TOMASZEWSKI v. TREVENA, INC. et al

RESPONSE in Support re MOTION to Consolidate Cases , for Appointment

E.D. Pa.March 26, 2019

00523199;V2 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA DR. WILLIAM TOMASZEWSKI, Individually and on Behalf of All Others Similarly Situated, Plaintiff, vs. TREVENA, INC., MAXINE GOWEN and ROBERTO CUCA, Defendants. Case No. 2:18-cv-04378- CMR CLASS ACTION RESPONSE IN FURTHER SUPPORT OF HUSEYIN ERENOGLU’S MOTION FOR APPOINTMENT AS LEAD PLAINTIFF AND APPROVAL OF LEAD COUNSEL On March 13, 2019, pursuant to the Court’s Order dated March 6, 2019 (Doc. No. 35) and the Court’s Protective Order dated March 12, 2019 (Doc. No. 38), lead plaintiff movant Huseyin Erenoglu produced his transaction confirmations in Trevena, Inc. (“Trevena”) securities (see ERENOGLU-000001-ERENOGLU-0000037). The Trevena Group and Mr. Ping now concede that Mr. Erenoglu is the movant with the largest financial interest in this action (see Doc. No. 40 at 3 (“Mr. Erenoglu appears to have the largest financial interest in this litigation” by over $66,000); Doc. No. 39 at 2 (acknowledging that Mr. Erenoglu’s losses are nearly $350,000 greater than Mr. Ping’s losses). They also concede that Mr. Erenoglu purchased and sold all of the Trevena shares that he claimed he did on his sworn Certification (see Doc. No. 39 at 1 (“the Certification and Declaration accurately reflect the number of shares Erenoglu purchased and sold”); Doc. No. 40 at 1 (“these stock trading statements show that Mr. Erenoglu made the total number of stock purchases he claims”)). In light of the foregoing, and because Mr. Erenoglu handily satisfies the adequacy and typicality requirements of Rule 23, Mr. Erenoglu should be appointed lead plaintiff in this action. Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 1 of 9 00523199;V2 2 And yet, despite this proof demonstrating that Mr. Erenoglu is the “most adequate plaintiff,” and despite representing to the Court that they would withdraw their motions if Mr. Erenoglu produced his transaction confirmations, the Trevena Group and Mr. Ping both continue to challenge Mr. Erenoglu. See Exhibit A to the Declaration of Laurence Hasson (“Hasson Decl.”), at 20:10-17; Doc. No. 14 at 13. The reason why is now obvious: counsel for these two movants place their own interests in being appointed lead counsel above the Class’ interests in being represented by the “most adequate plaintiff.” Left with no argument to contest Mr. Erenoglu’s financial interest, the Trevena Group and Mr. Ping resort to arguing that the presumption in his favor is rebutted by a minor typographical error on his Certification, which has since been corrected, and because Mr. Erenoglu listed his transactions on his Certification in the manner in which he ordered them. Such self-serving quibbles are not the proof that is required to rebut the strong presumption in favor of appointing Mr. Erenoglu as lead plaintiff. See Roby v. Ocean Power Techs., Inc., No. 14-cv-3799 (FLW) (LH6), 2015 WL 1334320, at *7 (D.N.J. Mar. 17, 2015) (“the PSLRA requires ‘actual proof’ to rebut the presumption of the most adequate plaintiff.”); In re Cendant Corp. Litig., 264 F.3d 201, 270 (3d Cir. 2001) (“Allegations [] are not proof []. If they were, then any class member (or lawyer seeking to be appointed lead counsel) could disable any presumptive lead plaintiff by making unsupported allegations”). I. MR. ERENOGLU HAS CONFIRMED THAT HE MADE EACH OF THE FOUR TRANSACTIONS SPECULATED TO BE OUT OF RANGE The Trevena Group and Mr. Ping initially speculated that four of Mr. Erenoglu’s transactions in Trevena stock were out of range. However, as Mr. Erenoglu explained to the Court, and as his transaction confirmations now unequivocally show, he made all of those trades, except there was an inadvertent, typographical error relating to the date on which three of those trades Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 2 of 9 00523199;V2 3 were made.1 Compare Certification (Doc. No. 9-4) with