McEvoy v. Apollo Global Management, LLC et al

Filing 137

ORDER granting 125 Defendants' Joint Limited Motion for Reconsideration. The Court's 122 previous Order is VACATED and replaced with this Order. 95 Defendants' Joint Motion for Summary Judgment is GRANTED. Judgment will be entered for Defendants. The clerk shall close the file. Signed by Judge Timothy J. Corrigan on 3/10/2022. (AGB)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
MICHAEL MCEVOY, on behalf of
himself and others similarly
situated,
Plaintiff,
v.

Case No. 3:17-cv-891-TJC-MCR

APOLLO GLOBAL
MANAGEMENT, LLC, a Delaware
limited liability company, APOLLO
MANAGEMENT VI, L.P., a
Delaware limited partnership, and
CEVA GROUP, PLC,
Defendants.
AMENDED ORDER 1
This putative class action is before the Court on Defendants Apollo Global
Management, Inc. (f/k/a Apollo Global Management, LLC), Apollo Management
VI, L.P. (collectively, “Apollo”), and CEVA Group PLC’s (“CEVA Group”) Motion
for Summary Judgment. Doc. 95. Plaintiff Michael McEvoy filed a response.
Docs. 112, 116. The Court previously converted Defendants’ motions to dismiss
to a motion for summary judgment and ordered limited discovery on the issue

This Order vacates Doc. 122, published on Westlaw as McEvoy v. Apollo
Glob. Mgmt., LLC, No. 3:17-CV-891-TJC-MCR, 2021 WL 2661006, at *1 (M.D.
Fla. June 29, 2021).
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of the statute of limitations only. Doc 80. Following the Court’s Order denying
the Motion, Doc. 122, the Defendants filed a Joint Limited Motion for
Reconsideration of Order Denying Motion for Summary Judgment. Doc. 125.
Plaintiff Michael McEvoy has responded. Doc. 128. Defendants have filed a
Reply. Doc. 131. McEvoy has filed a Sur-Reply. Doc. 134. The Court has
determined to vacate its order denying the Motion for Summary Judgment,
Doc. 122, and replace it with this Order granting summary judgment.
I.

BACKGROUND
A.

CEVA’s Formation and 2013 Restructuring

Plaintiff Michael McEvoy began working at Ryder Truck Lines in 1972.
Doc. 96-1 at 17:15–18:9. He soon transitioned to a company called Customized
Transportation, which was acquired by CSX, which in turn was sold to TNT
Logistics, which Apollo purchased and merged with EGL, Inc. to form CEVA
Logistics in 2006. Id. at 18:7–19:4. CEVA Logistics is a subsidiary of CEVA
Group, a global freight management and supply chain logistics company.
Doc. 97 at 1–2. CEVA Group itself was 99.9 percent owned by CEVA
Investments Limited (“CIL”), a Cayman Islands corporation, until 2013. Id. at
2. Apollo “held the vast majority of CIL’s preferred and common shares . . . .”
Id. at 3.
Upon CEVA Logistics’ formation, management-level employees from TNT
and EGL, including McEvoy (“Management Investors”), were asked to purchase
2

equity in the Cayman Islands company that became CIL. Doc. 96-1 at 30:18–
20. They did so through a fund called the 2006 Long-Term Incentive Plan (“2006
LTIP”). Id. at 23:2–6. The investment was to “increase [directors and
employees’] personal interest in [CIL’s] growth and success . . . .” Doc. 96-2 at
3. McEvoy invested approximately $10,000 in the 2006 LTIP. Doc. 96-1 at 23:6.
He received and reviewed the 2006 LTIP Agreement when he invested. Id. at
28:22–29:6.
According to Marvin Schlanger, the Chief Executive Officer of CEVA
Group from 2012 to 2014, facing financial problems in “mid-2012 into 2013,”
“CEVA Group’s management determined that CEVA’s only choice for survival
was a financial restructuring.” Doc. 97 at 2. In April 2013, CEVA Group
performed a “major debt-for-equity exchange” (“2013 Transaction”). Id. CEVA
Group converted much of CIL’s debt into equity ownership of a new entity called
CEVA Holdings, LLC (“CEVA Holdings”), diluting CIL’s ownership of CEVA
Group. Id. The transaction led to the de-valuation of CIL’s ownership of CEVA
Group from 99.9 percent to .01 percent, effectively wiping out all previous
investment in CIL, including the 2006 LTIP shares’ value. Id. On April 2, 2013,
CIL entered provisional liquidation proceedings in the Cayman Islands. Doc. 98
at 1. According to Schlanger’s declaration, “[n]o CIL shareholder, including
[Apollo]. . . recovered anything on account of their investment in CIL in the 2013

3

Restructuring or thereafter,” and a “collateral but inevitable consequence of the
2013 Transaction was the dissolution” of the 2006 LTIP. Doc. 97 at 2–3.
B.

