Soe v. Progenity, Inc.

• Court: District Court, S.D. California
• Decided: December 3, 2020
• Docket: 3:20-cv-01683
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 AUNG KYAW SOE, Individually Case No. 20-CV-01683-CAB-AHG and on Behalf of All Others 12 Similarly Situated, ORDER CONSOLIDATING CASES, APPOINTING LEAD PLAINTIFF, 13 Plaintiff, AND APPOINTING CLASS COUNSEL 14 v. [Doc. Nos. 23, 24, 25] 15 PROGENITY, INC., HARRY STYLLI, ERIC D’ESPARBES, 16 JEFFREY ALTER, JOHN BIGALKE, JEFFREY FERRELL, 17 BRIAN L. KOTZIN, SAMUEL NUSSBAUM, LYNNE POWELL, 18 PIPER SANDLER & CO., WELLS FARGO SECURITIES, LLC, 19 ROBERT W. BAIRD & CO. INCORPORATED, RAYMOND 20 JAMES & ASSOCIATES, INC., and BTIG, LLC, 21 Defendants. 22 23 24 Plaintiff Aung Kyaw Soe (hereinafter “Plaintiff”) brings this putative class 25 action complaint (the “Complaint”) alleging violations of the federal securities laws 26 against Defendants Progenity, Inc.; Harry Stylli; Eric d’Esparbes; Jeffrey Alter; John 27 Bigalke; Jeffrey Ferrell; Brian L. Kotzin; Samuel Nussbaum; Lynne Powell; Piper 28 Sandler & Co.; Wells Fargo Securities, LLC; Robert W. Baird & Co. Incorporated; 1 Raymond James & Associates, Inc.; and BTIG, LLC (collectively, “Defendants”). 2 [Doc. No. 1.]1 3 On October 27, 2020, the following parties filed motions seeking 4 consolidation, appointment as lead plaintiff, and approval of their respective 5 selections to be lead counsel: Mohammed Abdul Wajid (“Abdul Wajid”) [Doc. No. 6 23]; Phillip Matz [Doc. No. 24]; and Lin Shen, Lingjun Lin, and Fusheng Lin 7 (together, the “Lin group”) [Doc. No. 25] (the “Competing Motions”). 2 8 On November 17, 2020, the Lin group [Doc. No. 29] and Abdul Wajid [Doc. 9 No. 30] filed oppositions to each other’s Competing Motions. That same day, 10 Defendants filed statements of non-opposition to all Competing Motions, advising 11 that they did not oppose appointment of any lead plaintiff or the proposed 12 consolidation and took no position as to the other relief requested in the Competing 13 Motions. [Doc. Nos. 27, 28.] On November 24, 2020, the Lin group [Doc. No. 31] 14 and Abdul Wajid [Doc. No. 32] filed replies in support of their respective motions. 15 The Court finds the Competing Motions appropriate for resolution without a 16 hearing. After considering the papers filed in support of, and in opposition to, the 17 Competing Motions, the Court GRANTS the Lin group’s motion for lead plaintiff 18 and appointment of counsel [Doc. No. 25], and DENIES both Abdul Wajid’s and 19 Matz’s competing motions [Doc. Nos. 23 and 24], for the reasons outlined below. 20 The Court also GRANTS the parties’ requests to consolidate. 21 I. BACKGROUND 22 Pursuant to the Complaint filed in this matter, Progenity is a biotechnology 23 company based in San Diego, California that “specializes in developing and 24 commercializing molecular testing products and precision medicine applications,” 25 including “in vitro molecular tests designed to assist parents in making informed 26 1 Document numbers and page references are to those assigned by CM/ECF for the docket entry. 27 2 On November 17, 2020, Phillip Matz filed a Notice of Non-Opposition to Competing Motions. [Doc. No. 26.] Accordingly, “Competing Motions” refers to the motions filed by the Lin group 28 1 decisions related to family planning, pregnancy, and complex disease diagnosis.” 2 [Doc. No. 1 at p. 3, ¶ 4.] Plaintiff alleges that Progenity conducted its Initial Public 3 Offering (“IPO”) on June 22, 2020,3 where Defendants sold over 6.6 million shares 4 of Progenity common stock at a price of $15 per share, generating over $100 million 5 in gross offering proceeds. [Id. at p. 3, ¶ 5.] 