In Re Snap Inc. Securities Litigation

OPPOSITION to NOTICE OF MOTION AND MOTION to Certify an Interlocutory Appeal Under 28 U.S.C. Section 1292

C.D. Cal.July 18, 2018

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KESSLER TOPAZ MELTZER & CHECK, LLP JENNIFER L. JOOST (Bar No. 296164) jjoost@ktmc.com STACEY M. KAPLAN (Bar No. 241989) skaplan@ktmc.com One Sansome Street, Suite 1850 San Francisco, CA 94104 Telephone: (415) 400-3000 Facsimile: (415) 400-3001 -and- SHARAN NIRMUL (Pro Hac Vice) snirmul@ktmc.com NATHAN HASIUK (Pro Hac Vice) nhasiuk@ktmc.com JONATHAN F. NEUMANN (Pro Hac Vice) jneumann@ktmc.com 280 King of Prussia Road Radnor, PA 19087 Telephone: (610) 667-7706 Facsimile: (610) 667-7056 Attorneys for Plaintiffs Thomas DiBiase and David Steinberg, and Lead Counsel for the Putative Class UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA IN RE SNAP INC. SECURITIES LITIGATION Case No. 2:17-cv-03679-SVW-AGR CLASS ACTION MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) Date: August 13, 2018 Time: 1:30 p.m. Courtroom: 10A Judge: Hon. Stephen V. Wilson This Document Relates to: All Actions Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 1 of 18 Page ID #:1801 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page I. PRELIMINARY STATEMENT .............................................................. 1 II. LEGAL STANDARD ............................................................................... 3 III. ARGUMENT ............................................................................................ 4 A. The Motion Does Not Implicate Any Controlling Questions of Law Whose Immediate Resolution Would Materially Advance the Ultimate Termination of the Litigation .................................................................... 4 B. The Motion Fails to Establish the Requisite Substantial Ground for Difference of Opinion ............................................................................... 6 1. Whether a security’s “value” always equals its trading “price” ..... 7 2. Whether “the time such suit was brought” is always the date of the first-filed complaint ........................................................................ 9 IV. CONCLUSION ....................................................................................... 10 Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 2 of 18 Page ID #:1802 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Page(s) A.H.D.C. v. City of Fresno, Cal., 2003 WL 25948686 (E.D. Cal. Mar. 3, 2003) ......................................................... 6 Affiliated Ute Citizens of Utah v. U. S., 406 U.S. 128 (1972) ............................................................................................... 10 Astiana v. Dreyer’s Grand Ice Cream, Inc., 2012 WL 4892391 (N.D. Cal. Oct. 12, 2012) ................................................ 8, 9, 10 Barrer v. Chase Bank, USA, N.A., 2011 WL 1979718 (D. Or. May 18, 2011)............................................................... 5 In re Broderbund/Learning Co. Securities Litigation, 294 F.3d 1201 (9th Cir. 2002) .................................................................................. 7 Campton v. Ignite Rest. Grp. Inc., 2014 WL 61199 (S.D. Tex. Jan. 7, 2014) ................................................................ 7 Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc., 2014 WL1155403 (C.D. Cal. Mar. 21, 2014) .......................................................... 4 In re Cathode Ray Tube (CRT) Antitrust Litig., 2013 WL 567281 (N.D. Cal. Feb. 13, 2013) ............................................................ 4 In re Cement Antitrust Litig., 673 F.2d 1020 (9th Cir. 1982) .............................................................................. 1, 3 Cent. Laborers’ Pension Fund v. Sirva, Inc., 2006 WL 2787520 (N.D. Ill. Sept. 22, 2006) ........................................................ 10 Couch v. Telescope Inc., 611 F.3d 629 (9th Cir. 2010) ........................................................................... passim In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., 966 F. Supp. 2d 1031 (C.D. Cal. 2013) ............................................................ 4, 5, 6 Dura Pharms. v. Broudo, 544 U.S. 336 (2005) ................................................................................................. 