WSBA No. 39893 Joseph E. Bringman, WSBA No. 15236 Perkins Coie LLP Attorneys for Defendants Raymond Schinazi, Gary Wilcox, Jane Hsiao, Steve Rubin, David S. Block, Jeffrey Meckler and Todd Brady, and Nominal Defendant Cocrystal Pharma, Inc.

          STIPULATED MOTION AND ORDER

          THOMAS S. ZILLY, UNITED STATES DISTRICT JUDGE

         I. STIPULATED MOTION

         WHEREAS, on November 1, 2019, Plaintiff Martin Tutschek ("Plaintiff") filed in this Court a Verified Stockholder Derivative Complaint (the "Complaint") (ECF No. 1) on behalf of nominal defendant Cocrystal Pharma, Inc. ("Cocrystal"), captioned Tutschek v. Schinazi, et al., No. 19-cv-01775-TSZ (the "Action");

         WHEREAS, the Complaint names as defendants Raymond Schinazi, Gary Wilcox, Phillip Frost, Jane Hsiao, Steve Rubin, David S. Block, Jeffrey Meckler and Todd Brady (collectively, the "Individual Cocrystal Defendants"), who are current or former directors or officers of Cocrystal, and Elliot Mitchell Maza and Brian Keller (collectively with the Individual Cocrystal Defendants, the "Officer/Director Defendants"), who are former officers of Cocrystal's predecessor, BioZone Pharmaceuticals, Inc. ("BioZone"), and generally alleges that these Officer/Director Defendants breached fiduciary duties to shareholders of Cocrystal or BioZone by failing to disclose an alleged scheme to artificially inflate the price of BioZone's stock;

         WHEREAS the Complaint also names as defendants Barry Honig, Michael Brauser, John Stetson, and John O'Rourke (collectively, the "Shareholder Defendants" and, together with the Officer/Director Defendants and Cocrystal, the "Defendants"), who are alleged to be controlling shareholders of Cocrystal, and generally alleges that these Shareholder Defendants breached fiduciary duties by engaging in a "pump and dump" scheme that artificially inflated the price of BioZone stock, and otherwise engaged in related-party transactions that benefited themselves or entities that were either controlled or affiliated with them;

         WHEREAS, a related securities class action lawsuit, captioned Pepe v. Cocrystal Pharma, Inc., et al., No. 2:18-cv-14091-KM-JBC, is pending in the United States District Court for the District of New Jersey (the "Securities Class Action");

         WHEREAS, the plaintiff in the Securities Class Action asserts federal securities claims against certain defendants who are also named as defendants in this Action-including certain current or former officers of Cocrystal and former officers of BioZone-arising from facts common to those alleged in this Action;

         WHEREAS, the plaintiff in the Securities Class Action filed an amended complaint (ECF No. 37) on June 25, 2019;

         WHEREAS, the court in the Securities Class Action entered a stipulated order on October 21, 2019, directing that the "Stipulating Defendants" in that case would not be required to answer, move to dismiss, or otherwise respond to the plaintiff's amended complaint until after the parties to the Securities Class Action had engaged in mediation of the claims asserted in the Securities Class Action and reported to the District Court on the outcome of the mediation efforts;

         WHEREAS, the parties to the Securities Class Action engaged in mediation on November 22, 2019, before the Honorable Jose Linares (Ret.);

         WHEREAS, the parties to the Securities Class Action did not achieve a settlement on November 22, 2019, but are continuing to work with the mediator in an attempt to reach an agreed resolution;

         WHEREAS, on January 16, 2019, Plaintiff Susan S. Church filed a Verified Stockholder Derivative Complaint (the "Church Complaint") (ECF No. 1) on behalf of nominal defendant Cocrystal, captioned Church v. Maza, et al., No. ...


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