Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 KESSLER TOPAZ MELTZER & CHECK, LLP JENNIFER L. JOOST (Bar No. ) jjoost@ktmc.com STACEY M. KAPLAN (Bar No. ) skaplan@ktmc.com One Sansome Street, Suite 0 San Francisco, CA 0 Telephone: () 00-000 Facsimile: () 00-00 Attorneys for Lead Plaintiff Thomas DiBiase, Named Plaintiff David Steinberg, Proposed Named Plaintiffs Donald R. Allen and Shawn B. Dandridge, and Lead Counsel for the Putative Class [Additional counsel on signature page.] IN RE SNAP INC, SECURITIES LITIGATION UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION This Document Relates To: All Actions Case No. :-cv-0-svw-agr CLASS ACTION MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF LEAD PLAINTIFF S MOTION TO ADD DONALD R. ALLEN AND SHAWN B. DANDRIDGE AS NAMED PLAINTIFFS AND WITHDRAW DAVID STEINBERG AS NAMED PLAINTIFF Date: November, 0 Time: :0 p.m. Courtroom: 0A Judge: Hon. Stephen V. Wilson CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 Lead Plaintiff, Thomas DiBiase ( Lead Plaintiff ), respectfully submits this memorandum of points and authorities in support of his motion to add Donald R. Allen ( Allen ) and Shawn B. Dandridge ( Dandridge ) as named plaintiffs and withdraw David Steinberg ( Steinberg ) as a named plaintiff pursuant to Federal Rule of Civil Procedure ( Rule ) (the Motion ). I. INTRODUCTION This is a putative securities fraud class action brought on behalf of investors who purchased Snap Common Stock in its IPO and during the Class Period, and were injured by Defendants conduct. In particular, Lead Plaintiff alleges that Defendants misrepresented and omitted material facts regarding: (i) the impact of competition from Instagram; (ii) the existence and substance of a lawsuit challenging the metrics by which investors and advertisers valued Snap s platform, and internal control deficiencies at Snap; and (iii) Snap s use of growth hacking. Lead Plaintiff now seeks to add Allen and Dandridge as named plaintiffs and withdraw Steinberg as a named plaintiff under Rule. The Federal Rules of Civil Procedure provide that courts should freely give leave to add a party, so long as there is no undue delay or bad faith, prejudice, or futility. Here, none of these concerns apply. Lead Plaintiff acted expeditiously to identify Allen and Dandridge and produce documents on their behalf. Moreover, this case is still in a relatively early stage, with discovery only recently underway and Lead Plaintiff s Motion for Class Certification is being filed concurrently with this Motion. Finally, since Allen and Dandridge assert Unless otherwise noted: (i) all capitalized terms have the meaning ascribed to them in the Consolidated Amended Class Action Complaint for Violation of the Federal Securities Laws (ECF No. ) ( CAC ) and Lead Plaintiff s Motion for Class Certification (ECF No. -); (ii) citations to Ex. _ are to the exhibits attached to the Declaration of Sharan Nirmul in Support of Lead Plaintiff s Motion for Class Certification (ECF No. -); (iii) citations Nirmul R. Decl. are to the Declaration of Sharan Nirmul in Support of the Motion; (iv) all emphasis is added; and (v) all internal citations and quotations are omitted. CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 claims identical to those of the rest of the putative Class, there can be no prejudice to Defendants from their addition, and their claims are not futile. II. Lead Plaintiff respectfully submits that his motion should be granted. FACTS RELEVANT TO THE INSTANT MOTION Initial Pleadings and Orders: On September, 0, the Court appointed Thomas DiBiase as Lead Plaintiff, Kessler Topaz Meltzer & Check, LLP ( Kessler Topaz ) as Lead Counsel, and Rosman & Germain LLP as Liaison Counsel. ECF No.. On November 0, 0, Lead Plaintiff filed the CAC, which asserts claims arising under, (a)(), and of the Securities Act of ( U.S.C. k, l(a)(), and o), 0(b) and 0(a) of the Securities Exchange Act of ( U.S.C. j(b) and t(a)), and Rule 0b- promulgated thereunder by the SEC ( C.F.R. 0.0b-). ECF No.. On June, 0, the Court denied Defendants motions to dismiss in full. In re Snap Inc. Sec. Litig., 0 WL (C.D. Cal. June, 0) ( MTD Order ). The MTD Order further directed Lead Plaintiff to file a motion for class certification within 0 days (i.e., by September, 0). Defendants thereafter filed a motion to certify the MTD Order for interlocutory appeal, which the Court denied on August, 0. ECF No. 0. On July, 0, the parties submitted a Rule (f) Report, which contained a mutually agreed proposed schedule. Among other things, the proposed schedule set March, 0 as the deadline to add additional parties. ECF No. 0. Thereafter, the Court scheduled this matter for trial beginning on March, 0. ECF No. 0. A final pre-trial hearing is scheduled for February, 0. Id. Discovery: Discovery has commenced in earnest. As relevant here, Lead Plaintiff has propounded and responded to document requests, propounded a set of interrogatories, identified Allen and Dandridge in his Amended Initial