1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 IN RE APPLE INC. STOCKHOLDER LEAD CASE NO. 19-cv-05153-YGR DERIVATIVE LITIGATION 10 Consolidated with Case Nos. 19-cv-05863- YGR, 19-cv-05881-YGR, 19-cv-08246- 11 YGR)
12 ORDER APPOINTING LEAD COUNSEL 13 Re: Dkt. Nos. 21, 23
15 Before the Court are competing motions to appoint lead counsel filed by plaintiff Alan 16 Bankhalter (“Bankhalter”), who seeks appointment of Pritzker Levine LLP (“Pritzker”) and 17 Gainey McKenna & Egleston (“GM&E”); and plaintiffs Terrence Zehrer, Andrew Fine, Tammy 18 Federman SEP/IRA, and the Rosenfeld Family Foundation (collectively, “ZFFR”), who seek 19 appointment of Robbins LLP (“Robbins”) and WeissLaw LLP (“WeissLaw”). For the reasons set 20 forth below, the Court appoints the latter. 21 District courts regularly appoint lead counsel in complex consolidated suits. See Vincent v. 22 Hughes Air West, Inc., 557 F.2d 759, 774 (9th Cir. 1979). In doing so here, the Court is mindful 23 that the “guiding principle” is who will “best serve the interest of the plaintiffs.” Millman ex rel. 24 Friedman’s, Inc. v. Brinkley, 2004 WL 2284505, at *3 (N.D. Ga. Oct. 1, 2004) (citation omitted). 25 Five of six plaintiffs in this consolidated suit support ZFFR’s motion to appoint Robbins and 26 WeissLaw as lead counsel. Bankhalter is the only plaintiff who opposes the motion and moves for 27 appointment of his own counsel. Although not dispositive, the fact that a large majority of 1 Counsel’s experience also is a relevant factor in making a lead counsel appointment. See 2 Hacker v. Peterschmidt, 2006 WL 2925683, at *5 (N.D. Cal. Oct. 12, 2006) (considering 3 counsel’s “extensive experience in prosecuting shareholder derivative litigation”). Here, each of 4 the competing motions details the experience of proposed lead counsel in complex class and 5 individual litigation, including in securities cases. However, while Bankhalter claims that the 6 firms have similar experience, ZFFR argues that GM&E and Pritzker have fewer relevant, 7 successful experiences litigating derivative cases than Robbins and WeissLaw. For example, 8 ZFFR presents evidence that GM&E has never secured a monetary recovery in a derivative action 9 in which it served as lead counsel; overstates its role in certain cases; and has not engaged in 10 extensive litigation in a derivative action. ZFFR further notes that Pritzker points to only two 11 derivative actions in which it has been involved in any capacity. In contrast, ZFFR’s counsel 12 appears to have recovered substantial sums of money in extensively litigated derivative actions, 13 including ones in which it appeared as lead or co-lead counsel. On balance, ZFFR appears to have 14 an edge with respect to its counsel’s experience.1 15 Another important factor in selecting lead counsel is the work performed by counsel in 16 pursuing the claims in the action. See Millman, 2004 WL 2284505, at *3. Bankhalter claims that 17 because three of the four consolidated actions were filed near in time to one another and all four 18 actions have been stayed, all proposed lead counsel likely have done the same amount of work in 19 this case. ZFFR presents contrary evidence, however, demonstrating that its proposed lead 20 counsel has expended more effort litigating the case to this point, albeit on relatively routine 21 matters. Thus, on August 19, 2019, Robbins commenced the first of the four consolidated actions, 22 filing a complaint on behalf of plaintiff Terrence Zehrer.2 Robbins later led negotiations among 23
24 1 Bankhalter notes that he is the only movant to propose appointment of a firm (Pritzker) based in this district, where a substantial portion of the transactions and wrongdoings giving rise 25 to the claims in this action occurred. Given the benefits of technology, and in light of the fact that ZFFR proposes lead counsel with a presence nearby, in Southern California, Pritzker’s location 26 does not have a strong bearing on the appointment of lead counsel. 27 2 Courts have held that the first-to-file factor may be considered an “objective tie-breaker” 1 plaintiffs’ counsel and with defense counsel regarding initial scheduling and case management, 2 prepared and circulated the stipulation and proposed order to consolidate and stay the related 3 actions, and secured the agreement of most plaintiffs to the its proposed leadership structure. In 4 addition, WeissLaw invested time and effort in making a books and records demand on Apple Inc. 5 for documents relevant to this action. Even if counsel’s efforts have involved routine legal work, 6 they have demonstrated a commitment to progressing the action, which weighs in ZFFR’s favor.3 7 Next, the parties dispute whether Bankhalter’s complaint contains a fatal pleading error, 8 and if so, whether this error reflects counsel’s lack of knowledge of the applicable law. ZFFR 9 contends that Bankhalter’s complaint is subject to dismissal for failure to plead the specific dates 10 on which Bankhalter purchased Apple Inc. stock. Bankhalter counters that Rule 23.1 contains no 11 such requirement and ZFFR fails to cite binding Ninth Circuit authority for this proposition. 