Kusen v. Herbert, II

• Court: District Court, N.D. California
• Decided: November 24, 2023
• Docket: 3:23-cv-02940
• Status: Unknown

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 6 ALEXANDRA KUSEN, et al., Case No. 23-cv-02940-AMO

7 Plaintiffs, ORDER RE MOTIONS FOR 8 v. APPOINTMENT OF LEAD PLAINTIFF AND LEAD COUNSEL 9 JAMES H. HERBERT, II, et al., Re: Dkt. Nos. 15, 26, 35 Defendants. 10

11 12 Before the Court are three competing applications for appointment of lead plaintiff and 13 lead counsel. ECF 15, 26, 35.1 The motions are fully briefed and suitable for disposition without 14 hearing pursuant to Civil Local Rule 7-1(b). Having considered the parties’ papers, the relevant 15 legal authority, and good cause appearing, the Court GRANTS Alecta Tjänstepension 16 Ömsesidigt’s motion for appointment as lead plaintiff and approves its selection of Kessler Topaz 17 Meltzer & Check, LLP and Bernstein Litowitz Berger & Grossmann LLP as lead counsel. The 18 Court DENIES the remaining motions. 19 I. BACKGROUND 20 This is a federal securities class action on behalf of persons and entities who purchased or 21 acquired First Republic Bank securities between January 14, 2021, through May 1, 2023.2 ECF 1 22 23 1 All ECF references are to the filings in the above-captioned case unless otherwise indicated. 24

25 2 The competing plaintiffs propose different class periods. Alecta and the First Republic Investor Group agree that the broadest possible period – January 14, 2021, through May 1, 2023 – should 26 govern, while Singh proposes a slightly shorter period – January 14, 2023, through April 27, 2023. See ECF 15 at 6 n.2; ECF 26 at 6 n.2; ECF 35 at 5 n.1. The Court adopts the longer class period 27 for the purposes of appointing lead counsel but does not otherwise resolve any dispute as to which 1 ¶¶ 1, 35. On May 1, 2023, the California Department of Financial Protection and Innovation 2 announced that it had taken over First Republic and appointed the Federal Deposit Insurance 3 Corporation (“FDIC”) as receiver. Id. ¶¶ 17, 34, 106. The FDIC then accepted a bid from 4 JPMorgan “to assume all deposits, including all uninsured deposits, and substantially all assets of 5 First Republic Bank.” Id. ¶¶ 17 106. Plaintiffs allege that certain First Republic executives, and 6 First Republic’s auditor, KPMG, LLP, violated the Securities Exchange Act of 1934 and Rule 7 10b-5 promulgated thereunder. Id. ¶¶ 24-33, ¶¶ 120-123, ¶¶ 124-127. 8 On June 23, 2023, eight competing applicants filed motions seeking appointment as lead 9 plaintiff and approval of their selection of counsel.3 ECF 7, 12, 13, 15, 23, 26, 32, 35. One of 10 those applications has since been withdrawn. See ECF 40. Other applications were followed by 11 notices of non-opposition based on the fact that other movants appear to have a larger financial 12 interest in the litigation.4 See ECF 42, 43, 44, 47. The remaining applicants filed responses to the 13 pending motions on July 7, 2023. ECF 48, 49, 50. Their replies followed on July 14, 2023. ECF 14 51, 52, 54. 15 Alecta Tjänstepension Ömsesidigt, Singh, and the First Republic Investor Group are now 16 the only three movants competing for appointment as lead plaintiff and approval of their chosen 17 counsel. See ECF 15, 26, 35. Alecta was founded in 1917 and is headquartered in Stockholm, 18 Sweden. ECF 27-3 ¶ 2. It “manages the pensions for 2.6 million private individuals and 35,000 19 companies in Sweden.” Id. As of December 31, 2022, Alecta manages approximately has $103 20 billion in assets. Id. Singh is self-employed and operates a garage management company, a 21 commercial property management company, a real estate development business, and a dental 22

