united states district court northern district of … · 2019-07-23 · united states district...

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

RICHARD SEEKS, individually and on

behalf of all others similarly situated,

Plaintiff

v.

THE BOEING COMPANY, DENNIS A.

MUILENBURG, and GREGORY D.

SMITH,

Defendants

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No. 1:19-cv-02394

(Consolidated)

CLASS ACTION

Judge John J. Tharp, Jr.

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THE WANG FAMILY’S OMNIBUS MEMORANDUM OF LAW IN OPPOSITION TO

ALL OTHER MOTIONS FOR APPOINTMENT AS LEAD PLAINTIFF

Case: 1:19-cv-02394 Document #: 90 Filed: 07/19/19 of 22 PageID #:1093

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TABLE OF CONTENTS

I. PRELIMINARY STATEMENT .........................................................................................1

II. ARGUMENT .......................................................................................................................7

A. APPLICABLE LEGAL STANDARDS ........................................................................7

B. THE WANG FAMILY SHOULD BE APPOINTED AS LEAD PLAINTIFF .............8

C. THE REMAINING MOTIONS SHOULD BE DENIED .............................................9

1. MissPERS’ Motion Should be Denied ................................................................9

2. The Remaining Motions Should Also be Denied ..............................................14

III. CONCLUSION ..................................................................................................................15


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TABLE OF AUTHORITIES

Cases Page(s)

Aronson v. McKesson HBOC, Inc.,

79 F. Supp. 2d 1146 (N.D. Cal. 1999) .................................................................... 4, 11, 12, 13

Averdick v. Hutchinson Tech. Inc.,

2006 U.S. Dist. LEXIS 47445 (D. Minn. 2006) ................................................................. 6, 14

Bang v. Acura Pharms., Inc.,

2011 U.S. Dist. LEXIS 2550 (N.D. Ill. 2011) .......................................................................... 2

Bernstein v. Bernstein Litowitz Berger & Grossmann LLP,

814 F.3d 132 (2d Cir. 2016) ................................................................................................... 13

Bristol County Ret. Sys. v. Allscripts Healthcare Solutions, Inc.,

2012 U.S. Dist. LEXIS 161441 (N.D. Ill. 2012) ...................................................................... 2

Cambridge Ret. Sys. v. Mednax, Inc.,

2018 U.S. Dist. LEXIS 207064 (S.D. Fl. 2018) ................................................................. 4, 10


2018 U.S. Dist. LEXIS 210491 (S.D. Fl. 2018) ................................................................. 4, 10


2018 U.S. Dist. LEXIS 222766 (S.D. Fl. 2018) ....................................................................... 4

Chandler v. Ulta Beauty, Inc.,

2018 U.S. Dist. LEXIS 107340 (N.D. Ill. 2018) .............................................................. 1, 3, 9

Chiaretti v. Orthodontic Ctrs. of American, Inc.,

2003 U.S. Dist. LEXIS 25264 (E.D. La. 2003) .................................................................. 9-10

City of Taylor Gen. Emples. Ret. Sys. v. Astec Indus.,

2019 U.S. Dist. LEXIS 106588 (E.D. Tenn. 2019) .................................................................. 3

Cunha v. Hansen Natural Corp.,

2009 U.S. Dist. LEXIS 61086 (C.D. Cal. 2009) .............................................................. 5-6, 9

Danis v. USN Communications, Inc.,

189 F.R.D. 391 (N.D. Ill. 1999) ............................................................................................. 14

Ferrari v. Gisch,

225 F.R.D. 599 (C.D. Cal. 2004) .............................................................................................. 9


iii

Ferrari v. Impath, Inc.,

2004 U.S. Dist. LEXIS 13898 (S.D.N.Y. 2004) ....................................................................... 5

Foley v. Transocean Ltd.,

272 F.R.D. 126 (S.D.N.Y. 2011) .............................................................................................. 9

Hall v. Medicis Pharm. Corp.,

2009 U.S. Dist. LEXIS 24093 at *19 (D. Ariz. 2009) ............................................................ 14

In re Bally Total Fitness Sec. Litig.,

2005 U.S. Dist. LEXIS 6243 (N.D. Ill. 2005) ............................................................. 2, 5, 6, 8

In re Cavanaugh,

306 F.3d 726 (9th Cir. 2002) ........................................................................................... passim

In re Cendant Corp. Litig.,

264 F.3d 201 (3d Cir. 2001) ............................................................................................... 7, 11

In re Critical Path,

156 F. Supp. 2d 1102 (N.D. Cal. 2001) .................................................................................. 14

In re Enron Corp., Sec. Litig.,

206 F.R.D. 427 (S.D. Tex. 2002) ................................................................................. 4, 14-15

In re eSpeed, Inc. Sec. Litig.,

232 F.R.D. 95 (S.D.N.Y. 2005) ................................................................................................ 7

In re Groupon Secs. Litig.,

2012 U.S. Dist. LEXIS 123899 (N.D. Ill. 2012) ............................................................ passim

In re Motorola Sec. Litig., 2003 U.S. Dist. LEXIS 12651 (N.D. Ill. 2003) .............................................................. 7, 9, 15

