In Re Snap Inc. Securities Litigation

REPLY

C.D. Cal.October 2, 2018

LEAD PLAINTIFF’S REPLY NOTICE CASE NO. 2:17-CV-03679-SVW-AGR 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. 296130) skaplan@ktmc.com One Sansome Street, Suite 1850 San Francisco, CA 94104 Telephone: (415) 400-3000 Facsimile: (415) 400-3001 Attorneys for Lead Plaintiff Thomas DiBiase, Named Plaintiff David Steinberg, Proposed Named Plaintiffs Donald R. Allen and Shawn B. Dandridge, and Lead Counsel for the Putative Class [Additional counsel on signature page.] UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION IN RE SNAP INC. SECURITIES LITIGATION Case No. 2:17-CV-03679-SVW-AGR CLASS ACTION LEAD PLAINTIFF’S REPLY IN FURTHER SUPPORT OF HIS NOTICE OF WITHDRAWAL OF REQUEST FOR APPOINTMENT AS CLASS REPRESENTATIVE Judge: Stephen V. Wilson This Document Relates To: All Actions Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 1 of 7 Page ID #:2389 LEAD PLAINTIFF’S REPLY NOTICE 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 Lead Plaintiff Thomas DiBiase hereby submits this Reply in Further Support of his Notice of Withdrawal of Request for Appointment as Class Representative (ECF No. 118) (“Notice”).1 The central premise Defendants advance in their Response to Lead Plaintiff’s Notice (ECF No. 119) (“Response”) is incorrect: Mr. DiBiase has not withdrawn as the lead plaintiff in this litigation. To the contrary, he has expressly affirmed his willingness to remain in his role as lead plaintiff until the Court rules on the Rule 21 Motion and Motion for Class Certification. This course of action is consistent with the purpose of the PSLRA (which vests in a lead plaintiff the authority to control the litigation), promotes the best interest of the Class, and ensures that this action can be brought to trial on the schedule set by the Court. In short, there is no need to reopen the lead plaintiff process while a Court- appointed lead plaintiff remains able to act as a steward for the Class, and where two adequate and capable individuals have sought to be appointed class representatives to protect the interests of the Class. Any suggestion that the lead plaintiff process needs to be reopened prior to the adjudication of the Rule 21 Motion and the Motion for Class Certification is therefore misplaced. I. The Course of Action Set Forth in the Notice is Proper The course of action set forth in the Notice is consistent with ample authority in this Circuit (and beyond) which allows a lead plaintiff to propose a class representative at class certification. See, e.g., In re Twitter Inc. Sec. Litig., 2018 WL 3440708, at *6, -- F.R.D. -- (N.D. Cal. July 17, 2018); In re Silver Wheaton Corp. Sec. Litig., 2017 WL 2039171, at *10 (C.D. Cal. May 11, 2017); In re Intuitive Surgical Sec. Litig., 2016 WL 7425926, at *17-18 (N.D. Cal. Dec. 22, 2016); Hevesi v. Citigroup Inc., 366 F.3d 70, 82 (2d Cir. 2004); In re Initial Pub. Offering Sec. Litig., 214 F.R.D. 117, 123 1 Unless otherwise noted, defined terms herein have the same meaning as in the Notice and citations are omitted. Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 2 of 7 Page ID #:2390 LEAD PLAINTIFF’S REPLY NOTICE 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 (S.D.N.Y. 2002); In re Oxford Health Plans Inc., 191 F.R.D. 369, 378-79 (S.D.N.Y. 2000). Judge Tigar’s recent decision in In re Twitter is particularly instructive. In that case, the lead plaintiff sought to add an additional class representative at class certification. 2018 WL 3440708, at *6 n.4. Defendants opposed the addition of a class representative, arguing that it would “contravene the PSLRA and harm the class.” Id. at *5. First, after surveying the relevant authority, Judge Tigar held that the purpose of the PSLRA—to “enhance ‘the lead plaintiff[’s] power to control the course of the action’”—would be best served by allowing the lead plaintiff to propose an additional class representative. Id. (alteration in original). Further, the court reasoned that its appointment of a lead plaintiff at the pleading stage had no bearing on whether another class representative could later adequately represent the class: “The fact that one plaintiff might be the ‘most capable’ [under 15 U.S.C. §78u-4(a)(3)(B)(i)] does