9 Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 3 of 18 Page ID #:1803 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Ellerd v. Cty. of L.A., 2009 WL 3462179 (C.D. Cal. Oct. 22, 2009) .......................................................... 1 Envtl. Prot. Info. Ctr. v. Pac. Lumber Co., 2004 WL 838160 (N.D. Cal. Apr. 19, 2004) ........................................................... 9 Flores v. Velocity Express, LLC, 2015 WL 4463639 (N.D. Cal. July 21, 2015) .................................................... 3, 10 Gupta v. Snap Inc., et al., Case No. 17-cv-05054 .............................................................................................. 9 Hightower v. Schwarzenegger, 2009 WL 3756342 (E.D. Cal. Nov. 6, 2009) ................................................... 2, 5, 6 I.N.S. v. Cardoza-Fonseca, 480 U.S. 421 (1987) ................................................................................................. 8 James v. Price Stern Sloan, Inc., 283 F.3d 1064 (9th Cir. 2002) .................................................................................. 3 In re LendingClub Sec. Litig., 2017 WL 4750629 (N.D. Cal. Oct. 20, 2017) .......................................................... 8 linkLine Commc’ns, Inc. v. SBC Cal., Inc., No. 2:03-cv-05265-SVW, slip op. (C.D. Cal. Apr. 1, 2005) ................................... 3 Hawaii ex rel. Louie v. JP Morgan Chase & Co., 921 F. Supp. 2d 1059 (D. Haw. 2013) ..................................................................... 3 McMahan & Co. v. Wherehouse Entm’t, Inc., 65 F.3d 1044 (2d Cir. 1995) ..................................................................................... 2 NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012) ..................................................................................... 7 Rieve v. Coventry Health Care, Inc., 870 F.Supp.2d 856 (C.D. Cal. 2012) ........................................................................ 6 Shonts v. Hirliman, 28 F. Supp. 478 (S.D. Cal. 1939) ............................................................................. 8 U. S. Rubber Co. v. Wright, 359 F.2d 784 (9th Cir. 1966) ........................................................................ 2, 3, 4, 6 Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 4 of 18 Page ID #:1804 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR iv 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Villarreal v. Caremark LLC, 85 F. Supp. 3d 1063 (D. Ariz. 2015) ........................................................................ 4 In re Washington Mutual, Inc. Securities, Derivative & ERISA Litigation, 2010 WL 4272567 (W.D. Wash. Oct. 12, 2010) ..................................................... 8 In re Worlds of Wonder Securities Litigation, 35 F.3d 1407 (9th Cir. 1994) ................................................................................ 7, 8 Statutes 15 U.S.C. §77 ............................................................................................................ 8, 9 28 U.S.C. §1291 ................................................................................................... passim 28 U.S.C. § 1292(b) ................................................................................................... 1, 4 Securities Act Section §11 .................................................................................... passim Other Authorities Federal Regulation of Securities: Some Problems of Civil Liability, 48 Harv. L. Rev. 107 (Nov. 1934)............................................................................ 8 Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 5 of 18 Page ID #:1805 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR v 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF ABBREVIATIONS ABBREVIATION DEFINITION ¶__ Citations to paragraphs in the CAC (defined herein) CAC Consolidated Amended Class Action Complaint for Violation of the Federal Securities Laws (ECF No. 67) Defendants The Snap Defendants and the Underwriter Defendants (each as defined herein) D. Supp. Snap Defendants’ Supplemental Brief in Support of the Snap Defendants’ Motion to Dismiss (ECF No. 86) D. Supp. Reply Snap Defendants’ Supplemental Reply in Support of the Snap Defendants’ Motion to Dismiss (ECF No. 88) Ex. __ Exhibits to the Declaration of Ignacio E. Salceda in Support of the Motion (defined herein) IPO Initial Public Offering