6 On August 28, 2020, Plaintiff filed the present class action lawsuit against 7 Progenity, certain of its officers and directors, and the underwriters of its IPO, 8 alleging violations of Sections 11 and 15 of the Securities Act of 1933. [Id.] Plaintiff 9 represents a class of those who purchased Progenity common stock pursuant and/or 10 traceable to Progenity’s Registration Statement, issued in connection with its June 11 22, 2020 IPO. [Id. at p. 13, ¶ 39.] Plaintiff alleges that the Registration Statement 12 contained untrue statements of material fact, omitted material facts, and failed to 13 make the necessary disclosures required under the rules governing its preparation, 14 thereby causing damage to the class. [Id. at p. 3, ¶ 6.] Plaintiff seeks to recover 15 damages for Progenity investors. [Id. at p. 16.] 16 On September 11, 2020, Brickman Investments Inc. filed a substantially 17 identical class action lawsuit against Progenity in this district, captioned Brickman 18 Investments Inc. v. Progenity, Inc., et al., Case No. 3:20-cv-01795 (the “Brickman 19 action”). The complaint in the Brickman action alleges three counts for violations of 20 Sections 11, 12, and 15 of the Securities Act of 1933, arising out of Progenity’s 21 issuance of the Registration Statement in connection with its June 22, 2020 IPO. 22 [Brickman Doc. No. 1.] Abdul Wajid also filed a Motion to Consolidate Cases, 23 Appoint Lead Plaintiff, and Appoint Lead Counsel in the Brickman action. 24 [Brickman Doc. No. 10.] On November 24, 2020, the Court issued an Order of 25 Transfer Pursuant to the “Low-Number” Rule, transferring the Brickman action to 26 this Court’s docket. [Brickman Doc. No. 16.] 27 3 In his motion for appointment as lead plaintiff, Abdul Wajid contends that Progenity’s IPO 28 1 II. REQUEST FOR CONSOLIDATION 2 Federal Rule of Civil Procedure 42(a) provides that “when actions involving 3 common questions of law or fact are pending before the court, it . . . may order all 4 the actions consolidated.” FED. R. CIV. P. 42(a). The district court has “broad 5 discretion under this rule to consolidate cases pending in the same district.” Invs. 6 Rsch. Co. v. U.S. Dist. Ct., 877 F.2d 777 (9th Cir. 1989). In determining whether 7 consolidation is appropriate, the district court “weighs the saving of time and effort 8 consolidation would produce against any inconvenience, delay, or expense that it 9 would cause.” Huene v. United States, 743 F.2d 703, 704 (9th Cir. 1984) (subsequent 10 history omitted). The purpose of consolidation is to avoid the unnecessary costs or 11 delays that would ensue from proceeding separately with claims or issues sharing 12 common aspects of law or fact. EEOC v. HBE Corp., 135 F.3d 543, 550 (8th Cir. 13 1998). 14 Additionally, the Private Securities Litigation Reform Act (“PSLRA”) directs 15 that cases should be consolidated when more than one action is filed on behalf of a 16 class asserting substantially the same claim or claims. See In re Cendant Corp. Litig., 17 182 F.R.D. 476, 478 (D. N.J. 1998) (citing 15 U.S.C. § 78u-4(a)(3)(B)(ii)). 15 U.S.C. 18 § 78u-4(a)(3)(B)(ii) also requires that any motions for consolidation be decided first, 19 and that “as soon as practicable” thereafter, the Court “shall appoint the most 20 adequate plaintiff as lead plaintiff for the consolidated actions.” 15 U.S.C. § 78u- 21 4(a)(3)(B)(ii). 22 Here, there are two actions which plaintiffs wish to consolidate: Soe v. 23 Progenity, Inc., Case No. 3:20-cv-01683-CAB-AHG, and Brickman Investments Inc. 24 v. Progenity, Inc., Case No. 3:20-cv-01795-CAB-AHG. All parties moving for 25 appointment as lead plaintiff support consolidation of these two cases. [Doc. No. 23 26 at p. 6; Doc No. 25-1 at p. 6.] Defendants have also indicated that they do not oppose 27 consolidation. [Doc. Nos. 27, 28.] A review of the two complaints filed reveals that 28 1 both cases involve the same defendants, identical classes and factual allegations, and 2 largely identical claims for violations of the Securities Act of 1933. Because both 3 cases involve similar factual and legal issues surrounding the same alleged 4 misconduct by Defendants, consolidation of the two cases would promote judicial 5 economy. Accordingly, the Court GRANTS Abdul Wajid’s and the Lin group’s 6 motions to consolidate. [Doc Nos. 23, 25.] 