Hoang v. ContextLogic, Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 YEN HOANG, Individually and on Behalf Case No. 21-cv-03930-BLF of All Others Similarly Situated 9 Plaintiff, ORDER APPOINTING XIAOQUAN 10 YANG AND ALEXANDER DE BLOCK v. AS CO-LEAD PLAINTIFFS; AND 11 APPROVING SELECTION OF CONTEXTLOGIC, INC., et al., CO-LEAD COUNSEL 12 Defendants. [Re: ECF 27, 50] 13

15 16 17 This consolidated putative class action for alleged violations of the Securities Act of 1933 18 (“Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”) is brought 19 against Defendant ContextLogic, Inc. (“ContextLogic” or “the Company”), Company officers and 20 directors, and underwriters of the Company’s initial public offering (“IPO”). 21 This order addresses two motions for appointment of lead plaintiff and lead counsel, the 22 first brought by Xiaoquan Yang and Alexander De Block (“Yang & De Block”) and the second 23 brought by Joel Newman and Anand Chetram (“Newman & Chetram”). 24 For the reasons discussed below, the motion brought by Yang & De Block is GRANTED 25 and the motion brought by Newman & Chetram is DENIED. 26 The Court APPOINTS Yang & De Block as Co-Lead Plaintiffs and APPROVES Yang & 27 De Block’s selection of Glancy Prongay & Murray LLP and The Rosen Law Firm, P.A. as Co- 1 I. BACKGROUND 2 ContextLogic is a mobile ecommerce company that operates the Wish platform, which 3 connects consumers with merchants.1 Compl. ¶ 4, ECF 1. The Company completed its IPO on 4 December 16, 2020, selling 46 million shares of Class A common stock at $24 per share. Id. ¶ 6. 5 On January 14, 2021, an article published on Investorplace.com stated that the Company was 6 suffering from slowing growth and fulfillment issues. Id. ¶ 65. The Company’s share price fell 7 nearly 11.7%, closing at $24.84 per share on January 15, 2021. Id. On March 8, 2021, the 8 Company announced its fourth quarter and fiscal year 2020 financial results, disclosing among 9 other things that in the fourth quarter of 2020 its monthly active users (“MAUs”) declined 10% 10 from the fourth quarter of the prior year. Id. ¶ 66. The Company’s share price fell 10% on that 11 news, closing at $15.94 per share on March 8, 2021. Id. ¶ 68. On May 12, 2021, ContextLogic 12 announced that its MAUs declined another 7% in the first quarter of 2021. The Company’s share 13 price fell 29% on that news, closing at $8.11 per share on May 13, 2021. 14 Four putative class actions were filed against ContextLogic and related defendants in this 15 District: (1) Boehning v. ContextLogic Inc. et al., No. 21-cv-03671; (2) Hoang v. ContextLogic, 16 Inc., et al., No. 21-cv-03930; (3) Asmat v. ContextLogic, Inc., et al., No. 21-cv-05015; and 17 (4) Lam v. ContextLogic, Inc., et al., No. 21-cv-05411. Those actions asserted claims under the 18 Securities Act on behalf of investors who purchased ContextLogic securities traceable to the 19 registration statement and prospectus issued in connection with the Company’s IPO, and claims 20 under the Exchange Act on behalf of investors who purchased ContextLogic securities between 21 December 16, 2020 and May 12, 2021, inclusive (the “Class Period”). 22 Pursuant to the procedure set forth in the Private Securities Litigation Reform Act of 1995 23 (the “PSLRA”), notice of the first-filed Boehning action was published on May 17, 2021. Eight 24 movants filed lead plaintiff motions in the Boehning action. Before completion of briefing, named 25 plaintiff Jarrett Boehning voluntarily dismissed Boehning. The lead plaintiff movants continued 26

