UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA. Plaintiff, Defendants. Plaintiff, Defendants.

Transcription

1 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 PATRICK A. GRIGGS, Individually and On Behalf of All Others Similarly Situated, v. VITAL THERAPIES, INC.; TERRY WINTERS; and MICHAEL V. SWANSON, UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA Plaintiff, Defendants. ALICIA BEACH HALVERSTADT, Individually and On Behalf of All Others Similarly Situated, v. VITAL THERAPIES, INC.; TERRY WINTERS; and MICHAEL V. SWANSON, Plaintiff, Defendants. Case Nos.: -CV-00 JLS (NLS) -CV- JLS (NLS) ORDER GRANTING MOTION OF KAKTRALE AUSTIN FOR CONSOLIDATION OF THE ACTIONS, APPOINTMENT AS LEAD PLAINTIFF, AND APPROVAL OF SELECTION OF COUNSEL (ECF No. ) Two related putative class action lawsuits alleging violations of 0(b) and 0(a) of the Securities Exchange Act of and Securities Exchange Commission Rule 0b-, -CV-00 JLS (NLS)

2 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 C.F.R. 0.0b-, are pending before the Court. Plaintiffs bring these actions on behalf of all purchasers of Vital Therapies, Inc. securities between April, 0 through August, 0, against Vital Therapies and two senior executive officers, Terry Winters and Michael V. Swanson. Also before the Court is the Motion of Kaktrale Austin (Movant) for Consolidation of the Actions, Appointment as Lead Plaintiff, and Approval of Selection of Counsel. (Mot., ECF No..) The Court vacated the hearing and took the matter under submission without oral argument pursuant to Civil Local Rule.(d)(). (ECF No..) MOTION TO CONSOLIDATE Consolidation of actions is appropriate [i]f actions before the court involve a common question of law or fact. Fed. R. Civ. P. (a)(). Courts have recognized that securities class actions are particularly suited to consolidation to help expedite pretrial proceedings, reduce case duplication, avoid the involvement of parties and witnesses in multiple proceedings, and minimize the expenditure of time and money. Hufnagle v. Rino Int l Corp., No. CV 0--VBFVBKX, 0 WL 00, at * (C.D. Cal. Feb., 0) (citing In re Equity Funding of Amer. Sec. Litig., F. Supp., (C.D. Cal. )), adopted 0 WL 0 (Feb., 0). Consolidation is appropriate when multiple cases allege the same misrepresentations and omissions by defendants and have similar class and class period definitions. See Takeda v. Turbodyne Techs., Inc., F. Supp. d, 0 (C.D. Cal. ). Pursuant to the Private Securities Litigation Reform Act (PSLRA), the Court should rule on motions to consolidate before addressing appointment of lead plaintiff. U.S.C. u-(a)()(b)(ii). Movant argues that, [a]lthough the Actions are not identical, their common factual and legal bases, similar class periods, nearly identical legal claims, and identical / / / / / / Although additional motions were filed by Nelson Than and Sumesh Kumar (see ECF Nos.,, respectively), these motions were later withdrawn (see ECF Nos. 0,, respectively). Movant s Motion is therefore unopposed. -CV-00 JLS (NLS)