12 Bankhalter’s argument persuades to a certain extent: The Ninth Circuit has interpreted Rule 23.1 13 to require that a derivative plaintiff “be a shareholder at the time of the alleged wrongful acts” and 14 “retain ownership of the stock for the duration of the lawsuit,” Lewis v. Chiles, 719 F.2d 1044, 15 1047 (9th Cir. 1983), but does not appear to require the plaintiff to state the specific dates on 16 which it purchased stock. Nevertheless, Bankhalter’s allegations may still fall short. Indeed, the 17 case on which Bankhalter relies suggests that allegations that he “is a current Apple shareholder 18 during the relevant period” and “will continue to hold his Apple shares throughout the pendency 19 of this action,” are insufficient under Rule 23.1. See In re Corinthian Colleges, Inc. S’holder 20 Derivative Litig., No. SA CV 10-1597-GHK, 2012 WL 8502955, at *14 (C.D. Cal. Jan. 30, 2012) 21 (distinguishing allegations that plaintiff held stock during the “relevant period” with allegations 22
23 Shareholders Litig., 847 A.2d 1121 (Del. 2004). While not determinative, this factor weighs in favor of ZFFR. 24 3 Bankhalter claims that his proposed lead counsel investigated the underlying conduct and 25 potential legal claims before filing his complaint, continue to perform fact and legal research during the pendency of the stay, and worked with plaintiffs’ counsel and defense counsel to 26 organize and coordinate the litigation. With respect to the first two assertions, there is no evidence that GM&E or Pritzker has done more work than any other firm that filed a complaint in this case. 27 As to the last point, ZFFR proffers evidence that GM&E and Pritzker had little communication 1 that plaintiff held stock “at the time of the transactions and events complained of,” finding the 2 latter sufficient because it “track[s] the language of Rule 23.1”). At this juncture, the Court need 3 not and does not rule on the sufficiency of the pleadings. The Court addresses this issue only to 4 note that such a pleading vulnerability casts doubt on Bankhalter’s arguments that his counsel are 5 best suited represent plaintiffs in this case.4 6 For the foregoing reasons, the Court exercises its discretion and hereby ORDERS: 7 1. ZFFR’s motion is GRANTED.5 Co-Lead Counsel for plaintiffs for the conduct of this 8 Consolidated Action shall be: 9 ROBBINS LLP 10 BRIAN J. ROBBINS (190624) 11 CRAIG W. SMITH (164886) SHANE P. SANDERS (237146) 12 ASHLEY R. RIFKIN (246602) STEVEN R.
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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 IN RE APPLE INC. STOCKHOLDER LEAD CASE NO. 19-cv-05153-YGR DERIVATIVE LITIGATION 10 Consolidated with Case Nos. 19-cv-05863- YGR, 19-cv-05881-YGR, 19-cv-08246- 11 YGR)
12 ORDER APPOINTING LEAD COUNSEL 13 Re: Dkt. Nos. 21, 23
15 Before the Court are competing motions to appoint lead counsel filed by plaintiff Alan 16 Bankhalter (“Bankhalter”), who seeks appointment of Pritzker Levine LLP (“Pritzker”) and 17 Gainey McKenna & Egleston (“GM&E”); and plaintiffs Terrence Zehrer, Andrew Fine, Tammy 18 Federman SEP/IRA, and the Rosenfeld Family Foundation (collectively, “ZFFR”), who seek 19 appointment of Robbins LLP (“Robbins”) and WeissLaw LLP (“WeissLaw”). For the reasons set 20 forth below, the Court appoints the latter. 21 District courts regularly appoint lead counsel in complex consolidated suits. See Vincent v. 22 Hughes Air West, Inc., 557 F.2d 759, 774 (9th Cir. 1979). In doing so here, the Court is mindful 23 that the “guiding principle” is who will “best serve the interest of the plaintiffs.” Millman ex rel. 24 Friedman’s, Inc. v. Brinkley, 2004 WL 2284505, at *3 (N.D. Ga. Oct. 1, 2004) (citation omitted). 