27 1 These facts are drawn from the allegations of the complaint filed in Hoang, and are not disputed 1 briefing their motions based on their view that Jerrett Boehning’s voluntary dismissal was 2 effective only as to his own claims and that the district court would appoint a lead plaintiff to 3 represent the entire putative class. However, the Boehning court terminated all pending motions in 4 August 2021, commenting that the motions could be refiled in one of the open cases. The 5 Boehning court terminated without comment a subsequent administrative motion to relate Hoang, 6 Asmat, and Lam to Boehning and to rule on the lead plaintiff motions. 7 In August 2021, the three remaining actions – Hoang, Asmat, and Lam – were related and 8 assigned to a single judge. Yang & De Block thereafter filed a motion in Hoang seeking 9 consolidation of the three actions, appointment as co-lead plaintiffs, and approval of co-lead 10 counsel. After that motion was filed, the district judge who related the cases filed an order of 11 recusal. The cases were reassigned to the judge who presided over the original Boehning action, 12 but that judge also filed an order of recusal. Hoang, Asmat, and Lam eventually were reassigned 13 to the undersigned judge in December 2021. 14 On January 11, 2022, this Court inquired whether Yang & De Block had given notice of 15 their motion filed in Hoang to all parties in the related Asmat and Lam actions. Yang & De Block 16 indicated that they gave notice of their motion to the plaintiffs in Asmat and Lam only after the 17 Court’s inquiry. On January 18, 2022, Newman & Chetram filed a motion for appointment as co- 18 lead plaintiffs and approval of co-lead counsel, stating that previously they had been unaware of 19 the motion filed by Yang & De Block in Hoang. To ensure that all interested parties received 20 notice of both motions, this Court ordered that the motions be filed in Asmat and Lam at least 21 thirty-five days prior to the March 3, 2022 hearing on the motions. No other putative class 22 members filed motions or responded to the pending motions. 23 The Court heard argument on both motions on March 3, 2022. On March 4, 2022, the 24 Court granted the portion of the Yang & De Block motion requesting consolidation of Hoang, 25 Asmat, and Lam. The Court directed that all future filings be made only in Hoang and that Asmat 26 and Lam be closed. The Court advised that the competing lead plaintiff motions would be 27 addressed in a separate order. 1 II. LEGAL STANDARD 2 A. Lead Plaintiff 3 The PSLRA governs appointment of lead plaintiffs in all private securities class actions. 4 See 15 U.S.C. §§ 77z-1(a)(3), 78u-4(a)(3). The district court shall appoint as lead plaintiff “the 5 member or members of the purported plaintiff class that the court determines to be most capable of 6 adequately representing the interests of class members,” also referred to as the “most adequate 7 plaintiff.” Id. §§ 77z-1(a)(3)(B)(i), 78u-4(a)(3)(B)(i). 8 The PSLRA “provides a simple three-step process for identifying the lead plaintiff.” In re 9 Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002). At the first step, the pendency of the first-filed 10 action, the claims made, and the purported class period must be publicized in a “widely circulated 11 national business-oriented publication or wire service.” Id. (internal quotation marks and citation 12 omitted). The notice must advise that any putative class member may seek appointment as lead 13 plaintiff. See id. 14 Second, the court must identify the presumptive lead plaintiff, that is, “the movant with the 15 largest financial interest who otherwise satisfies the requirements of Rule 23 of the Federal Rules 16 of Civil Procedure.” In re Mersho, 6 F.4th 891, 899 (9th Cir. 2021) (internal quotation marks and 17 citation omitted). To determine which movant has the largest financial interest, the court “must 18 compare the financial stakes of the various plaintiffs and determine which one has the most to gain 19 from the lawsuit.” Cavanaugh, 306 F.3d at 730. When making that comparison, “the court may 20 select accounting methods that are both rational and consistently applied.” Id. at 730 n.4. The 21 court then must determine whether the movant with the largest financial interest “satisfies the 22 requirements of Rule 23(a), in particular those of ‘typicality’ and ‘adequacy.’” Id. at 730. At this 23 stage in the proceedings, only a “a prima facie showing of adequacy and typicality” need be made. 24 Mersho, 6 F.4th at 899. If the plaintiff with the largest financial interest satisfies Rule 23(a), that 25 plaintiff “becomes the presumptively most adequate plaintiff.” Id. (internal quotation marks and 26 citation omitted.” “If the movant with the largest losses does not satisfy the Rule 23 requirements, 27 the district court must then look to the movant with the next largest losses and repeat the inquiry.” 