3 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 Defendants, warrant consolidation of the Actions. (Mot. Mem., ECF No. -.) Having reviewed the pleadings, the Court concurs that consolidation is warranted. MOTION FOR APPOINTMENT AS LEAD PLAINTIFF I. Legal Standard The PSLRA governs the selection of a lead plaintiff in private securities class actions: the lead plaintiff is to be the most capable of adequately representing the interests of class members. U.S.C. u-(a)()(b)(i). There is a three-step process in determining the lead plaintiff under the PSLRA. In re Cavanaugh, 0 F.d, (th Cir. 00). The first plaintiff to file an action governed by the PSLRA must publicize the pendency of the action, the claims made, and the purported class period in a widely circulated national business-oriented publication or wire service. U.S.C. u- (a)()(a)(i)(i). This notice must also alert the public that any member of the purported class may move the court to serve as lead plaintiff. U.S.C. u-(a)()(a)(i)(ii). Next, the court must select the presumptive lead plaintiff. See In re Cavanaugh, 0 F.d at 0 (citing U.S.C. u-(a)()(b)(iii)(i)). To determine the presumptive lead plaintiff, the district court must compare the financial stakes of the various plaintiffs and determine which one has the most to gain from the lawsuit. Id. at 0. After the court identifies the plaintiff with the most to gain, the court must determine whether that plaintiff, based on the information he provides, satisfies the requirements of Rule (a), in particular those of typicality and adequacy. Id. If that occurs, that plaintiff becomes the presumptive lead plaintiff. Id. If not, the court selects the plaintiff with the next-largest financial stake and determines whether that plaintiff satisfies the requirements of Rule. Id. The court repeats this process until it selects a presumptive lead plaintiff. Id. Finally, plaintiffs not selected as the presumptive lead plaintiff may rebut the presumptive lead plaintiff s showing that it satisfies Rule s typicality and adequacy Pinpoint citations to docketed materials refer to the CM/ECF page numbers electronically stamped at the top of the page. -CV-00 JLS (NLS)

4 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 requirements. Id. (citing U.S.C. u-(a)()(b)(iii)(ii)). This is accomplished by demonstrating the presumptive lead plaintiff either will not fairly and adequately protect the interests of the class or is subject to unique defenses that render such plaintiff incapable of adequately representing the class. U.S.C. u-(a)()(b)(iii)(ii)(aa) (bb). If the court determines that the presumptive lead plaintiff does not meet the typicality or adequacy requirement, then it must return to step two, select a new presumptive lead plaintiff, and again allow the other plaintiffs to rebut the new presumptive lead plaintiff s showing. In re Cavanaugh, 0 F.d at. The court repeats this process until all challenges have been exhausted. Id. (citing In re Cendant Corp. Litig., F.d 0, (d Cir. 00)). II. Analysis A. Notice On December, 0, Patrick A. Griggs filed the first of the two related cases. (ECF No. ; see also Mot. Mem. n., ECF No. -.) On that same date, Notice of the class action suit was published in Globe Newswire, a widely-circulated national businessoriented wire service. (Mot. Mem. & n., ECF No. -; see also Declaration of Adam C. McCall (McCall Decl.) Ex., ECF No. -.) The Notice publicized the pendency of the action, the claims made, and the purported class period in a widely circulated national business-oriented publication or wire service. U.S.C. u-(a)()(a)(i)(i). The Notice also alerted the public that any member of the purported class may move the court to serve as lead plaintiff. U.S.C. u-(a)()(a)(i)(ii). B. Selection of Presumptive Lead Plaintiff As noted above, the PSLRA provides that the most capable plaintiff and hence the lead plaintiff is the one who has the greatest financial stake in the outcome of the case, so long as that plaintiff meets the requirements of Federal Rule of Civil Procedure. In re Cavanaugh, 0 F.d at. Movant asserts financial losses in this litigation of approximately $,.. (Mot. Mem., ECF No. -; see also McCall Decl. Ex., ECF No. -.) It is undisputed that Movant has the largest financial interest in this matter. -CV-00 JLS (NLS)