In re Oppenheimer Rochester Funds Group Sec. Litig.,

2009 U.S. Dist. LEXIS 113555 (D. Co. 2009) ....................................................................... 15

In re Telxon Corp. Sec. Litig.,

67 F. Supp. 2d 803 (N.D. Ohio 1999) ............................................................................ passim

In re UnumProvident Corp. Sec. Litig.,

2003 U.S. Dist. LEXIS 24633 (E.D. Tenn. 2003) ........................................................... passim

In re Versata, Inc.,

2001 U.S. Dist. LEXIS 24270 (N.D. Cal. 2001) .................................................................... 14


iv

Knurr v. Orbital ATK, Inc.,

220 F. Supp. 3d 653 (E.D. Va. 2016) ............................................................................. 4, 9, 12

Maiden v. Merge Techs., Inc.,

2006 U.S. Dist. LEXIS 85635 (E.D. Wis. 2006) ...................................................................... 8

Mohanty v. Bigband Networks, Inc.,

2008 U.S. Dist. LEXIS 32764 (N.D. Cal. 2008) ................................................................ 3, 13

Naiditch v. Applied Micro Circuits Corp.,

2001 U.S. Dist. LEXIS 21374 (S.D. Cal. 2001) ..................................................................... 11

Sakhrani v. Brightpoint, Inc.,

78 F. Supp. 2d 845 (S.D. Ind. 1999) ....................................................................................... 14

Schueneman v. Arena Pharm., Inc.,

2011 U.S. Dist. LEXIS 87373 (S.D. Cal. 2011) ................................................................. 6, 14

Sokolow v. LJM Funds Mgmt.,

2018 U.S. Dist. LEXIS 107339 (N.D. Ill. 2018) .................................................................. 7, 9

Stearns v. Navigant Consulting Inc.,

89 F. Supp. 2d 1014 (N.D. Ill. 2000) ...................................................................................... 11

Stengle v. Am. Italian Pasta Co.,

2005 U.S. Dist. LEXIS 43816 (W.D. Mo. 2005) ................................................................. 6, 9

Takara Tr. v. Molex Inc.,

229 F.R.D. 577 (N.D. Ill. 2005) ................................................................................... 1, 2, 3, 8

Thompson v. Shaw Group, Inc.,

2004 U.S. Dist. LEXIS 25641 (E.D. La. 2004) ...................................................................... 13

Woburn Ret. Sys. v. Omnivision Techs., Inc.,

2012 U.S. Dist. LEXIS 21590 (N.D. Cal. 2012) ................................................................ 6, 14

Zhu v. UCBH Holdings, Inc.,

682 F. Supp. 2d 1049, 1055 n.1 (N.D. Cal. 2010) .................................................................. 15

Statutes

15 U.S.C. § 78u-4 ................................................................................................................ passim

15 U.S.C. §78a ............................................................................................................................... 7


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Rules

Federal Rule of Civil Procedure 23 ................................................................................... 1, 2, 7, 9

Other

H.R. Conf. Rep. No. 104 369, at 35 (1995),

reprinted in 1995 U.S.C.C.A.N. 679 ................................................................................. 11


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I. PRELIMINARY STATEMENT

Seven motions for appointment as lead plaintiff were initially filed with the Court pursuant

to the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Five remain pending.1 In

addition to the Wang Family’s motion [ECF No. 41], lead plaintiff motions are present by: (i) the

Public Employees’ Retirement System of Mississippi (“MissPERS”) [ECF No. 52]; (ii) Robert W.

Kegley, Sr. [ECF No. 32]; (iii) the Laborers’ Pension Fund of Central and Eastern Canada

(“Canada Fund”) [ECF No. 46]; and (iv) the “Boeing Investor Group” [ECF No. 36]. The Wang

Family respectfully submits this omnibus memorandum of law in further support of its motion for

appointment as lead plaintiff, and in opposition to all other lead plaintiff motions. See generally

Takara Tr. v. Molex Inc., 229 F.R.D. 577 (N.D. Ill. 2005) (Castillo, J.).

The PSLRA’s requirements for selecting a lead plaintiff are “straightforward.” In re

Groupon Secs. Litig., 2012 U.S. Dist. LEXIS 123899, at *16 (N.D. Ill. 2012) (quoting Herrgott v.

United States Dist. Court for the N. Dist. of Cal. (In re Cavanaugh), 306 F.3d 726, 732 (9th Cir.

2002)) (Norgle, J.). Now that the Court has consolidated the two actions filed in this matter, the

Court must appoint as lead plaintiff the person with the largest claimed loss that otherwise satisfies

the typicality and adequacy requirements of Federal Rule of Civil Procedure 23 (“Rule 23”). See

In re Cavanaugh, 306 F.3d at 732. “The PSLRA presumes that the most adequate plaintiff is the

plaintiff who—in addition to satisfying other [Rule 23] requirements—has the largest financial

interest in the relief sought by the class.” Chandler v. Ulta Beauty, Inc., 2018 U.S. Dist. LEXIS

107340, at *6-7 (N.D. Ill. 2018) (Dow, J.). While the PSLRA does not define “financial interest,”

courts in this District hold that “the best yardstick by which to judge ‘largest financial interest’ is

1 On June 19, 2019, the Boeing Investor Group [ECF No. 75] and Ali Alibrahim [ECF No. 76] withdrew their respective lead plaintiff motions. All emphasis added and internal citations omitted unless otherwise noted.


