Last August, when prominent litigation funding firm Burford Capital Ltd. was hit with as securities class action lawsuit, I published a post highlighting the new suit. In a post in which I arguably had some fun at Burford’s expense – the post was entitled “Isn’t It Ironic? Litigation Funding Firm Hit With Securities Suit” – I detailed the shareholder plaintiff’s allegations. Having drawn readers’ attention to the lawsuit, it seems only fair for me now to point out to readers what subsequently happened in the lawsuit. The fact is, the plaintiff has voluntarily dismissed the lawsuit, albeit without prejudice.
As detailed in a December 20, 2019 Bloomberg article (here), the previous day the plaintiff in the securities suit against Burford filed a notice with the court voluntarily dismissing the lawsuit without prejudice. The plaintiff filed the notice dismissing the case even though Burford had not yet filed a motion to dismiss or even filed an answer. A copy of the plaintiff’s December 19, 2019 notice of voluntary dismissal without prejudice can be found here.
Readers may recall that the lawsuit followed shortly after a high profile report about Burford published by the short-seller, Muddy Waters. The report triggered a sharp drop in Burford’s share price. The plaintiff’s voluntary withdrawal of the lawsuit may be interpreted to suggest that the plaintiff’s counsel did not in fact find enough to sustain the suit notwithstanding the short seller’s report, which could be interpreted as a caution about attaching weight to the short-seller’s motivated communications. A short-seller’s report alone arguably is not enough to support a suit. (In my original post about the Burford lawsuit, I detailed the company’s response to the short-seller’s report; even at the very outset, there were a number of cautionary signs warning against relying on the report.)
To be sure, the plaintiff’s voluntary dismissal was without prejudice. Theoretically, at least, another plaintiff could try to pick the lawsuit back up again. However, the fact that the initially motivated plaintiff’s counsel did not find enough worth pursuing here suggests strongly that there likely would be little to pique the interest of another plaintiff’s lawyer. The strong likelihood is that this claim is over and done with and will not be revived by another claimant. (Yet another reason why it is unlikely another claimant would pick this case back up is the very small fraction of U.S. trading in Burford securities; the plaintiff class and most optimistic version of class damages are both likely very small, if indeed a class and class damages could be sustained at all.)