ERENOGLU-0000023. Importantly, the Trevena Group and Mr. Ping no longer dispute whether Mr. Erenoglu made any of those trades; nor do they dispute that Mr. Erenoglu has the largest financial interest in this action. See Doc. No. 40 at 3 (“Mr. Erenoglu appears to have the largest financial interest in this litigation” by over $66,000); Doc. No. 39 at 2 (acknowledging that Mr. Erenoglu’s losses are nearly $350,000 more than Mr. Ping’s losses). Instead, they now assert, without any support, that a minor typographical error should prevent Mr. Erenoglu from serving as lead plaintiff. Undersigned counsel apologizes for the inadvertent typographical error on Mr. Erenoglu’s Certification. However, the record should now be clear that this error does not impact Mr. Erenoglu’s losses or his adequacy and typicality. In fact, it is well-settled that a minor error on a certification does not impugn a movant’s adequacy under Rule 23 or prevent him from being appointed lead plaintiff. See In re Solar City Corp. Sec. Litig., No. 16-CV-04686-LHK, 2017 WL 363274, at *6 (N.D. Cal. Jan. 25, 2017) (“Multiple district courts have held that ‘minor or inadvertent mistakes made in a sworn certification do not strike at the heart of Rule 23’s adequacy requirement.’”) (collecting cases); see also Doc. No. 17 at 5. Even Mr. Ping’s counsel conceded this point at the March 6, 2019 hearing, stating that “if he (Mr. Erenoglu) did purchase those shares, 1 On January 7, 2019, Mr. Erenoglu voluntarily submitted a Declaration attesting that he made each of the contested transactions at the price and quantity listed on his Certification (Doc. No. 9-4), but that there was a minor typographical error relating to the date on which three of those purchases were made. See Declaration of Huseyin Erenoglu In Support of His Motion to Consolidate Related Actions, For Appointment as Lead Plaintiff and Approval of Lead Counsel (Doc. No. 17-5) (“Erenoglu Decl.”) at ¶¶ 3-8. Specifically, Mr. Erenoglu purchased 9,457 shares at $2.40 per share in a pre-market trade on October 2, 2018, and he purchased 5 shares at $2.69 per share, 15,000 shares at $2.70 per share, and 464 shares at $2.88 per share on October 4, 2018 instead of October 2, 2018. Undersigned counsel represented the same to the Court at the March 6, 2019 hearing (see Hasson Decl., Ex. A at 23:22-24:4). Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 3 of 9 00523199;V2 4 Your Honor, I have no reason to question his adequacy or his typicality.” Hasson Decl., Ex. A at 19:5-6. II. MR. ERENOGLU HAS CONFIRMED THAT HE PURCHASED THE 315,000 TREVENA SHARES SPECULATED TO BE “HIGHLY IMPLAUSIBLE” The Trevena Group also initially speculated that Mr. Erenoglu’s October 2, 2018 purchase of 315,000 Trevena shares was “highly implausible,” but now both movants concede, as they must, that Mr. Erenoglu purchased every one of those shares on that date. See Doc. No. 39 at 1 (“the Certification and Declaration accurately reflect the number of shares Erenoglu purchased and sold”); Doc. No. 40 at 1 (“these stock trading statements show that Mr. Erenoglu made the total number of stock purchases he claims”). Nevertheless, both movants continue to challenge Mr. Erenoglu by arguing that his Certification contains errors because he did not purchase all 315,000 Trevena shares in a single block at exactly $2.60 per share. See Doc. No. 14 at 3-5. For the reasons articulated below, this argument fails and is also now mooted. There is no longer any dispute that Mr. Erenoglu purchased and sold all of the shares that he claimed he did. See supra at 3. Thus, Mr. Erenoglu had no reason (and certainly no intention) to hide any of his trades on his Certification. In fact, Mr. Erenoglu’s Certification reflects the trades that he made in Trevena stock, including a single purchase order for 315,000 shares on October 2, 2018. This is demonstrated by Mr. Erenoglu’s Declaration (Doc. No. 17-5) and the screenshots of the filled trade orders attached thereto (see Erenoglu Decl. at Exhibits A-G). Aside from the minor typographical error discussed supra, Mr. Erenoglu’s Certification and Declaration accurately reflect the same date, price per share, and quantity of his filled trade orders as reported by his broker. See Erenoglu Decl. at Exhibits A-G; id. at ¶¶ 4-8. Mr. Erenoglu’s transaction confirmations, in contrast, reflect the detailed manner in which his broker executed his orders, including his October 2, 2018 purchase order of 315,000 shares of Trevena stock (id. at ¶ 5)). Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 4 of 9 00523199;V2 5 However, the mere fact that this large purchase order was executed through a series of individual transactions is of no consequence – it is beyond dispute that Mr. Erenoglu made a single purchase order for 315,000 shares, the order was executed, his losses have been sustained, and his losses are by far the largest of any movant. Hasson Decl., Ex. A at 7:2-17. Furthermore, no amount of rounding changes the calculus. The cost basis per share for Mr. Erenoglu’s 315,000 share purchase, without the negligible rounding to $2.60 per share reflected on his screenshots, is $2.5983 per share, which amounts to an approximate $500 difference in Mr. Erenoglu’s total losses. See Hasson Decl., Ex. A at 6:14-8:6. This negligible rounding difference forms the basis for Mr. Ping’s new and futile argument that Mr. Erenoglu has “overstated his total losses by $518.61.” See Erenoglu Decl. at Exhibit B; id. at ¶ 5. III. MR. ERENOGLU IS THE MOST ADEQUATE PLAINTIFF TO LEAD THIS ACTION Mr. Erenoglu is the “most adequate plaintiff” to lead this action. The lawyer-driven Trevena Group, comprised of five unrelated and geographically dispersed individuals represented by four different law firms, and Mr. Ping have now conceded that, with losses of over $550,000, Mr. Erenoglu has the largest financial interest in this action by a wide margin. See Doc. No. 13 at 4-5. In addition, Mr. Erenoglu has made the required prima facie showing of his typicality and adequacy (see Doc. No. 13 at 5-6). No movant has presented any proof to rebut the strong presumption in favor of appointing Mr. Erenoglu as lead plaintiff. See In re Cendant Corp. Litig., 264 F.3d at 268 (“If no class member succeeds in rebutting the presumption, then the district court should appoint the presumptive lead plaintiff as the lead plaintiff.”). For these reasons, Mr. Erenoglu should be appointed the lead plaintiff for this action. Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 5 of 9 00523199;V2 6 IV. THE TREVENA GROUP AND MR. PING CONTINUE TO CHALLENGE MR. ERENOGLU OUT OF SELF-INTEREST The Trevena Group and Mr. Ping both claimed that they would withdraw their motions if they received Mr. Erenoglu’s transaction confirmations, and yet, now that they have them, it is noteworthy that both movants continue to challenge Mr. Erenoglu. At the March 6, 2019 hearing, counsel for Mr. Ping persuaded the Court that in order to “put this issue [concerning Mr. Erenoglu’s trades] to rest,” “an easy fix” would be for Mr. Erenoglu to produce his trade confirmations. See Hasson Decl., Ex. A at 24:5-20. Counsel for Mr. Ping, stated that: I think that the solution here, as Mr. Block pointed out, is fairly simple, is [sic] Mr. Erenoglu produces his Trade Confirmations for that day, or he produces his Monthly Statements, showing the shares that he purchased, as opposed to the Orders that he submitted to his Broker. That should solve this problem once and for all. * * * Whatever error this was, I believe it was an error. However, I think it is easy for the Court, in relatively short time, to determine, in fact, what Mr. Erenoglu purchased on the 2nd, and what he purchased on the 4th. * * * If Mr. Erenoglu submits to the Court that he actually purchased those shares, from my perspective he will have proven that he lost the $500,000-and-some-odd that he claims. And my Client, therefore, is no longer, presumptively, the Lead Plaintiff. So, I think that's easy to solve. Mr. Block's