5 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 (See ECF Nos., 0,.) Movant also has established that he satisfies the requirements of Rule (a), specifically typicality and adequacy. See In re Cavanaugh, 0 F.d at. Here, Movant, like the other members of the Class, acquired Vital Therapies common stock during the Class Period at prices artificially inflated by Defendants materially false and misleading statements, and were damaged thereby. (Mot. Mem., ECF No. -.) Thus, Movant s claims are typical under Rule. The test for adequacy is meant to determine whether the class representative and his counsel have any conflicts of interest with other class members and whether the class representative and his counsel will prosecute the action vigorously on behalf of the class. Staton v. Boeing Co., F.d, (th Cir. 00) (citing Hanlon v. Chrysler Corp., 0 F.d 0, 00 (th Cir. )). Here, [n]ot only is there no evidence of antagonism between Movant s interests and those of the Class, but Movant has a significant and compelling interest in prosecuting the Actions based on the large financial losses he has suffered as a result of the wrongful conduct alleged in the Actions. (Mot. Mem., ECF No. -.) There also is no showing that Movant is subject to any unique defenses. Accordingly, the Court finds that, for purposes of lead plaintiff appointment, Movant has made a showing satisfying the adequacy requirement of Rule. Because Movant has the greatest financial stake and satisfies the requirements of Rule (a), he is presumptively the most adequate plaintiff to represent the class. This presumption may be rebutted only upon proof by a member of the purported plaintiff class that Movant either () will not fairly and adequately protect the interests of the class, or () is subject to unique defenses that render [it] incapable of adequately representing the class. U.S.C. u(a)()()(b)(iii)(ii). No party has opposed Movant s motion for appointment as lead plaintiff. Accordingly, the presumption that Movant is the most adequate lead plaintiff has not been rebutted, and the Court therefore need not proceed to consider the motion of the movant with the next largest financial stake. See In re Cavanaugh, 0 F.d at 0. Absent proof that the lead plaintiff candidate with the -CV-00 JLS (NLS)

6 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 largest financial interest does not satisfy the requirements of Rule, said candidate is entitled to lead plaintiff status. In re Cavanaugh, 0 F.d at. Thus, Movant is entitled to be the lead plaintiff in this action. MOTION TO APPOINT COUNSEL Under the PSLRA, the lead plaintiff is given the right, subject to court approval, to select and retain counsel to represent the class. U.S.C. u-(a)()(b)(v). [T]he district court should not reject a lead plaintiff s proposed counsel merely because it would have chosen differently. Cohen v. U.S. Dist. Court, F.d 0, (th Cir. 00) (citing In re Cavanaugh, 0 F.d at, & n.). [I]f the lead plaintiff has made a reasonable choice of counsel, the district court should generally defer to that choice. Id. at (citing Cendant, F.d at ; H.R. Rep. No. 0- () (Conf. Rep.), reprinted in U.S.C.C.A.N. 0, ). Movant asks the Court to approve his selection of Levi & Korsinsky as lead counsel. (Mot. Mem., ECF No. -.) The Court has reviewed the firm s resume (McCall Decl. Ex., ECF No. -), and the Court is satisfied that Movant has made a reasonable choice of counsel. The Levi & Korsinsky firm has extensive experience in the prosecution of securities class actions (see id. at ), and it appears that it will adequately represent the interests of all class members. Accordingly, the Court defers to Movant s choice of counsel. CONCLUSION In light of the foregoing, the Court GRANTS Movant s Motion. (ECF No..) Accordingly:. The two related actions, Griggs v. Vital Therapies, Inc., No. -CV-00 JLS (NLS) and Halverstadt v. Vital Therapies, Inc., No. -CV- JLS (NLS), are HEREBY CONSOLIDATED. All documents filed SHALL BEAR the caption In re Vital Therapies, Inc. Securities Litigation, -CV-00 JLS (NLS). A consolidated amended complaint SHALL BE FILED within thirty (0) days of the electronic docketing of this Order. Defendants SHALL ANSWER or otherwise respond to the amended consolidated -CV-00 JLS (NLS)

7 Case :-cv-000-jls-nls Document Filed 0/0/ Page of 0 0 complaint within thirty (0) days of the filing of the amended consolidated complaint.. Movant is HEREBY APPOINTED as lead Plaintiff.. Movant s selection of Levi & Korsinsky as lead counsel is HEREBY APPROVED. IT IS SO ORDERED. Dated: May, 0 -CV-00 JLS (NLS)