not mean that another plaintiff is not also capable, and nothing in the PSLRA appointment process sheds any light on that question.” Id. at *6. Numerous courts have reached the same conclusion. See, e.g., In re HiEnergy Techs., Inc. Sec. Litig., 2006 WL 2780058, at *6 (C.D. Cal. Sept. 26, 2006) (“Whether [the proposed class representative] is ‘the most adequate’ Plaintiff [under the PSLRA] in this case or not therefore has no bearing on whether he is an adequate class representative as Rule 23 requires.”); In re Glob. Crossing, Ltd. Sec. Litig., 313 F. Supp. 2d 189, 205 (S.D.N.Y. 2003) (“Judges presiding over complex securities class actions under the PSLRA have repeatedly rejected arguments, like those defendants raise here, that seek to confuse the role of lead plaintiffs under the PSLRA with that of named plaintiffs for purposes of ordinary class action standing law, or to claim that the individual lead plaintiff must have standing to bring all of the claims asserted in the class action complaint.”); In re Oxford, 191 F.R.D. at 378-79 (“There is no requirement found in the plain meaning of the statute that a Lead Plaintiff accept designation of Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 3 of 7 Page ID #:2391 LEAD PLAINTIFF’S REPLY NOTICE 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 class representative under Rule 23, and the statute does not provide for any specific action by the Court should it turn out after a Lead Plaintiff has been appointed; that Lead Plaintiff should on further examination fail to meet all of the requirements of Rule 23, or simply withdraw his or her expression of willingness to serve as Class Representative, in order to avoid the risk of a possible adjudication to that effect, or for any reason.”). Finally, and relatedly, Judge Tigar observed that “courts in this district and circuit regularly appoint both lead and additional plaintiffs as class representatives in PSLRA class actions.” In re Twitter, 2018 WL 3440708, at *6 (collecting cases). This is because “[t]he proposed class and Class Representatives are to be reviewed according to the standards of Rule 23, without any deference to the earlier determinations made in the appointment of Lead Plaintiffs.” Id. (alterations in original). Indeed, as Lead Plaintiff also explained in the Notice, “the PSLRA’s lead plaintiff appointment process involves a less searching inquiry than the Rule 23 class certification process.” Id. at *5 (emphasis added). Just as in In re Twitter, Mr. DiBiase—in his role as lead plaintiff—has proposed additional class representatives (Mr. Allen and Mr. Dandridge) to represent the interests of the Class. As Judge Tigar explained, the PSLRA encourages a lead plaintiff to make such tactical decisions “to control the course of the action.” Consistent with this reasoning, countless courts have allowed additional class representatives to be put forth at the class certification stage, see supra at pp. 1-2, even where the lead plaintiff is not certified as a class representative, see, e.g., In re Lehman Bros. Sec. & ERISA Litig., 2013 WL 440622, at *2 (S.D.N.Y. Jan. 23, 2013) (finding “‘no reason to subject the class to [the effect of] this potential defense [i.e., that the lead plaintiff did not rely on the alleged misstatements] where there is another’ proposed class representative that is not subject to it”) (first alteration in original). This case is no different. In fact, Mr. Allen and Mr. Dandridge will be subject to the more “searching” inquiry under Rule 23 than any lead plaintiff inquiry prescribed the PSLRA. Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 4 of 7 Page ID #:2392 LEAD PLAINTIFF’S REPLY NOTICE 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 Defendants’ authorities do not address the precise situation (or procedural posture) here, and are distinguishable on their facts. In the majority of the cases cited by Defendants, the lead plaintiff process was reopened only after the lead plaintiffs’ claims were dismissed for lack of standing. See Claude v. Robert, 2015 U.S. Dist. LEXIS 44319, at *9 (W.D. Wash. Apr. 3, 2015) (reopening lead plaintiff process after the court dismissed the lead plaintiff’s claims for lack of standing); In re Bank of Am. Corp. Auction