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the amount of loss, period.” In re Bally Total Fitness Sec. Litig., 2005 U.S. Dist. LEXIS 6243, at

*14 (N.D. Ill. 2005) (Grady, J.); Takara Tr., 229 F.R.D. at 579 (same).

The Wang Family

The Wang Family is the “most adequate plaintiff.” The Wang Family suffered over $4.7

million in losses as a result of their purchases of shares of The Boeing Company common stock

between January 8, 2019 and May 8, 2019, inclusive (the “Class Period”). See ECF No. 43 at 1;

id. at 7; ECF No. 45-2. The Wang Family’s loss easily represents the largest financial interest of

any applicant seeking to be appointed lead plaintiff. See § II.B, infra. In addition, because the

Wang Family prima facie satisfies the typicality and adequacy requirements Rule 23, it should be

deemed the presumptive lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).

With that presumption triggered, “it is the [competing movants’] burden to

produce proof that the [Wang Family] will not fairly and adequately protect the interests of the

class.” Bristol County Ret. Sys. v. Allscripts Healthcare Solutions, Inc., 2012 U.S. Dist. LEXIS

161441, at *19 (N.D. Ill. 2012) (Holderman, J.). “[T]he question is not whether another movant

might do a better job of protecting the interests of the class than the presumptive lead plaintiff;

instead, the question is whether anyone can prove that the presumptive lead plaintiff will not do a

‘fair and adequate’ job.” Bang v. Acura Pharms., Inc., 2011 U.S. Dist. LEXIS 2550, at *13 (N.D.

Ill. 2011) (Kendall, J.). That high burden cannot be met here.2 See §II, B., infra.

2 Kathleen Wang works for the State of Nevada and her husband, Kenny Wang Sr., is a retired investor with 30 years of investment experience who resides in Nevada and also spends time in China. Their son, Kenny Wang Jr., lives and works in Nevada. While Bernstein Litowitz may seek to make much ado of it, there is nothing unusual about a lead plaintiff spending time abroad. Indeed, Bernstein Litowitz represents – including in active PSLRA cases – numerous foreign investors.


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MissPERS

MissPERS claims the second largest loss of $2.5 million. See ECF No. 55 at 6. Due to

MissPERS’ significantly smaller loss (i.e., $2.2 million less than the Wang Family), MissPERS

may “attempt[] to muddy these otherwise clear waters by arguing that it should be appointed as

co-lead plaintiff” based on the unremarkable fact that it is an institutional investor. Takara Tr.,

229 F.R.D. at 579. Indeed, MissPERS’ counsel (Bernstein Litowitz Berger & Grossman, LLP

(hereinafter, “Bernstein Litowitz”) contacted the Wang Family’s counsel to propose having

MissPERS serve as co-lead plaintiff alongside the Wang Family and its counsel on that basis. See

ECF No. 84 at 2-3; ECF No. 85-1. Given the profound adequacy issues MissPERS faces here,

however, that invitation was declined. Nevertheless, “to the extent that [MissPERS] argues that

its status as the lone institutional investor creates a presumption in its favor, that argument [should

be] rejected.” Groupon, 2012 U.S. Dist. LEXIS 123899, at *14; Ulta Beauty, 2018 U.S. Dist.

LEXIS 107340, at *17 (same). “[A] plaintiff’s mere status as an institutional investor does not

provide any presumption that the institutional plaintiff is a more adequate lead plaintiff than an

individual investor with a larger financial interest.” Mohanty v. Bigband Networks, Inc., 2008 U.S.

Dist. LEXIS 32764, at *17-18 (N.D. Cal. 2008); see City of Taylor Gen. Emples. Ret. Sys. v. Astec

Indus., 2019 U.S. Dist. LEXIS 106588, at *11-13 (E.D. Tenn. 2019) (same).

That reasoning is particularly apt here given that MissPERS is presumptively barred from

serving as lead plaintiff under the PSLRA’s prohibition against “professional plaintiffs.” 15 U.S.C.

§78u-4(a)(3)(B)(vi). That provision presumptively disqualifies proposed lead plaintiffs who have

served in that capacity in more than five cases in three years. See id. Here, MissPERS has served

in at least eleven. ECF No. 56-1 at 2; see In re UnumProvident Corp. Sec. Litig., 2003 U.S. Dist.

LEXIS 24633, at *22 (E.D. Tenn. 2003) (“[s]imultaneous prosecution of nine different securities


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class actions would stretch the resources of even the largest institutional investors.”). Indeed, a

federal district court just recently denied MissPERS’ lead plaintiff motion pursuant to the

PLSRA’s 5-in-3 presumptive bar, finding it currently no longer qualified to serve in that role. See

Cambridge Ret. Sys. v. Mednax, Inc., 2018 U.S. Dist. LEXIS 207064, at *42 (S.D. Fl. 2018) (“the

Court [will] not exercise its discretion to waive the PSLRA’s restriction against MissPERS serving

in what would be its twelfth role as lead plaintiff in the most recent three years”);3 see also Knurr

v. Orbital ATK, Inc., 220 F. Supp. 3d 653, 662-63 (E.D. Va. 2016) (barring institutional

professional plaintiff); In re Enron Corp., Sec. Litig., 206 F.R.D. 427, 457 (S.D. Tex. 2002) (same);

Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1156 (N.D. Cal. 1999) (same).