CIL’s Communications to McEvoy

In December 2012, CEVA Logistics informed McEvoy that due to general
cutbacks, he would be laid off in March 2013. Doc. 96-1 at 24:14–18. He
exercised his put rights to sell his 2006 LTIP shares at their present value on
January 21, 2013, and was informed the following day that CEVA could
purchase them back on April 1, 2013, and that their most recent value was
approximately €50 per share. Doc. 112-35 at 5–6. His last day at CEVA was
March 31, 2013. Id. at 7. CEVA Logistics temporarily re-hired him as an
independent contractor from October through December 2013 to help start a
new logistics contract. Doc. 96-1 at 136:20–37:16, 137:23–25.
CIL informed McEvoy of the 2006 LTIP dissolution and CIL’s lack of
value via registered letter dated April 5, 2013, stating that “[t]he directors of
[CIL] have received advice from valuation and restructuring professionals that
[CIL’s] shareholding in CEVA is now without value, in consequence of the
financial condition of CEVA. You may have seen, or shortly will see, press
announcements concerning the proposed restructuring of CEVA.” Doc. 96-3 at
2. The letter further stated that “[i]n light of [CIL’s] and CEVA’s financial
condition, we have been advised that it is unlikely that there will be any
recoveries for shareholders of [CIL] in their capacities as shareholders.” Id. at 3.
4

CIL sent another letter announcing the appointment of Joint Provisional
Liquidators (“JPLs”) as part of the Cayman Islands liquidation proceedings on
April 8, 2013. Doc. 98-1. On April 17, 2013, the JPLs sent a letter to twenty to
thirty Management Investors who had contacted the JPLs with questions.
Doc. 112-29 at 125. The document has a question and answer section on CIL’s
condition and the 2006 LTIP, confirming to Management Investors that the
company had no value, and that “no alternative investment is being offered to
the [s]hareholders, nor is there any exchange offer being offered to the
[s]hareholders.” Doc. 98-2 at 4. The letter explained that the liquidation was
performed “pursuant to the irrevocable proxy and power of attorney granted to
Apollo Management VI, L.P.” in the 2006 LTIP Agreement. Id. at 3. Schlanger
instructed the attorneys drafting the letter to exclude “reference to any new
equity plans . . . [because the] letter [would be] going to a lot of people who no
longer are with the Company and have nothing to do with any new plans.” Doc.
97-7 at 3. This was, he explained in his declaration to the Court, to avoid
creating an “impression that those former employees were eligible to participate
in the 2013 CEVA Holdings LTIP” (discussed below). Doc. 97 at 6. While
McEvoy does not recall reading the question and answer document, he received
an email with an identically named attachment. Doc. 96-1 at 88:23–90:1.
The JPLs sent another letter on June 14, 2013 informing Management
Investors that CIL was insolvent, listing the names of the Management
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Investors who had been represented as part of the bankruptcy proceedings, and
stating that there was an involuntary Chapter 7 bankruptcy proceeding taking
place against CIL in the Southern District of New York. Docs. 98-3; 112-39.
On March 4, 2014, McEvoy corresponded with the JPLs, now the Joint
Official Liquidators, asking for documentation that his “investments [were]
worthless” for “US tax purposes.” Doc. 98-4 at 4. They confirmed with
documentation, and McEvoy claimed a $10,000 loss in his tax returns for 2013.
Docs. 96-7 at 2; 98-4.
Between 2013 and 2015, McEvoy discussed his investment in the 2006
LTIP multiple times. In 2013 he had a “casual conversation” with a friend who
was an attorney who advised him not to pursue a case against CEVA. Doc. 96-1
at 69:19–71:2, 121:19–21. In June 2015 he discussed losing the value of his
investment in the 2006 LTIP at lunch with two former CEVA employees who
themselves had not invested in the LTIP. Id. at 44:11–14, 49:1–8. On October
3, 2015, he discussed his financial loss with a different individual who had
invested in the 2006 LTIP and was still employed at CEVA, though he did not
recall discussing any potential re-investment or pending litigation against the
company. Id. at 38:3–5, 39:9–21, 40:17–41:12.
C.