Motion Snap Defendants’ Motion for Certification of an Interlocutory Appeal filed by the Snap Defendants (ECF No. 94). Order In Chambers Order Denying Motion to Dismiss, filed June 7, 2018 (ECF No. 92). Order for Supp. Briefing In Chambers Order for Additional Briefing on the Motion to Dismiss, filed February 20, 2018 (ECF No. 84) Plaintiffs Lead Plaintiff Thomas DiBiase and Additional Plaintiff David Steinberg P. Supp. Plaintiffs’ Memorandum of Points and Authorities in Response to the Order for Supp. Briefing (ECF No. 85) P. Supp. Reply Plaintiffs’ Reply Memorandum of Points and Authorities in Response to the Order for Supp. Briefing (ECF No. 89) Snap Snap Inc. Snap Defendants Snap, Evan Spiegel, Robert Murphy, Andrew Vollero, Imran Khan, Joanna Coles, A.G. Lafley, Mitchell Lasky, Michael Lynton, Stanley Meresman, Scott D. Miller, and Christopher Young Snap Mem. Snap Defendants’ Memorandum of Point and Authorities in Support of the Motion (ECF No. 94-1) Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 6 of 18 Page ID #:1806 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs respectfully submit this memorandum of law in opposition to the Motion for Certification of an Interlocutory Appeal Under 28 U.S.C. § 1292(b) filed by the Snap Defendants (ECF No. 94).1 I. PRELIMINARY STATEMENT On June 7, 2018, the Court denied Defendants’ motion to dismiss in its entirety. Defendants now ask the Court to certify the Order pursuant to 28 U.S.C. § 1292(b).2 Requests for interlocutory appeal are granted only in “exceptional circumstances [that would] justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.” Ellerd v. Cty. of L.A., 2009 WL 3462179, at *2 (C.D. Cal. Oct. 22, 2009). In bringing this motion, however, Defendants point to no such “exceptional circumstances” that warrant certification. Instead, the crux of Defendants’ Motion is their fundamental disagreement with the Court’s plain reading of Section 11, which, on its face, distinguishes between a stock’s “price” and its “value.” However, “[a] party’s strong disagreement with the Court’s ruling is not sufficient” to warrant interlocutory appeal. Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). To the contrary, as the Ninth Circuit has made clear, requests for interlocutory appeal should be granted “only in exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). Here, the questions that 1 The Underwriter Defendants joined in the Motion. See ECF No. 101. Unless otherwise noted: (i) all capitalized terms have the meaning ascribed to them in the CAC or Table of Abbreviations; (ii) all emphasis is added; and (iii) all internal citations and quotations have been omitted. 2 More specifically, Defendants’ Motion seeks certification for immediate appellate review of two distinct questions: (i) whether “value” as used in subparts (1) and (3) of Section 11(e) refers to “the price of the defendant’s security had the security been sold rather than held, as the Snap Defendants contend,” or “the true worth of the security had the price not been inflated by alleged falsehood, as Plaintiffs contend and as this Court held,” and, only to the extent the Ninth Circuit resolves the first question in Defendants’ favor (ii) whether “the time such suit was brought” is always the date of the first-filed complaint, regardless of any deficiency that existed as to such complaint or whether it included claims against all Defendants. See Snap Mem. at 5. Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 7 of 18 Page ID #:1807 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants seek to certify relate solely to Plaintiffs’ Section 11 claims, and will have no impact on the resolution of the claims that the Court sustained under Section 12(a)(2), Rule 10b-5, Section 15, and Section 20(a). U. S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966) (a legal question that is “relevant to only one of several causes of action alleged” is not an appropriate basis for interlocutory appeal). Even more fundamentally, Plaintiffs’ Rule 10b-5 and Section 12(a)(2) claims will require proof of the same elements as their Section 11 claims (e.g., falsity, materiality, damages), will require virtually identical discovery, and will ultimately be proven with the same evidence. Thus, this “litigation will be conducted in substantially the same manner regardless of [an interlocutory appellate] decision….” Hightower v. Schwarzenegger, 2009 WL 3756342, at *4 (E.D. Cal. Nov. 6, 2009). As a result, “the appeal cannot be said to materially advance the ultimate termination of the litigation.” Id. Defendants’ Motion is fatally deficient for yet another reason: they cannot demonstrate the “substantial ground for difference of opinion” necessary to warrant interlocutory appeal. 