Relatedly, MissPERS’ motion should be denied for the added reason that the class should

not be saddled with a professional plaintiff being accused of the sort of serious alleged misconduct

that was just recently independently unearthed by another court considering its lead plaintiff

motion. See Mednax, Inc., 2018 U.S. Dist. LEXIS 207064, at *41 (noting need for district courts’

“close review of the application to serve as counsel for lead plaintiff submitted by Bernstein

Litowitz on behalf of … MissPERS”); see also Cambridge Ret. Sys. v. Mednax, Inc., 2018 U.S.

Dist. LEXIS 210491, at *5-6 (S.D. Fl. 2018) (denying MissPERS’ motion to “modify”). Further,

that alleged misconduct is currently the subject of ongoing litigation in this very District by an

objecting class member before the Hon. Andrea R. Wood in In Re Stericycle Securities Litigation,

Case No. 1:16-cv-07145 (N.D. Ill., July 1, 2019).4

3 Cambridge Ret. Sys. v. Mednax, Inc., 2018 U.S. Dist. LEXIS 222766 (S.D. Fl. 2018) (adopting report and recommendation). 4 See Objection of Mark Petri at 5 (attached as Ex. A to the Declaration of Ramzi Abadou in Further Support of the Wang Family’s Lead Plaintiff Motion (hereinafter “Abadou Decl., Ex. __”).


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Finally, despite hiring numerous different investigators to personally harass and intimidate

the Wang Family, their associates and neighbors in Nevada following the June 21, 2019

presentment hearing, MissPERS’ chosen counsel will not muster any “proof” of the Wang

Family’s inadequacy. See Abadou Decl., Ex. D; Ferrari v. Impath, Inc., 2004 U.S. Dist. LEXIS

13898, at *21-23 (S.D.N.Y. 2004) (characterizing ad hominem attacks against the presumptive

lead plaintiff as “innuendo and inferences rather than established fact”). MissPERS’ motion

should be denied. See § II.C.1, infra. It is inadequate and, given the nature of the ongoing

proceedings in Stericycle, it is also clearly “subject to unique defenses.” Bally, 2005 U.S. Dist.

LEXIS 6243, at *19.

Robert W. Kegley. Sr.

Mr. Kegley, the person with the third largest claimed loss (i.e., $885,120), is similarly not

the “most adequate plaintiff.” See ECF No. 34 at 7. In addition to claiming a far smaller loss than

the Wang Family, Mr. Kegley filed a faulty PLSRA certification. See ECF No. 35-1. The PSLRA

requires each person seeking appointment as lead plaintiff to disclose “any other action under this

title, filed during the 3-year period preceding the date on which the certification is signed by the

plaintiff, in which the plaintiff has sought to serve as a representative party on behalf of class.” 15

U.S.C. §78u-4(a)(2)(A)(v). Mr. Kegley’s certification, however, failed to disclose his involvement

in Turocy v. El Pollo Loco Holdings Inc., et al., (Case No. 8:15-cv-01343-DOC-KES) pending in

the United States District Court for the Central District of California. See Abadou Decl. Ex. B;

Cunha v. Hansen Natural Corp., 2009 U.S. Dist. LEXIS 61086, at *10-12 (C.D. Cal. 2009)


6

(provision applies to all cases (active or otherwise) the party in question has served as a lead

plaintiff in the past three years).5 Kegley’s motion should therefore also be denied.

Canada Fund

The Canada Fund has the next largest loss (i.e., $865,662) [ECF No. 48 at 7] and, while

both it and its counsel are undoubtedly qualified and adequate, its loss is considerably smaller than

the Wang Family’s.

Boeing Investor Group

The last remaining applicant, the five-member “Boeing Investor Group,” similarly should

not be appointed lead plaintiff. See Stengle v. Am. Italian Pasta Co., 2005 U.S. Dist. LEXIS

43816, at *14 (W.D. Mo. 2005) (“this [Boeing Investor Group] title appears to have been adopted

solely for purposes of this litigation”). First, with an aggregated claimed $751,741 loss, it still does

not possess the largest financial interest as required under the PSLRA. ECF No. 37 at 5; see In re

Cavanaugh, 306 F.3d at 732. Second, unlike the Wang Family, it is an unrelated group of five

individuals that appear to have been combined to artificially manufacture the largest loss. See

Bally, 2005 U.S. Dist. LEXIS 6243, at *8 (“Where the members of a group do not share business

or other relationships independent of the lawsuit … appointment of such an artificial group of

persons as lead plaintiffs should be rare under the PSLRA.”). Its motion, too, should therefore be

denied.6

5 Notably, after being appointed lead plaintiff, Mr. Kegley inexplicably withdrew from that matter at the class certification stage. See Abadou Decl., Ex. B. 6 To the extent that the Boeing Investor Group seeks to be appointed “co-lead plaintiff” based on its purchases of Boeing options, that request should be rejected. See Schueneman v. Arena Pharm., Inc., 2011 U.S. Dist. LEXIS 87373, at *17 (S.D. Cal. 2011) (refusing to appoint options trader as co-lead plaintiff); Woburn Ret. Sys. v. Omnivision Techs., Inc., 2012 U.S. Dist. LEXIS 21590, at *19-20 (N.D. Cal. 2012) (same); Averdick v. Hutchinson Tech. Inc., 2006 U.S. Dist. LEXIS 47445, at *18 (D. Minn. 2006) (same).


