Lamontagne v. Tesla, Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 THOMAS LAMONTAGNE, Case No. 23-cv-00869-AMO 8 Plaintiff, ORDER GRANTING OAKLAND 9 v. COUNTY’S MOTION TO APPOINT LEAD PLAINTIFF AND LEAD 10 TESLA, INC., et al., COUNSEL 11 Defendants. Re: Dkt. Nos. 14, 20, 27, 28 [12] 13 In this putative securities class action, Plaintiff Oakland County Voluntary Employees’ 14 Beneficiary Association (“Oakland County VEBA”) and Oakland County Employees’ Retirement 15 System (“Oakland County ERS” and together with Oakland County VEBA, “Oakland County”) 16 filed a motion to be appointed as lead plaintiff pursuant to the Private Securities Litigation Reform 17 Act (“PSLRA”), 15 U.S.C. § 78u-4(a)(3)(B). ECF 14. Oakland County also seeks appointment of 18 its counsel, Labaton Sucharow LLP (“Labaton Sucharow”) as lead counsel, and Hagens Berman 19 Sobol Shapiro LLP (“Hagens Berman”) as liaison counsel for the putative class. Id. The motion 20 is unopposed. Pursuant to Civil Local Rule 7-1(b), the Court finds the motion appropriate for 21 determination on the papers. For the reasons set forth below, the Court GRANTS Oakland 22 County’s motion to be appointed as lead plaintiff and GRANTS Oakland County’s motion to 23 appoint Labaton Sucharow as interim lead counsel and Hagens Berman as liaison counsel. 24 I. APPOINTMENT OF LEAD PLAINTIFF 25 The Ninth Circuit has established a three-step process for determining appointment of lead 26 plaintiff in private securities actions arising under the PSLRA. 15 U.S.C. § 78u-4(a)(1); In re 27 Cavanaugh, 306 F.3d 726 , 729 - 30 (9th Cir. 2002); see Mulligan v. Impax Labs, Inc., No. C-131 PSLRA’s notice requirement. Within twenty days of filing the complaint, the plaintiff must 2 publish a notice in a widely circulated national business-oriented publication advising members of 3 the putative class of the pending action. 15 U.S.C. § 78u-4(3)(A)(i). The publication must notify 4 the putative class that any member has sixty days from the publication of such notice to move the 5 Court to serve as lead plaintiff. Id. Second, the Court must determine the plaintiff “most capable 6 of adequately representing the interests of class members.” 15 U.S.C. § 78u-4(3)(B)(i). There is a 7 rebuttable presumption that the “most adequate plaintiff” (1) either filed the complaint or made a 8 motion in response to the notice; (2) has the largest financial interest; and (3) otherwise satisfies 9 Federal Rule of Civil Procedure 23. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I); see Cavanaugh, 306 F.3d 10 at 729 - 30 (describing the PSLRA process for appointing lead plaintiff). Third, putative class 11 members may rebut the presumption that the most adequate plaintiff will fairly and adequately 12 represent the class. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II). 13 The Court examines Oakland County’s compliance with these statutory requirements. 14 After plaintiff Thomas Lamontagne filed his complaint on February 27, 2023, his counsel 15 published a notice in Globe Newswire announcing the litigation and alerting class members of the 16 deadline to seek appointment as lead plaintiff. ECF 14 at 10; ECF 14-4 at 2 - 4. On April 28, 17 2023, seemingly in response to the notice, Oakland County timely moved to be appointed as lead 18 plaintiff, ECF 14 at 5 - 6, satisfying the notice requirement to be appointed lead plaintiff. See 15 19 U.S.C. § 78u-4(3)(A)(i); Mulligan, 2013 WL 3354420 , at *3. 20 Next, the Court considers whether Oakland County is the most capable of adequately 21 representing the interests of the class members. 