1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 THE RECKSTIN FAMILY TRUST, et al., Case No. 22-cv-01413-HSG
8 Plaintiffs, ORDER GRANTING SAMARGHANDI’S MOTION FOR 9 v. APPOINTMENT AS LEAD PLAINTIFF AND LEAD COUNSEL, DENYING THE 10 C3.AI, INC., et al., REMAINING MOTIONS FOR LEAD PLAINTIFF 11 Defendants. Re: Dkt. Nos. 30, 11, 18, 25, 26, 35, 39 12 13 Plaintiffs Mark Samarghandi (Dkt. No. 30), Yining Cai (Dkt. No. 7), Leonard Janos (Dkt. 14 No. 11), Hossein Afshari (Dkt. No. 18), Fadi Karnaby (Dkt. No. 25), Dennis Martinez and Christie 15 Sweeney (Dkt. No. 26), David Hu and Li Zhong Hu (Dkt. No. 35), and Sravan Potu (Dkt. No. 39) 16 each filed competing motions for appointment of lead plaintiff and lead counsel. Cai has since 17 withdrawn her motion (Dkt. No. 56), and non-opposition notices have been filed by the following 18 parties, leaving Samarghandi as the sole movant: Potu (Dkt. No. 45), Hu and Zhong Hu (Dkt. No. 19 47), Karnaby (Dkt. No. 48), Afshari (Dkt. No. 49), Martinez and Sweeney (Dkt. No. 50), and 20 Janos (Dkt. No. 53). See also Dkt. No. 57. Samarghandi requests that the Court appoint him as 21 Lead Plaintiff and approve his selection of Hagens Berman Sobol Shapiro LLP (“Hagens 22 Berman”) as Lead Counsel. Dkt No. 30. 23 Having carefully considered the relevant filings and authorities, the Court GRANTS 24 Samarghandi’s Motion to Appoint Mark Samarghandi as Lead Plaintiff and Approve His 25 Selection of Lead Counsel (Dkt. No. 30) and DENIES the remaining unwithdrawn motions (Dkt. 26 Nos. 11, 18, 25, 26, 35, 39).1 27 I. APPOINTMENT OF LEAD PLAINTIFF 1 The Private Securities Litigation Reform Act (“PSLRA”) “instructs district courts to select 2 as lead plaintiff the one ‘most capable of adequately representing the interests of class members.’” 3 In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002) (quoting 15 U.S.C. § 78u-4(a)(3)(B)(i)). 4 “The ‘most capable’ plaintiff—and hence the lead plaintiff—is the one who has the greatest 5 financial stake in the outcome of the case, so long as he meets the requirements of Rule 23.” Id. 6 The Ninth Circuit interprets the PSLRA as establishing “a simple three-step process for 7 identifying the lead plaintiff pursuant to these criteria.” Id. The Court must: (1) determine 8 whether appropriate notice was published; (2) determine which plaintiff has the largest financial 9 stake and whether this plaintiff satisfies the typicality and adequacy requirements; and (3) provide 10 the other plaintiffs an opportunity to rebut the presumptive lead plaintiff’s showing of typicality 11 and adequacy. Id. at 729–32. 12 A. Notice Requirement 13 Step One consists of meeting the PSLRA's notice requirement. Id. at 729. “The first 14 plaintiff to file an action covered by the [PSLRA] must post this notice ‘in a widely circulated 15 national business-oriented publication or wire service.’” Id. (quoting 15 U.S.C. § 78u- 16 4(a)(3)(A)(i)). The notice must be published within 20 days of the complaint's filing. 15 U.S.C. § 17 78u-4(a)(3)(A)(i). The notice must also alert putative class members “(I) of the pendency of the 18 action, the claims asserted therein, and the purported class period; and (II) that, not later than 60 19 days after the date on which the notice is published, any member of the purported class may move 20 the court to serve as lead plaintiff of the purported class.” Id. 21 Here, notice was published in Globe Newswire on March 4, 2022, the same day that the 22 complaint was filed. See Dkt. No. 1; Dkt. No. 30-3 (“Gilmore Decl.”), Ex. C. This complied with 23 the PSLRA's 20-day filing deadline, and Globe Newswire is a “widely circulated [inter]national 24 business-oriented news reporting service,” as required. Cavanaugh, 306 F.3d at 729 (quotation 25 omitted). The notice specifically announced the filing of the action against Defendant, described 26 the asserted claim under the Securities Act, described the class and advised putative class 27 members that they had sixty days from the date of the notice to file a motion to seek