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II. ARGUMENT

A. APPLICABLE LEGAL STANDARDS

To identify the “most adequate plaintiff,” the PSLRA provides that “the court shall adopt

a presumption that the most adequate plaintiff in any private action arising under this title [15

U.S.C. §§78a, et seq.] is the person or group of persons that ... in the determination of the court,

has the largest financial interest in the relief sought by the class; and otherwise satisfies the

requirements of Rule 23 of the Federal Rules of Civil Procedure.” 15 U.S.C. §78u-

4(a)(3)(B)(iii)(I); see In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95, 98-99 (S.D.N.Y. 2005) (“The

lead plaintiff determination does not depend on the Court’s judgment of which party would be best

lead plaintiff for the class, but rather which candidate fulfils the requirements of the Act.”); In re

Cendant Corp. Litig., 264 F.3d 201, 268 (3d Cir. 2001) (lead plaintiff inquiry “is not a relative

one.”) (Becker, C.J.).

The PSLRA’s rebuttable presumption may be rebutted “only upon proof” that the

presumptively most adequate plaintiff “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.” 15 U.S.C. §78u-4(a)(3)(B)(iii)(II). That burden is robust. See Sokolow v.

LJM Funds Mgmt., 2018 U.S. Dist. LEXIS 107339, at *27 (N.D. Ill. 2018) (“The Court is not,

however, persuaded to disregard the presumption established by the PSLRA based on unsupported

conjecture.”) (Dow, J.); In re Motorola Sec. Litig., 2003 U.S. Dist. LEXIS 12651, at *19 (N.D. Ill.

2003) (“Neither Commerzbank nor the Local 710 Funds has offered sufficient proof against New

Jersey, and therefore the court grants New Jersey’s motion for appointment as lead plaintiff.”)

(Pallmeyer, J.).

In addition, the PSLRA presumptively bars overly-litigious proposed lead plaintiffs from

serving as lead plaintiff in more than five cases in any three year period:


8

Restrictions on professional plaintiffs. Except as the court may otherwise permit,

consistent with the purposes of this section, a person may be a lead plaintiff, or an

officer, director, or fiduciary of a lead plaintiff, in no more than 5 securities class

actions brought as plaintiff class actions pursuant to the Federal Rules of Civil

Procedure during any 3-year period.

15 U.S.C. §78u-4(a)(3)(B)(vi). Courts apply the PSLRA’s “professional plaintiff’ restriction

rigorously, holding that the “requirement that plaintiffs certify that they did not buy the security at

the direction of their lawyers or for purposes of litigation, as well as the prohibition against

professional plaintiffs, will diminish the risk of lawyer-driven lawsuits.” Cavanaugh, 306 F.3d at

738; UnumProvident, 2003 U.S. Dist. LEXIS 24633, at *21-22 (“The larger number of cases being

directed by a single institutional investor, the less likely it is [that Congress’] purposes [in enacting

the PSLRA] are being served.”).

B. THE WANG FAMILY SHOULD BE APPOINTED AS LEAD PLAINTIFF

The $4.7 million loss the Wang Family incurred from their Class Period transactions in

Boeing securities is significantly larger than the remaining lead plaintiff applicants’ losses:

Proposed Lead Plaintiff Claimed Loss

Wang Family $4.7 million

MissPERS $2.5 million

Kegley $885,120

Canada Fund $865,662

Boeing Investor Group $751,741

See Maiden v. Merge Techs., Inc., 2006 U.S. Dist. LEXIS 85635, at *13 (E.D. Wis. 2006) (movant

with largest financial interest is “presumptively entitled to lead plaintiff status.”); Takara, 229

F.R.D. at 579; Bally, 2005 U.S. Dist. LEXIS 6243, at *6; id. at *14-15.


9

In addition to possessing the “largest financial interest in the relief sought by the class,” a

proposed lead plaintiff must also “otherwise satisf[y] the requirements of Rule 23 of the Federal

Rules of Civil Procedure.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I); Ulta Beauty, 2018 U.S. Dist. LEXIS

107340, at *13. Only two of those requirements—typicality and adequacy—apply at this stage of

the proceedings. See Sokolow, 2018 U.S. Dist. LEXIS 107339, at *20. As set forth in their opening

papers, the Wang Family prima facie satisfy both the typicality and adequacy requirements of Rule

23. See ECF No. 43 at 7-10; Motorola, 2003 U.S. Dist. LEXIS 12651, at *10 (“A wide-ranging

analysis of the Rule 23 factors should be left for consideration of a motion for class certification.”)

(Pallmeyer, J.); see Foley v. Transocean Ltd., 272 F.R.D. 126, 133 (S.D.N.Y. 2011) (finding

opposition to lead plaintiff’s adequacy “belied by [presumptive lead plaintiff's] role in this lawsuit,

its motion to be named lead plaintiff, and its sworn certification that it will adequately and

aggressively lead the class.”); Ferrari v. Gisch, 225 F.R.D. 599, 608-09 (C.D. Cal. 2004) (same);

see also ECF No. 45-1; ECF No. 45-2 (Wang Family’s sworn PLSRA certifications and loss chart,

respectively).