23 period for purposes of appointing counsel but declining to rule on whether the shorter class period was appropriate for the consolidated action). 24 3 To the extent the motions seek consolidation, the Court denies them as moot. The three 25 previously filed actions identified by the parties as necessitating consolidation – City of Hollywood Police Officers Retirement System v. First Republic Bank, No. 23-cv-01993 (N.D. Cal. Apr. 24, 26 2023), Alcorn v. First Republic Bank, No. 23-cv-03013 (N.D. Cal. June 20, 2023), and Collier v. First Republic Bank, 23-cv-03096 (N.D. Cal. June 22, 2023), have been dismissed. See City of 27 Hollywood ECF 17; Alcorn ECF 13; Collier ECF 13. 1 practice. ECF 35-6 ¶ 2. His investment experience consists of the 20 years he has spent managing 2 his own investment portfolio. Id. ¶ 4. Philippe D. Katz, Terumah Foundation, the United Equities 3 Commodities Co., 111 John Realty Corp., and Marneu Holding Co. comprise the First Republic 4 Investor Group. ECF 15-2 ¶ 1. “Terumah is a private charitable foundation under IRS section 5 501(c)(3).” ECF 15 at 16. “United Equities, invests in publicly traded debt and equities, as well 6 as other non-public investments,” as does Marneu Holding Co. Id. “111 John is a company that 7 principally invests in real estate.” Id. “Each of these entities are controlled in relevant part by 8 [Moses] Marx and his son-in-law, Katz.[5] Katz serves as the Secretary of 111 John and Terumah, 9 and as a Partner of both Marneu and United Equities.” Id. 10 The Court must now appoint Alecta, Singh, or the First Republic Investment Group to act 11 as lead plaintiff in this action and decide whether to approve the appointed lead plaintiff’s chosen 12 counsel as lead counsel. 13 II. LEGAL STANDARDS 14 A. Appointment of Lead Plaintiff 15 The Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-4, sets forth a 16 three-step process for appointing a lead plaintiff. In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 17 2002). “In step one, notice of the action must be posted so purported class members can move for 18 lead plaintiff appointment.” In re Mersho, 6 F.4th 891, 899 (9th Cir. 2021) (citing § 78u- 19 4(a)(3)(A)(i)(I)-(II)). 20 At the second step, “the district court must determine which movant is the ‘most adequate 21 plaintiff,’ which is defined as the plaintiff ‘most capable of adequately representing the interests of 22 class members.’” Id. (citing § 78u-4(a)(3)(B)(i)). In making this determination, the court must 23 apply “‘a presumption that the most adequate plaintiff’ is the movant with the largest financial 24 interest who ‘otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil 25 Procedure.’” Id. (citing § 78u-4(a)(3)(B)(iii)(I)). The court “must identify which movant has the 26 largest alleged losses and then determine whether that movant has made a prima facie showing of 27 1 adequacy and typicality.” Id. (citing In re Cavanaugh, 306 F.3d at 730 & n.5). “[T]he movant 2 with the largest stake . . . [who] has made a prima facie showing of adequacy and typicality . . . 3 ‘becomes the presumptively most adequate plaintiff.’” Id. (citing In re Cavanaugh, 306 F.3d at 4 730). But, if the movant with the largest alleged losses “does not satisfy the Rule 23 requirements, 5 the district court must then look to the movant with the next largest losses and repeat the 6 inquiry.” Id. (citing In re Cavanaugh, 306 F.3d at 730). At this stage, “the process is not 7 adversarial, so the Rule 23 determination should be based on only the movant’s pleadings and 8 declarations.” Id. (citing In re Cavanaugh, 306 F.3d at 730). 9 “[T]he process ‘turns adversarial’” at step three. Id. (citing In re Cavanaugh, 306 F.3d at 10 730). “The third step . . . give[s] other plaintiffs an opportunity to rebut the presumptive lead 11 plaintiff’s showing that it satisfies Rule 23’s typicality and adequacy requirements.” In re 12 Cavanaugh, 306 F.3d at 730 (citing § 78u-4(a)(3)(B)(iii)(II)). “The presumption may be rebutted 13 ‘only upon proof by a member of the purported plaintiff class that the presumptively most 14 adequate plaintiff . . . will not fairly and adequately protect the interests of the class; or [ ] is 15 subject to unique defenses that render such plaintiff incapable of adequately representing the 16 class.” In re Mersho, 6 F.4th at 899 (citing § 78u-4(a)(3)(B)(iii)(II)(aa)-(bb) (modifications in 17 original)). “The statute requires proof that the presumptive lead plaintiff is not adequate.” Id. 18 The presumption may not “be set aside for any reason that the court may deem sufficient.” Id. 19 (citing In re Cavanaugh, 306 F.3d at 729 n.2). “If the presumption is not rebutted, the 20 presumptively most adequate plaintiff must be selected as lead plaintiff.” Id. (citing § 78u- 21 4(a)(3)(B)(i)). 22 B. Appointment of Lead Counsel 23 Under the PSLRA, the Court must also appoint lead counsel. 15 U.S.C. § 78u- 24 4(a)(3)(B)(v) (“The most adequate plaintiff shall, subject to the approval of the court, select and 25 retain counsel to represent the class.”). “While the appointment of counsel is made subject to the 26 approval of the court, the Reform Act clearly leaves the choice of class counsel in the hands of the 27 lead plaintiff.” In re Cavanaugh, 306 F.3d at 734 (citing § 78u-4(a)(3)(B)(v); In re Cendant Corp. 1 counsel, the district court should generally defer to that choice.” Cohen v. U.S. Dist. Ct., N. Dist. 2 of Cal., 586 F.3d 703, 712 (9th Cir. 2009) (citing In re Cendant, 264 F.3d at 276). 3 III. DISCUSSION 4 A. Appointment of Lead Plaintiff 5 1. Step One 6 Under the first step of the relevant framework, the PSLRA requires “publi[cation of] the 7 pendency of the action, the claims made and the purported class period.” In re Cavanaugh, 306 8 F.3d at 729 (citing § 78u-4(a)(3)(A)). The plaintiff in the first-filed action “must post this notice 9 ‘in a widely circulated national business-oriented publication or wire service.’” Id. (citing § 78u- 10 4(a)(3)(A)(i)). Publication is required “[n]ot later than 20 days after the date on which the 11 complaint is filed.” 