appointment 1 as Lead Plaintiff in the lawsuit. See Gilmore Decl., Ex. C. Accordingly, Step One’s requirements 2 are met. 3 B. Largest Financial Stake in the Litigation 4 Step Two consists of identifying the presumptive lead plaintiff. See Cavanaugh, 306 F.3d 5 at 729–30. There is a rebuttable presumption that the “most adequate plaintiff” is the one who 6 “(aa) has either filed the complaint or made a motion in response to a notice under subparagraph 7 (A)(i); (bb) in the determination of the court, has the largest financial interest in the relief sought 8 by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil 9 Procedure.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). Thus, once the filing requirement of subsection 10 (a)(3)(B)(iii)(I)(aa) is met, “the district court must compare the financial stakes of the various 11 plaintiffs and determine which one has the most to gain from the lawsuit.” Cavanaugh, 306 F.3d 12 at 730. Samarghandi alleges that he suffered losses of $1,234,611.90 based on his purchases of 13 the Company’s securities during the Class Period. See Dkt. No. 30-3, Gilmore Decl., Ex. B. Eight 14 of the parties that filed motions to appoint a lead plaintiff have since filed statements 15 acknowledging that they do not have the largest financial stake: Potu (Dkt. No. 45 at 1), Hu and 16 Zhong Hu (Dkt. No. 47 at 1), Karnaby (Dkt. No. 48 at 1), Afshari (Dkt. No. 49 at 1), Martinez and 17 Sweeney (Dkt. No. 50 at 1), and Janos (Dkt. No. 53 at 2). Cai has since withdrawn her motion, 18 recognizing that she also does not have the largest stake. Dkt. No. 56 at 1. Movant thus has the 19 largest known financial interest as defined by the PSLRA. 20 C. Movant’s Typicality and Adequacy 21 Next, a presumptive lead plaintiff has the burden of setting forth a prima facie case that he 22 can satisfy the class representative requirements of Rule 23(a), typicality and adequacy. 15 U.S.C. 23 § 78u-4(a)(3)(B)(iii)(I); Cavanaugh, 306 F.3d at 730. Samarghandi represents that he is unaware 24 of any conflicts between his claims and those asserted on behalf of the putative class, or of any 25 unique defenses, that would render him atypical or unable to adequately protect the interest of the 26 class. Dkt. No. 30 at 6. The Court agrees that Samarghandi's claimed injuries, stemming from the 27 purchase of Defendant’s securities during the Class Period in reliance upon purported false and 1 Samarghandi susceptible to any apparent unique defenses that would make him inadequate to 2 represent the class in this action: his interest is clearly aligned with that of the proposed Class 3 because his claim is identical to those of all Class members who purchased the Company’s 4 securities. Moreover, there is no evidence of antagonism between Movant’s interest and that of 5 proposed Class members. Accordingly, the typicality and adequacy requirements are met. 6 II. APPOINTMENT OF LEAD COUNSEL 7 Samarghandi has moved for approval of his selection of Hagens Berman Sobol Shapiro 8 LLP (“Hagens Berman”) as lead counsel. Dkt Nos. 30, 57; see also 15 U.S.C. § 78u-4(a)(3)(B)(v) 9 (“The most adequate plaintiff shall, subject to the approval of the court, select and retain counsel 10 to represent the class.”).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 THE RECKSTIN FAMILY TRUST, et al., Case No. 22-cv-01413-HSG
8 Plaintiffs, ORDER GRANTING SAMARGHANDI’S MOTION FOR 9 v. APPOINTMENT AS LEAD PLAINTIFF AND LEAD COUNSEL, DENYING THE 10 C3.AI, INC., et al., REMAINING MOTIONS FOR LEAD PLAINTIFF 11 Defendants. Re: Dkt. Nos. 30, 11, 18, 25, 26, 35, 39 12 13 Plaintiffs Mark Samarghandi (Dkt. No. 30), Yining Cai (Dkt. No. 7), Leonard Janos (Dkt. 14 No. 11), Hossein Afshari (Dkt. No. 18), Fadi Karnaby (Dkt. No. 25), Dennis Martinez and Christie 15 Sweeney (Dkt. No. 26), David Hu and Li Zhong Hu (Dkt. No. 35), and Sravan Potu (Dkt. No. 39) 16 each filed competing motions for appointment of lead plaintiff and lead counsel. Cai has since 17 withdrawn her motion (Dkt. No. 56), and non-opposition notices have been filed by the following 18 parties, leaving Samarghandi as the sole movant: Potu (Dkt. No. 45), Hu and Zhong Hu (Dkt. No. 19 47), Karnaby (Dkt. No. 48), Afshari (Dkt. No. 49), Martinez and Sweeney (Dkt. No. 50), and 20 Janos (Dkt. No. 53). See also Dkt. No. 57. Samarghandi requests that the Court appoint him as 21 Lead Plaintiff and approve his selection of Hagens Berman Sobol Shapiro LLP (“Hagens 22 Berman”) as Lead Counsel. Dkt No. 30. 