28 U.S.C. § 1292(b). In this Circuit, courts typically find that “a substantial ground for difference of opinion exists where the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point.” Couch, 611 F.3d at 633. Here, there is no Circuit split as to Defendants’ first “question”— indeed, the only Circuit court to address the question is in full agreement with the Court’s well-reasoned Opinion. See, e.g., McMahan & Co. v. Wherehouse Entm’t, Inc. 65 F.3d 1044, 1048-49 (2d Cir. 1995) (“Congress’ use of the term ‘value,’ as distinguished from the terms ‘amount paid’ and ‘price’ indicates that, under certain circumstances, the market price may not adequately reflect the security’s value.”). The substantial weight of authority is in accord. See, e.g., P. Supp. at 7-9; P. Supp. Reply at 1-3. Nor can Defendants manufacture a Circuit split by pointing to Ninth Circuit opinions that do not analyze the pertinent question. Defendants’ second “question” is similarly deficient—indeed, they “have not cited a single case that conflicts with the Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 8 of 18 Page ID #:1808 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 holding in the order at issue.” Flores v. Velocity Express, LLC, 2015 WL 4463639, at *3 (N.D. Cal. July 21, 2015) (finding no substantial ground for difference of opinion). Simply put, Defendants have come nowhere close to meeting their heavy burden, and their motion should be denied. U. S. Rubber Co., 359 F.2d at 785 (holding that section 1292 “was not intended merely to provide review of difficult rulings in hard cases” and should “be used only in extraordinary cases where decision of an interlocutory appeal might avoid protracted and expensive litigation”). II. LEGAL STANDARD Ordinarily, “parties may appeal only from orders which end[] the litigation on the merits and leave[] nothing for the court to do but execute the judgment.” Couch, 611 F.3d at 632; 28 U.S.C. § 1291. Section 1292(b) provides a “narrow exception” to this rule where the district court finds that an interlocutory order: (i) “involves a controlling question of law”; (ii) “as to which there is substantial ground for difference of opinion”; and (iii) “that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” Couch, 611 F.3d at 633; 28 U.S.C. §1292(b). Section 1292(b) “must be construed narrowly,” James v. Price Stern Sloan, Inc., 283 F.3d 1064, 1067 n. 6 (9th Cir. 2002), and used “only in exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation.” Cement, 673 F.2d at 1026. The party pursuing the interlocutory appeal “has a heavy burden to show that ‘exceptional circumstances’” warrant immediate appellate review. Hawaii ex rel. Louie v. JP Morgan Chase & Co., 921 F. Supp. 2d 1059, 1065 (D. Haw. 2013) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)). “Moreover, district court judges have unfettered discretion to deny certification even when all [three statutory criteria] are satisfied.” linkLine Commc’ns, Inc. v. SBC Cal., Inc., No. 2:03-cv-05265-SVW, slip op. at 28 (C.D. Cal. Apr. 1, 2005) (Ex. 1 at 28). Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 9 of 18 Page ID #:1809 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. ARGUMENT A. The Motion Does Not Implicate Any Controlling Questions of Law Whose Immediate Resolution Would Materially Advance the Ultimate Termination of the Litigation The touchstone of the analysis under Section 1292(b) is whether there is a controlling legal question the resolution of which “would more speedily terminate the litigation.” Villarreal v. Caremark LLC, 85 F. Supp. 3d 1063, 1067 (D. Ariz. 2015); In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., 966 F. Supp. 2d 1031, 1044 (C.D. Cal. 2013) (interlocutory review is only appropriate if it “facilitate[s] disposition of the action by getting a final decision on a controlling legal issue sooner, rather than later in order to save the courts and the litigants unnecessary trouble and expense.”) Carrillo v. Schneider Logistics Trans-Loading and Distribution, Inc., 