1 only the movant’s pleadings and declarations.” Id. 2 “At step three, the process turns adversarial.” Mersho, 6 F.4th at 899 (internal quotation 3 marks and citation omitted). The court must “give other plaintiffs an opportunity to rebut the 4 presumptive lead plaintiff’s showing that it satisfies Rule 23’s typicality and adequacy 5 requirements.” Cavanaugh, 306 F.3d at 730. The presumption may be rebutted only upon proof 6 that the presumptive lead plaintiff “will not fairly and adequately protect the interests of the class” 7 or “is subject to unique defenses that render such plaintiff incapable of adequately representing the 8 class.” Mersho, 6 F.4th at 899. “If the presumption is not rebutted, the presumptively most 9 adequate plaintiff must be selected as lead plaintiff.” Id. 10 B. Lead Counsel 11 Under the PSLRA, the lead plaintiff has the right, subject to court approval, to select and 12 retain counsel to represent the class. See Cohen v. U.S. Dist. Ct., 586 F.3d 703, 711 (9th Cir. 13 2009). “[I]f the lead plaintiff has made a reasonable choice of counsel, the district court should 14 generally defer to that choice.” Id. at 712. 15 III. DISCUSSION 16 In evaluating the lead plaintiff motions brought by Yang & De Block on the one hand, and 17 Newman & Chetram on the other, the Court follows the three-step process provided in the PSLRA 18 and summarized in Cavanaugh. 19 A. Notice 20 At the first step, the Court must confirm that the PSLRA’s notice requirement was met. A 21 notice was published in Business Wire on May 17, 2021, announcing the pendency of the first- 22 filed Boehning action. See Linehan Decl. ¶ 2 & Exh. A. That notice contained all required 23 information, including a description of the claims made and the proposed class period. See id. 24 The notice advised that any putative class member could seek appointment as lead plaintiff. See 25 id. In response, eight timely motions for lead plaintiff were filed in Boehning, including separate 26 motions by Yang, De Block, Newman, and Chetram. 27 After Boehning was dismissed, Yang & De Block joined forces to file their current motion 1 notice of that motion, Newman and Chetram joined forces to file a competing motion in Hoang for 2 appointment as co-lead plaintiffs. To ensure that all interested parties had an opportunity to renew 3 their lead plaintiff motions, or to file briefing on the pending motions, this Court required that the 4 pending motions be filed in Asmat and Lam at least thirty-five days before the hearing date on the 5 motions. As noted above, no other putative class members renewed their lead plaintiff motions or 6 filed briefing on the pending motions. 7 Based on this record, the Court finds that the PSLRA’s notice requirement was satisfied. 8 B. Presumptive Lead Plaintiff 9 At the second step, the Court must identify the presumptive lead plaintiff by determining 10 (a) which of the two sets of movants have the largest financial interest in the relief sought by the 11 class, and (b) whether the movants with the largest financial interest satisfy the requirements of 12 Rule 23(a). 13 1. Largest Financial Interest 14 “[N]either the PSLRA nor the Ninth Circuit specifies precisely how to calculate which 15 plaintiff has the largest financial interest.” Perlmutter v. Intuitive Surgical, Inc., No. 10-CV- 16 03451-LHK, 2011 WL 566814, at *3 (N.D. Cal. Feb. 15, 2011). “The only real guidance offered 17 by the Ninth Circuit in In re Cavanaugh is that ‘the court may select accounting methods that are 18 both rational and consistently applied’ in order to ‘compare the financial stakes of the various 19 plaintiffs and determine which one has the most to gain from the lawsuit.’” Id. (quoting In re 20 Cavanaugh, 306 F.3d at 730 n.4). 