15 U.S.C. § 78u-4(3)(B)(i)-(iii). In addition to 22 filing a timely motion to be appointed as lead plaintiff, Oakland County has alleged—and it is 23 uncontested—that it the largest financial interest in the litigation.1 ECF 14 at 10; ECF 28. While 24 the Ninth Circuit “has not provided clear guidance on what metrics district courts should use” in [25] 1 Plaintiffs Michael Reece and Robert Kent filed a competing motion for appointment as co-lead [26] plaintiffs. ECF 20. However, after reviewing Oakland County’s motion, Reece and Kent filed a statement of non-opposition, conceding that they do not have the “largest financial interest” in the [27] litigation. ECF 27. Thus, Oakland County’s motion is unopposed. See ECF 28. Because the 1 determining which potential plaintiff has the greatest financial interest in the litigation, Mulligan, [2] 2013 WL 3354420 , at *4, district courts frequently consider four factors, including the total net 3 funds expended, and the approximate losses suffered during the class period. Xu v. FibroGen, 4 Inc., No. 21-cv-02623-EMC, 2021 WL 3861454 , at *4 (N.D. Cal. Aug. 30, 2021). Oakland 5 County alleges that it suffered “last-in first-out” losses of approximately $2,020,887 on its relevant 6 transactions in Tesla securities during the class period. ECF 14 at 10; ECF 14-3 at 2 - 3. As no 7 other putative class member has claimed a greater financial interest, Oakland County has 8 established that it has the largest financial interest in the litigation.2 See id.; In re Extreme 9 Networks Inc. Sec. Litig., No. 15-CV-04883-BLF, 2016 WL 3519283 , at *3 (N.D. Cal. June 28, 10 2016). 11 Finally, in determining whether Oakland County has established a rebuttable presumption 12 that it is the most adequate plaintiff, the Court must also examine whether Oakland County 13 satisfies the Rule 23 typicality and adequacy requirements. See 15 U.S.C. §78u-4(a)(3)(B)(iii)(I); 14 Xu, 2021 WL 3861454 , at *7. The typicality requirement considers whether other class members 15 have “the same or similar injury . . . based on conduct which is not unique to the named plaintiffs, 16 and whether other class members have been injured by the same course of conduct.” Melucci v. 17 Corcept Therapeutics Inc., No. 19-CV-01372-LHK, 2019 WL 4933611 , at *4 (N.D. Cal. Oct. 7, 18 2019). The adequacy requirement ensures that the plaintiff will “fairly and adequately protect the 19 interests of the class,” Fed. R. Civ. P. 23(a)(4), and ensures that plaintiff and counsel do not have 20 any conflicts of interest with other class members and will “prosecute the action vigorously.” 21 Ellis v. Costco Wholesale Corp., 657 F.3d 970, 985 (9th Cir. 2011) (citation omitted). Oakland 22 County asserts that, like all other putative class members, it “(i) purchased or otherwise acquired 23 Tesla stock during the Class Period; (ii) at prices allegedly artificially inflated by Defendants’ 24 materially false and misleading statements and/or omissions; and (iii) suffered damages as a 25 result.” ECF 14 at 11. Oakland County alleges that its interests are aligned with those of other [27] 2 Plaintiffs Reece and Kent have conceded that they do not have the largest financial interest in the 1 prospective class members. Id. at 12. Further, as detailed below, Oakland County has 2 satisfactorily alleged that counsel will pursue the action vigorously. Id. As Oakland County filed 3 a motion in response to the notice, has the largest financial interest, and otherwise satisfies the 4 requirements of Federal Rule of Civil Procedure 23, Oakland County has established a rebuttable 5 presumption that it is the “most adequate plaintiff” under 15 U.S.C. §78u-4(a)(3)(B)(iii). 6 No class members have rebutted the presumption that Oakland County will fairly and 7 adequately represent the class. See Mulligan, 2013 WL 3354420 at *9. Indeed, the other movants 8 filed a statement of non-opposition recognizing that they are not the largest financial stakeholders. 9 ECF 27. 10 Because Oakland County has met the statutory requirements for appointment as lead 11 plaintiff, the Court GRANTS Oakland County’s uncontested motion for appointment as lead 12 plaintiff under 15 U.S.C. § 78u-4(a)(3). 