UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Transcription

1 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #: 0 0 Benjamin Heikali SBN 0 bheikali@faruqilaw.com 0 Wilshire Boulevard, Suite 0 Los Angeles, CA 00 Telephone: -- Facsimile: -- Richard W. Gonnello (admitted pro hac vice, Case No. :-cv-00-svw-agr) rgonnello@faruqilaw.com Sherief Morsy (admitted pro hac vice, Case No. :-cv-00-svw-agr) smorsy@faruqilaw.com Third Avenue, th Floor New York, NY 00 Telephone: --0 Facsimile: -- Attorneys for Shinu Gupta IN RE SNAP INC. SECURITIES LITIGATION UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA No. :-cv-0-svw-agr SHINU GUPTA S JOINDER IN DEFENDANTS RESPONSE TO PURPORTED WITHDRAWAL OF LEAD PLAINTIFF CLASS ACTION Judge: Hon. Stephen V. Wilson SHINU GUPTA S JOINDER IN DEFENDANTS RESPONSE TO PURPORTED WITHDRAWAL OF LEAD PLAINTIFF :-cv-0-svw-agr

2 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #: 0 0 Shinu Gupta ( Gupta ) respectfully joins in Defendants Response to Purported Withdrawal of Lead Plaintiff Thomas DiBiase ( DiBiase ) (ECF No. ) ( Response ) in opposing DiBiase s Notice of Withdrawal of Request for Appointment as Class Representative (ECF No. ) (the Withdrawal Notice ). The Withdrawal Notice s proposal to replace the current Lead Plaintiff, DiBiase, with two individuals of Lead Counsel s choosing proposed named plaintiffs Donald R. Allen ( Allen ) and Shawn B. Dandridge ( Dandridge ) should be denied because it contravenes the requirements of the Private Securities Litigation Reform Act of ( PSLRA ), U.S.C. u-(a)(), and it was not properly noticed as a motion. INTRODUCTION The PSLRA was enacted to prevent lawyer-driven litigation and to put clients not their lawyers in control of securities class actions. See In re Cavanaugh, 0 F.d,, (th Cir. 00). Here, two of Lead Counsel s clients have sought to withdraw under mysterious, unspecified circumstances and now seek to replace themselves with two individuals of Lead Counsel s choosing. This is precisely the type of attorney gamesmanship that the PSLRA sought to end and should be rejected outright. In any event, courts faced with the withdrawal of the Lead Plaintiff have not merely allowed Lead Counsel to choose a replacement. As Defendants explained in their Response, courts either: () reopen the PSLRA s lead plaintiff process and grant priority to those who filed the initial complaint or originally timely moved for appointment; or () reopen the process to all potential class members who wish to serve. Response at. Unless otherwise noted, all internal citations and quotations are omitted and all emphases are added. PLAINTIFF :-cv-0-svw-agr

3 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #: 0 0 PROCEDURAL HISTORY By way of background, Gupta filed one of the original complaints in the above-captioned action (the Action ) and was one of several movants who timely sought appointment to serve as lead plaintiff in the Action on July, 0. See ECF No.. On September, 0, the Court ultimately appointed DiBiase as Lead Plaintiff for the action, approved his selection of counsel, and consolidated the related actions. ECF No.. Thereafter, on November, 0, DiBiase filed a Consolidated Amended Complaint, adding as named plaintiff David Steinberg ( Steinberg ). ECF No.. On August 0, 0, DiBiase filed two motions: () a motion for class certification (ECF No. ) ( Class Certification Motion ) which sought, inter alia, to appoint DiBiase, Allen, and Dandridge as class representatives; and () a motion to add Allen and Dandridge as named plaintiffs and to withdraw named plaintiff Steinberg for unspecified personal reasons pursuant to Federal Rule of Civil Procedure (ECF No. ) ( Rule Motion ). Less than a month later, DiBiase failed to attend his scheduled deposition and thereafter filed his Withdrawal Notice, which purported to notify the Court of: () his withdrawal of his request to be appointed a class representative; () his intent to withdraw as Lead Plaintiff and as named plaintiff after the Court adds Dandridge and Allen as named plaintiffs and appoints them as Class Representatives. ECF No. at. Defendants filed their Response to DiBiase s Withdrawal Notice on October, 0, opposing the proposed substitution as procedurally improper under the PSLRA. See Gupta v. Snap Inc., et al., No. :-cv-00-svw-agr (C.D. Cal.), ECF No.. Tellingly, Steinberg did not submit a sworn declaration explaining his reasons for seeking to withdraw as a named plaintiff. Rather, Lead Counsel submitted a declaration in support of the Rule Motion claiming that Steinberg wishes to withdraw due to personal reasons. See ECF No. - at. PLAINTIFF :-cv-0-svw-agr