C. THE REMAINING MOTIONS SHOULD BE DENIED

1. MissPERS’ Motion Should be Denied

In addition to its smaller loss, MissPERS’ motion should also be denied because it is

subject to the PSLRA’s presumptive bar against “professional plaintiffs.” See 15 U.S.C. §78u-

4(a)(3)(B)(vi). Hence, “[e]ven if the [MissPERS] were able to assert the greater loss figure, [ ] its

motion for appointment as lead plaintiff would have to be denied for an additional and independent

reason: it has served as lead plaintiff in [eleven] securities class actions in the last three years.” In

re Telxon Corp. Sec. Litig., 67 F. Supp. 2d 803, 819-20 (N.D. Ohio 1999); see Stengle, 2005 U.S.

Dist. LEXIS 43816, at *19-20; Cunha, 2009 U.S. Dist. LEXIS 61086, at *20; Knurr, 220 F. Supp.

3d at 659-62; Chiaretti v. Orthodontic Ctrs. of American, Inc., 2003 U.S. Dist. LEXIS 25264, at


10

*5-6 (E.D. La. 2003) (enforcing PSLRA’s presumptive bar); UnumProvident, 2003 U.S. Dist.

LEXIS 24633, at *21 (same).

Indeed, in December 2018, a Florida federal court denied MissPERS’ effort to be appointed

lead plaintiff due to, inter alia, the PSLRA’s presumptive prohibition against “professional

plaintiffs,” reasoning:

The alleged payments of kickbacks by the Bernstein Litowitz firm, which

apparently were not denied by MissPERS and its counsel and indeed may have been

solicited by MissPERS, are disappointing, at best. Such alleged payments arguably

indicate a need for close review of the application to serve as counsel for lead

plaintiff submitted by Bernstein Litowitz on behalf of … MissPERS …. Based on

the above concerns, the Court finds sufficient basis to not exercise discretion in

favor of MissPERS, i.e., the Court finds insufficient basis to waive the PSLRA’s

restriction on a plaintiff serving as lead plaintiff in more than five cases in three

years. . . Even if [ ] MissPERS were determined to have the ‘largest financial

interest in the relief sought’ in this action and, thus, to be the presumptively most

adequate plaintiff, the Court would not exercise its discretion to waive the

PSLRA's restriction against MissPERS serving in what would be its twelfth role

as lead plaintiff in the most recent three years, based on the Court’s concerns about

the entities’ insufficiently developed plan to manage this action and the concerns

noted above regarding the relationship with the proposed lead counsel.

Mednax, Inc., 2018 U.S. Dist. LEXIS 207064, at *41-42. In a subsequent ruling, the Mednax court

admonished MissPERS for, as here, concealing these serious issues in connection with its initial

lead plaintiff motion, reasoning:

The opinion expressed by the Second Circuit was that ‘federal courts in the future

(e.g., those considering whether to name [the firm] as lead class counsel or find

[MissPERS] to be an adequate class representative’ might find the allegations of

‘legitimate interest.’ Arguably, in light of their duty of candor to the Court,

MissPERS and the Bernstein firm may have had an obligation to disclose the

information above … in their memorandum seeking appointment as lead plaintiff

and class counsel.

Mednax, 2018 U.S. Dist. LEXIS 210491, at *5-6. That MissPERS again failed to disclose these

unique issues here is rendered even more problematic in light of its counsel’s efforts to initially

work alongside the Wang Family and then, after being rebuffed, seeking to intimidate them into


11

withdrawing their motion.7 See ECF No. 84 at 2-3; Abadou Decl., Ex. C. And it’s not the first

time they have done such things during lead plaintiff proceedings in this District. See Stearns v.

Navigant Consulting Inc., 89 F. Supp. 2d 1014, 1016 (N.D. Ill. 2000) (Castillo, J.). Enough is

enough – as under the PSLRA, courts must “take care to prevent the use of discovery to harass

presumptive lead plaintiffs, something that the [PSLRA] was meant to guard against.” Cendant,

264 F.3d 201, 270 n.49; n. 12, supra.8

Despite the foregoing, MissPERS may ask this Court to adopt, as law, certain ambiguous

Conference Report language from the PSLRA to have the presumptive “professional plaintiff” bar

lifted on its behalf. See H.R. Conf. Rep. No. 104 369, at 35 (1995), reprinted in 1995 U.S.C.C.A.N.

679, 734; c/f Telxon, 67 F. Supp. 2d at 820-21 (the “statute itself contains no express blanket

exception for institutional investors.”); McKesson, 79 F. Supp. 2d at 1156 (“Florida’s arguments

do not persuade the court to lift the presumptive bar. The text of the statute contains no flat

exemption for institutional investors.”). UnumProvident, 2003 U.S. Dist. LEXIS 24633, at *19

(same); Naiditch v. Applied Micro Circuits Corp., 2001 U.S. Dist. LEXIS 21374, at *7 (S.D. Cal.

2001) (“The Conference Report for the Reform Act is quite explicit that the preference for large

institutional investors should not be overridden by the professional plaintiff restriction …”).