23 Having carefully considered the relevant filings and authorities, the Court GRANTS 24 Samarghandi’s Motion to Appoint Mark Samarghandi as Lead Plaintiff and Approve His 25 Selection of Lead Counsel (Dkt. No. 30) and DENIES the remaining unwithdrawn motions (Dkt. 26 Nos. 11, 18, 25, 26, 35, 39).1 27 I. APPOINTMENT OF LEAD PLAINTIFF 1 The Private Securities Litigation Reform Act (“PSLRA”) “instructs district courts to select 2 as lead plaintiff the one ‘most capable of adequately representing the interests of class members.’” 3 In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002) (quoting 15 U.S.C. § 78u-4(a)(3)(B)(i)). 4 “The ‘most capable’ plaintiff—and hence the lead plaintiff—is the one who has the greatest 5 financial stake in the outcome of the case, so long as he meets the requirements of Rule 23.” Id. 6 The Ninth Circuit interprets the PSLRA as establishing “a simple three-step process for 7 identifying the lead plaintiff pursuant to these criteria.” Id. The Court must: (1) determine 8 whether appropriate notice was published; (2) determine which plaintiff has the largest financial 9 stake and whether this plaintiff satisfies the typicality and adequacy requirements; and (3) provide 10 the other plaintiffs an opportunity to rebut the presumptive lead plaintiff’s showing of typicality 11 and adequacy. Id. at 729–32. 12 A. Notice Requirement 13 Step One consists of meeting the PSLRA's notice requirement. Id. at 729. “The first 14 plaintiff to file an action covered by the [PSLRA] must post this notice ‘in a widely circulated 15 national business-oriented publication or wire service.’” Id. (quoting 15 U.S.C. § 78u- 16 4(a)(3)(A)(i)). The notice must be published within 20 days of the complaint's filing. 15 U.S.C. § 17 78u-4(a)(3)(A)(i). The notice must also alert putative class members “(I) of the pendency of the 18 action, the claims asserted therein, and the purported class period; and (II) that, not later than 60 19 days after the date on which the notice is published, any member of the purported class may move 20 the court to serve as lead plaintiff of the purported class.” Id. 21 Here, notice was published in Globe Newswire on March 4, 2022, the same day that the 22 complaint was filed. See Dkt. No. 1; Dkt. No. 30-3 (“Gilmore Decl.”), Ex. C. This complied with 23 the PSLRA's 20-day filing deadline, and Globe Newswire is a “widely circulated [inter]national 24 business-oriented news reporting service,” as required. Cavanaugh, 306 F.3d at 729 (quotation 25 omitted). The notice specifically announced the filing of the action against Defendant, described 26 the asserted claim under the Securities Act, described the class and advised putative class 27 members that they had sixty days from the date of the notice to file a motion to seek appointment 1 as Lead Plaintiff in the lawsuit. See Gilmore Decl., Ex. C. Accordingly, Step One’s requirements 2 are met. 3 B. Largest Financial Stake in the Litigation 4 Step Two consists of identifying the presumptive lead plaintiff. See Cavanaugh, 306 F.3d 5 at 729–30. There is a rebuttable presumption that the “most adequate plaintiff” is the one who 6 “(aa) has either filed the complaint or made a motion in response to a notice under subparagraph 7 (A)(i); (bb) in the determination of the court, has the largest financial interest in the relief sought 8 by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil 9 Procedure.