15 U.S.C. § 78u-4(a)(3)(A)(i)). The notice “must also state that ‘any member 12 of the purported class may move the court to serve as lead plaintiff.’” In re Cavanaugh, 306 F.3d 13 at 729 (citing § 78u-4(a)(3)(A)(i)(II)). Those applications must be filed “not later than 60 days 14 after the date on which the notice is published.” 15 U.S.C. § 78u-4(a)(3)(A)(i)(II)). 15 Here, the parties agree that the statutory 20-day period for publishing a notice to investors 16 commenced upon the filing of the now-dismissed City of Hollywood action, No. 23-cv-01993, 17 filed on April 24, 2023.6 See ECF 15 at 16; ECF 26 at 14 n.5; ECF 35 at 7-8. The plaintiff in the 18 City of Hollywood litigation published the notice the same day the case was filed: April 24, 2023. 19 See ECF 15-5; ECF 27-4; ECF 35-8. No party disputes that the publication of the required notice 20 was timely, see generally ECF 15, 26, 35, 48, 49, 50, 51, 52, 54, and the Court finds that the 21 notice was published within the time set by statute. 22 In order to be timely, the instant motions for appointment of lead plaintiff and lead counsel 23 needed to be filed no later than June 23, 2023. See 15 U.S.C. § 78u-4(a)(3)(A)(i)(II) (requiring 24 motions be filed within 60 days of the notice’s publication). Alecta, the First Republic Investor 25 Group, and Singh each filed their competing motions for appointment of lead plaintiff and lead 26 counsel on that day. See ECF 15, 26, 35. No party disputes that the motions are timely, see 27 1 generally ECF 15, 26, 35, 48, 49, 50, 51, 52, 54, and the Court finds that each motion was timely 2 filed within the 60-day deadline. 3 The Court therefore finds that step one of the PSLRA framework is met by each of the 4 moving parties and proceeds to step two. 5 2. Step Two 6 At this step, the Court must identify the “‘presumptively most adequate plaintiff’ – and 7 hence the presumptive lead plaintiff” by determining which movant “‘has the largest financial 8 interest in the relief sought by the class’” and “‘otherwise satisfies the requirements of Rule 23 of 9 the Federal Rules of Civil Procedure.’” In re Cavanaugh, 306 F.3d at 729-30 (quoting § 78u- 10 4(a)(3)(B)(iii)(I)). 11 a. Largest Financial Interest 12 In determining which plaintiff has the “largest financial interest,” courts in the Ninth 13 Circuit “may select accounting methods that are both rational and consistently applied.” In re 14 Cavanaugh, 306 F.3d at 730 n.4. “‘[C]ourts typically consider the Lax-Olsten factors, which 15 include: (1) the number of shares purchased during the class period; (2) the number of net shares 16 purchased during the class period; (3) the total net funds expended during the class period; and 17 (4) the approximate losses suffered during the class period.’” Weston v. DocuSign, Inc., 22-cv- 18 00824-WHO, 2022 WL 1301770, at *2 (N.D. Cal. Apr. 18, 2022) (quoting In re Nutanix, Inc. Sec. 19 Litig., No. 19-CV-01651-WHO, 2021 WL 783579, at *2 (N.D. Cal. March 1, 2021)). Not every 20 factor carries the same weight, and most courts place “the most emphasis on the competing 21 movants’ estimated losses, using a ‘last in, first out’ (‘LIFO’) methodology.” See id. (quoting 22 Bodri v. Gopro, Inc., No. 16-CV-00232-JST, 2016 WL 1718217, at *3 (N.D. Cal. April 28, 23 2016)). “Most courts within this district use the LIFO method to calculate estimated losses.” See 24 id. (citing Scheller v. Nutanix, Inc., No. 19-CV-01651-WHO, 2021 WL 2410832, at *4 (N.D. Cal. 25 June 10, 2021)). 26 Here, Alecta claims LIFO losses of $667,906,407, the First Republic Investor Group 27 claims collective losses of $7,985,467, and Singh claims losses of $3,387,042.41. See ECF 15-4 1 methodology. See generally ECF 15, 26, 35, 48, 49, 50, 51, 52, 54. Based on the alleged losses as 2 reported by the parties, the Court finds that Alecta has the largest financial interest. See Twitchell 3 v. Enovix Corp., No. 23-cv-00071-SI, 2023 WL 3170044, at *9 (N.D. Cal. Apr. 28, 2023) (relying 4 on LIFO calculations presented in the parties’ opening briefs). 5 The Court now turns to the relevant requirements under Rule 23. 6 b. Rule 23 7 i. Adequacy 8 Adequacy turns on “two questions: (1) do the movant and its ‘counsel have any conflicts of 9 interest with other class members’ and (2) will the movant and its ‘counsel prosecute the action 10 vigorously on behalf of the class?’” In re Mersho, 6 F.4th at 899-900 (quoting Ellis v. Costco 11 Wholesale Corp., 657 F.3d 970, 985 (9th Cir. 2011) (internal quotations and further citations 12 omitted)). Under the PSLRA, the court examines adequacy twice. Id. at 900. “At step two, it will 13 consider whether the movant has made a prima facie showing of adequacy.” Id. (citing In re 14 Cavanaugh, 306 F.3d at 730). Then, “[a]t step three, it will consider whether competing movants 15 have offered proof that the presumptive lead plaintiff will not adequately represent the class.” Id. 16 (citing In re Cavanaugh, 306 F.3d at 730-31). In determining whether the elements of adequacy 17 and typicality have been met, “[t]he district court has latitude as to what information it will 18 consider.” Id. (citing In re Cavanaugh, 306 F.3d at 732). However, whether “the district court 19 believes another plaintiff may be ‘more typical’ or ‘more adequate’ is of no consequence.” In re 20 Cavanaugh, 306 F.3d at 732. Rather, “[s]o long as the plaintiff with the largest losses satisfies the 21 typicality and adequacy requirements, [that plaintiff] is entitled to lead plaintiff status, even if the 22 district court is convinced that some other plaintiff would do a better job.” Id. (footnote omitted). 23 Through its general counsel, Alecta has submitted a PSLRA certification7 stating, among 24 other things, that it: 25 26