2014 WL 1155403, at *4 (C.D. Cal. Mar. 21, 2014) (“The key consideration. . . is whether permitting an interlocutory appeal would minimiz[e] the total burdens of litigation on parties and the judicial system by accelerating or at least simplifying trial court proceedings.”). Defendants simply cannot meet this fundamental burden. First, this litigation will proceed in substantially the same form and scope whether or not Plaintiffs’ Section 11 claims are litigated. This is because the Court has sustained Securities Act claims (Sections 12(a)(2), and 15(a)) and Exchange Act claims (Sections 10(b) and 20(a)) and the facts for these causes of action are predicated on largely the very same facts as Plaintiffs’ Section 11 claims. Indeed, this is precisely why courts have consistently rejected interlocutory review where the legal question presented for review is “relevant to only one of several causes of action alleged.” U.S. Rubber Co., 359 F.2d at 785; see, e.g., Carrillo, 2014 WL 1155403, at *4 (holding that where plaintiff had multiple alternative theories of liability, non-dispositive legal question was “not a controlling question”); In re Cathode Ray Tube (CRT) Antitrust Litig., 2013 WL 567281, at *4 (N.D. Cal. Feb. 13, 2013) (finding that interlocutory appeal “would not hasten the termination of this litigation because [plaintiffs] would still have numerous claims left to litigate, even though some federal claims might be Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 10 of 18 Page ID #:1810 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 extinguished as to some plaintiffs”). Similarly, where, as here, the “issue presented [], at its heart, concerns primarily the scope of damages to which plaintiffs may be entitled” immediate appellate resolution would not “materially advance the ultimate termination of the litigation.” Barrer v. Chase Bank, USA, N.A., 2011 WL 1979718, *4-5 (D. Or. May 18, 2011). Second, and relatedly, given the substantial overlap between all of Plaintiffs’ causes of action, there can be no dispute that discovery, which has already commenced in this action, will be identical across all claims. All claims require Plaintiffs to establish that the Registration Statement contained materially false and misleading statements and omissions of material fact—the same false statements and omissions that serve as the basis for Plaintiffs’ Section 11 claims. Accordingly, not only does interlocutory review not advance the ultimate termination of the litigation, it does not alter in any meaningful way the evidence that will be developed for trial. Countrywide, 966 F. Supp. 2d at 1046 (standard for certification not met where “discovery would proceed in largely the same fashion” regardless of resolution of issue on appeal); Hightower, 2009 WL 3756342, at *4 (quoting White v. Nix, 43 F.3d 374, 378-79 (8th Cir. 1994) (“[w]hen litigation will be conducted in substantially the same manner regardless of [an interlocutory appellate] decision, the appeal cannot be said to materially advance the ultimate termination of the litigation.”)). Third, neither question for which Defendants seek interlocutory review involves “a controlling question of law,” because as the Court recognized, Plaintiffs have adequately pled Section 11 damages under either interpretation of “value” as used in Section 11(e). Order at 14-16. Therefore, as Defendants concede, the Ninth Circuit would need to resolve both questions in Defendants’ favor to have any impact on this litigation. See Snap Mem. at 5 (admitting that the interpretation of “the time such suit was brought” only “arise[s]” to the extent one accepts their proffered interpretation of “value”). Moreover, even if the Ninth Circuit did reach the secondary question of whether the initial complaint date is always determinative of Section 11 damages, it Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 11 of 18 Page ID #:1811 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 would also have to resolve the additional dispute as to whether the initial complaint in this Action—which under Defendants’ view, was deficient for lack of standing—could also bind Plaintiffs and the Class. Significantly, Defendants do not address this additional impediment to using the trading price on the date of the initial complaint under the facts of this case. The absence of any benefit to the ultimate pre-trial management