The 2013 LTIP

According to Schlanger, in order to “take steps to try and maintain morale
at the company,” the newly-formed CEVA Holdings “developed a new incentive
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program, which was formally adopted as the 2013 CEVA Holdings LTIP” (“2013
LTIP”). Doc. 97 at 3. CEVA employees with ranks of M-4 and higher received
restricted stock options and penny stock options, and those ranked M-3 and
below received cash awards. Id. The cash awards were in amounts “equal to
60% of [eligible] employees’ prior net cumulative investments in CIL and vested
over a five-year period.” Doc. 97 at 4. The President of CEVA Americas
instructed management to “not be shy of reminding [Management Investors]
that their equity has been converted into new plans.” Doc. 112-12 at 2 (emphasis
in original).
D.

Litigation and Public Statements

Three of CIL’s unsecured debtholders filed an uncontested involuntary
Chapter 7 petition against CIL in the United States Bankruptcy Court for the
Southern District of New York on April 22, 2013, which the Bankruptcy Court
granted, appointing a Chapter 7 Trustee (“Trustee”). In re CIL Ltd., 582 B.R.
46 (Bankr. S.D.N.Y. 2018), amended on reconsideration, No. 13-11272-JLG,
2018 WL 3031094 (Bankr. S.D.N.Y. June 15, 2018) (“Bankruptcy Proceeding”).
On December 8, 2014, the Trustee filed a complaint in the Bankruptcy
Proceeding alleging that Apollo orchestrated a fraudulent transfer of CIL’s
interest in CEVA Group to CEVA Holdings without consideration, naming CIL
directors Gareth Turner and Mark Beith, CEVA Group, and CEVA Holdings as
defendants. Doc. 96-11. The complaint alleged that the directors “orchestrated
7

and authorized a secretive recapitalization of CEVA that erased the value of
CIL’s shares of CEVA . . . .” Id. at 3. On March 31, 2015, the Trustee filed an
Amended Complaint in the Proceeding. Doc. 96-12. Creditors also filed direct
claims against CEVA Logistics AG in the Supreme Court of the State of New
York County of New York in 2019. Doc. 121 at 1, 2.
CEVA Holdings’ Third Quarter Interim Financial Statements, released
November 18, 2013, announced that “[a] new management equity plan”
including cash compensation “replaced the previous plan that was administered
by CIL Limited and cancelled as part of the Recapitalization.” Doc. 97-4 at 23.
CEVA Holdings’ 2013 Annual Report, released on February 28, 2014, also
discussed the plan. Doc. 97-6 at 14–15.
CEVA’s Management Investors’ losses were discussed in some news
articles. The Loadstar, an U.K.-based logistics news source founded in 2012,
published an article on Management Investors’ losses due to the 2013
Transaction on August 19, 2013. Doc. 72-2. Titled “CEVA staff say they were
‘press-ganged’ into investment that lost them thousands,” the article stated that
Management Investors had invested between €10,000 and as much as €400,000,
had felt pressured to invest in the 2006 LTIP, and that some had recovered 60
percent of their investment under a new equity scheme. Id. at 2–4. The article
mentioned that some investors and lenders were considering or involved in
litigation in the Cayman Islands and New York. Id. at 1, 2. The article quoted
8

Schlanger stating that “we have given people the opportunity to participate in
a new equity plan. If the company performs, they can perform as much or more
than their initial investment. We think we’ve treated everyone fairly.” Doc. 722 at 3. The Loadstar published another article on September 9, 2015, headlined
“‘Wiped-out’ CEVA investors win court hearing over alleged fraud . . .”
discussing the Bankruptcy Proceeding and printing the same quote from
Schlanger. Doc. 96-14 at 2. On September 11, 2015, the New York Post
published an article entitled “Astros owner getting results on and off the field,”
which focused on an individual who lost a bidding war on EGL to Apollo.
Doc. 96-15 at 2. The article highlighted Apollo’s behavior in the EGL
acquisition, saying that “ex-employees now say they were pressured to roll over
much of their proceeds from the sale of EGL into Apollo-controlled Ceva under
threat of losing their jobs,” and that those same employees were contemplating
legal action against Apollo. Doc. 96-15 at 3.
E. McEvoy’s Original Complaint and New York Bankruptcy
Court-Imposed Stay
On August 3, 2017, McEvoy filed a putative class action lawsuit (“Original
Complaint”) in this Court against Apollo Global Management, Turner, and
Beith for losses, alleging self-dealing and fraudulent conversion. Doc. 1. The
Trustee filed a motion in the New York Bankruptcy Court to enjoin McEvoy’s
case on October 18, 2017, arguing the claims McEvoy asserted were derivative