25 Five of six plaintiffs in this consolidated suit support ZFFR’s motion to appoint Robbins and 26 WeissLaw as lead counsel. Bankhalter is the only plaintiff who opposes the motion and moves for 27 appointment of his own counsel. Although not dispositive, the fact that a large majority of 1 Counsel’s experience also is a relevant factor in making a lead counsel appointment. See 2 Hacker v. Peterschmidt, 2006 WL 2925683, at *5 (N.D. Cal. Oct. 12, 2006) (considering 3 counsel’s “extensive experience in prosecuting shareholder derivative litigation”). Here, each of 4 the competing motions details the experience of proposed lead counsel in complex class and 5 individual litigation, including in securities cases. However, while Bankhalter claims that the 6 firms have similar experience, ZFFR argues that GM&E and Pritzker have fewer relevant, 7 successful experiences litigating derivative cases than Robbins and WeissLaw. For example, 8 ZFFR presents evidence that GM&E has never secured a monetary recovery in a derivative action 9 in which it served as lead counsel; overstates its role in certain cases; and has not engaged in 10 extensive litigation in a derivative action. ZFFR further notes that Pritzker points to only two 11 derivative actions in which it has been involved in any capacity. In contrast, ZFFR’s counsel 12 appears to have recovered substantial sums of money in extensively litigated derivative actions, 13 including ones in which it appeared as lead or co-lead counsel. On balance, ZFFR appears to have 14 an edge with respect to its counsel’s experience.1 15 Another important factor in selecting lead counsel is the work performed by counsel in 16 pursuing the claims in the action. See Millman, 2004 WL 2284505, at *3. Bankhalter claims that 17 because three of the four consolidated actions were filed near in time to one another and all four 18 actions have been stayed, all proposed lead counsel likely have done the same amount of work in 19 this case. ZFFR presents contrary evidence, however, demonstrating that its proposed lead 20 counsel has expended more effort litigating the case to this point, albeit on relatively routine 21 matters. Thus, on August 19, 2019, Robbins commenced the first of the four consolidated actions, 22 filing a complaint on behalf of plaintiff Terrence Zehrer.2 Robbins later led negotiations among 23
24 1 Bankhalter notes that he is the only movant to propose appointment of a firm (Pritzker) based in this district, where a substantial portion of the transactions and wrongdoings giving rise 25 to the claims in this action occurred. Given the benefits of technology, and in light of the fact that ZFFR proposes lead counsel with a presence nearby, in Southern California, Pritzker’s location 26 does not have a strong bearing on the appointment of lead counsel. 27 2 Courts have held that the first-to-file factor may be considered an “objective tie-breaker” 1 plaintiffs’ counsel and with defense counsel regarding initial scheduling and case management, 2 prepared and circulated the stipulation and proposed order to consolidate and stay the related 3 actions, and secured the agreement of most plaintiffs to the its proposed leadership structure. In 4 addition, WeissLaw invested time and effort in making a books and records demand on Apple Inc. 5 for documents relevant to this action. Even if counsel’s efforts have involved routine legal work, 6 they have demonstrated a commitment to progressing the action, which weighs in ZFFR’s favor.3 7 Next, the parties dispute whether Bankhalter’s complaint contains a fatal pleading error, 8 and if so, whether this error reflects counsel’s lack of knowledge of the applicable law. ZFFR 9 contends that Bankhalter’s complaint is subject to dismissal for failure to plead the specific dates 10 on which Bankhalter purchased Apple Inc. stock. Bankhalter counters that Rule 23.1 contains no 11 such requirement and ZFFR fails to cite binding Ninth Circuit authority for this proposition. 12 Bankhalter’s argument persuades to a certain extent: The Ninth Circuit has interpreted Rule 23.1 13 to require that a derivative plaintiff “be a shareholder at the time of the alleged wrongful acts” and 14 “retain ownership of the stock for the duration of the lawsuit,” Lewis v. Chiles, 719 F.2d 1044, 15 1047 (9th Cir. 1983), but does not appear to require the plaintiff to state the specific dates on 16 which it purchased stock. Nevertheless, Bankhalter’s allegations may still fall short. Indeed, the 17 case on which Bankhalter relies suggests that allegations that he “is a current Apple shareholder 18 during the relevant period” and “will continue to hold his Apple shares throughout the pendency 19 of this action,” are insufficient under Rule 23.1. See In re Corinthian Colleges, Inc. S’holder 20 Derivative Litig., No. SA CV 10-1597-GHK, 2012 WL 8502955, at *14 (C.D. Cal. Jan. 30, 2012) 21 (distinguishing allegations that plaintiff held stock during the “relevant period” with allegations 22