of this litigation is fatal to Defendants’ petition for interlocutory review. Countrywide, 966 F. Supp. 2d at 1046; Hightower, 2009 WL 3756342, at *4. Indeed, interlocutory review at this juncture would actually promote judicial inefficiency by potentially delaying the ultimate disposition of this case and “by requiring immediate consideration of issues which may become moot or irrelevant.” A.H.D.C. v. City of Fresno, Cal., 2003 WL 25948686, at *2 (E.D. Cal. Mar. 3, 2003); see Rieve v. Coventry Health Care, Inc., 870 F.Supp.2d 856, 880 (C.D. Cal. 2012) (“[W]here the Court concludes certification would actually delay the resolution of the litigation, certification is not appropriate.”). B. The Motion Fails to Establish the Requisite Substantial Ground for Difference of Opinion Setting aside Defendants’ inability to credibly argue that interlocutory review at this juncture advances the ultimate termination of this litigation, there is no “substantial ground for difference of opinion” that exists other than one that Defendants have manufactured. Couch, 611 F.3d at 633. “Courts traditionally will find that a substantial ground for difference of opinion exists where the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point.” Id. However, the fact that a question of law is merely “uncertain” is insufficient to justify immediate appellate review. U. S. Rubber Co., 359 F.2d at 785. Defendants fail to demonstrate the requisite “substantial ground for difference of opinion” as to either question to warrant certification under Section 1292(b). Id. at 784. Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 12 of 18 Page ID #:1812 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. Whether a security’s “value” always equals its trading “price” First, Defendants cannot establish a dispute between the Circuits. To the contrary, as this Court recognized in denying Defendants’ motions to dismiss, the overwhelming majority of the courts in this and other Circuits analyzing the issue, including the only Court of Appeals to directly address the question, have held that “value” and “price” are not always identical. See, e.g., NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145, 165-66 (2d Cir. 2012) (“under § 11, the key is not . . . market price; the key is value”); Campton v. Ignite Rest. Grp. Inc., 2014 WL 61199, at *5 (S.D. Tex. Jan. 7, 2014) (“Congress’ use of the term ‘value,’ as distinguished from the terms ‘amount paid’ and ‘price’ indicates that, under certain circumstances, the market price may not adequately reflect the security’s value.”); see also P. Supp. at 7-9; P. Supp. Reply at 1-3; Order at 15-16. Faced with this compendium of law, Defendants attempt to manufacture a Circuit split where none exists by pointing to the Ninth Circuit’s opinion in In re Broderbund/Learning Co. Securities Litigation, 294 F.3d 1201, 1204 (9th Cir. 2002). Contrary to Defendants’ claim, however, Broderbund did not “resolve[] th[e] question” of Section 11(e)’s use of “price” and “value.” Snap. Mem. at 1; see Order for Supp. Briefing at 2. Rather, the relevant portion of the Ninth Circuit’s opinion in Broderbund reveals only a passing reference to Section 11(e)(1) without any analysis or consideration of the “value” versus “price” issue. 294 F.3d at 1204. Indeed, as set forth in Plaintiffs’ opposition, the only two Ninth Circuit opinions touching on Section 11(e)’s use of “value” versus “price,” Broderbund and In re Worlds of Wonder Sec. Litig., 35 F.3d 1407, 1421 (9th Cir. 1994), “each found that plaintiffs had failed to prove loss for reasons entirely unrelated to whether Section 11 damages were measured by stock price or some alternative value, and stated that damages can be measured by Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 13 of 18 Page ID #:1813 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 stock price on the day suit is filed only in passing.” In re LendingClub Sec. Litig., 2017 WL 4750629, at *12 n.4 (N.D. Cal. Oct. 20, 2017).3 Defendants’ creative attempt to reinterpret the plain language of Section 11 fares no better. Snap Mem. at 3, 6-8. Section 11’s statutory text makes a clear distinction between the “price” of a security and the “value” of a security. 