9

claims that were property of CIL’s estate. In re CIL Ltd., No. 13-11272-JLG,
2018 WL 878888, at *1 (Bankr. S.D.N.Y. Feb. 9, 2018). The Bankruptcy Court
agreed, declaring McEvoy’s putative class action in this Court “null and void ab
initio.” Id. at *12. McEvoy moved the Bankruptcy Court to permit him to amend
his complaint to assert direct claims, proposing an amended complaint that
excluded defendants Turner and Beith and added defendants CEVA Group and
Apollo Management VI. Doc. 31 at 4. On October 16, 2018, the New York
Bankruptcy Court allowed McEvoy to file the proposed amended complaint in
this proceeding. Doc. 31-2.
On December 7, 2018, McEvoy filed the Amended Class Action Complaint
in this Court (“Amended Complaint”), alleging total losses of approximately
€30,000,000. 2 Doc 35. In addition to naming new defendants, the Amended
Complaint alleges a new injury: that the named Defendants caused putative
class members “to not receive, or not equally receive, a required adjustment” as
part of CEVA’s 2013 restructuring. Id. ¶ 15. The Amended Complaint raised
one claim under the Investment Advisors Act that the Court has already
dismissed. Doc. 80.

With leave of the Court, McEvoy filed a Second Amended Complaint
on July 23, 2021 that alleged that Defendants “were engaged in actual selfdealing” and fraudulently concealed the nature of the re-structuring and 2013
LTIP from the Management Investors. Doc. 124, ¶¶ 108–122. The new
allegations in the Second Amended Complaint do not alter the Court’s analysis.
2

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II.

ANALYSIS 3
A.

Statute of Limitations

Under the terms of the 2006 LTIP Agreement, Delaware law governs this
dispute. The applicable statute imposes a three-year limitations period on
claims for breach of fiduciary duty. DEL. CODE ANN. tit. 10, § 8106. 4 “The
general law in Delaware is that the statute of limitations begins to run, i.e., the
cause of action accrues, at the time of the alleged wrongful act, even if the
plaintiff is ignorant of the cause of action.” In re Dean Witter P’ship Litig., No.
CIV. A. 14816, 1998 WL 442456, at *4 (Del. Ch. July 17, 1998), aff’d, 725 A.2d
441 (Del. 1999). The Court determines that for the purposes of the statute of

On a motion for summary judgment, the Court cannot weigh evidence,
but rather can only rule on undisputed facts in the record. When a motion for
summary judgment is based on a statute of limitations, “the moving party must
establish that ‘the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party’ on the timeliness issue.” 100079 Canada, Inc.
v. Stiefel Lab’ys, Inc., 954 F. Supp. 2d 1360, 1368 (S.D. Fla. 2013), aff’d, 596 F.
App’x 744 (11th Cir. 2014) (quoting Ashcroft v. Randel, 391 F. Supp. 2d 1214,
1219 (N.D. Ga. 2005)). “Summary judgment may not be granted when the
record indicates a material fact is in dispute or if it seems desirable to inquire
more thoroughly into the facts in order to clarify the application of law to the
circumstances.” Eluv Holdings (BVI) Ltd. v. Dotomi, LLC, C.A. No. 6894-VCP,
2013 WL 1200273, at *4 (Del. Ch. Mar. 26, 2013).
3

Whether the limitation is addressed under the statute of limitations or
the doctrine of laches generally leads to the same result under Delaware law.
See Kraft v. WisdomTree Invs., Inc., 145 A.3d 969, 973–76 (Del. Ch. 2016)
(explaining the application of the statute of limitations or laches in the
Delaware Court of Chancery, and noting that courts generally apply the statute
of limitations by analogy to cases where laches applies).
4