27 7 “Under the PSLRA, all proposed lead plaintiffs must submit a sworn certification setting forth • “did not purchase the securities that are the subject of this action at 1 the direction of . . . counsel or in order to participate in any private 2 action[,]”

3 • “is willing to serve as a representative party on behalf of the class, including providing testimony at deposition and trial, if 4 necessary[,]” 5 • “has fully reviewed the facts and allegations of a complaint filed in 6 this action and adopts its allegations[,]”

7 • “intends to actively monitor and vigorously pursue this action for 8 the benefit of the class[,]”

9 • “will endeavor to provide fair and adequate representation and work 10 directly with the efforts of class counsel to ensure that the largest recovery for the class consistent with good faith and meritorious 11 judgment is obtained[,]”

12 • “has neither served nor sought to serve as a representative party for a class action filed under the federal securities laws during the three 13 years prior to the date of [its] certification[,]” and 14 • “will not accept any payment for serving as a representative party 15 on behalf of the class beyond Plaintiff’s pro rata share of any recovery, except such reasonable costs and expenses (including lost 16 wages) directly relating to the representation of the class as ordered 17 or approved by the Court[.]” 18 ECF 27-1 ¶¶ 1-2, 5, 7-10. 19 The supporting declaration of Alecta’s general counsel adds, among other things, that:

20 • He is “informed of and understand[s] the requirements and duties 21 imposed by the . . . [PSLRA] . . . on the lead plaintiff, including the selection and retention of counsel, and overseeing the prosecution of 22 the litigation.”

23 • “Alecta understands and accepts the duties and responsibilities with 24 which a lead plaintiff is charged under the PSLRA, including to oversee and supervise the litigation separate and apart from counsel. 25 Alecta is a sophisticated institutional investor with significant experience acting as a fiduciary and selecting, hiring, and overseeing 26 27 the activities of outside counsel in complex litigation[,]” including 1 cases involving the prosecution of “individual claims under the 2 federal securities laws in Allianz Global Investors Kapitalanlagegesellschaft MBH, et al. v. Vivendi, S.A., et al., No 07 3 Civ. 8156 (S.D.N.Y.), and AFA Livforstikringsaktiebolag, et al. v. Merck & Co., Inc., et al., No. 07-cv-4024 (D.N.J.). Moreover, 4 Alecta has a dedicated staff of professionals who will ensure the effective oversight of this litigation and counsel.” 5

6 • “Alecta is strongly motivated to recover the significant losses it incurred as a result of Defendants’ violations of the federal 7 securities laws. Alecta is committed to addressing the alleged misconduct at the heart of this case, which raises significant public 8 policy concerns regarding the integrity of the public markets, the 9 governance of large financial institutions, and the interests of the institutional investor community more broadly. Further driving 10 Alecta’s decision to seek to lead this case is its interest in holding all culpable parties accountable for the misconduct underlying this 11 action. For these reasons, among others, Alecta believes that this case should be led by a committed institutional investor with 12 significant resources and a financial interest substantial enough to 13 ensure that the claims are litigated vigorously, efficiently, and in the best interests of the class. Alecta’s principal goals in this litigation 14 are to maximize the recovery for the class from all culpable parties and seek recompense for the significant corporate governance 15 failures at issue in this case[,]” and