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). Thus, once the filing requirement of subsection 10 (a)(3)(B)(iii)(I)(aa) is met, “the district court must compare the financial stakes of the various 11 plaintiffs and determine which one has the most to gain from the lawsuit.” Cavanaugh, 306 F.3d 12 at 730. Samarghandi alleges that he suffered losses of $1,234,611.90 based on his purchases of 13 the Company’s securities during the Class Period. See Dkt. No. 30-3, Gilmore Decl., Ex. B. Eight 14 of the parties that filed motions to appoint a lead plaintiff have since filed statements 15 acknowledging that they do not have the largest financial stake: Potu (Dkt. No. 45 at 1), Hu and 16 Zhong Hu (Dkt. No. 47 at 1), Karnaby (Dkt. No. 48 at 1), Afshari (Dkt. No. 49 at 1), Martinez and 17 Sweeney (Dkt. No. 50 at 1), and Janos (Dkt. No. 53 at 2). Cai has since withdrawn her motion, 18 recognizing that she also does not have the largest stake. Dkt. No. 56 at 1. Movant thus has the 19 largest known financial interest as defined by the PSLRA. 20 C. Movant’s Typicality and Adequacy 21 Next, a presumptive lead plaintiff has the burden of setting forth a prima facie case that he 22 can satisfy the class representative requirements of Rule 23(a), typicality and adequacy. 15 U.S.C. 23 § 78u-4(a)(3)(B)(iii)(I); Cavanaugh, 306 F.3d at 730. Samarghandi represents that he is unaware 24 of any conflicts between his claims and those asserted on behalf of the putative class, or of any 25 unique defenses, that would render him atypical or unable to adequately protect the interest of the 26 class. Dkt. No. 30 at 6. The Court agrees that Samarghandi's claimed injuries, stemming from the 27 purchase of Defendant’s securities during the Class Period in reliance upon purported false and 1 Samarghandi susceptible to any apparent unique defenses that would make him inadequate to 2 represent the class in this action: his interest is clearly aligned with that of the proposed Class 3 because his claim is identical to those of all Class members who purchased the Company’s 4 securities. Moreover, there is no evidence of antagonism between Movant’s interest and that of 5 proposed Class members. Accordingly, the typicality and adequacy requirements are met. 6 II. APPOINTMENT OF LEAD COUNSEL 7 Samarghandi has moved for approval of his selection of Hagens Berman Sobol Shapiro 8 LLP (“Hagens Berman”) as lead counsel. Dkt Nos. 30, 57; see also 15 U.S.C. § 78u-4(a)(3)(B)(v) 9 (“The most adequate plaintiff shall, subject to the approval of the court, select and retain counsel 10 to represent the class.”). The Court defers to Samarghandi's choice of lead counsel because his 11 choice is not “so irrational, or so tainted by self-dealing or conflict of interest, as to cast genuine 12 and serious doubt on [his] willingness or ability to perform the functions of lead plaintiff.” 13 Cavanaugh, 306 F.3d at 733; see also id. at 739 n.11 (noting that “Congress gave the lead 14 plaintiff, and not the court, the power to select a lawyer for the class”). Hagens Berman has 15 extensive experience as counsel in securities class actions. See Dkt. No. 30-5, Ex. D (firm 16 resume). The Court thus approves Samarghandi's selection of counsel. 17 III. CONCLUSION 18 For the foregoing reasons, the Court GRANTS Samarghandi’s motion. Dkt. No. 30. All 19 pending unwithdrawn motions are DENIED. See Dkt. Nos. 11, 18, 25, 26, 35, 39. Samarghandi 20 is appointed as Lead Plaintiff for the putative class. Hagens Berman is further approved as lead 21 counsel for the putative class. 22 The Court further SETS a telephonic case management conference on January 17, 2023, at 23 2:00 p.m. All counsel shall use the following dial-in information to access the call: 24 Dial-In: 888-808-6929; 25 Passcode: 6064255 26 // 27 // 1 For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and where 2 at all possible, parties shall use landlines. The Court DIRECTS the parties to meet and confer and 3 submit a joint case management statement by January 10, 2023. 4 IT IS SO ORDERED. 5 || Dated: 12/12/2022 6 Alapurd 5 Mb). HAYWOOD S. GILLIAM, JR. 7 United States District Judge 8 9 10 11 12
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