7 III. APPOINTMENT OF LEAD PLAINTIFF 8 Under the PSLRA, the district court “shall appoint as lead plaintiff the member 9 or members of the purported class that the court determines to be the most capable 10 of adequately representing the interest of the class members.” 15 U.S.C. § 78u- 11 4(a)(3)(B)(i). The PSLRA creates a rebuttable presumption that the most adequate 12 plaintiff is the person or group that: (1) either filed the complaint or brought the 13 motion for appointment of lead plaintiff in response to the publication of notice, (2) 14 has the “largest financial interest” in the relief sought by the class, and (3) otherwise 15 satisfies the requirements of Federal Rule of Civil Procedure 23. 15 U.S.C. § 78u- 16 4(a)(3)(B)(iii)(I)(aa)–(cc). The presumption may be rebutted only upon proof by a 17 purported class member that the presumptively most adequate plaintiff: (1) will not 18 fairly and adequately protect the interests of the class or (2) is subject to “unique 19 defenses” that render such plaintiff incapable of adequately representing the class. 20 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa)–(bb). 21 By its terms, the PSLRA “provides a simple three-step process for identifying 22 the lead plaintiff” in a private securities class action litigation. In re Cavanaugh, 306 23 F.3d 726, 729 (9th Cir. 2002). “The first step consists of publicizing the pendency 24 of the action, the claims made and the purported class period.” Id. At the second 25 step, “the district court must consider the losses allegedly suffered by the various 26 plaintiffs,” and select as the “presumptively most adequate plaintiff . . . the one who 27 has the largest financial interest in the relief sought by the class and otherwise 28 1 satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.” Id. at 2 729–30 (internal citations omitted). Finally, at the third step, the district court must 3 “give other plaintiffs an opportunity to rebut the presumptive lead plaintiff’s showing 4 that it satisfies Rule 23’s typicality and adequacy requirements.” Id. at 730. 5 1. All Movants Met the PSLRA’s Procedural Requirements 6 Under the PSLRA, a plaintiff who files a securities litigation class action must 7 provide notice to class members via publication in a widely-circulated national 8 business-oriented publication or wire service within 20 days of filing the complaint. 9 15 U.S.C. § 78u-4(a)(3)(A)(i). The notice must: (1) advise class members of the 10 pendency of the action, the claims asserted therein, and the purported class period; 11 and (2) inform potential class members that, within 60 days of the date on which 12 notice was published, any members of the purported class may move the court to 13 serve as lead plaintiff in the purported class. 15 U.S.C. § 78u-4(a)(3)(A)(i)(I)–(II). 14 On August 28, 2020, Plaintiff published a notice of the instant securities class 15 action in Business Wire, a widely circulated national business-oriented wire service. 16 [Doc. Nos. 23-3, 25-3.] Plaintiff’s notice was published the same day that the 17 Complaint was filed, stating that: 18 “Robbins Geller Rudman & Dowd LLP . . . today announced that it has 19 filed a class action seeking to represent purchasers of Progenity, Inc. common stock pursuant and/or traceable to the registration statement . 20 . . issued in connection with Progenity’s June 2020 initial public 21 offering (“IPO”). This action was filed in the Southern District of California and is captioned Soe v. Progenity, Inc.” 22 [Id.] The Court finds that Plaintiff’s notice met the requirements set forth in the 23 PSLRA. Further, both Abdul Wajid and the Lin group timely moved for appointment 24 as lead plaintiff by the October 27, 2020 deadline. [Doc Nos. 23, 25.] Thus, both 25 candidates for lead plaintiff have met the PSLRA’s procedural requirements. 