16 • “Alecta is committed to satisfying the fiduciary obligations that it 17 will assume if appointed Lead Plaintiff, including conferring with counsel regarding litigation strategy and other matters, attending 18 court proceedings, depositions, settlement mediations, and hearings as needed, and reviewing and authorizing the filing of important 19 litigation documents. . . . Alecta will ensure and . . . reaffirms that the securities class action against Defendants will be vigorously 20 prosecuted consistent with the Lead Plaintiffs obligations under the 21 PSLRA and in the best interests of the class.” 22 ECF 27-3 ¶¶ 1, 3, 4, 14. In addition, Alecta has retained Kessler Topaz and Bernstein Litowitz “to 23 prosecute this action in a zealous and efficient manner and in the best interests of the class.” Id. 24 ¶ 7. 25 Given these sworn statements, the Court finds that Alecta has sufficiently demonstrated 26 that it will act to safeguard the interest of other class members and is ready, willing, and able to 27 devote the necessary resources to do so, including by retaining and overseeing counsel 1 an effective lead plaintiff. See In re SiRF Tech. Holdings, Inc. Sec. Litig., No. C 08-0856 MMC, 2 2008 WL 2220601, at *3 (N.D. Cal. May 27, 2008) (“[B]y enacting the PSLRA, Congress sought 3 to increase the participation of institutional investors in securities class actions.”). The Court 4 therefore finds that Alecta has made a prima facie showing of adequacy. 5 ii. Typicality 6 “The purpose of the typicality requirement is to assure that the interest of the named 7 representative aligns with the interests of the class.” Hanon v. Dataprods. Corp., 976 F.2d 497, 8 508 (9th Cir. 1992) (citation omitted). “The putative lead plaintiff satisfies the typicality 9 requirement when it has suffered the same injuries as absent class members, as a result of the same 10 conduct by the defendants.” In re Extreme Networks Inc. Sec. Litig., No. 15-cv-04883-BLF, 2016 11 WL 3519283, at *3 (N.D. Cal. June 28, 2016) (citing Hanon, 976 F.2d at 508). 12 Here, Alecta, like all other potential class members, purchased First Republic Bank 13 securities and claims financial losses stemming from alleged misrepresentations and omissions 14 made by certain First Republic executives and its auditor. See ECF 27-1 ¶ 3 & Schedule A; ECF 15 27-2 at 3. Alecta seeks redress for the alleged financial losses that resulted from those 16 misrepresentations and omissions. See ECF 27-3 ¶¶ 4-5. Alecta thus asserts the same injury as 17 other class members, stemming from the same conduct by the defendants. Its interests therefore 18 align with those of other class members. This is sufficient for the prima facie showing of 19 typicality required at this stage. See In re Extreme Networks Inc. Sec. Litig., 2016 WL 3519283, at 20 *3. 21 The Court therefore finds that Alecta has suffered the largest alleged loss and has made a 22 prima facie showing of adequacy and typicality. As such, Alecta is the presumptive lead plaintiff. 23 The Court now moves to step three. 24 3. Step Three 25 The Court now turns to examining any proof from the First Republic Investor Group or 26 Singh that “rebut[s] the presumptive lead plaintiff’s showing that it satisfies Rule 23’s typicality 27 and adequacy requirements.” See In re Cavanaugh, 306 F.3d at 730 (citing § 78u- 1 a. Challenges by the First Republic Investor Group 2 The First Republic Investor Group argues that Alecta is “inadequate and/or atypical” for 3 three reasons. ECF 49 at 11-18. None is convincing. 4 The First Republic Investor Group first argues that Alecta’s “unnecessary involvement of 5 two law firms . . . raises disqualifying questions about Alecta’s adequacy.” Id. at 11. It asserts 6 that Alecta “has not explained why it needs to be represented by two large law firms in this matter, 7 nor why the Class needs two law firms to serve as Co-Lead Counsel.” Id. The First Republic 8 Investor Group also claims that “this is the third instance in the past six weeks in which a Swedish 9 institutional investor or group thereof sought appointment as Lead Plaintiff in a PSLRA action, 10 proposing both [Kessler Topaz and Bernstein Litowitz] as Co-Lead Counsel for the Class.” Id. at 11 12-13. It “respectfully questions whether three separate Swedish institutional investors 12 independently selected exactly the same two firms as Co-Lead Counsel in these three unrelated 13 actions, or whether these representations reflect some other arrangement between [Kessler Topaz 14 and Bernstein Litowitz].” Id. at 13. The First Republic Investor Group’s “questions” do not 15 constitute proof, and only proof will suffice to disturb the lead plaintiff presumption. See In re 16 Mersho, 6 F.4th at 899 (“The statute requires proof that the presumptive lead plaintiff is not 17 adequate.”) (citing § 78u-4(a)(3)(B)(iii)(II)(aa)-(bb)). 18 The First Republic Investor Group next argues that Alecta’s chosen counsel’s “filings in an 19 earlier-filed, related action in this Judicial District raise additional questions with respect to 20 Alecta’s supervision of its counsel.” ECF 49 at 13. As the group points out, Kessler Topaz and 21 Bernstein Litowitz previously filed the City of Hollywood action on April 24, 2023. City of 22 Hollywood, ECF 1. The FDIC, as receiver for First Republic Bank, filed a motion to stay the 23 action, which Judge Gilliam granted on June 13, 2023. City of Hollywood ECF 13, 16. On June 24 16, 2023, the City of Hollywood voluntarily dismissed the case pursuant to Federal Rule of Civil 25 Procedure 41(a)(1)(A)(i). City of Hollywood, ECF 17. Then, on June 23, 2023, Alecta moved for 26 appointment as lead plaintiff and for approval of Kessler Topaz and Bernstein Litowitz as lead 27 counsel in this action. ECF 26. Based on this sequence of events, the First Republic Investor 1 Considered together, Alecta’s Proposed Co-Lead Counsel’s filings 2 in Hollywood Police and in the above-captioned Related Actions reflect an effort to evade the consequences of Judge Gilliam’s order 3 staying Hollywood Police. Moreover, given that the ostensible 60- day PSLRA-imposed notice period and Lead Plaintiff motion 4 deadline in these substantively identical Related Actions (June 23, 2023) was triggered by publication of the notice of pendency of 5 Hollywood Police, the abrupt dismissal of Hollywood Police shortly before the motion deadline raises questions as to whether the 6 pending Lead Plaintiff motions are in fact properly before this Court. The foregoing circumstances, taken together, do not allay 7 concerns as to whether Alecta or its counsel would be in the driver’s seat if the Court were to appoint Alecta as Lead Plaintiff. 8 9 ECF 49 at 14. 10 These contentions lack any proof on which the Court may properly rely, and even if 11 argument were alone sufficient, the arguments the First Republic Investor Group’s advances here 12 are unpersuasive. To the extent the voluntary dismissal in City of Hollywood was designed to 13 “evade the consequences” of a stay order, the First Republic Investor Group offers no explanation 14 why the motion to stay could not be renewed in the subsequently filed actions, why no such 15 motion was filed,8 or why the voluntary dismissal was improper when squarely authorized by 16 Federal Rule of Civil Procedure 41(a)(1)(A)(i). Nor does the First Republic Investor Group 17 explain which court is the “proper” one for resolving the pending motions. Had there been a 18 genuine concern that these motions should be pending before another court, any party, including 19 the First Republic Investor Group, should have filed a motion seeking to relate this action to the 20 lowest-numbered case as provided for in Civil Local Rule 3-12.9 The docket in that case reflects 21 8 Instead, the FDIC, as Receiver for First Republic Bank, filed a motion to intervene in this action 22 October 30, 2023. ECF 77. When the Court ordered short supplemental briefs on the impact of that motion, Alecta, the First Republic Group, and Singh agreed that the Court should proceed to 23 appoint lead counsel. ECF 82, 83, 84.