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limitations, McEvoy’s cause of action alleged in the Amended Complaint
accrued under Delaware law on June 11, 2013, the date the 2013 LTIP became
effective. 5 Doc. 97-6 at 14–15. Absent tolling, the limitations period expired on
June 11, 2016.
Because the New York Bankruptcy Court declared the Original
Complaint void ab initio, Defendants argue that the filing date for limitations
purposes is that of the Amended Complaint, December 7, 2018. (Doc. 95 at 17
n.82). McEvoy argues that because the New York Bankruptcy Court permitted
him to amend, the operative date of filing should be that of the Original
Complaint on August 3, 2017.
Whether or not the Original Complaint is void, the claims raised in the
Amended Complaint do not relate back. This Circuit views “Rule 15(c)(1) as
incorporating state law relation-back rules when the law of that state provides
the statute of limitations for an action.” Saxton v. ACF Indus., Inc., 254 F.3d
959, 963 n.6 (11th Cir. 2001). Under Delaware law, new arguments of law relate
back, but new facts generally do not. See Cent. Mortg. Co. v. Morgan Stanley

See ¶ 15 of the Amended Complaint, which claimed that Defendants
“caused members of the Management Co-Investors to not receive, or not equally
receive, a required adjustment during the 2013 Transaction.” Doc. 35.
Defendants may be correct that McEvoy “mistakenly” alleges that the 2013
LTIP was an adjustment to the 2006 LTIP, Doc. 95, but whether or not this was
the case is not at question in this Motion.
5

12

Mortg. Cap. Holdings LLC, No. 5140-CS, 2012 WL 3201139, at *18 (Del. Ch.
Aug. 7, 2012) (finding that new disputed transactions that were otherwise
identical to previously alleged transactions constituted time-barred new facts);
id. at *18 n.156 (collecting cases distinguishing new allegations of fact, which
are subject to the statute of limitations, and new allegations of law, which relate
back). The key question is whether the preceding complaint put defendants “on
notice” of the new claims. Quadrant Structured Prod. Co., Ltd. v. Vertin, No.
6990-VCL, 2015 WL 6157759, at *20 (Del. Ch. Oct. 20, 2015). The Amended
Complaint names two new defendants, drops two defendants, and is based on a
new factual premise: that the 2013 LTIP, including the cash awards, was in fact
a continuation or “required adjustment” to employees’ 2006 LTIP investments.
Doc. 35 ¶ 15. This new claim does not relate back to the Original Complaint,
and so the Original Complaint’s August 3, 2017 date of filing does not apply.
Having found no relation back, in its now vacated order, the Court
determined that the “constructive” date of filing for statute of limitations
purposes should be November 30, 2017, rather than the actual date of filing of
the Amended Complaint, December 7, 2018:
On November 30, 2017, McEvoy informed the New
York Bankruptcy Court that if not for the stay, he
would file an Amended Complaint incorporating
allegations relating to the 2013 LTIP in this Court. Doc.
112-46 at 3 n.1. At that point, Defendants had notice of
McEvoy’s new claims, but McEvoy could not file an
amended complaint until the Bankruptcy Court
13

permitted him to do so, which it did not do until October
2018. Therefore, the Court will constructively treat the
date of filing of the operative Amended Complaint in
this Court as November 30, 2017.
Doc. 122 at 12. However, the Court is now persuaded that there is no basis in
Delaware law for establishing a “constructive filing” date for statute of
limitations purposes. Even if there might be scenarios in which Delaware courts
would allow for a constructive filing date, this case does not present such
circumstances. First, the Bankruptcy Court footnote was filed in a different
proceeding from this case. Second, the Bankruptcy Court footnote upon which
the constructive filing is based does not specifically identify two of the
defendants, CEVA Group, PLC, and Apollo Management IV, L.P., that were
later named in the Amended Complaint. Thus, these parties were not placed on
“constructive notice” of Plaintiffs’ intent to file a claim against them. Third,
McEvoy could have earlier filed the non-derivative case in this Court that
ultimately became the Amended Complaint without running afoul of the
automatic stay in the CIL Bankruptcy Proceeding. That he chose to instead file
claims that implicated the CIL bankruptcy estate and to consent to a stay in
this case was his choice. Delay resulting thereby in filing the Amended
Complaint cannot be used to alter the filing date for statute of limitations
purposes. Absent relation back, which the Court has found not to apply, the
date of commencement for statute of limitations purposes is the date of the filing

14

of the Amended Complaint, December 7, 2018, which is well after the expiration
of the statute of limitations on June 11, 2016. Thus, McEvoy must show that
the claim was tolled from June 11, 2013 to at least December 7, 2015 to be
timely.
B.