21 District courts within the Ninth Circuit generally consider the four “Lax” factors, first 22 articulated in the Lax v. First Merchants Acceptance Corp., 1997 WL 461036 (N.D. Ill. Aug. 11, 23 1997), to determine which plaintiff has the greatest financial interest. See Lako v. Loandepot, Inc., 24 8:21-cv-01449-JLS-JDE, 2022 WL 1314463, at *3 (C.D. Cal. May 2, 2022) (applying Lax 25 factors); Weston v. DocuSign, Inc., No. 22-CV-00824-WHO, 2022 WL 1301770, at *2 (N.D. Cal. 26 Apr. 18, 2022) (same); Sneed v. AcelRx Pharms., Inc., No. 21-CV-04353-BLF, 2021 WL 27 5964596, at *2 (N.D. Cal. Dec. 16, 2021) (same); Nicolow v. Hewlett Packard Co., No. 12-05980 1 number of shares purchased during the class period; (2) the number of net shares purchased during 2 the class period; (3) total net funds expended during the class period; and (4) the approximate 3 losses suffered during the class period.” Sneed, 2021 WL 5964596, at *2. “Of the four factors, 4 courts consider the fourth factor, the approximate losses suffered, as most determinative in 5 identifying the plaintiff with the largest financial loss.” Lako, 2022 WL 1314463, at *3 (internal 6 quotation marks and citation omitted). 7 Predictably, the competing movants have different views of how these factors cut in this 8 case. As an initial matter, Newman & Chetram request that the Court consider only losses under 9 the Exchange Act, and disregard all losses under the Securities Act, when determining which 10 movants have the greatest financial interest. The reason for this request is apparent when the 11 Court looks at the parties’ claimed losses. While the losses claimed by the competing movants are 12 fairly close under the Exchange Act, the losses claimed by Yang & De Block under the Securities 13 Act far exceed those claimed by Newman and Chetram. Thus, Newman & Chetram’s only 14 realistic chance at being deemed the movants with the greatest financial interest is to persuade the 15 Court to ignore the Securities Act losses. 16 Newman & Chetram contend that “Exchange Act losses are a better measure of financial 17 interest in this litigation than Securities Act losses,” because the number of class members seeking 18 recovery under the Exchange Act will be much greater than the number of class members seeking 19 recovery under the Securities Act. Newman & Chetram Mot. at 9, ECF 50. Based on that 20 argument, Newman & Chetram request that only Exchange Act losses be considered in the 21 determination of greatest financial interest, and that the substantial loss of $516,859.43 claimed by 22 Yang & De Block under the Securities Act be disregarded. The authorities cited by Newman & 23 Chetram do not support their proposed approach. See Miami Police Relief & Pension Fund v. 24 Fusion-io, Inc., No. 13-CV-05368-LHK, 2014 WL 2604991 (N.D. Cal. June 10, 2014); 25 Eichenholtz v. Verifone Holdings, Inc., No. C07-06140MHP, 2008 WL 3925289 (N.D. Cal. Aug. 26 22, 2008). The cited portion of Fusion-io states that “[f]or purposes of appointing a lead plaintiff, 27 the longest class period governs.” Fusion-io, 2014 WL 2604991, at *1 n.3. The Fusion-io court 1 Act affects the determination which plaintiff has the largest financial interest. See id. at *4. In 2 fact, all parties in Fusion-io agreed which class member had the greatest financial loss. See id. In 3 Eichenholtz, “the court decline[d] the invitation to artificially shorten the class period when 4 determining the plaintiff with the greatest financial interest in this litigation.” Eichenholtz, 2008 5 WL 3925289, at *3. Eichenholtz did not address appointment of a lead plaintiff in a case 6 involving claims under both the Exchange Act and the Securities Act. 7 Newman & Chetram argue that the adoption of longer class periods in Fusion-io and 8 Eichenholtz support the general proposition that courts should “assess financial interest with 9 reference to the most inclusive class definition.” Newman & Chetram Mot. at 9. In this Court’s 10 view, Fusion-io and Eichenholtz cannot be read in this manner. The Ninth Circuit has offered 11 clear guidance that “the district court must identify which movant has the largest alleged losses 12 and then determine whether that movant has made a prima facie showing of adequacy and 13 typicality. Mersho, 6 F.4th at 899; see also Cavanaugh, 306 F.3d at 729 (“[T]he district court 14 must consider the losses allegedly suffered by the various plaintiffs.”). Nothing in the Ninth 15 Circuit’s guidance, or in any other case of which this Court is aware, suggests that a movant’s 16 losses should be considered only as to claims asserted by the majority of putative class members. 