Compass Lexecon Client Co-Diagnostics Granted Motion for Summary Judgment in Securities Class Action

On May 1, 2020, Co-Diagnostics, Inc. issued a press release stating that its Covid-19 diagnostics test had achieved 100% clinical sensitivity and specificity in validation studies. On May 14, news outlets reported on the accuracy of Co-Diagnostics’ test, the FDA stated that no test is 100% accurate, and Co-Diagnostics issued its quarterly financial results. On May 15, its stock price decreased significantly.

Plaintiff Gelt Trading, Ltd. sued Co-Diagnostics, alleging that the May 1 press release was materially misleading and artificially inflated Co-Diagnostics’ stock price because the test was not 100% accurate. The Plaintiff also alleged that the truth was revealed to the market on May 14 via the news outlets and FDA disclosures, causing investors to suffer losses. Co-Diagnostics retained Compass Lexecon and Senior Consultant Professor Allen Ferrell to rebut the Plaintiff’s expert’s opinions on loss causation and damages. Both experts filed reports and were deposed.

On March 4, 2025, Judge Jill N. Parrish of the US District Court for the District of Utah granted Co-Diagnostics’ motions to exclude the testimony of the Plaintiff’s expert and for summary judgment on loss causation grounds. In her opinion, Judge Parrish agreed with and relied on Professor Ferrell's analysis and conclusion that the Plaintiff’s expert disregarded the stock price impact of the company’s quarterly financial results, which were unrelated to the Plaintiff’s allegations.

Professor Ferrell was supported by a team led by Michael Keable that included Xanthi Gkougkousi, Yoad Shefi, Ran Wei, Jonnie Tompkins, and Ken Maeba. Compass Lexecon worked closely with Doug Greene, Genevieve York-Erwin, and Zachary Taylor of BakerHostetler.