Post-trial Motions: An Overview

On February 13, 2008, Apollo concurrently filed post-trial motions in which it asked the trial court to: (1) reverse the erroneous verdict; (2) order a new trial; or (3) condition denial of Apollo’s motions on the plaintiffs’ acceptance of a reduced amount of damages not to exceed $3.49 per share. The jury previously awarded damages in the amount of $5.55 per share. The trial court has stayed enforcement of the judgment while the motions are pending.

Argument: The jury’s apparent finding that an analyst’s downgrade was a corrective disclosure is fundamentally flawed as a matter of law

Under securities law, to prevail at trial, the plaintiffs had to prove that a “corrective disclosure” – a disclosure that reveals to the market the falsity of prior statements or omissions – caused the price of Apollo’s stock to decline and, subsequently, the plaintiffs’ losses. In its motion for judgment as a matter of law, Apollo argues the plaintiffs did not make this showing.

When the contents of the initial government report at issue were reported by major business publications including the Wall Street Journal, Apollo’s stock price did not decline in a statistically significant fashion. Consequently, the plaintiffs pointed to a downgrade by a single market analyst one week later – a downgrade that made no mention of the report’s contents and contained no new information – and argued that it caused a decline in the price of Apollo stock for which the plaintiff class of shareholders should be compensated.

In its motion for judgment as a matter of law, Apollo argues the downgrade represented nothing more than one analyst’s subjective assessment or opinion of information already available to the public. Courts have explicitly rejected the loss causation theory upon which the plaintiffs’ case rests. The jury’s apparent finding that the downgrade was a corrective disclosure is flawed as a matter of law.

Argument: Because the downgrade did not cause a significant price decline on the same day it was broadly reported, the jury had to reject the widely accepted efficient market concept

At trial, the plaintiffs seized upon the analyst’s downgrade, which importantly was never mentioned as a corrective disclosure in the complaint, because it was issued in closest proximity to the only day on which a statistically significant change in the price of Apollo’s stock occurred. And even then, because the downgrade did not cause a significant price decline on the same day it was broadly reported, the jury had to reject the widely accepted efficient market concept, which states that new information is rapidly – within hours or minutes – absorbed and reflected in securities prices.

In its motion for judgment as a matter of law, Apollo argues that the plaintiffs’ theory it took the market anywhere from two to six trading days to digest publicly disclosed information is legally flawed. The efficient market hypothesis, upon which class-wide reliance in this case was premised, and the evidence presented at trial can only reasonably support a finding that new information was rapidly incorporated into Apollo’s stock price. There is no basis for the jury’s conclusion to the contrary and thus no basis for the jury to award damages.

The ultimate disclosure of the initial government report’s contents caused no immediate statistically significant movement in Apollo’s stock price. It is Apollo’s position that the plaintiffs in this case did not suffer any damages; there simply was no loss associated with the report’s unsubstantiated allegations.

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