17 In CTI Biopharma, the district court resolved contested lead plaintiff motions in favor of 18 the movants with the largest collective loss in a case involving claims under both the Exchange 19 Act and the Securities Act, even though those movants arguably lacked standing under the 20 Exchange Act. In re CTI Biopharma Corp. Sec. Litig., No. C16-216RSL, 2016 WL 7805876, at 21 *4 (W.D. Wash. Sept. 2, 2016). The CTI Biopharma court reasoned that “courts often appoint 22 purchasers of one type of securities to represent purchasers of other types of securities of the same 23 issuer where the interests of those purchasers are aligned.” Id. (internal quotation marks and 24 citation omitted). Nothing in this record suggests that Yang & De Block would not represent the 25 interests of class members asserting claims under the Exchange Act, particularly as Yang & De 26 Block claim hundreds of thousands of dollars of Exchange Act losses. 27 The Court therefore denies Newman & Chetram’s request to limit the calculation of 1 based on consideration of the movants’ total claimed losses under both the Exchange Act and the 2 Securities Act. The Court notes that only Yang & De Block have addressed the first three Lax 3 factors – the number of shares purchased, the number of net shares purchased, and the total net 4 funds expended. Those figures were provided in Yang & De Block’s reply brief. At the hearing, 5 counsel for Newman & Chetram stated, “I would not agree with the numbers in those charts 6 necessarily, and I would just – I just want to put in an objection against that.” Hrg. Tr. 26:19-21, 7 ECF 72. However, counsel did not articulate any substantive reasons for rejecting Yang & De 8 Block’s figures. The Court acknowledges that it denied Newman and Chetram’s motion for leave 9 to file a sur-reply. See Order, ECF 60. However, Newman & Chetram’s proposed sur-reply did 10 not offer specific objections to Yang & De Block’s figures relating to the first three Lax factors, 11 nor did it offer competing figures. See Newman & Chetram Prop. Sur-Reply, ECF 58-2. Because 12 Newman & Chetram have failed to address the first three Lax factors, and absent substantive 13 objections to the figures offered by Yang & De Block, the Court accepts those figures for purposes 14 of evaluating the current motions. 15 a. Lax Factor 1 – Number of Shares Purchased 16 The first Lax factor requires the Court to consider the number of shares purchased during 17 the class period. Yang & De Block purchases 106,771 shares, while Newman & Chetram 18 purchases 119,315 shares. This factor slightly favors Newman & Chetram. 19 b. Lax Factor 2 – Number of Net Shares Purchased 20 The second Lax factor requires the Court to consider the number of net shares purchased 21 during the class period. Yang & De Block purchased 96,771 net shares, while Newman & 22 Chetram purchased 37,598 net shares. This factor favors Yang & De Block. 23 c. Lax Factor 3 – Total Net Funds Expended 24 The third Lax factor requires the Court to consider the total net funds expended during the 25 during the class period. Yang & De Block expended $1,481,811.57 during the class period, while 26 Newman & Chetram expended $727,821.29 during the class period. This factor favors Yang & 27 De Block. 1 d. Lax Factor 4 – Approximate Losses 2 The fourth Lax factor requires the Court to consider the approximate losses suffered by the 3 movants during the class period. As noted above, this factor is given the greatest weight. District 4 courts within the Ninth Circuit use a variety of accounting methods to calculate losses in lead 5 plaintiff motions. These methods generally fall into two categories: those that calculate actual 6 economic losses suffered, without regard for the possibility of recovery; and those that calculate 7 losses that are potentially recoverable under applicable statutes and case law. See Mehedi v. View, 8 Inc., No. 21-CV-06374-BLF, 2022 WL 377406, at *4 (N.D. Cal. Feb. 8, 2022). 