24 9 The rule provides, in pertinent part:

25 Whenever a party knows or learns that an action, filed in or removed to this district is (or the party believes that the action may be) related 26 to an action which is or was pending in this District as defined in Civil L.R. 3-12(a), the party must promptly file in the lowest- 27 numbered case an Administrative Motion to Consider Whether 1 no such motion. 2 Finally, the First Republic Investor Group argues that Alecta cannot represent class 3 members who held First Republic Bank securities through the entire proposed class period 4 because Alecta sold all of its shares by the time the bank made a further corrective disclosure on 5 March 16, 2023, and as a result, held no stock during the final six weeks of the proposed class 6 period. ECF 49 at 15-18. The First Republic Investor Group thus asks that “to the extent that the 7 Court does appoint Alecta to a leadership role in this litigation, the First Republic Investor Group 8 respectfully requests that it be appointed as a Co-Lead Plaintiff alongside Alecta to ensure that the 9 interests of all investors are adequately represented in this litigation.” Id. at 17. 10 Like other courts in this district, this Court rejects the argument. See Retail Wholesale 11 Dep’t Store Union Loc. 338 Ret. Fund v. Stitch Fix, Inc., No. 22-CV-04893-HSG, 2023 WL 12 3613313, at *4 (N.D. Cal. May 22, 2023) (“[T]he Court agrees with cases holding that plaintiffs 13 who sell their stock at a net loss after the first of multiple disclosures are not precluded from 14 serving as lead plaintiffs.”). Cf. Twitchell, 2023 WL 3170044, at *6, *8 (“declin[ing] to adopt a 15 rule that a plaintiff who sells its stock before the final disclosure may never serve as lead plaintiff” 16 but appointing co-lead plaintiffs where counsel for each plaintiff “indicated that they were 17 amenable to this arrangement and represented that they could work together efficiently, so as not 18 to increase the attorney expense to the class”); Sayce v. Forescout Techs., Inc., No. 20-CV-00076- 19 SI, 2020 WL 6802469, at *6 (N.D. Cal. Nov. 19, 2020) (finding that “the class would be best 20 represented by lead plaintiffs who also purchased securities during the earlier portion of the class 21 period” where one movant purchased defendant’s “stock roughly one year after the start of the 22 class period, and after several of the partial disclosures alleged in the Amended Complaint”). 23 Alecta suffered losses of over $600 million by the time First Republic Stock fell by more than 24

25 proof of service pursuant to Civil L.R. 5-5, must be served on all known parties to each apparently related action. A courtesy copy of 26 the motion must be lodged with the assigned Judge in each apparently related case under Civil L.R. 5-1(d)(7). 27 1 $100 per share. ECF 52 at 10, 19. Though the timing of Alecta’s losses is offered to undermine 2 Alecta’s typicality and adequacy, its substantial losses reinforce that Alecta is typical and adequate 3 to discharge its duties as lead plaintiff, without the First Republic Investor Group as a co-lead. See 4 Retail Wholesale Dep’t Store Union Loc. 338 Ret. Fund, 2023 WL 3613313, at *4-*5 (rejecting 5 argument that applicant who sold shares after multiple corrective disclosures was precluded from 6 serving as lead plaintiff and finding appointment of a co-lead plaintiff as “unnecessary and 7 potentially . . . at odds with the PSLRA.”). The Court accordingly rejects the challenges from the 8 First Republic Investor Group. 9 b. Challenges by Singh 10 Singh also argues that Alecta is not typical or adequate to serve as lead plaintiff because 11 Alecta will face unique defenses as to standing, a purportedly defective PSLRA certification, and 12 reliance.10 ECF 50 at 9-14. Singh’s arguments are not persuasive. 13 As to standing, Singh argues that Alecta “did not actually own or purchase on its own 14 behalf any First Republic shares during the Class Period.” Id. at 10. Singh claims that “the 15 securities at issue appear to have been purchased and sold by the Alecta Pension Fund” and that 16 Alecta has “not demonstrated that it has standing to sue on behalf of the pension fund that it 17 manages.” Id. Singh challenges the sworn statement of Alecta’s general counsel that “Alecta has 18 full power and authority to bring suit to recover for its investment losses” because its general 19 counsel does not “provide[] any support for this conclusion,” such as a statement that Alecta has a 20 valid and enforceable assignment from the pension fund. Id. at 10. On these grounds, Singh 21 claims that “there is a substantial likelihood that a unique defense concerning Alecta’s standing 22 could be raised.” Id. 23 Alecta counters that Singh lacks any evidence to support these contentions, and points to 24 its PSLRA certification, which lists Alecta’s “purchase and sale transactions in the First Republic 25