7 Bernstein Litowitz hired the following four individuals to harass and stalk the Wang Family in Nevada: (i) Anthony Henrie; (ii) Paul J. Nelson; (iii) Andrew Thompson, and (iv) Robert Van Ralph. On July 16, 2019, a Nevada court set an August 1, 2019 hearing for a temporary restraining order against these individuals sought by the Wang Family. See Abadou Decl., Exs. C & D. Bernstein Litowitz has admitted in communications with counsel that it hired these individuals and touted the fact that one of them entered one of the Wang Family’s neighbor’s home to speak with them about the Wang Family’s finances. While Bernstein Litowitz may not believe that the Wang Family lost as much money as they did here, such allegations “are not proof of wrongdoing. If they were, then any class member (or lawyer seeking to be appointed lead counsel) could disable any presumptive lead plaintiff with unsupported allegations.” Cendant, 264 F.3d at 270 n.49. 8 Notably, Bernstein Litowitz is currently seeking discovery against one of its own clients before the Honorable Robert M. Dow, Jr. in Hedick v. The Kraft-Heinz Company (N.D. Ill., Case No. 19-1339 (RMD)) to carve out a position for itself as lead counsel in that case. See Abadou Decl. Ex. E at 1-2.


12

“That argument fails for the simple reason that Congress enacts, and the President signs,

statutes — not conference reports.” Knurr, 220 F. Supp. 3d at 661. “To state the obvious, an

exemption for institutional investors appears nowhere in the statute’s text.” Id. at 659; McKesson,

79 F. Supp. 2d at 1156 (PSLRA’s 5-in-3 provision “is best interpreted as imposing a presumptive

bar against lead plaintiff candidates who have served in that same capacity in five other cases over

the past three years.”). “By relying on the Conference Report, [MissPERS] is essentially arguing

that the text of the Five-in-Three Provision is merely evidence of Congress’s intent, and that the

true meaning of the statute is found in the Report. That argument fails because it would ‘demean

the constitutionally prescribed method of legislating to suppose that [the legislature’s] elaborate

apparatus for deliberation on, amending, and approving a text is just a way to create some evidence

about the law, while the real source of legal rules is the mental processes of legislators.” Knurr,

220 F. Supp. 3d at 661 (quoting Matter of Sinclair, 870 F.2d 1340, 1344 (7th Cir. 1989)

(Easterbrook, J.) (emphases in original)).

The Court should follow the statutorily-grounded rule adopted by other federal courts to

preclude MissPERS from further exceeding the PSLRA’s presumptive bar. See 15 U.S.C. §78u-

4(a)(3)(B)(vi); Telxon, 67 F. Supp. 2d at 820 (“The FSBA argues that the Conference Report is

strong evidence that ignoring the prohibition in this instance would be ‘consistent with the

purposes’ of the PSLRA … The statute is the law, not what the Conference Committee says the

statute means.”). One of the underlying purposes of the PSLRA was to eliminate “lawyer-driven”

litigation. See Enron, 206 F.R.D. at 457 (“the purposes of the provision would be lost if the Court

granted [FSBA’s] application.”). Again, the burden was on MissPERS in its initial motion to

demonstrate why the PSLRA’s presumptive bar against professional plaintiffs should be lifted.

See Telxon, 67 F. Supp. 2d at 820; McKesson, 79 F. Supp. 2d at 1156 (5-in-3 rule creates “a


13

rebuttable presumption that the same plaintiff should not direct more than five securities class

actions in three years”); UnumProvident, 2003 U.S. Dist. LEXIS 24633, at *20 (“the burden is

upon the presumptively barred candidate to demonstrate why the bar should not be applied in a

given case”). MissPERS has failed to meet its burden.9 Instead, with its failure to self-report the

issues raised herein, it has demonstrated why the bar should be imposed.

Moreover, an objecting class member in Stericycle is currently seeking limited discovery

into the nature of the relationship between MissPERS and Bernstein Litowitz that similarly

troubled the Second Circuit and the Mednax court. See Bernstein v. Bernstein Litowitz Berger &

Grossmann LLP, 814 F.3d 132 (2d Cir. 2016); Abadou Decl., Exs. F & G. The fruits of that

discovery could, were MissPERS appointed, disrupt this securities fraud litigation against Boeing

to the detriment of the class. See id. “Under the circumstances, the Court [should not] conclude

granting [MissPERS] an exception to the professional plaintiff rule would be consistent with the

purposes of the PSLRA. Neither the PSLRA nor its legislative history express any congressional

desire institutional investors be permitted to dominate or monopolize the lead plaintiff role.”

UnumProvident, 2003 U.S. Dist. LEXIS 24633, at *23.

Finally, “to the extent that [MissPERS] argues that its status as the lone institutional

investor creates a presumption in its favor, that argument [should be] rejected.” Groupon, 2012

U.S. Dist. LEXIS 123899, at *14; Mohanty, 2008 U.S. Dist. LEXIS 32764 at *17-19 (same); see

Telxon, 67 F. Supp. 2d at 821-22 (same). “[T]he plain language of the PSLRA does not permit the

Court to favor [an institutional investor] over another plaintiff with a greater financial stake merely

9 See Thompson v. Shaw Group, Inc., 2004 U.S. Dist. LEXIS 25641, at *22 (E.D. La. 2004) (“Any speculation aside, the Court rules simply that there is a risk of overstretch where Detroit P&G would be directing a total of eight concurrent lawsuits were Detroit P&G selected as Lead Plaintiff here as well.”).


14

because [the institutional investor] is an institutional investor.” Hall v. Medicis Pharm. Corp.,

2009 U.S. Dist. LEXIS 24093 at *19 (D. Ariz. 2009). MissPERS’ status as an institutional

investor, therefore, does not override the PSLRA’s explicit language requiring courts to appoint

the applicant with the largest loss (i.e., the Wang Family) as lead plaintiff. See Groupon, 2012

U.S. Dist. LEXIS 123899, at *14-17. Its motion should be denied.