9 Methods for calculating actual economic losses suffered include the first-in-first-out 10 (“FIFO”) method and the last-in-first-out (“LIFO”) method. See Schueneman v. Arena Pharms., 11 Inc., No. 10cv1959 BTM (BLM), 2011 WL 3475380, at *3 (S.D. Cal. Aug. 8, 2011). “Under 12 FIFO, stocks which were acquired first are assumed to be sold first for loss calculation purposes.” 13 Perlmutter, 2011 WL 566814, at *10 (internal quotation marks and citation omitted). “Under 14 LIFO, stocks which were acquired most recently are assumed to be sold first.” Id. (internal 15 quotation marks and citation omitted). 16 Methods for calculating recoverable losses address concerns raised by the Supreme Court’s 17 decision in Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005). In Dura, the Supreme Court held 18 that in cases based on a fraud-on-the-market theory, a purchaser of stock at fraudulently inflated 19 prices cannot recover without proving loss caused by the defendant’s fraud as opposed to ordinary 20 market forces. See Dura, 544 U.S. at 346. This is because securities fraud actions are intended 21 “not to provide investors with broad insurance against market losses, but to protect them against 22 those economic losses that misrepresentations actually cause.” Id. at 345. The Supreme Court 23 observed that where a purchaser buys shares at an inflated price but “sells the shares quickly 24 before the relevant truth begins to leak out, the misrepresentation will not have led to any loss.” 25 Id. at 342. The Dura-adjusted LIFO method considers losses only with respect to shares retained 26 at the time of a corrective disclosure. See Mehedi, 2022 WL 377406, at *5. Dura-adjusted LIFO 27 partially addresses the concerns raised by Dura, since it ignores the portion of the losses that took 1 Loss method is a variation on Dura-adjusted LIFO. See id. at *6. “The only difference between 2 this approach and the Dura-adjusted loss approach is instead of using the actual purchase price of 3 the stock to determine its value before the Corrective Disclosure, the Court uses the stock price 4 just before the Corrective Disclosure.” Id. 5 In their moving papers, both sets of movants rely on the following losses calculated using 6 the LIFO method: 7 8 Movant Exchange Act Claimed Loss Securities Act Claimed Loss 9 Yang & De Block collectively $384,062.66 $516,859.43 10 Newman & Chetram collectively $417,162.69 $380.496.14 11 The parties’ moving papers do not state expressly which methodology was used to arrive at 12 these figures, but based on their subsequent briefs and the arguments presented at the hearing, it is 13 clear that the LIFO method was used. The losses under the Exchange Act are set forth at page 9 of 14 the Yang & De Block moving papers, see ECF 27, and page 8 of the Newman & Chetram moving 15 papers, see ECF 50.2 The losses under the Securities Act are set forth at page 9 of the Yang & De 16 Block moving papers, see ECF 27. Newman & Chetram do not address losses under the 17 Securities Act, see ECF 50, and they do not challenge the loss amounts offered by Yang & De 18 Block. 19 At the hearing, counsel for Newman and Chetram clarified that the movants’ total losses 20 cannot be calculated by simply adding Exchange Act losses with Securities Act losses, because 21 there will be some overlap in the losses recoverable under the two Acts. See Hrg. Tr. 22:14-23:13, 22 ECF 72. Counsel did not provide the Court with specifics as to the extent of that overlap, so the 23 Court cannot determine the movants’ approximate losses with precision. However, while 24 Newman & Chetram’s Exchange Act losses exceed those of Yang & De Block by approximately 25 2 There is a slight discrepancy of approximately $2.00 in the figures offered by the two sets of 26 movants with respect to Newman & Chetram’s Exchange Act losses under the LIFO method. That discrepancy does not impact the Court’s evaluation of the parties’ motions. The Court adopts 27 the Newman & Chetram figure, which is supported by Exhibit B to the Apton Declaration, see 1 $33,100, Yang & De Block’s Securities Act losses exceed those of Newman & Chetram by 2 approximately $136,363. Whatever the overlap between losses under the two Acts, the Court is 3 satisfied that under the LIFO method Yang & De Block have the greater approximate losses. 