YLITALO v. AUTOMATIC DATA PROCESSING, INC.

CourtDistrict Court, D. New Jersey
DecidedJune 27, 2025
Docket2:24-cv-07635
StatusUnknown

This text of YLITALO v. AUTOMATIC DATA PROCESSING, INC. (YLITALO v. AUTOMATIC DATA PROCESSING, INC.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
YLITALO v. AUTOMATIC DATA PROCESSING, INC., (D.N.J. 2025).

Opinion

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

DALE YLITALO, Individually and On Behalf of All Others Similarly Situated, Case No. 2:24-cv-07635-JKS-LDW Plaintiff,

v. OPINION

AUTOMATIC DATA PROCESSING, INC., June 27, 2025 ADP, INC., and AMERICAN CENTURY INVESTMENTS SERVICES, INC.

Defendants. SEMPER, District Judge. This matter comes before the Court upon Plaintiff Dale Ylitalo’s (“Ylitalo”) motion to appoint lead plaintiff and lead counsel. (ECF 31.) Defendants Automatic Data Processing, Inc. (“Automatic”), ADP, Inc. (“ADP”), and American Century Investment Services, Inc. (“ACI”) filed a response. (ECF 32, “Resp.”) Ylitalo filed a reply brief. (ECF 33, “Reply.) The Court considered the parties’ submissions and decided the motion without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Local Civil Rule 78.1(b). For the reasons stated herein, Ylitalo’s motion for appointment as lead plaintiff and approval of counsel (ECF 31) is GRANTED. I. FACTUAL AND PROCEDURAL BACKGROUND This is a putative federal securities class action brought on behalf of all those who own and operate their own business who purchased or otherwise acquired for themselves a SIMPLE IRA from Defendant ADP from July 9, 2024 to three years prior (the “Class Period”), the funds for which were directed into one of ACI’s One Choice Target Date Portfolios at the time of sale of the SIMPLE IRA (the “Class”). (ECF 1, Compl. ¶ 1.) This action is brought on behalf of the Class for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 12(a)(2) and 15 of the Securities Act of 1933, in addition to claims arising under Florida and New Jersey law. (Id.) Defendant Automatic and ADP, a subsidiary of Automatic, provide human resources

management software and services. (Id. ¶¶ 2-3.) ADP also sells retirement plans including SIMPLE IRAs, the funds for which are invested in ACI’s “One Choice Target Date Portfolios,” which the Complaint describes as “Funds of Funds” comprised exclusively of ACI owned and managed mutual funds (Id. ¶¶ 4-5; see also id. ¶ 1.) Plaintiff purchased a SIMPLE IRA plan following a July 26, 2023 conversation with an allegedly unlicensed and unregistered sales representative (the “Sales Representative”). (Id. ¶¶ 68, 76; id. Ex. 1.) Plaintiff alleges that unlicensed and unregistered ADP employees sold the SIMPLE IRAs, and that Automatic and ACI “knew of and encouraged” the use of unlicensed and unregistered personnel to sell the SIMPLE IRA plans. (Id. ¶¶ 5-6.) Plaintiff further alleges that ADP and ACI failed to disclose to consumers that the unlicensed and unregistered personnel were required to sell

a certain number of SIMPLE IRAs and received incentives to sell the SIMPLE IRAs. (Id. ¶¶ 10, 50-51, 54.) Plaintiff also alleges that the unlicensed and unregistered sales representatives misled Plaintiff and Class Members as to their potential returns on their SIMPLE IRAs. (Id. ¶ 86.) Plaintiff has seen a lower return on his SIMPLE IRA than the 6% he was promised at the time of purchase.1 (Id. ¶¶ 69-77.) On July 9, 2024, Plaintiff Dale Ylitalo filed the Complaint individually and on behalf of all others similarly situated. (ECF 1.) On July 9, 2024, Ylitalo filed a motion to appoint lead plaintiff and approval of counsel. (ECF 31, the “Motion”.) Ylitalo’s Motion is unchallenged by the other

1 Defendants contest this allegation. (See ECF 32; infra Section II.A.) Class members. Defendants jointly filed a response to the Motion, raising a number of issues regarding Plaintiff’s adequacy to serve as lead Plaintiff. (ECF 32.) The Court now considers Plaintiff’s Motion.2 II. APPOINTMENT OF LEAD PLAINTIFF

The Private Securities Litigation Reform Act (“PSLRA”) directs the Court to appoint as lead plaintiff “the member or members of the purported plaintiff class that the court determines to be [the] most capable of adequately representing the interests of class members[.]” 15 U.S.C. §§ 78u-4(a)(3)(B)(i), 77z-1(a)(3)(B)(i). As relevant here, I. In general. . . . the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this title is the person or group of persons that –

(aa) has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i); (bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

II. Rebuttal evidence. The presumption described in subclause (I) may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff — (aa) will not fairly and adequately protect the interests of the class; or (bb) is subject to unique defenses that render such plaintiff incapable of adequately representing the class.

15 U.S.C. §§ 78u-4(a)(3)(B)(iii), 77z-1(a)(3)(B)(iii).

2 Defendants lack standing to formally oppose Plaintiff’s motion for appointment as lead plaintiff, but the Court may consider the issues raised by Defendants “for the Court’s benefit with the appropriate skepticism that Defendants do not have the best interest of the members of the class at heart.” Blake Partners, Inc. v. Orbcomm, Inc., No. 07-4517, 2008 WL 2277117, at *4 (D.N.J. June 2, 2008); see also Fields v. Biomatrix, Inc., 198 F.R.D. 451, 454 (D.N.J. 2000). The “most adequate plaintiff” must also satisfy the requirements of Federal Rule of Civil Procedure 23 (15 U.S.C. §§ 78u-4(a)(3)(B)(iii)(I)(cc), 77z-1(a)(3)(B)(iii)(I)(cc)): One or more members of a class may sue or be sued as representative parties on behalf of all members only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). A. Largest Financial Interest The Third Circuit has been clear that “[i]n appointing a lead plaintiff, the court’s first duty is to identify the movant that is presumptively entitled to that status. The process begins with the identification of the movant with ‘the largest financial interest in the relief sought by the class.’” In re Cendant Corp. Litig., 264 F.3d 201, 262 (3d Cir. 2001) (quoting 15 U.S.C. § 78u- 4(a)(3)(B)(iii)(I)(bb)). In doing so, “[c]ourts have discretion to appoint an investor with the largest stake in the litigation.” Roby v. Ocean Power Techs., Inc., No. 14-3799, 2015 WL 1334320, at *5 (D.N.J. Mar. 17, 2015) (citing In re Cendant Corp. Litig., 264 F.3d at 262). “The Third Circuit has concluded that ‘largest financial interest’ means the largest loss.” Roby, 2015 WL 1334320, at *5 (citing In re Cendant Corp.

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