26 / / / 27 / / / 28 1 2. The Lin Group is the Most Adequate Lead Plaintiff 2 As noted above, the Court must presume a plaintiff as the “most adequate 3 plaintiff” if that candidate (1) either filed the complaint or made a motion in response 4 to the early notice, (2) has the largest financial interest in the relief sought by the 5 class, and (3) otherwise satisfies the requirements of Rule 23 of the Federal Rules of 6 Civil Procedure. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). The PSLRA also “provides in 7 categorical terms that the only basis on which a court may compare plaintiffs 8 competing to serve as lead is the size of their financial stake in the controversy.” 9 Cavanaugh, 306 F.3d at 732 (emphasis in original). 10 a. Largest Financial Interest 11 In determining which of the candidates for lead plaintiff has the largest 12 financial interest, the Court must “compare the financial stakes of the various 13 plaintiffs and determine which one has the most to gain from the lawsuit.” Id. at 730. 14 In making this comparison and calculating each candidate’s financial interest, the 15 court “may select accounting methods that are both rational and consistently 16 applied.” Id. at 730 n.4. 17 Abdul Wajid alleges that he has the largest financial interest because he “lost 18 $91,563.30 on his Progenity investments.” [Doc. No. 30 at p. 5.] Abdul Wajid 19 purchased 19,198 shares of Progenity stock from June 19–26, 2020 for a total cost of 20 $250,846.30. [Doc. No. 23-5 at p. 2.] He then sold all his shares on July 1, 2020 for 21 a net loss of $91,663.30 (of which $91,563.30 is available to recover under 15 U.S.C. 22 § 77k(e)). [Id.] The Lin group also alleges that they have the largest financial interest 23 with a combined loss of $18,540.00 on their Progenity investments. [Doc. No. 25-5 24 at p. 2.] Each member of the Lin group remains in possession of their collective 25 3,800 shares of Progenity stock. [Id.] 26 The Lin group does not dispute that Wajid’s claimed loss makes him the 27 plaintiff with largest financial interest in the relief sought by the class. [Doc. No. 29 28 1 at p. 5.] However, they argue that Wajid ultimately has no recoverable loss because 2 the affirmative defense of negative causation applies to him. The Court finds that 3 this argument is better addressed under its analysis of typicality below. Thus, based 4 on his alleged loss of $91,563.30, it is easily ascertained that Abdul Wajid has the 5 largest financial interest in this lawsuit. 6 b. Rule 23(a) Requirements 7 After determining which candidate has the largest financial stake in the 8 controversy, the Court must then “focus its attention on that plaintiff and determine, 9 based on the information he has provided in his pleadings and declarations, whether 10 he satisfies the requirements of Rule 23(a), in particular those of ‘typicality’ and 11 ‘adequacy.’” Cavanaugh, 306 F.3d at 730 (emphasis in original). If that candidate 12 satisfies the requirements of typicality and adequacy, “he becomes the presumptively 13 most adequate plaintiff.” Id. However, if that plaintiff does not satisfy Rule 23(a)’s 14 criteria, “the court must repeat the inquiry, this time considering the plaintiff with the 15 next-largest financial stake, until it finds a plaintiff who is both willing to serve and 16 satisfies the requirements of Rule 23.” Id. Because Abdul Wajid has the largest 17 financial interest in this matter, the Court first analyzes whether he satisfies Rule 18 23(a)’s requirements of typicality and adequacy. 19 i. Typicality 20 Federal Rule of Civil Procedure 23(a)(3) requires that “the claims or defenses 21 of the representative parties are typical of the claims or defenses of the class.” “The 22 test of typicality is whether other members have the same or similar injury, whether 23 the action is based on conduct which is not unique to the named plaintiff[], and 24 whether other class members have been injured by the same course of conduct.” 