4 While both parties focus on economic loss in their moving papers, Yang & De Block 5 provided additional argument on recoverable loss in their opposition to Newman & Chetram’s 6 motion. See Yang & De Block Opp. at 6, ECF 56. The chart at page 6 of Yang & De Block’s 7 opposition indicates that under the “Retained Share Loss” method, Newman & Chetram’s 8 Exchange Act losses are $315,001.33 (as opposed to $417,162.69 under the LIFO method), and 9 that Yang & De Block’s Exchange Act losses are unchanged.3 See Yang & De Block Opp. at 6, 10 ECF 56. At the hearing, counsel for Yang & De Block clarified that they used the Dura-adjusted 11 LIFO method, meaning that they did not count any losses from stocks that were bought and sold 12 prior to a corrective disclosure or, in other words, that were not held over any corrective 13 disclosure. See Hrg. Tr. 13:5-15:3, ECF 72. The losses calculated under the Dura-adjusted LIFO 14 method confirm the court’s conclusion under the LIFO method that Yang & De Block have the 15 greater approximate losses. 16 At the hearing, counsel for Newman & Chetram argued that use of the Dura-adjusted 17 LIFO method is not appropriate in this case. See Hrg. Tr. 16:3-17:6, ECF 72. Counsel pointed out 18 that this case is distinguishable from other cases in which the Dura-adjusted LIFO method has 19 been used, because this case involves three corrective disclosures rather than a single corrective 20 disclosure. See id. Based on Yang & De Block’s explanation that they excluded only those shares 21 purchased and sold before any corrective disclosure, it appears that the Dura-adjusted LIFO 22 method properly may be used in this case. Under that method, Yang & De Block clearly have the 23 greater approximately losses. 24 Neither set of movants requested use of the Recoverable Loss method that this Court 25 applied in Mehedi and Enphase. See Mehedi, 2022 WL 377406, at *6; Hurst v. Enphase Energy, 26

27 3 The chart in Yang & De Block’s opposition states their LIFO/Retained Share losses as 1 Inc., No. 20-CV-04036-BLF, 2020 WL 7025085, at *4 (N.D. Cal. Nov. 30, 2020). As noted 2 above, the Recoverable Loss method is a variation of the Dura-adjusted LIFO method, in which 3 “instead of using the actual purchase price of the stock to determine its value before the Corrective 4 Disclosure, the Court uses the stock price just before the Corrective Disclosure.” Mehedi, 2022 5 WL 377406, at *6. It may be that the parties believed that use of the Recoverable Loss method 6 would be too complicated in light of the multiple corrective disclosures alleged in this case. Both 7 Mehedi and Enphase involved a single corrective disclosure. See Mehedi, 2022 WL 377406, at 8 *5; Hurst, 2020 WL 7025085, at *4. Counsel for Yang & De Block commented during the 9 hearing that “with multiple drops, it gets very confusing if you do it the way where you multiply 10 the shares.” Hrg. Tr. 14:23-25, ECF 72. Even with multiple disclosures, however, Yang & De 11 Block’s counsel argued that their proposed use of Dura-adjusted LIFO is appropriate because it 12 applies LIFO but simply excludes the four Newman & Chetram transactions involving shares that 13 were not held over any corrective disclosure. See id. at 14:24-15:3. Counsel stated that the goal 14 was “only excluding shares where clearly there’s no loss causation” under Dura. See id. at 13:13- 15 14. The Court finds that on the facts of this case, Yang & De Block’s proposed application of the 16 Dura-adjusted LIFO method is rational and consistent with the requirements of Cavanaugh. See 17 Cavanaugh, 306 F.3d at 730 n.4. 18 The Court concludes that Yang & De Block have the greater approximate losses under 19 either the LIFO method or the Dura-adjusted LIFO method. 