Court Certifies Class Action in BioErgonomics, Inc. Shareholder Litigation

MINNEAPOLIS, MN:  Local investors achieved a significant victory in their bid to challenge the alleged fraudulent transfer of all assets of their small biomedical company after a Minnesota court ordered that they may pursue their losses on a class-wide basis.  The “angel investors” protest the transfer of $19 million in company assets of BioErgonomics, Inc. (BioE), in satisfaction of a $5 million debt to an entity owned by Minnesota businessman, Ron Erickson.  Named in the complaint are BioE’s officers and directors, including Ron Erickson who served as the company’s Chairman of the Board.  Erickson is also Chairman and CEO of Holiday Companies, and now Chair of the newly-formed BioE based in Vadnais Heights. 

On September 9, 2011 Judge Lloyd Zimmerman issued a memorandum certifying a class of all non-insider persons and entities who held common or preferred stock in BioErgonomics on November 9, 2009.   The court concluded that “[c]onducting 463 separate trials on the central issue of whether Defendants allegedly transferred $19 million in assets to cover only $5 million in loans, leaving Plaintiffs’ shares worthless would, by any measure, be impractical, time-consuming, and expensive.”  The court further denied Defendants’ attempt to defeat Plaintiffs’ motion on the basis that many in the class would be subject to arbitration, finding that Defendants had waived any such argument by invoking the “litigation machinery.”

BioE designs, develops and commercializes human umbilical cord blood stem cells.  Many of the local investors were drawn to the company based upon its commitment to use umbilical cord stem cells and because the Roman Catholic Church had publicly supported the use of these types of cells for drug discovery and therapeutic research.

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