4 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #: 0 0 See ECF No. at -. DiBiase filed a reply in further support of his Withdrawal Notice on October, 0. See ECF No.. ARGUMENT The PSLRA requires that the court appoint a lead plaintiff to control the litigation. See U.S.C. u-(a)()(b)(). Although [t]he PSLRA is entirely silent on the proper procedure for substituting a new lead plaintiff when the previously certified one withdraws[,] In re Initial Pub. Offering ( IPO ) Sec. Litig., F.R.D., 0 (S.D.N.Y. 00), courts facing this situation do not automatically substitute as Lead Plaintiff someone of Lead Counsel s choosing, see In re Neopharm, Inc. Sec. Litig., 00 WL 0, at * (N.D. Ill. Apr., 00). As Defendants point out, allowing Lead Counsel to make such a decision is wholly inconsistent with the PSLRA s goals. Response at. Accordingly, courts generally require at least a modified reopening of the PSLRA s lead plaintiff appointment process when the Lead Plaintiff withdraws. Reese v. Malone, 0 WL, at * (W.D. Wash. Apr., 0); see also Fort Worth Employees Retirement Fund v. J.P. Morgan Chase & Co., F. Supp. d, (S.D.N.Y. 0); In re Gentiva Sec. Litig., F.R.D. 0, (E.D.N.Y. 0); In re Smith Barney Transfer Agent Litig., 0 WL, at * (S.D.N.Y. Dec., 0); Neopharm, 00 WL 0, at *. The Withdrawal Notice is an obvious attempt to avoid the reopening of the lead plaintiff process to ensure that Lead Counsel maintains control of the case. DiBiase attributes his desire to withdraw from his role as Lead Plaintiff due to an unspecified months-long health issue that somehow prevents him from attending his September, 0 deposition at the last minute, but which is not severe enough to prevent him from serving as Lead Plaintiff until after the Court rules on his pending motions. See ECF No. - at -. Presumably, DiBiase is avoiding PLAINTIFF :-cv-0-svw-agr

5 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #: being deposed because discovery will confirm that he is inadequate to serve as Lead Plaintiff. By attempting to swap out DiBiase for potential Class Representatives Dandridge and Allen without affirmatively requesting the Court s permission, Lead Counsel is seeking to prevent a new lead plaintiff and new lead counsel from being appointed. Indeed, if Lead Counsel had its way, it would leave the class without a duly-appointed lead plaintiff, in contravention of Congress s mandate, and it would render any settlement reached in this Action vulnerable to appeal for flouting the PSLRA s lead plaintiff appointment requirements. DiBiase does not cite a single case where a court allowed a securities class action subject to the PSLRA to proceed without a duly-appointed lead plaintiff. Accordingly, the Court should reopen the lead plaintiff process for 0 days, granting priority to those who either originally filed the complaint or timely filed a motion for appointment in this Action. This approach is consistent with the PSLRA s strict timeliness requirements, see In re NYSE Specialists Sec. Litig., 0 F.R.D., - (S.D.N.Y. 00), and with decisions other courts have made in similar circumstances. See Smith Barney, 0 WL, at * (granting priority in reopened lead plaintiff process to those who originally timely moved); cf. IPO, F.R.D. at 0 n. (noting that if other plaintiffs originally timely moved for appointment as lead plaintiff or filed the complaint, they would arguably be entitled to priority over any other potential lead plaintiffs in replacing the withdrawn lead plaintiff). Alternatively, the Court should require that notice be republished and reopen the lead plaintiff process to all potential class members willing to serve as lead plaintiff. See generally U.S.C. u-(a)()(a). Lastly, assuming arguendo that the Court was inclined to allow DiBiase s proposed substitution, it should decline to do so here because DiBiase s Withdrawal PLAINTIFF :-cv-0-svw-agr

6 Case :-cv-0-svw-agr Document Filed 0/0/ Page of Page ID #:0 0 0 Notice is not a properly noticed motion under Local Rule.. See L.R.. ( The Court may decline to consider a motion unless it meets the requirements of L.R. - through -[,] which include, inter alia, that the party seeking relief meet and confer with the opposing party s counsel). CONCLUSION For the foregoing reasons, Gupta respectfully joins in Defendants Response and submits that DiBiase s attempt to substitute Danbridge and Allen as Lead Plaintiffs be denied. Dated: October, 0 Respectfully submitted, By: /s/ Richard W. Gonnello Richard W. Gonnello Benjamin Heikali SBN 0 0 Wilshire Boulevard, Suite 0 Los Angeles, CA 00 Telephone: -- Facsimile: -- bheikali@faruqilaw.com Richard W. Gonnello (pro hac vice, Case No. :-cv-00-svw-agr) rgonnello@faruqilaw.com Sherief Morsy (pro hac vice, Case No. :-cv-00-svw-agr) smorsy@faruqilaw.com Third Avenue, th Floor New York, NY 00 Telephone: --0 Facsimile: -- rgonnello@faruqilaw.com smorsy@faruqilaw.com Attorneys for Shinu Gupta PLAINTIFF :-cv-0-svw-agr