23 Shareholders Litig., 847 A.2d 1121 (Del. 2004). While not determinative, this factor weighs in favor of ZFFR. 24 3 Bankhalter claims that his proposed lead counsel investigated the underlying conduct and 25 potential legal claims before filing his complaint, continue to perform fact and legal research during the pendency of the stay, and worked with plaintiffs’ counsel and defense counsel to 26 organize and coordinate the litigation. With respect to the first two assertions, there is no evidence that GM&E or Pritzker has done more work than any other firm that filed a complaint in this case. 27 As to the last point, ZFFR proffers evidence that GM&E and Pritzker had little communication 1 that plaintiff held stock “at the time of the transactions and events complained of,” finding the 2 latter sufficient because it “track[s] the language of Rule 23.1”). At this juncture, the Court need 3 not and does not rule on the sufficiency of the pleadings. The Court addresses this issue only to 4 note that such a pleading vulnerability casts doubt on Bankhalter’s arguments that his counsel are 5 best suited represent plaintiffs in this case.4 6 For the foregoing reasons, the Court exercises its discretion and hereby ORDERS: 7 1. ZFFR’s motion is GRANTED.5 Co-Lead Counsel for plaintiffs for the conduct of this 8 Consolidated Action shall be: 9 ROBBINS LLP 10 BRIAN J. ROBBINS (190624) 11 CRAIG W. SMITH (164886) SHANE P. SANDERS (237146) 12 ASHLEY R. RIFKIN (246602) STEVEN R. WEDEKING (235759) 13 5040 Shoreham Place San Diego, CA 92122 14 Telephone: (619) 525-3990 15 Facsimile: (619) 525-3991 E-mail: brobbins@robbinsarroy.com 16 csmith@robbinsllp.com ssanders@robbinsllp.com 17 arifkin@robbinsllp.com swedeking@robbinsllp.com 18
19 WEISSLAW LLP 20 DAVID C. KATZ (admitted pro hac vice) MARK D. SMILOW (pro hac to be filed) 21 JOSHUA RUBIN (pro hac to be filed) 1500 Broadway, 16th Floor 22 23 4 ZFFR also challenges Bankhalter’s motion for failing to address his counsel’s resources 24 with specificity. However, Bankhalter represents that counsel’s resources are “sufficient” and that the firms have an “ability and willingness to dedicate substantial resources” to this matter. The 25 Court has no reason to believe otherwise, and thus, finds that the parties’ resources are not determinative in ruling on the motions. 26 5 Bankhalter argues that in the alternative, the Court may appoint one firm from each of the 27 competing motions. The Court is not persuaded, however, that giving partial relief to both New York, NY 10036 1 Telephone: (212) 682-3025 2 Facsimile: (212) 682-3010 E-mail: dkatz@weisslawllp.com 3 msmilow@weisslawllp.com jrubin@weisslawllp.com 4 WEISSLAW LLP 5 Joel E. Elkins 6 9107 Wilshire Blvd., Suite 450 Beverly Hills, CA 90210 7 Telephone: (310) 208-2800 Facsimile (310) 209-2348 8 E-mail: jelkins@weisslawllp.com
10 2. Co-Lead Counsel shall have the sole authority to speak for plaintiffs in all matters 11 regarding pre-trial procedure, trial, and settlement, and shall assign all work in their discretion in 12 such manner as to facilitate the orderly and efficient prosecution of this litigation and to avoid 13 unnecessarily duplicative or unproductive effort. Co-Lead Counsel shall keep records detailed 14 enough to determine whether such duplicative or unproductive effort occurred especially for 15 purposes of side-by-side comparison. 16 3. Co-Lead Counsel will be responsible for coordinating all activities and appearances 17 on behalf of plaintiffs. No motion, request for discovery, or other pre-trial or trial proceedings 18 will be initiated or filed by any plaintiffs except through Co-Lead Counsel. 19 4. Co-Lead Counsel shall be available and responsible for communications to and 20 from this Court, including distributing orders and other directions from the Court to counsel. 21 5. Co-Lead Counsel shall be responsible for creating and maintaining a master service 22 list of all parties and their respective counsel. 23 6. Defendants’ counsel may rely upon all agreements made with Co-Lead Counsel, or 24 other duly authorized representative of Co-Lead Counsel, and such agreements shall be binding on 25 plaintiffs. 26 7. This Order shall apply to this Consolidated Action and any future-filed actions 27 relating to the subject matter of this case. When a case that properly belongs as part of the 1 Counsel shall endeavor in good faith to alert the Court to such filing, remand, or transfer to assist 2 || in assuring that counsel in subsequent actions receive notice of this Order. 3 This Order terminates Docket Numbers 21 and 23. 4 IT Is SO ORDERED. 5 Dated: June 29, 2020 YVONNE GONZALEZ ROGERS 6 UNITED STATES DISTRICT COURT JUDGE 7 8 9 10 ll 12
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