Rate Sec. (ARS) Mktg. Litig., 2009 WL 2031764, at *1 (N.D. Cal. July 9, 2009) (same); In re Smith Barney Transfer Agent Litig., 823 F. Supp. 2d 202, 203 (S.D.N.Y. 2011) (same); Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 862 F. Supp. 2d 322, 325 (S.D.N.Y. 2012) (same). And in In re Neopharm, Inc. Securities Litigation, 2004 U.S. Dist. LEXIS 5814, at *3 (N.D. Ill. Apr. 7, 2004), the lead plaintiff actually withdrew from the case pursuant to an appropriate motion and court order. Here, Lead Plaintiff’s claims were sustained, not dismissed. And, as noted above, Lead Plaintiff has not withdrawn. Defendants’ authorities are inapposite. II. Defendants Should Not Be Permitted to Dictate the Terms of Lead Plaintiff’s Withdrawal On the other hand, allowing Defendants to dictate the terms of Mr. DiBiase’s (eventual) withdrawal would not advance the purpose of the PSRLA. Indeed, “to state the obvious, [Defendants’] interests in this litigation are not aligned with those of the class.” In re Twitter, 2018 WL 3440708, at *7 (rejecting defendants’ challenge to the adequacy of counsel); see also In re Pfizer Inc. Sec. Litig., 282 F.R.D. 38, 48 (S.D.N.Y. 2012) (“It is in a defendant’s best interests to object to class counsel who are, in fact, best suited to protect the class and represent its interests, so that the defendant can seek new class counsel who will more readily compromise the claims of the class.”). Moreover, Defendants’ implicit suggestion that Mr. DiBiase is not capable of continuing in his role as lead plaintiff is not well taken. Any doubts in this respect are easily erased by the substantial work he has done to date, the solution he has proposed to ensure the Class remains adequately represented until his eventual withdrawal, and Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 5 of 7 Page ID #:2393 LEAD PLAINTIFF’S REPLY NOTICE 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 the sworn certification attesting to his ability to continue as lead plaintiff submitted with the Notice. To be sure, given his substantial losses in excess of $300,000, Mr. DiBiase has every incentive to see this case forward, and to ensure a swift and fair resolution. Conversely, Defendants’ proposal will disrupt the orderly prosecution of this case, leading to delay which likely will prejudice the Class and call into question the propriety of the Court’s March 12, 2019 trial date. This is particularly true in light of Defendants’ unilateral decision to stay discovery by suspending the majority of document production and interfering with at least one of Lead Plaintiff’s third party subpoenas. Needless to say, this is improper. If Defendants wish to stay discovery, they must file an appropriate application with the Court. See, e.g., Apple v. Eastman Kodak Co., 2011 WL 334669, at *2 (N.D. Cal. Feb. 1, 2011) (“Simple logic teaches that . . . unless and until it is granted a stay, [a party] should be required to conduct discovery as if no motion had been filed at all.”); Nelsen v. Konami Gaming, Inc., 2017 U.S. Dist. LEXIS 203509 (D. Nev. Dec. 11, 2017) (“A party is not entitled to [unilaterally] grant itself such relief”). In summary, there is no need to reopen the lead plaintiff process at this juncture. Mr. DiBiase continues to willingly serve the Class as the court-appointed Lead Plaintiff. And the Court will have the opportunity to assess the adequacy of the two individuals Mr. DiBiase has proposed as class representatives under the more rigorous Rule 23 standard by deciding the currently pending motions. Respectfully submitted, Dated: October 3, 2018 KESSLER TOPAZ MELTZER & CHECK, LLP /s/ Sharan Nirmul SHARAN NIRMUL (Pro Hac Vice) snirmul@ktmc.com ETHAN J. BARLIEB (Pro Hac Vice) ebarlieb@ktmc.com Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 6 of 7 Page ID #:2394 LEAD PLAINTIFF’S REPLY NOTICE 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 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 Lead Plaintiff Thomas DiBiase, Named Plaintiff David Steinberg, Proposed Named Plaintiffs Donald R. Allen and Shawn B. Dandridge, 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 Liaison Counsel for the Putative Class Case 2:17-cv-03679-SVW-AGR Document 122 Filed 10/03/18 Page 7 of 7 Page ID #:2395