group, I can talk about at a later time. But, for now, if Mr. Erenoglu submits that documentation, we will withdraw. (Emphasis added). Hasson Decl., Ex. A at 19:7-12; 19:19-22; 20:10-17. Counsel for Mr. Ping further stated that “if he (Mr. Erenoglu) did purchase those shares, Your Honor, I have no reason to question his adequacy or his typicality.” Hasson Decl., Ex. A at 19:5-6. Similarly, counsel for the Trevena Group represented to the Court that it will withdraw its motion if Mr. Erenoglu submits a Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 6 of 9 00523199;V2 7 declaration supporting his willingness to be a lead plaintiff and provides proof that he made the contested trades. See Doc. No. 14 at 13. These movants have not withdrawn their motions because, as is now apparent, their counsel are seeking to attain leadership positions in this action at any cost, including the cost of preventing the “most adequate plaintiff” (Mr. Erenoglu) from representing the Class. 15 U.S.C. § 78u- 4(a)(3)(B)(iii)(I) (the “most adequate plaintiff” of a federal securities class action is the movant with “the largest financial interest in the relief sought by the class” who “otherwise satisfies the requirements of Rule 23”). The Court should not be persuaded by the petty arguments made by these movants; nor should it reward such gamesmanship of their counsel. V. CONCLUSION The record should now be clear that Mr. Erenoglu is the “most adequate plaintiff” to lead this action. However, to eliminate the potential for any remaining concern, concurrently with this submission, Mr. Erenoglu is submitting a corrected Certification2 that, in addition to correcting the typographical error discussed supra, also lists Mr. Erenoglu’s trades in the manner in which his broker executed his trade orders. See Hasson Decl., Exhibit B.3 2 See Vladimir v. Bioenvision, Inc., No. 07 Civ. 6416 (SHS) (AJP), 2007 WL 4526532, at *9 n.19 (S.D.N.Y. Dec. 21, 2007) (accepting revised certification) (collecting cases); Doc. No. 17 at 5 n. 4. 3 At the March 6, 2019 hearing, counsel for the Trevena Group raised an argument, for the first time, mischaracterizing a form retainer they found on undersigned counsel’s website. The Court need not address this issue and can consider it waived. See, e.g. People v. Clarke, S. Ct. Crim. No. 2009-0104 2011 WL 2150103, at *5, n.15 (V.I. Apr. 12, 2011) (“The People, however, failed to raise this issue until oral arguments. We will, therefore, not address this issue.”). Nevertheless, the Trevena Group’s argument is now moot as, in an abundance of caution, Mr. Erenoglu has executed a new retainer that does not contain any of the provisions that were mischaracterized as problematic. Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 7 of 9 00523199;V2 8 Dated: March 26, 2019 Respectfully submitted, THE WEISER LAW FIRM, P.C. /s/ Christopher L. Nelson Christopher L. Nelson (PA Bar #85609) 22 Cassatt Avenue Berwyn, PA 19312 Telephone: (610) 225-2677 Facsimile: (610) 408-8062 Email: cln@weiserlawfirm.com BERNSTEIN LIEBHARD LLP Stanley D. Bernstein Laurence J. Hasson 10 East 40th Street New York, NY 10016 Telephone: (212) 779-1414 Facsimile: (212) 779-3218 Email: bernstein@bernlieb.com lhasson@bernlieb.com Counsel for Huseyin Erenoglu Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 8 of 9 00523199;V2 9 CERTIFICATE OF SERVICE I, Christopher L. Nelson, hereby certify that on March 26, 2019, a true and correct copy of the annexed RESPONSE IN FURTHER SUPPORT OF HUSEYIN ERENOGLU’S MOTION FOR APPOINTMENT AS LEAD PLAINTIFF AND APPROVAL OF LEAD COUNSEL was served in accordance with the Federal Rules of Civil Procedure with the Clerk of the Court using the CM/ECF system, which will send a notification of such filing to all parties with an email address of record who have appeared and consented to electronic service in this action. Dated: March 26, 2019 /s/ Christopher L. Nelson Christopher L. Nelson Case 2:18-cv-04378-CMR Document 43 Filed 03/26/19 Page 9 of 9