2. The Remaining Motions Should Also be Denied

As set forth in § I, supra, neither Mr. Kegley, the Canada Fund, nor the Boeing Investor

Group possess the largest loss.10 For that “straightforward” and independent reason, each of their

respective motions should be denied. See In re Cavanaugh, 306 F.3d at 732 (“[t]he court must

examine potential lead plaintiffs one at a time, starting with the one who has the greatest financial

interest, and continuing in descending order if and only if the presumptive lead plaintiff is found

inadequate or atypical”). The Boeing Investor Group may nevertheless ask this Court to appoint

them as “niche” lead plaintiffs to represent a subclass of options traders.11 See Schueneman, 2011

U.S. Dist. LEXIS 87373, at *17 (refusing to appoint options trader as co-lead plaintiff); Woburn,

2012 U.S. Dist. LEXIS 21590, at *19-20 (same); Averdick, 2006 U.S. Dist. LEXIS 47445, at *18-

20 (same). Separate classes, however, need not be created here. See Enron, 206 F.R.D. at 455.

As common stock purchasers, the Wang Family can and will represent the interests of all of

10 As set forth above, Mr. Kegley’s motion should be denied for the added reason that he failed to timely file an “acceptable sworn certification[]” as required by the PSLRA. In re Versata, Inc., 2001 U.S. Dist. LEXIS 24270, at *11 (N.D. Cal. 2001). 11 In addition to being a disfavored group (see Sakhrani v. Brightpoint, Inc., 78 F. Supp. 2d 845, 853 (S.D. Ind. 1999)), one member of the Boeing Investor Group (Richard Eads) traded in put options– a highly atypical investment strategy premised on the belief that, in this case, an issuer’s securities would fall below a certain value, that district courts throughout the country have found problematic. ECF No 38-2; see In re Critical Path, 156 F. Supp. 2d 1102, 1109-1110 (N.D. Cal. 2001) (“It is a poor choice to appoint a class representative who engaged in a trading practice premised on the belief the stock would fall.”); Danis v. USN Communications, Inc., 189 F.R.D. 391, 396 (N.D. Ill. 1999) (“The motivations behind short selling may indeed be inconsistent with the assumptions underlying the fraud on the market theory.”).


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Boeing’s securities purchasers – including, as necessary, options traders. See id.

III. CONCLUSION

For all the foregoing reasons, the Wang Family respectfully requests that this Court: (1)

appoint them to serve as lead plaintiff in the consolidated action; and (2) approve their selection

of Kahn Swick & Foti, LLC as Lead Counsel and Miller Law LLC as Liaison Counsel; and (3)

grant such other and further relief regarding MissPERS and its counsel as the Court may deem just

and proper.12

Dated: July 19, 2019 Respectfully submitted,

The Wang Family

/s/ Ramzi Abadou

Ramzi Abadou

KAHN SWICK & FOTI, LLP

912 Cole Street, # 251

San Francisco, CA 94117

Telephone: 504-455-1400

Facsimile: 504-455-1498

[email protected]

Lewis Kahn

Alexander Burns

12 Bernstein Litowitz’s intimidation campaign against the Wang Family should concern this Court. See ECF No. 84; see also n.7, supra. Indeed, it intensified its intimidation of witnesses connected to the Wang Family after the Court denied the Wang Family’s motion to modify – improperly viewing that denial as an invitation by the Court to continue its harassment. Such conduct has “no place in lead plaintiff briefing under § 78u-4(a)[.]” In re Oppenheimer Rochester Funds Group Sec. Litig., 2009 U.S. Dist. LEXIS 113555, at *25 (D. Co. 2009). As they did in Kraft-Heinz, Bernstein Litowitz could have sought the information about the Wang Family’s investment in Boeing legitimately – via the PLSRA’s discovery provision. See Zhu v. UCBH Holdings, Inc., 682 F. Supp. 2d 1049, 1055 n.1 (N.D. Cal. 2010). They knew that that burden, however, was high and likely to be denied. See id. So, instead, they chose to intimidate the Wang Family by contacting their co-workers, friends and neighbors asking questions about their finances and ability to suffer a $4.7 million loss. See Abadou Decl., Ex. D. In an effort to respectfully have the Court put an end to that harassment, and despite the Wang Family’s sworn PSLRA certifications, the Wang Family will provide their Class Period trading records in Boeing to the Court in camera if so requested by Your Honor. See Motorola, 2003 U.S. Dist. LEXIS 12651, at *20 n. 4 (reviewing and crediting in camera lead plaintiff submission).


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Alayne Gobeille

KAHN SWICK & FOTI, LLC

1100 Poydras Street, Suite 3200

New Orleans, LA 70163

Telephone: 504-455-1400

Facsimile: 504-455-1498

[email protected]

[email protected]

[email protected]

Proposed Lead Counsel for the Class

Marvin A. Miller

Andrew Szot

MILLER LAW LLC

115 S. LaSalle Street, Suite 2910

Chicago, IL 60603

Telephone: 312-332-3400

Facsimile: 312-676-2676

[email protected]

[email protected]

Proposed Liaison Counsel for the Class


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