13 II. APPOINTMENT OF LEAD COUNSEL 14 The PSLRA “expressly provides that lead plaintiff has the power to select lead counsel.” 15 Cohen v. U.S. Dist. Ct. for N. Dist. of California, 586 F.3d 703 , 709 (9th Cir. 2009); 16 15 U.S.C. § 78u-4(a)(3)(B)(v). The Court “generally defer[s]” to lead plaintiff’s reasonable 17 choice of counsel. Id. at 712. Federal Rule of Civil Procedure 23(g)(3) authorizes courts to 18 “designate interim counsel to act on behalf of a putative class before determining whether to 19 certify the action as a class action.” Fed. R. Civ. P. 23(g)(3).3 Courts typically weigh the factors 20 outlined in Rule 23(g)(1)(A): “(i) the work counsel has done in identifying or investigating 21 potential claims in the action; (ii) counsel’s experience in handling class actions, other complex 22 litigation, and the types of claims asserted in the action; (iii) counsel’s knowledge of the applicable 23 law; and (iv) the resources that counsel will commit to representing the class.” Fed. R. Civ. P. 24 23(g)(1)(A); see Olosoni v. HRB Tax Group, Inc., No. 19-cv-03610-SK, 2019 WL 7576680 at *5 25 (N.D. Cal. Nov. 05, 2019); Levitte v. Google, Inc., No. C 08-03369 JW, 2009 WL 482252 , at *2 [26] 3 Oakland County seeks appointment of Labaton Sucharow as lead counsel. ECF 14 at 13. [27] Because the Court has not yet determined whether to certify a class, the Court limits the 1 (N.D. Cal. Feb. 25, 2009). The Court may further consider “any other matter pertinent to 2 counsel’s ability to fairly and adequately represent the interests of the class.” Fed. R. Civ. P. 3 23(g)(1)(B). 4 Oakland County has selected Labaton Sucharow to be lead counsel for the class and has 5 established that Labaton Sucharow satisfies the Rule 23(g) factors. ECF 14 at 13. Labaton 6 Sucharow evidences its extensive experience litigating securities class actions, as well as its 7 knowledge of the applicable law. The firm has litigated complex securities class actions in this 8 and other districts in California and New York. See ECF 14 at 13 (noting recovery of $1 billion 9 for injured investors in In re American International Group, Inc. Securities Litigation, No. 04-cv10 8141 (S.D.N.Y.), and $117.5 million settlement secured in In re Mercury Interactive Corp. 11 Securities Litigation, No. 05-cv-3395 (N.D. Cal.)). The firm’s résumé boasts its significant 12 experience and recoveries for plaintiffs in securities class action litigation. ECF 14-5 at 6 - 14. 13 The firm has successfully recovered $19 billion in the aggregate in securities class actions and has 14 served as lead or co-lead counsel in numerous actions. ECF 14-5 at 6, 14 - 16. Accordingly, 15 Labaton Sucharow has shown it is qualified to serve as lead counsel for the putative class. 16 Oakland County also selected Hagens Berman, located in Berkley, California, to serve as 17 liaison counsel. See Manual for Complex Litigation (Fourth) § 10.221 (2004) (discussing 18 administrative role of liaison counsel and noting that “[l]iaison counsel will usually have offices in 19 the same locality as the court”). Hagens Berman has obtained recoveries for injured investors in 20 securities cases, ECF 14 at 13, and has experience successfully representing investors in class 21 action litigation, ECF 14-6 at 32 - 33. 22 No movant challenges Oakland County’s selection of class counsel and liaison counsel. 23 Considering the qualifications and experience of both firms, no grounds exist to disturb Oakland 24 County’s choice that these law firms serve as lead and liaison counsel. 25 /// 26 /// 27 /// 1 Accordingly, this Court GRANTS Oakland County’s motion for Labaton Sucharow LLP 2 || to serve as interim class counsel and Hagens Berman Sobol Shapiro LLP to serve as liaison 3 counsel. [4] 5 IT IS SO ORDERED. 6 Dated: July 5, 2023 7 - , ARACELI MARTINEZ-OLGUIN 9 United States District Judge [13] © [16] = 17 Z 18