25 Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010) 26 (internal quotations omitted). Representative claims are “typical” if they are 27 “reasonably co-extensive with those of absent class members,” although “they need 28 1 not be substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th 2 Cir. 1998), overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 3 338 (2011). However, a plaintiff should not be appointed as class representative “if 4 there is a danger that absent class members will suffer if their representative is 5 preoccupied with defenses unique to it.” Hanon v. Dataproducts Corp., 976 F.2d 6 497, 508 (9th Cir. 1992) (internal quotations omitted); see also 15 U.S.C. § 78u- 7 4(a)(3)(B)(iii)(II) (the presumption of most adequate plaintiff may be rebutted by 8 proof that the person “is subject to unique defenses that render such plaintiff 9 incapable of adequately representing the class.”). 10 Abdul Wajid contends that his claims are typical because “[l]ike all class 11 members, Mr. Abdul Wajid purchased Progenity common stock pursuant and/or 12 traceable to Progenity’s IPO at allegedly inflated prices and suffered damages as a 13 result.” [Doc. No. 23-1 at p. 13.] However, the Lin group argues that Abdul Wajid’s 14 claims for recovery are subject to a unique “negative causation” defense, thereby 15 making his claims atypical of the putative class. [Doc. No. 31 at p. 7.] The Lin group 16 maintains that because Abdul Wajid sold all his Progenity shares before any of the 17 corrective disclosures alleged in the Complaint were made, he “cannot attribute the 18 price decline that caused his loss to an alleged corrective disclosure,” and thus 19 Defendants will inevitably assert a negative causation defense to “eliminate Wajid’s 20 claim.” [Id.] As a result, Abdul Wajid will spend “substantial energy defending his 21 claim at the expense of the claims of other class members who held through at least 22 one corrective disclosure.” [Id.] 23 For claims brought under Section 11 of the Securities Act of 1933, “[t]he 24 affirmative defense of negative causation prevents recovery for losses that the 25 defendant proves are not attributable to the alleged misrepresentation or omission in 26 the registration statement.” Hildes v. Arthur Andersen LLP, 734 F.3d 854, 860 (9th 27 Cir. 2013). The defendant bears a “heavy burden” of proof on this defense, and must 28 1 show that the depreciation in value of a plaintiff’s stock “resulted from factors other 2 than the alleged material misstatement” in the defendant’s registration statement. Id.; 3 see also 15 U.S.C. § 77k(e). Generally, a defendant’s misstatement “will not be 4 deemed to have caused a loss if the shares at issue were sold before the defendant 5 discloses its misleading statement.” In re Lendingclub Sec. Litig., 282 F. Supp. 3d 6 1171, 1181 (N.D. Cal. 2017). 7 At this stage of the litigation, the Court need not determine whether a negative 8 causation defense would be successful to defend against Abdul Wajid’s claims. Such 9 a fact-intensive analysis is “generally established by a defendant on a motion for 10 summary judgment or at trial,” rather than at the motion to appoint lead plaintiff 11 stage. See Levine v. AtriCure, Inc., 508 F. Supp. 2d 268, 272-73 (S.D.N.Y. 2007); 12 see also In re Lyft Sec. Litig., No. 19-cv-02690-HSG, 2020 WL 1043628, at *6 (N.D. 13 Cal. Mar. 4, 2020) (“[T]his is a highly fact-intensive affirmative defense, and the 14 Court is not aware of any case in which a court has tried to definitively resolve its 15 applicability at this stage of the proceedings.”). Nevertheless, the Court may 16 “consider evidence which goes to the requirements of Rule 23 even though the 17 evidence may also relate to the underlying merits of the case.” Hanon, 976 F.2d at 18 509. 