20 e. Weighing the Lax Factors 21 Weighing the Lax factors, the Court finds that Yang & De Block have the greatest 22 financial interest. While the first factor slightly favors Newman & Chetram, all of the other 23 factors favor Yang & De Block, including the fourth and most important factor. 24 2. Rule 23(a) Requirements 25 The Court next considers whether Yang & De Block have made a prima facie showing that 26 they satisfy the Rule 23(a) requirements of typicality and adequacy. See Mersho, 6 F.4th at 899 27 (“Once the district court has determined that the movant with the largest stake has made a prima 1 plaintiff.” (internal quotation marks and citation omitted)). “Examination of the remaining 2 requirements is deferred until the lead plaintiff moves for class certification.” Mehedi, 2022 WL 3 377406, at *9. 4 a. Adequacy 5 To determine Yang and De Block’s adequacy, the Court must resolve two questions: (1) 6 whether Yang & De Block and their counsel have any conflicts of interest with other class 7 members and (2) whether Yang & De Block and their counsel will prosecute the action vigorously 8 on behalf of the putative class. See Mehedi, 2022 WL 377406, at *9. The record does not reflect 9 any conflicts of interest. Moreover, given that Yang & De Block and their counsel got this case 10 moving again after it stagnated following termination of Boehning, and the Court is satisfied that 11 Yang & De Block and their counsel will prosecute this action vigorously on behalf of the putative 12 class. The Court also notes that Yang & De Block have filed a joint declaration committing to 13 fulfill their obligations as co-lead plaintiffs if they are selected. See Joint Decl., ECF 56-1. 14 b. Typicality 15 The Court finds that the claims of Yang & De Block under the Exchange Act and 16 Securities Act are typical of those of the putative class. 17 3. Yang & De Block are the Presumptive Lead Plaintiffs 18 Based on the above, the Court finds that Yang & De Block are the presumptive lead 19 plaintiffs. 20 C. Opportunity to Rebut 21 In order to rebut this presumption, Newman & Chetram must present proof that Yang & 22 De Block “will not fairly and adequately protect the interests of the class” or are “subject to 23 unique defenses that render [them] incapable of adequately representing the class.” Mersho, 6 24 F.4th at 899. No such proof has been presented. Newman & Chetram urge the Court to reject the 25 joint declaration offered by Yang & De Block because it was not filed with their moving papers, 26 and suggest that Yang & De Block acted improperly when they filed their renewed lead plaintiff 27 motion only in the Hoang action without giving notice to other class members. The Court will not 1 intent when the filed their renewed lead plaintiff motion in Hoang. 2 The Court finds that Newman & Chetram have not presented the type of proof necessary to 3 || rebut the presumption. 4 Accordingly, Yang & De Block’s motion for appointment as co-lead plaintiffs is 5 GRANTED and Newman & Chetram’s competing motion is DENIED. 6 D. Lead Counsel 7 “TI]f the lead plaintiff has made a reasonable choice of counsel, the district court should 8 generally defer to that choice.” Cohen, 586 F.3d at 712. Yang & De Block have selected Glancy 9 || Prongay & Murray LLP and The Rosen Law Firm P.A. to act as co-lead counsel. The Court has 10 reviewed the firms’ resumes, see Linehan Decl. Exhs. D and E, ECF 28-4, 28-5, and is satisfied 11 that Yang & De Block have made a reasonable choice of counsel. 12 The Court APPROVES Yang & De Block’s selection of Glancy Prongay & Murray LLP 13 and The Rosen Law Firm P.A. as co-lead counsel. 14 |) Iv. ORDER 3 15 (1) Yang & De Block’s motion for appointment as co-lead plaintiffs is GRANTED, a 16 and Yang & De Block ARE APPOINTED as Co-Lead Plaintiffs in this case. 3 17 (2) Glancy Prongay & Murray LLP and The Rosen Law Firm P.A. ARE APPOINTED 18 as Co-Lead Counsel in this case. 19 (3) Newman & Chetram’s motion is DENIED. 20 (4) This order terminates ECF 27, 50. 21 22 || Dated: May 16, 2022 han ham Lh aman BETH LABSON FREEMAN 24 United States District Judge 25 26 27 28