NEW YORK — March 10, 2025 — BakerHostetler announces that members of its Securities and Governance Litigation practice team secured a complete dismissal on summary judgment of a Section 10(b) securities class action in the U.S. District Court for the District of Utah.
On June 15, 2020, Gelt Trading Ltd. filed a securities class action against Co-Diagnostics Inc. and certain of the company’s current and former directors and officers alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Co-Diagnostics (NASDAQ: CODX) is a molecular diagnostics company headquartered in Salt Lake City.
At issue was Co-Diagnostics’ May 1, 2020 press release that disclosed, among other things, that its Logix Smart COVID-19 test demonstrated “100% sensitivity and 100% specificity” — well-defined scientific metrics — across independent evaluations. Gelt Trading alleged that the press release was false and/or misleading because it conveyed to investors that the Logix Smart test was “100% accurate,” allegedly inflating Co-Diagnostics’ stock price. Gelt Trading claimed that this artificial inflation was removed, and investors suffered losses, when Co-Diagnostics’ stock price dropped on May 15, 2020, following three disclosures that allegedly revealed the press release to be false.
BakerHostetler was retained to replace prior counsel after the initial motion to dismiss was denied and the case was in the early phases of discovery. On summary judgment, BakerHostetler argued that Gelt Trading could not establish any genuine issue of material fact supporting liability as to any element of a Section 10(b) claim — falsity, scienter, reliance, loss causation or damages. BakerHostetler also argued that Gelt Trading’s experts’ testimony — which related to clinical testing and loss causation — should be excluded on summary judgment under Daubert.
On March 4, after oral argument, the court granted Co-Diagnostics’ Daubert motion to exclude the testimony of Gelt Trading’s loss causation expert and granted summary judgment for Co-Diagnostics, concluding that Gelt Trading could not demonstrate loss causation.
With respect to the motion to exclude, the court found that Gelt Trading’s loss causation expert’s testimony was not admissible evidence for two reasons. First, its expert failed to subscribe his report under penalty of perjury as required under 28 U.S.C. Section 1746. Second, its expert failed to account for obvious alternative explanations for the May 15, 2020 stock price drop.
As for the motion for summary judgment, the court concluded that none of the three alleged corrective disclosures corrected the May 1, 2020 press release, either because they did not discuss Co-Diagnostics’ Logix Smart test or because the allegedly contradictory information was long known to the market and already incorporated into Co-Diagnostics’ stock price. Accordingly, Gelt Trading could not establish that the May 1, 2020 press release was the cause of its or the class’s losses. Having reached this conclusion, the court declined to address the other summary judgment arguments or the other Daubert motions.
“This dismissal is a tremendous victory for our clients and the firm, and we are optimistic about our chances of prevailing in any appeal the plaintiff might file. This win demonstrates that securities class actions can be litigated to success even after the motion to dismiss stage. Far too often, securities class actions settle in the wake of the denial of a motion to dismiss, but the right cases can and should be litigated through class certification and summary judgment,” said Doug Greene, a partner at BakerHostetler and leader of its firmwide Securities and Governance Litigation practice team.
The BakerHostetler team representing Co-Diagnostics included Partners Doug Greene, Genevieve York-Erwin, Marissa Peirsol and Zachary Taylor.
The case is Gelt Trading, Ltd. v. Co-Diagnostics, Inc. et al., Case No. 2:20-cv-00368-JNP-DBP (D. Utah).
With more than 400 litigators in offices coast to coast, BakerHostetler’s Litigation Practice Group represents market-leading clients in virtually every type of case and proceeding, nationally and around the world. The group’s roster of litigators includes former prosecutors, veteran civil trial attorneys and former enforcement officials from various government agencies. Recognized as a “go-to law firm” for its deep bench, commitment to client needs and tenacity, and named by BTI as “Most Feared in Litigation,” BakerHostetler’s Litigation Practice Group successfully protects clients in and outside the courtroom. For more information, visit bakerlaw.com/Litigation. Connect with us on LinkedIn at @BakerHostetler, @DouglasGreene, @GenevieveYork-Erwin, @MarissaPeirsol and @ZacharyTaylor or on the social platform X at @BakerHostetler.
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