19 The Court finds the fact that Abdul Wajid sold all his Progenity shares over 20 three weeks before any of the alleged corrective disclosures were issued makes his 21 claims atypical of the putative class. The Complaint alleges that Progenity publicly 22 released new information regarding its financial position on July 23, 2020 and August 23 13, 2020, thereby revealing that the Registration Statement it previously issued was 24 false or misleading. Abdul Wajid was not affected by any of these alleged corrective 25 disclosures, as he was no longer a Progenity shareholder at the time such disclosures 26 were made. He had sold his 19,198 shares and incurred his $91,563.30 loss weeks 27 before Progenity released any updated financial data to the public. While Abdul 28 1 Wajid may still be entitled to recover his losses as a class member—and Defendants 2 would carry a “heavy burden” to establish otherwise—his situation is distinct from 3 the typical class member who seeks to recover losses sustained after the alleged 4 corrections were disclosed to the market. 5 Having determined that Abdul Wajid does not satisfy Rule 23(a)’s criteria, the 6 Court must then look at the moving party with the next largest financial stake in the 7 matter—here, the Lin group. The Court finds that the Lin group’s claims are typical 8 of those of the putative class. In their motion, the Lin group contends that “[l]ike all 9 members of the class, [the Lin group] purchased Progenity common stock pursuant 10 to or traceable to the Registration Statement and suffered losses as a result of their 11 transactions.” [Doc. No. 25-1 at p. 9.] They allege that their damages, “like the 12 losses suffered by all other members of the Class, arise from the artificial inflation of 13 Progenity common stock caused by defendants’ alleged misrepresentations and 14 omissions.” [Id. at p. 10.] Further, each member of the Lin group purchased their 15 Progenity shares on June 19, 2020 (the IPO date) and maintained their ownership 16 through all three alleged corrective disclosures and the filing of this lawsuit. [Doc. 17 No. 25-5 at p. 2.] The Lin group’s claims are therefore typical of other class 18 members’ claims. 19 ii. Adequacy 20 Federal Rule of Civil Procedure 23(a)(4) requires that the named plaintiff suing 21 on behalf of a class fairly and adequately protect the interests of that class. The test 22 for adequacy asks whether the lead plaintiff and his counsel “have any conflicts of 23 interest with other class members” and whether they will “prosecute the action 24 vigorously on behalf of the class.” Hanlon, 150 F.3d at 1020. 25 Here, it appears that the Lin group’s interests do not conflict with the interests 26 of the putative class members. The Lin group’s joint declaration demonstrates their 27 commitment to prosecuting the class’s claims, working with class counsel “to obtain 28 1 the largest possible recovery for the putative class in good faith and with vigorous 2 advocacy,” and providing fair and adequate representation to the class. [Doc. No. 3 25-6 at p. 5.] Further, the Lin group’s selection of such experienced counsel as 4 Glancy Prongay & Murray LLP suggests that they will adequately represent the class 5 with its best interests in mind. Accordingly, the Court finds that the Lin group meets 6 the requirements to be appointed lead plaintiff under Rule 23. 7 3. Abdul Wajid Fails to Rebut the Presumption that the Lin Group 8 Should be Appointed Lead Plaintiff 9 Finally, the PSLRA requires that other plaintiffs be given an opportunity to 10 present evidence rebutting the presumptive lead plaintiff’s showing that it satisfies 11 Rule 23’s typicality and adequacy requirements. See Cavanaugh, 306 F.3d at 730. 12 The presumption may be rebutted “only upon proof by a member of the purported 13 plaintiff class that the presumptively most adequate plaintiff—(aa) will not fairly and 14 adequately protect the interests of the class; or (bb) is subject to unique defenses that 15 render such plaintiff incapable of adequately representing the class.” 