SARAH NETBURN, Magistrate Judge.
On August 14, 2017, plaintiff Rustem Nurlybaev commenced a securities class action against ZTO Express (Cayman) Inc. ("ZTO"), various underwriters, and certain individuals alleging violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. This action seeks damages on behalf of all persons who purchased or otherwise acquired securities traceable to ZTO's registration statement (filed in conjunction with its October 27, 2017 Initial Public Offering), and were damaged thereby.
Before the litigation can proceed, the Private Securities Litigation Reform Act (the "PSLRA") requires the Court to appoint the lead plaintiff and counsel for the putative class. 15 U.S.C. § 77z-1(a)(3)(B). On October 16, 2017, three parties filed motions to be appointed class representative: Nurlybaev, ZTO Investor Group, and the Wong Family Trusts. After these motions were filed, and upon review of the motion brought by the Wong Family Trusts, ZTO Investor Group and Nurlybaev filed Notices of Non-Opposition, conceding that they did "not appear to have the largest financial interest" in the relief sought by the class.
Although the Wong Family Trusts' motion is unopposed, the Court must still ensure that it is the most adequate plaintiff under the PSLRA.
The PSLRA establishes "a two-step competitive process" to determine which plaintiff is most adequate.
As for the requirements of Rule 23, at this stage a proposed lead plaintiff need only make a "preliminary showing" that it will satisfy the typicality and adequacy requirements of Rule 23.
Second, once the court has identified the presumptive "most adequate plaintiff," other members of the purported class may try to rebut the statutory presumption by showing that the presumptive lead plaintiff will not fairly and adequately protect the interests of the class or is incapable of adequately representing the class because of "unique defenses." 15 U.S.C. § 77z-1(a)(3)(B)(iii)(II). But the Court does not need to determine whether other plaintiffs may be more typical or adequate than the presumptively adequate plaintiff. "So long as the plaintiff with the largest losses satisfies the typicality and adequacy requirements, he is entitled to lead plaintiff status, even if the district court is convinced that some other plaintiff would do a better job."
The PSLRA further requires the Court to approve the lead plaintiff's selection of counsel. 15 U.S.C. § 77z-1(a)(3)(B)(v). "The PSLRA evidences a strong presumption in favor of approving a properly-selected lead plaintiff's decisions as to counsel selection and counsel retention."
First, Wong Family Trusts timely filed a motion to be appointed lead plaintiff, satisfying the requirement that it make "a motion in response to a notice" of the putative class action. 15 U.S.C. § 77z-1(a)(3)(B)(iii)(I)(aa). Notice of the class action was published on August 15, 2017, and the Wong Family Trusts filed its motion on October 16, 2017.
Second, the Wong Family Trusts have the largest financial interest in the relief sought by the class of the other two movants. Indeed, both Nurlybaev and the ZTO Investor Group concede this fact. Dkt Nos. 40 & 41. The Court, moreover, has reviewed the figures provided by the Wong Family Trusts sufficient to analyze each movant's financial interest under the
Third, the Wong Family Trusts meet the typicality and adequacy requirements of Rule 23 of the Federal Rules of Civil Procedure. The Wong Family Trusts allege the same facts and make the same legal arguments as the other members of the class: centrally, that ZTO made false or misleading statements in its registration statement in connection with its initial public offering. Therefore, the Wong Family Trusts is typical of the class.
The Wong Family Trusts is also an adequate representative. Plaintiff's counsel is Hagens Berman Sobol Shapiro LLP ("Hagens Berman"), a firm with extensive experience representing classes in securities actions.
Finally, because there is no opposition to the Wong Family Trusts' motion, the presumption that it is the most adequate class representative is not rebutted. 15 U.S.C. § 77z-1(a)(3)(B)(iii)(II) (the presumption "may be rebutted only upon proof by a member of the purported plaintiff class");
The Wong Family Trusts retained Hagens Berman as its counsel. "There is a strong presumption in favor of approving a properly-selected lead plaintiff's decision as to counsel."
The Wong Family Trusts' motion for appointment as lead plaintiff and to approve Movants' selection of Hagens Berman as lead counsel is GRANTED. The correlating motions filed by Nurlybaev and the ZTO Investor Group are DENIED. The Clerk of the Court is directed to terminate the motions at ECF Nos. 30, 33, and 36.
Unless otherwise ordered by the Court, the Wong Family Trusts shall file an amended consolidated class action complaint 45 days from the date of this Order & Opinion. Defendants shall answer or otherwise move against the amended consolidated class action complaint 45 days from its filing.