Disclosures on CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 August, 0, and has made initial productions on behalf of Lead Plaintiff, Allen, Dandridge, and Steinberg. Nirmul R.. Decl., -. The parties also have met and conferred extensively regarding the appropriate scope and content of their respective productions. Id.. Steinberg: On or about August, 0, counsel for Lead Plaintiff notified Defendants that, due to personal reasons, Steinberg no longer wished to participate in this action as a named plaintiff. Nirmul R.. Decl.. Accordingly, this Motion seeks to withdraw him under Rule, the effect of which would be to allow Steinberg to remain an absent Class member. Allen: Allen is a resident of California who purchased Snap Common Stock during the Class Period and was damaged thereby. Ex. A (Allen s executed certification). Allen has retained Kessler Topaz and is willing and able to serve as a class representative. Id. Dandridge: Dandridge is a resident of Kansas who purchased Snap Common Stock during the Class Period and was damaged thereby. Ex. B (Dandridge s executed certification). Dandridge has retained Kessler Topaz and is willing and able to serve as a class representative. Id. Lead Plaintiff s Motion for Class Certification: Lead Plaintiff s Motion for Class Certification is being filed concurrently with this Motion. The parties have agreed to the following schedule for Lead Plaintiff s Motion for Class Certification and the instant Motion: (i) Defendants opposition: October, 0; (ii) Lead Plaintiff s reply: November, 0; and (iii) Hearing: November, 0. III. ARGUMENT A. Legal Standard Rule governs the addition or withdrawal of party-plaintiffs, providing that [o]n motion or on its own, the court may at any time, on just terms, add or drop a CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 party. Courts assess requests to add or drop a party pursuant to Rule under the same liberal standard applicable to requests to amend a complaint under Rule. See, e.g., Heilman v. Cook, 0 WL, at *- (S.D. Cal. Feb., 0) ( The liberal standard of Rule applies to Rule motions. ) (quoting De Malherbe v. Int'l Union of Elevator Constructors, F. Supp., (N.D. Cal. )); see also Duling v. Gristede s Operating Corp., F.R.D., - (S.D.N.Y. 00) (collecting cases and concluding that the same standard of liberality applies under either Rule [ or ] ); Ceisler v. First Pa. Corp., WL 0, at * (E.D. Pa. May, ) (same). Rule (a)() provides that courts should freely give leave when justice so requires. The Ninth Circuit has explained that this policy is to be applied with extreme liberality. Sonoma Cty. Ass'n of Retired Emps. v. Sonoma Cty., 0 F.d 0, (th Cir. 0) (quoting Owens v. Kaiser Found. Health Plan, Inc., F.d 0, (th Cir. 00)). Thus, the Court should freely give leave to add a party absent undue delay, bad faith, futility, or prejudice. See Carroll v. Wells Fargo & Co., 0 WL, at * (N.D. Cal. Mar., 0) (articulating standard under Rule ); see also Heilman, 0 WL, at *- ( The test of whether additions or subtractions of parties should be allowed under Rule, like the test under Rule, is whether such action will prejudice the non-moving party, and whether it will serve to avoid multiplicity of suits. ). Moreover, it is the consideration of prejudice to the opposing party that carries the greatest weight. Eminence Capital, LLC v. Aspeon, Inc., F.d 0, 0 (th Cir. 00) (citing DCD Programs, Ltd. v. Leighton, F.d, (th Cir. )). The opposing party bears the burden of showing prejudice. Id. Absent prejudice, or a strong showing of any of the remaining [] factors, there exists a presumption under Rule (a) in favor of granting leave. Duran v. Sephora USA, Inc., 0 WL, CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 at * (N.D. Cal. Aug., 0) (alternation and emphasis in original) (citing Eminence, F.d at 0). B. The Court Should Add Allen and Dandridge as Named Plaintiffs and Withdraw Steinberg as a Named Plaintiff Here, Lead Plaintiff s Motion to add Allen and Dandridge as named plaintiffs and withdraw Steinberg as a named plaintiff readily meets the extremely liberal standards under Rules and. Lead Plaintiff has not delayed or acted in bad faith, there is no prejudice to Defendants in adding Allen and Dandridge (or removing Steinberg) at this early juncture, and their addition (or withdrawal, as the case may be) is not futile. First, there can be no doubt that Lead Plaintiff acted expeditiously and in good faith in seeking Allen and Dandridge s addition and Steinberg s withdrawal. Initially, on or around August, 0, counsel for Lead Plaintiff promptly notified Defendants that, due to personal reasons, Mr. Steinberg no longer wished to serve as a named plaintiff. Nirmul R.. Decl.. On the same date, counsel informed Defendants of Lead Plaintiff s intent to add additional named plaintiffs. Id.. Lead Plaintiff formally identified Allen and Dandridge in their Amended Initial Disclosure Statement, which were served on August, 0. Id.. Moreover, discovery in this case is still