15 U.S.C. § 16 78u-4(a)(3)(B)(iii)(II). If the court finds that the presumptive lead plaintiff does not 17 meet the typicality or adequacy requirements, it must then look to the plaintiff with 18 the next lower stake in the litigation, and then repeat this process “sequentially until 19 all challenges have been exhausted.” Cavanaugh, 306 F.3d at 731. 20 As discussed above, the Lin group successfully rebutted the presumption that 21 Abdul Wajid is the most adequate lead plaintiff in this matter. However, Abdul 22 Wajid failed to provide the Court with any meaningful evidence challenging the Lin 23 group’s typicality or adequacy. In his reply, Abdul Wajid claims that by 24 acknowledging the possibility of a negative causation defense, the Lin group 25 “effectively sells out the class by limiting its recoverable damages, just so it can claim 26 the largest losses” and thereby “establishes its own inadequacy.” [Doc. No. 32 at p. 27 6.] However, as Abdul Wajid points out throughout his reply, “this Court should not 28 1 presume that defendants will successfully establish their affirmative defense.” [Id. 2 at p. 11.] By showing why Abdul Wajid’s claims are atypical, the Lin group has not 3 done harm to the class—rather, they present evidence for the Court to consider in 4 selecting the best plaintiff to adequately represent and serve the class. In sum, there 5 is no evidence before this Court to rebut the presumption that the Lin group is the 6 most adequate lead plaintiff and satisfies the requirements of Rule 23. 7 IV. APPOINTMENT OF LEAD COUNSEL 8 The PSLRA provides that the lead plaintiff shall select and retain counsel to 9 represent the class, subject to court approval. 15 U.S.C. § 78u-4(a)(3)(B)(v). In 10 determining whether to approve a lead plaintiff’s attorney as lead counsel, the court 11 must consider: 12 “(i) the work counsel has done in identifying or investigating potential 13 claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; 14 (iii) counsel's knowledge of the applicable law; and (iv) the resources 15 that counsel will commit to representing the class.” 16 FED. R. CIV. P. 23(g)(1)(A). The court may also consider “any other matter pertinent 17 to counsel’s ability to fairly and adequately represent the interests of the class.” Id. 18 However, a court may disturb the lead plaintiff’s choice of counsel only if “necessary 19 to protect the interests of the plaintiff class.” Statement of Manager—The “Private 20 Securities Litigation Reform Act of 1995,” 141 Cong. Rec. H14691-08, at H13700 21 (daily ed. Nov. 28, 1995); see also Cavanaugh, 306 F.3d at 732-33 (noting that “the 22 district court has no authority to select for the class what it considers to be the best 23 possible lawyer,” unless the named plaintiff’s choice of counsel “is so irrational . . . 24 [as to] cast[] doubt on his ability to handle the responsibilities of lead plaintiff.”). In 25 other words, “the district court should not reject a lead plaintiff’s proposed counsel 26 merely because it would have chosen differently.” Cohen v. U.S. Dist. Ct., 586 F.3d 27 703, 711 (9th Cir. 2009). 28 1 Here, Glancy Prongay & Murray LLP (GPM) satisfies the statutory 2 requirements for lead class counsel and would fairly and adequately represent the 3 class under Rule 23(g)(1)(A) and the PSLRA. GPM specializes in representing 4 investors in nationwide class actions and has served as lead or co-lead counsel in 5 numerous securities class actions that resulted in significant recoveries for class 6 members. [Doc. No. 25-7, Firm Resume.] Because GPM appears competent to 7 represent the class, the Court defers to the Lin group’s choice and hereby approves 8 GPM as Lead Counsel. 