26 10 The First Republic Investor Group purports to “join” in some of these arguments for the first time in its reply brief. See ECF 51 at 11-13. Alecta has objected to this. See ECF 55, 56. The 27 Court has not considered any arguments the First Republic Investor Group raised for the first time 1 Bank securities that are the subject of this action.” ECF 52 at 11; see also ECF 27-1. Alecta also 2 points to the supplemental declaration of its general counsel stating that “[t]here is no entity 3 operating as the ‘Alecta Pension Fund,’” “all of the securities listed in Alecta’s certification . . . 4 were owned by Alecta,” and “Alecta is the only entity that purchased the securities listed in 5 Alecta’s Certification.” Id.; ECF 53-1 ¶¶ 3, 4. This is sufficient to establish standing. See Ohio 6 Pub. Emps. Ret. Sys. v. Meta Platforms, Inc., Nos. 21-cv-08812-JST, 21-cv-08873-JST, 21-09041- 7 JST, 2022 WL 3571995, at *2 (N.D. Cal. July 26, 2022) (crediting declarations indicating that 8 movant held legal title to shares and had authority to sue in its own name for damages suffered on 9 those investments). 10 As to Alecta’s purportedly defective PSLRA certification, Singh claims Alecta’s general 11 counsel lacks the authority to sign such a certification on Alecta’s behalf. ECF 50 at 11. Singh 12 asserts that the “certification is not signed by a member of the Council of Administration (Alecta’s 13 highest decision-making body), a member of its Board of Directors, Chief Executive Officer, or 14 even an officer of the company.” Id. Citing to Alecta’s 2022 Annual and Sustainability Report, 15 Singh argues that the authority of Alecta’s general counsel is limited to “staff functions.” Id. 16 Singh contends that the conclusory statement by Alecta’s general counsel that he is “authorized to 17 make legal decisions of behalf of Alecta” lacks an explanation of what legal decisions he is able to 18 make, whether he is authorized to sign Alecta’s PSLRA certification, and whether he has authority 19 to bind Alecta or to act on its behalf. Id. Singh further asserts that Alecta cannot cure these 20 deficiencies “with a tardy supplement.” Id. Because the validity of Alecta’s certification is “fairly 21 debatable,” Singh contends that there is a “substantial likelihood” that Alecta would be subject to a 22 unique defense. Id. at 12. 23 Alecta counters that its “certification plainly states that the signatory . . . is Alecta’s 24 General Counsel[,]” who is “authorized to make legal decisions on behalf of Alecta.” ECF 52 at 25 12; see also ECF 27-1 ¶ 6. Alecta also points to its general counsel’s sworn statement that he is 26 “authorized to make th[e] Declaration on behalf of Alecta.” ECF 52 at 12; see also ECF 27-3 ¶ 2. 27 The supplemental declaration of Alecta’s general counsel likewise asserts that he “is fully 1 any other person within Alecta . . . is necessary to bind Alecta in this litigation.” ECF 52 at 12; 2 ECF 53-1 ¶ 5. The Court credits these sworn declarations over arguments based on Singh’s 3 readings of a public corporate report and speculation of what “substantial likelihoods” might arise 4 in this case. See Twitchell, 2023 WL 3170044, at *8 (rejecting argument, unsupported by proof, 5 that fund manager could bind movant where supplemental declaration provided that the manager 6 had such authority); Ohio Pub. Emps. Ret. Sys., 2022 WL 3571995, at *3 (declining to discount 7 sworn declarations based on opposing party’s argument). 8 Finally, Singh argues that Alecta will also be subject to unique defenses because certain 9 executives were terminated following an internal investigation and because Swedish regulators are 10 conducting their own investigation of Alecta, which will strain its resources. ECF 50 at 12-14. 11 Singh asserts that the termination of those executives means that key percipient witnesses will be 12 unavailable, hindering Alecta’s ability to present testimony and documents to prove its claims. Id. 13 at 13. Singh also asserts that “any documents or testimony suggesting that Alecta implemented 14 trade strategies inconsistent with internal and external risk management rules give rise to unique 15 reliance defenses potentially thwarting Alecta’s ability to invoke the fraud on the market 16 presumption.” Id. Citing to a news article in a publication titled Pensions and Investments, Singh 17 claims the concern “is far from speculative.” Id. at 14. 18 Alecta asserts that Singh’s “unsupported speculation . . . is insufficient under the PSLRA.” 