Gruber v. Gilbertson

MEMORANDUM & ORDER Defendants bring a trident of motions aiming to dismiss this securities fraud action on summary judgment, (ECF No. 325), to exclude expert testimony, (ECF No. 312), and to decertify the class, (ECF No. 322.) For the reasons that follow, Defendants’ motion for summary judgment is denied, Defendants’ motion to exclude expert testimony is granted in part and denied in part, and Defendants’ motion to decertify the class is denied. BACKGROUND This Court assumes familiarity with its prior decisions and recites only the facts necessary to determine these motions. See Gruber v. Gilbertson, 2019 WL 4458956 (S.D.N.Y. Sept. 17, 2019); Gruber v. Gilbertson, 2019 WL 4439415 (S.D.N.Y. Sept. 17, 2019); Gruber v. Gilbertson, 2018 WL 1418188 (S.D.N.Y. Mar. 20, 2018).). Defendants Ryan Gilbertson and Michael Reger were the architects of the fraud. They appointed Defendants Gabriel G. Claypool, Craig M. McKenzie, Timothy R. Brady, Terry H. Rust, Paul M. Cownie, David J. Fellon, Gary L. Alvord, and James L. Thornton (collectively, the “Director and Officer Defendants”) as directors and officers of Dakota Plains Holdings, Inc. I. Creation of Dakota Plains In 2008, Gilbertson and Reger founded Dakota Plains Transport Inc., the predecessor to Dakota Plains, after their earlier venture was scrutinized by the financial press for insider trading. (See Decl. of Solomon B. Cera in Opp’n to Mot. for Summ. J., ECF No. 363 (“Cera Decl.”) Exs. 10, 11, 12.) The intended business of Dakota Plains was to transload oil onto railcars for transport to refineries on the east and west coasts. Dakota Plains issued millions of shares to Gilbertson and Reger, and millions more to their friends and family. (Fourth Am. Compl., ECF No. 271 (“FAC”),

82-86; Cera Decl., Exs. 24-27.) Gilbertson and Reger installed their fathers, Weldon Gilbertson and James Reger, as the Company’s officers and directors of the then two-person board. (Cera Decl., Ex. 16.) As purported compensation for his role, Weldon received 1.2 million shares of Dakota Plains stock, the vast majority of which he unwittingly transferred to Gilbertson. (See FAC