15 U.S.C. §77k(e). Well-established canons of statutory construction presume “that Congress acts intentionally and purposely in the disparate inclusion or exclusion” of particular language, I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 432 (1987)—here, the use of the word “value” instead of “price.”4 Clearly recognizing that the plain language of Section 11 is fatal to their argument, Defendants attempt to explain it away, arguing that “value is the term applied by [§11(e)(1)] to a security that is held, while price is the term applied by [§11(e)(2) and (3)] to a security that is sold.” Snap Mem. at 7-8 (emphasis in original). However, as evidenced by Defendants’ failure to cite any authority supporting this reading of Section 11(e), Defendants’ interpretation has no basis in the statutory text of Section 11, its legislative history, or any case to consider the issue, further negating their claim that there exists “substantial ground for difference of opinion.” Astiana v. Dreyer’s Grand Ice Cream, Inc., 2012 WL 4892391, at *3 (N.D. Cal. Oct. 12, 2012) (finding party “failed to meet its burden of establishing a substantial ground for 3 Defendants’ attempt to manufacture a “substantial ground for a difference of opinion” by relying on In re Washington Mutual, Inc. Securities, Derivative & ERISA Litig.n, 2010 WL 4272567 (W.D. Wash. Oct. 12, 2010) fails because this decision plainly misreads Broderbund and Worlds of Wonder, and in any event is not controlling and runs contrary to the weight of authority. See P. Supp. at 6-9; P. Supp. Reply at 1- 3. 4 Early courts and commentators clearly understood the distinction to be a meaningful one. See, e.g., Federal Regulation of Securities: Some Problems of Civil Liability, 48 Harv. L. Rev. 107, 114-15 (Nov. 1934) (“Ordinarily, the market quotation would seem conclusive of [the value at the time of suit], but the particular issue may be unlisted or sold only over the counter, or such value may have been influenced by the false representation upon which the plaintiff acted. Obviously, this cannot be an absolute standard; a showing that market value differs from intrinsic worth should be permitted.”); Shonts v. Hirliman, 28 F. Supp. 478, 483 (S.D. Cal. 1939) (“The object of the Congress was to compensate a person for the depreciation in the value—the actual value of his security.”). Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 14 of 18 Page ID #:1814 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 difference of opinion on the legal question at issue” where “its reliance on [cited] cases was misplaced” and thus “it cited no opinion on point”).5 Nor does the fact that Defendants have managed to come up with some unsupported argument give rise to a substantial ground for disagreement; otherwise, a party could manufacture the requisite “substantial ground” in any case: [The movant] may disagree with the way the court has interpreted the relevant doctrine, but at least one party [is always] convinced that the court got it wrong. Such disagreement is not tantamount to a disagreement among the courts, and it does not itself compel section 1292(b) review. If it did, nearly every judgment would give rise to an interlocutory appeal. Envtl. Prot. Info. Ctr. v. Pac. Lumber Co., 2004 WL 838160, at *4 (N.D. Cal. Apr. 19, 2004). In sum, Defendants’ unsupported interpretation does not establish the requisite “substantial ground for difference of opinion” to warrant immediate appellate review. Astiana, 2012 WL 4892391, at *3. 2. Whether “the time such suit was brought” is always the date of the first-filed complaint Defendants also fail to establish a “substantial ground for difference of opinion” as to the interpretation of the “time such suit was brought.” 6 Defendants are incorrect 5 In a similar fashion, Defendants suggest that had Congress intended “value” to denote circumstances where market price and value diverge, “Congress would also have used ‘value’ rather than ‘price’ in measures 2 and 3 of §11(e)” because “[p]rice inflation due to misrepresentation is as fully contemplated by measures 2 and 3 as by measure 1.” Snap Mem. at 7. However, this argument ignores the fact that plaintiffs who sell their securities at inflated prices above the IPO price do not have compensable damages, since Section 11(e) limits damages to the IPO price. 15 U.S.C. §77k(g); cf. Dura Pharms. v. Broudo, 544 U.S. 336, 342 (2005) (holding that in the 10b context, “an inflated purchase price will not itself constitute or proximately cause the relevant economic loss” because if “the purchaser sells the shares quickly before the relevant truth begins to leak out, the misrepresentation will not have led to any loss”). 