19 ECF 52 at 15. The Court agrees. Speculation about how any regulatory investigation may 20 progress, whether there will be any findings showing conduct inconsistent with applicable rules, or 21 whether documents or other evidence will be difficult to obtain does not constitute proof. Even if 22 the Court were to credit Singh’s assertions, the supplemental declaration of Alecta’s general 23 counsel provides evidence to the contrary: 24 • “Alecta fully understands its obligations as a Lead Plaintiff and confirms that it will comply with its fiduciary obligations to the 25 class, as well as its discovery obligations in this litigation. Alecta is a sophisticated institutional investor with considerable resources 26 at its disposal. . . . Given Alecta’s size, the departure of any 27 employee, regardless of their level within Alecta, will not impede Alecta’s ability to fulfill its various obligations to the class and its 1 • “Alecta is one of Sweden’s largest institutional investors and is 2 constantly striving to fulfill its obligations to its stakeholders. This goal is achieved, in part, by conducting periodic internal reviews, 3 as well as being subject to external oversight by regulators. Alecta’s investments in First Republic are not immune from such 4 reviews. Reviews relating to Alecta’s investments in First Republic securities, which have not found any violations of 5 Alecta’s policies or guidelines, will not impact Alecta’s ability to 6 fulfill its obligations to the class.” 7 ECF 53-1 ¶¶ 6, 7. In light of these sworn statements, the Court finds that Alecta is an adequate 8 plaintiff notwithstanding Singh’s arguments. Cf. In re Network Assocs., Inc., Sec. Litig., 76 F. 9 Supp. 2d 1017, 1029 (N.D. Cal. 1999) (declining to appoint entity as lead plaintiff where “two 10 sister banks . . . [wer]e under investigation for criminal fraud violations of the laws[,] . . . 11 authorities ha[d] conducted ‘raids’ . . . part of its criminal fraud investigation,” and a CEO of one 12 bank “ha[d] already been arrested for tax evasion, fraud, money laundering, conspiracy and 13 consorting with criminal elements”); Karp v. Diebold Nixdorf, Inc., No. 19 Civ. 6180 (LAP), 2019 14 WL 5587148, at *5 (S.D.N.Y. Oct. 30, 2019), adhered to on reconsideration, 2019 WL 6619351 15 (S.D.N.Y. Dec. 5, 2019) (finding movants inadequate in light of a “non-speculative risk” that they 16 would run out of funding due to related bankruptcy proceedings). 17 Having rejected the arguments offered to rebut the lead plaintiff presumption, the Court 18 appoints Alecta as lead plaintiff. 19 B. Appointment of Lead Counsel 20 Once the Court has found the “most adequate plaintiff,” that plaintiff “shall, subject to the 21 approval of the court, select and retain counsel to represent the class.” 15 U.S.C. § 78u- 22 4(a)(3)(B)(v). “[I]f the lead plaintiff has made a reasonable choice of counsel, the district court 23 should generally defer to that choice[.]” Cohen, 586 F.3d at 712. The Court “should not reject a 24 lead plaintiff’s proposed counsel merely because it would have chosen differently.” Id. at 711. 25 Here, the Court will not disturb Alecta’s selection of counsel, as its choice is not “so 26 irrational, or so tainted by self-dealing or conflict of interest, as to cast genuine and serious doubt 27 on [its] willingness or ability to perform the functions of lead plaintiff.” See In re Cavanaugh, 306 1 F.3d at 733 (citing In re Cendant, 264 F.3d at 266). Kessler Topaz and Bernstein Litowitz have 2 || extensive experience litigating PSLRA matters, and courts in this district and elsewhere have 3 || routinely appointed them to act as lead counsel in such cases. See, e.g., In re NVIDIA Corp. Sec. 4 || Litig., No. 18-cv-07669-HSG, 2019 WL 1960341, at *4 (N.D. Cal. May 2, 2019) (approving lead 5 || plaintiffs selection of Kessler Topaz and Bernstein Litowitz as lead counsel); Schaeffer v. 6 || Depaolo, No. 23-CV-1921-FB-JRC, 2023 WL 5153481, at *8 (E.D.N.Y. Aug. 10, 2023) (same); 7 || see also ECF 27-6 (Kessler Topaz firm resume listing representative matters); ECF 27-7 8 || (Bernstein Litowitz firm resume listing representative matters). These firms have certified that 9 they do not have any conflicts of interest, that they are committed to vigorously prosecuting this 10 || litigation on behalf of the class, and that they will commit the resources necessary to do so. ECF 11 31, 63, 71, 73, 76, 96. The Court therefore approves Alecta’s selection of Kessler Topaz and 12 || Bernstein Litowitz to act as lead counsel here. g 13 || IV. CONCLUSION 14 For the reasons set forth above, Alecta’s motion for appointment as lead plaintiff and 3 15 approval of its chosen counsel is GRANTED. The remaining motions are DENIED. a 16 IT IS SO ORDERED.

17 || Dated: November 24, 2023 18 □□ - (Nnaceh dele ARACELI MARTINEZ-OLGUIN 20 United States District Judge 21 22 23 24 25 26 27 28