Tolling Doctrines

Delaware has three doctrines that toll the statute of limitations: (1)
inherently unknowable injuries; (2) fraudulent concealment; and (3) equitable
tolling. In re Dean Witter, 1998 WL 442456, at *5–*6. McEvoy argues that “any
or all theories available” apply. Doc. 112 at 22. The plaintiff “bear[s] the burden
of pleading specific facts to demonstrate that the statute of limitations was, in
fact, tolled.” In re Dean Witter, 1998 WL 442456, at *6. 6 The plaintiff must
plead “either that he was diligently and productively pursuing his rights before
the statute of limitations expired or that he was precluded from doing so based
on some unusual and unanticipated change in circumstances.” Forman v.
CentrifyHealth, Inc., No. CV 2018-0287-JRS, 2019 WL 1810947, at *9 (Del. Ch.
Apr. 25, 2019). “What constitutes unreasonable delay and prejudice [for the
delay in bringing a claim] are questions of fact that depend upon the totality of
the circumstances.” Deputy v. Deputy, No. CV 10874-VCZ, 2020 WL 1018554,

The Court noted that the plaintiff is supposed to plead a basis for tolling
the statute of limitations, which McEvoy had not, but permitted him to amend
his complaint to make allegations that gave rise to tolling, which he then did.
Docs. 81 at 22:4–9; 124.
6

15

at *47 (Del. Ch. Mar. 2, 2020) (quoting Hudak v. Procek, 806 A.2d 140, 153 (Del.
2002)).
Based on the record before the Court, a reasonable jury could find that
there was fraudulent concealment because Defendants used “actual artifice” to
prevent McEvoy from learning of his injury. In re Dean Witter, 1998 WL
442456, at *5. There is some evidence that Defendants attempted to conceal the
existence of the 2013 LTIP from non-participating Management Investors.
Schlanger stated that communications to former CEVA employees were
intentionally different than those to present CEVA employees. Doc. 116-2 at
63:8-17. Defendants argue that these differences “demonstrate[] Defendants’
good faith” and were intended to “avoid confusion.” Doc. 117 at 6–7. This is not
an undisputed fact. While much of McEvoy’s fraudulent concealment argument
relies on edits to the April 17, 2013 question and answer document, which
McEvoy did not even recall reading, the document sheds light on CEVA
executives’ communications strategy and purposeful concealment of the 2013
LTIP to non-participating Management Investors. Doc. 98-2. There is a genuine
question of material fact as to whether the statute of limitations was tolled from
June 11, 2013 until at least December 7, 2015.
C.

Inquiry Notice

Regardless of whether any tolling doctrine applies to McEvoy’s claim,

16

the limitations period is tolled [only] until such time
that persons of ordinary intelligence and prudence
would have facts sufficient to put them on inquiry
which, if pursued, would lead to the discovery of the
injury. Inquiry notice does not require actual discovery
of the reason for the injury. Nor does it require
plaintiffs’ awareness of all of the aspects of the alleged
wrongful conduct. Rather, the statute of limitations
begins to run when plaintiffs should have discovered
the general fraudulent scheme.
In re Dean Witter, 1998 WL 442456, at *7. Inquiry notice occurs when the
plaintiff “encounter[s] facts that reasonably should arouse suspicion” and “lead
to an investigation capable of producing facts sufficient to allow the plaintiff to
file a complaint capable of surviving a motion to dismiss.” Gallagher Indus.,
LLC v. Addy, No. 2018-0106-SG, 2020 WL 2789702, at *13 (Del. Ch. May 29,
2020). If McEvoy was or should have been on inquiry notice before December 7,
2015, three years before the filing date of the Amended Complaint, his claim is
time-barred.
Inquiry notice generally occurs when an investor receives a “red flag[]”
indicating their injury, even if they do not know the injury’s full extent.
Gallagher, 2020 WL 2789702, at *13 (citation omitted). A red flag may come in
the form of “inherently contradictory information” alerting an investor to a
potential claim. In re Dean Witter, 1998 WL 442456, at *9. It may also be a
communication signaling a change in the corporate structure, such as a letter
announcing a “tremendous amount of change . . . .” Silverberg v. Padda, No.