in its relatively nascent stages. No party or witness has been deposed, a protective order was only proposed on August, 0 (ECF No. ), and entered on August 0, 0 (ECF No. ), and the parties continue to meet and confer over their document productions. Nirmul R. Decl.. Despite this, Allen, Dandridge, and Steinberg have already made initial document productions (on August, 0) evidencing their transactions in Snap Common Stock, and Allen and Dandridge have agreed to produce additional documents pursuant to the same document requests served on Lead Plaintiff. Id. -. Likewise, counsel has informed Defendants that Allen and Dandridge will be made available for CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 depositions, along with Lead Plaintiff, in advance of the deadline for Defendants opposition to class certification. Id.. Nothing in this course of conduct suggests bad faith or delay. Indeed, Courts frequently allow additional named plaintiffs and class representatives to join or withdraw from a pending action to protect the interests of a putative class, which is the purpose of this Motion. See, e.g., In re Gen. Motors LLC Ignition Switch Litig., 0 WL 0, at * (S.D.N.Y. Nov., 0) (collecting cases and permitting amendment to add new named plaintiffs and class representatives because courts hold that adding a new class representative is appropriate, even required, to protect class interests ); see also MANUAL FOR COMPLEX LITIGATION (Fourth). (00) (explaining circumstances under which it is appropriate to add a new class representative, including where a potential class representative is no longer pursuing the litigation ). Second, because adding Allen and Dandridge, and withdrawing Steinberg, does not meaningfully change the contours of this litigation, there can be no prejudice to Defendants. Compare, e.g., Gerber Plumbing Fixtures, LLC v. Amerifreight, Inc., 0 WL, at * (C.D. Cal. Nov., 0) (allowing plaintiff to add defendant and finding no prejudice where allegations are largely unchanged and the matter is within the relatively early stages of the litigation ), with Jackson v. Bank of Haw., 0 F.d, (th Cir. 0) ( Putting the defendants through the time and expense of continued litigation on a new theory, with the possibility of additional discovery, would be manifestly unfair and unduly prejudicial. ). Although it is not Lead Plaintiff s burden to establish as much on this Motion, Defendants cannot point to any prejudice that will result from the addition of Allen and Dandridge or withdrawal of Steinberg. Prejudice in the context of [Rule ], means undue difficulty in prosecuting a lawsuit as a result of a change of tactics or theories CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 on the part of the other party. Flores v. U. S. Immigration & Customs Enf't, 0 WL 0, at * (W.D. Wash. June, 0); see also Nissou-Rabban v. Capital One Bank (USA), N.A., F. Supp. d, (S.D. Cal. 0) ( the expenditure of additional monies or time do not constitute undue prejudice ). Here, Allen s and Dandridge s claims are identical to those of the proposed Class: (i) they are based on the same allegations (those in the CAC); (ii) concern the same security (Snap Common Stock); and (iii) are based on the same legal theories (violations of the Exchange Act and the Securities Act). Indeed Allen and Dandridge were and continue to be putative Class members in this action. Finally, the addition of Allen and Dandridge is not futile, as their claims have already been sustained in full by this Court in its MTD Order. See, e.g., Olausen v. Murguia, 0 WL, at * (D. Nev. May, 0) (claims not futile where factual allegations are similar and the claims are identical to those in the original complaint ); see also Bridgeport Music, Inc. v. Universal Music Grp., Inc., F.R.D. 0, (S.D.N.Y. 00) (claims were not futile where they are identical to those already in the case ). IV. CONCLUSION For the foregoing reasons, Lead Plaintiff respectfully requests that the Court grant his Motion. DATED: August 0, 0 Respectfully submitted, KESSLER TOPAZ MELTZER & CHECK, LLP /s/ Sharan Nirmul SHARAN NIRMUL (Pro Hac Vice) snirmul@ktmc.com ETHAN J. BARLIEB (Pro Hac Vice) ebarlieb@ktmc.com CASE NO. :-CV-0-SVW-AGR
Case :-cv-0-svw-agr Document - Filed 0/0/ Page of Page ID #: 0 0 NATHAN HASIUK (Pro Hac Vice) nhasiuk@ktmc.com JONATHAN F. NEUMANN (Pro Hac Vice) jneumann@ktmc.com 0 King of Prussia Road Radnor, PA 0 Telephone: (0) -0 Facsimile: () - and JENNIFER L. JOOST (Bar No. ) jjoost@ktmc.com STACEY M. KAPLAN (Bar No. ) skaplan@ktmc.com One Sansome Street, Suite 0 San Francisco, CA 0 Telephone: () 00-000 Facsimile: () 00-00 Attorneys for Lead Plaintiff Thomas DiBiase, Named Plaintiff David Steinberg, Proposed Named Plaintiffs Donald R. Allen and Shawn B. Dandridge, and Lead Counsel for the Putative Class ROSMAN & GERMAIN LLP DANIEL L. GERMAIN (Bar #) germain@lalawyer.com Ventura Boulevard, Suite 00 Encino, CA Telephone: () 0 Facsimile: () -0 Liaison Counsel for the Putative Class CASE NO. :-CV-0-SVW-AGR