6 Defendants erroneously frame this issue as a choice between the initial complaint, which they contend was deficient for lack of standing, see Order at 15, and the CAC. However, Defendants ignore the second-filed complaint in this action, Gupta v. Snap Inc., et al., Case No. 17-cv-05054 (ECF No. 1) (“Gupta complaint”), filed on July 10, 2017, and which added claims under Section 11 against each of the Underwriter Defendants named in the CAC. See P. Sup. at 10. Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 15 of 18 Page ID #:1815 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 when they suggest that “a substantial line of authority directly conflicts with this Court’s decision.” Snap. Mem. at 1, see id. at 8. As demonstrated in Plaintiffs’ prior submissions on this issue, see P. Supp. Reply at 3-5, Defendants’ cited cases are all inapposite, as they fail to address the critical questions relevant to the facts of this case: (i) whether an initial complaint that is deficient for a lack of standing provide the operative date for the calculation of Section 11 damages; and (ii) whether the initial complaint date controls for subsequently added defendants. Indeed, Defendants have failed to cite any authority directly addressing the factual situation present here. See Snap Mem. at 8-9. “It is well settled that the mere presence of a disputed issue that is a question of first impression, standing alone, is insufficient to demonstrate a substantial ground for difference of opinion.” Couch, 611 F.3d at 634. Defendants have thus failed to establish that a substantial ground for difference of opinion exists as to the interpretation of “the time such suit was brought” in the context of this case. See Flores, 2015 WL 4463639, at *3 (finding case did not present a substantial ground for difference of opinion where “[d]efendants have not cited a single case that conflicts with the holding in the order at issue”); Astiana, 2012 WL 4892391, at *3 (same).7 IV. CONCLUSION For the reasons set forth above, Plaintiffs respectfully submit that the Court should deny Defendants’ Motion. 7 Notwithstanding Defendants’ arguments based on equity, see Snap Mem at 10, it would run contrary to the remedial purpose of Section 11 to use an initial complaint that is deficient for lack of standing to defeat the claims of all class members. Affiliated Ute Citizens of Utah v. U. S., 406 U.S. 128, 151 (1972) (“Congress intended securities legislation enacted for the purpose of avoiding frauds to be construed not technically and restrictively, but flexibly to effectuate its remedial purposes.”); see also Cent. Laborers’ Pension Fund v. Sirva, Inc., 2006 WL 2787520, at *10 (N.D. Ill. Sept. 22, 2006) (holding that allowing a defendant to relate back to an earlier filed complaint to dismiss a plaintiff’s claim would defeat the purpose of the relation-back doctrine). Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 16 of 18 Page ID #:1816 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DATED: July 18, 2018 Respectfully submitted, KESSLER TOPAZ MELTZER & CHECK, LLP /s/ Sharan Nirmul SHARAN NIRMUL (Pro Hac Vice) snirmul@ktmc.com NATHAN HASIUK (Pro Hac Vice) nhasiuk@ktmc.com JONATHAN F. NEUMANN (Pro Hac Vice) jneumann@ktmc.com 280 King of Prussia Road Radnor, PA 19087 Telephone: (610) 667-7706 Facsimile: (267) 948-2512 - and – JENNIFER L. JOOST (Bar No. 296164) jjoost@ktmc.com STACEY M. KAPLAN (Bar No. 241989) skaplan@ktmc.com One Sansome Street, Suite 1850 San Francisco, CA 94104 Telephone: (415) 400-3000 Facsimile: (415) 400-3001 Attorneys for Plaintiffs Thomas DiBiase and David Steinberg, and Lead Counsel for the Putative Class ROSMAN & GERMAIN LLP DANIEL L. GERMAIN (Bar No. 143334) germain@lalawyer.com 16311 Ventura Boulevard, Suite 1200 Encino, CA 91436 Telephone: (818) 788 0877 Facsimile: (818) 788-0885 Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 17 of 18 Page ID #:1817 MEMO OF POINTS AND AUTHORITIES IN OPPOSITION TO SNAP DEFENDANTS’ MOTION FOR CERTIFICATION OF AN INTERLOCUTORY APPEAL UNDER 28 U.S.C. § 1292(b) CASE NO. 2:17-CV-03679-SVW-AGR 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Liaison Counsel for the Putative Class Case 2:17-cv-03679-SVW-AGR Document 106 Filed 07/18/18 Page 18 of 18 Page ID #:1818