9 V. CONCLUSION 10 For the reasons stated above, the Court GRANTS the Lin group’s motions for 11 Consolidation of Related Actions, Appointment as Lead Plaintiff, and Approval of 12 Lead Counsel. [Doc. No. 25]. The Court DENIES both Abdul Wajid’s and Matz’s 13 competing motions. [Doc. Nos. 23, 24.] The Court ORDERS as follows: 14 1. Pursuant to Federal Rule of Civil Procedure 42(a), Soe v. Progenity, 15 Inc., Case No. 3:20-cv-01683, and Brickman Investments Inc. v. Progenity, Inc., Case 16 No. 3:20-cv-01795, and all related actions are consolidated for all purposes (the 17 “Consolidated Action”). This Order will apply to the Consolidated Action and to 18 each case that relates to the same subject matter that is subsequently filed in this 19 District or is transferred to this District, and is consolidated with the Consolidated 20 Action. 21 2. A Master File is established for this proceeding. The Master File will 22 be Case No. 3:20-cv-01683-CAB-AHG. The Clerk will file all pleadings in the 23 Master File and note such filings on the Master Docket. 24 3. An original of this Order will be filed by the Clerk in the Master File. 25 4. The Clerk shall mail a copy of this Order to counsel of record in the 26 Consolidated Action. 27 28 1 5. Every pleading in the Consolidated Action must have the following 2 caption: 3 IN RE PROGENITY, INC. 4 Case No. 20-cv-1683-CAB-AHG SECURITIES LITIGATION 5 6 7 6. The Court requests the assistance of counsel in calling to the attention 8 of the Clerk of this Court the filing or transfer of any case that may properly be 9 consolidated as part of the Consolidated Action. 10 7. When a case that arises out of the same subject matter as the 11 Consolidated Action is hereinafter filed in this Court or transferred from another 12 court, the Clerk of this Court will: 13 a. File a copy of this Order in the separate file for such action; and 14 b. Make the appropriate entry in the Master Docket for the 15 Consolidated Action. 16 8. Each new case that arises out of the subject matter of the Consolidated 17 Action will be consolidated with the Consolidated Action. This Order will apply 18 thereto, unless a party objects to consolidation (as provided for herein), or to any 19 provision of this Order, within 10 days after the date upon which a copy of this Order 20 is served on counsel for such party by filing an application for relief, and this Court 21 deems it appropriate to grant such application. Nothing in the foregoing will be 22 construed as a waiver of Defendants’ right to object to consolidation of any 23 subsequently filed or transferred related action. 24 9. Pursuant to 15 U.S.C. § 78u-4(a)(3)(B), the Lin group (comprised of Lin 25 Shen, Lingjun Lin, and Fusheng Lin) is appointed to serve as Lead Plaintiff in the 26 Consolidated Action. 27 28 1 10. Pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v), the Lin group’s selection of 2 | Glancy Prongay & Murray LLP as Lead Counsel for the class is approved. Lead 3 | Counsel will have the authority to speak for all plaintiffs and class members in all 4 | matters regarding the litigation, including, but not limited to, pre-trial proceedings, 5 | motion practice, trial, and settlement. Additionally, Lead Counsel shall have the 6 | following responsibilities: 7 a. To brief and argue motions; 8 b. To initiate and conduct discovery, including, but not limited to, ? coordination of discovery with Defendants’ counsel, □□□ □□□ 10 preparation of written interrogatories, requests for admissions, and requests for production of documents; 12 c. To direct and coordinate the examination of witnesses in depositions; 13 d. To act as spokesperson at pretrial conferences; e. To call meetings of the plaintiffs’ counsel as they deem necessary 15 and appropriate from time to time; 16 f. To initiate and conduct any settlement negotiations with Defendants’ 17 counsel; 18 g. To consult with and employ experts; and 19 h. To perform such other duties as may be expressly authorized by 20 further order of this Court. a It is SO ORDERED. 22 | Dated: December 3, 2020 ? 23 A Hon. Cathy Ann Bencivengo 05 United States District Judge

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