17

2017-0250-KSJM, 2019 WL 4566909, at *11 (Del. Ch. Sept. 19, 2019) (internal
quotation marks omitted) (citing documents in that case’s record). In In re Dean
Witter, defendants’ “campaign of misinformation,” including confident public
filings and frequent cash distributions, was insufficient to toll the statute of
limitations when plaintiffs could have seen the decline in the investment fund’s
capital merely by “looking beyond the language on the first page of [the] annual
reports . . . .” 1998 WL 442456, at *7–8.
Even taking into account any efforts by Defendants to conceal
information about the 2013 LTIP, it is reasonable to argue that McEvoy should
have been on inquiry notice in 2013 when he was suddenly informed that his
shares, which had been worth €50 each, were now worth €0. McEvoy had the
2006 LTIP Agreement in his possession, which he alleges mandated
adjustments to his investment. McEvoy could see that CEVA continued to
operate after he was let go, and that it was perhaps expanding, even hiring him
temporarily to start up a new contract. He could have asked at any point if
anyone in CEVA received a return on their prior investment, including during
his October 2015 conversation with a CEVA executive who had also invested in
the 2006 LTIP.
Other events also cumulatively contribute to inquiry notice. The JPLs in
the Cayman Islands CIL liquidation informed Management Investors of the
New York Bankruptcy Proceeding in a letter dated June 14, 2013. McEvoy
18

confirmed with the JPLs that his investments had lost their value on March 4,
2014. Two publicly available financial reports released November 18, 2013, and
February 28, 2014 from CEVA Holdings discussed a new equity plan replacing
the 2006 LTIP. Three newspaper articles mentioned CEVA’s restructuring and
that funds were re-invested or that Management Investors were contemplating
legal action against Apollo before December 7, 2015, including a New York Post
article published on September 11, 2015. Cf. Burrell v. Astrazeneca LP, No.
CIV.A. 07C-01-412(SER), 2010 WL 3706584, at *6 n.64 (Del. Super. Ct. Sept.
20, 2010) (determining that articles published in papers of record including the
New York Times and Wall Street Journal, combined with other sources of
information, provided notice). And finally, the Bankruptcy Proceeding included
public filings alleging fraudulent self-dealing and provided fodder for further
inquiry. The initial complaint in the Bankruptcy Proceeding was filed on
December 8, 2014, and an amended complaint on March 31, 2015.
Losing an investment would not necessarily put a reasonable investor on
notice that others who had lost theirs were being given an opportunity to
recover some of their lost value. But under Delaware law McEvoy was “not
entitled to sit idly by, blindly relying on defendants’ assurances, when the
documents and disclosures plaintiffs received regularly were so suggestive of
mismanagement,” or in this case, breach of fiduciary duty. In re Dean Witter,
1998 WL 442456, at *9. There was ample information and opportunity available
19

between 2013 and 2015 for McEvoy to investigate whether CEVA had in fact
lost all its value, and whether some Management Investors may have been
allowed to participate in the 2013 LTIP. He also knew some of the allegations
that he included in his Amended Complaint even before he filed his Original
Complaint. 7 Before December 7, 2015, McEvoy had “facts sufficient to put [him]
on inquiry, which, if pursued, would [have] led to discovery of the injury.” In re
Dean Witter, 1998 WL 442456 at *7. As a matter of Delaware law, McEvoy was
on inquiry notice as to his potential claims before December 7, 2015. Therefore,
regardless of whether any tolling applies, the three-year statute of limitations
expired before the filing of the Amended Complaint on December 7, 2018.
McEvoy’s action is time-barred.
Accordingly, it is hereby
ORDERED:
1.

Defendants’ Joint Limited Motion for Reconsideration of Order

Denying Motion for Summary Judgment (Doc. 125) is GRANTED.

McEvoy alleges that in July 2017, before filing the Original Complaint,
he “became aware of the existence of a document, marked confidential, showing
that during the 2013 Transaction Defendants had converted certain
Management Co-Investors’ investments in CIL to Cash,” and that in December
2017, he found “separate CIL financial statements” marked confidential and
not provided to any former Management Investors. Doc. 124 ¶¶ 120–21.
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2.

The Court’s previous ORDER (Doc. 122) on Defendants’ Joint

Motion for Summary Judgment (Doc. 95) is VACATED, to be replaced with this
present Order.
3.

Defendants’ Joint Motion for Summary Judgment (Doc. 95) is

GRANTED.
4.

Judgment will be entered for the Defendants. The Clerk should

close the file.
DONE AND ORDERED in Jacksonville, Florida the 10th day of March,
2022.

agb
Copies:
Counsel of record

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