Salhuana v. Diamond Foods, Inc. et al

Filing 22

ORDER (1) SCHEDULING HEARING ON MOTIONS TO APPOINT LEAD PLAINTIFF, (2) REQUESTING INFORMATION FROM LEAD-PLAINTIFF CANDIDATES; (3) SETTING BRIEFING SCHEDULE. Signed by Judge Alsup on January 5, 2012. (Attachments: # 1 Appendix Questionnaire to Lead-Plaintiff Candidates)(whalc2, COURT STAFF) (Filed on 1/5/2012)

1
2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7
FOR THE NORTHERN DISTRICT OF CALIFORNIA
8
9
JORGE SALHUANA, individually and on behalf
of all others similarly situated,

No. C 11-05386 WHA

11
Plaintiff,
For the Northern District of California

United States District Court

10

12

COURT QUESTIONNAIRE
TO LEAD-PLAINTIFF
CANDIDATES

v.
13
14

DIAMOND FOODS, INC, MICHAEL J.
MENDES, and STEVEN M. NEIL,

15

Defendants.
/

16
AND RELATED ACTIONS
17
/
18
19

TO EACH LEAD-PLAINTIFF CANDIDATE:

20

The Court appreciates your interest in serving as the lead plaintiff in this lawsuit. You

21

must personally read this statement of duties of the lead plaintiff and how class counsel will be

22

selected and approved. It is important for you to understand that the lead plaintiff will have to

23

take an active role in managing the lawsuit. You could not, if selected, simply leave the case

24

for counsel to handle.

25

In 1996, our Congress enacted a statute known as the Private Securities Litigation

26

Reform Act (PSLRA). The PSLRA seeks to place a real investor, not a lawyer, in charge of

27

any securities class action. To do this, the PSLRA created a statutory position of responsibility

28

called “the lead plaintiff.” This officer acts as a fiduciary for all members of the proposed

1

class and must manage the case to obtain the largest recovery for the proposed class consistent

2

with good faith and meritorious advocacy.

3

Over the course of the litigation, the lead plaintiff must take affirmative steps to keep

4

himself or herself reasonably informed on the progress and status of the case, including its

5

strengths and weaknesses, the prospects for settlement, and the resources invested in the suit or

6

proposed to be invested. With respect to each major litigation decision — such as important

7

motions, settlement discussions and trial preparation — the lead plaintiff shall have the

8

authority and responsibility to manage the case and to direct class counsel, after, of course,

9

receiving the advice of class counsel. The lead plaintiff shall meet in person with counsel
periodically, shall attend all major hearings and mediation sessions, and shall attend trial. And,

11
For the Northern District of California

United States District Court

10

of course, the lead plaintiff must give deposition and trial testimony. No settlement will be

12

approved by the Court without the lead plaintiff’s careful recommendation in favor of it.

13

Reasonable travel, telephone and business expenses incurred as a result of the lead plaintiff

14

duties may be reimbursed as expenses from any recovery or may be advanced by class counsel.

15

The first obligation of the lead plaintiff will be to select and propose class counsel for

16

court approval, an important choice that will warrant care and due diligence. No decision by

17

the lead plaintiff is more important than the selection of class counsel. Like any other

18

important decision by a fiduciary, the decision should be preceded by due diligence. The

19

extent of such due diligence will be a matter of judgment based on the facts and circumstances.

20

Significantly, even if you have already retained a lawyer for yourself in this matter, if you are

21

selected as the lead plaintiff, you would assume a higher responsibility, and would then be

22

obligated to undertake due diligence appropriate to the higher responsibility. In selecting class

23

counsel, you could not automatically keep your present lawyer.

24

In selecting class counsel, the lead plaintiff has an obligation to assess the trial and

25

securities track records of the specific lawyer candidate who would perform the actual work

26

for the class. This requires evaluation of particular, individual lawyers. In exercising due

27

diligence, it is also important to compare fees and expenses proposed by the candidates, i.e., to

28

comparison shop. In securities class actions, class counsel are usually awarded a fee (plus all
2

1

reasonable expenses) from the recovery. Only the leftover residue is distributed to the class.

2

The greater the fees and expenses, therefore, the less will be available for the investors. It is

3

not uncommon for fees and expenses, plus the costs of administration and distribution, to

4

reduce the individual plaintiffs’ recovery to a few cents per share. In the Court’s experience,

5

excellent candidates will differ substantially in their up-front fee proposals. In one large recent

6

securities case, for example, the fee proposals of excellent candidates varied from as low as

7

eight percent to over twenty-five percent of the eventual recovery. The lead plaintiff has an

8

obligation to the investor class to take such potential savings into account.

9

Depending upon the facts and circumstances, the Court may require the lead plaintiff to
evaluate competitive proposals from various lawyers seeking the job of class counsel. (If so,

11
For the Northern District of California

United States District Court

10

the Court would post an order soliciting proposals and arrange for the proposals to be delivered

12

to the lead plaintiff.) It is important to the Court, in evaluating the qualifications of

13

lead-plaintiff candidates, to know in advance that the lead-plaintiff candidate is fully prepared

14

to carry out his or her lead-plaintiff responsibilities, as outlined above, and to fully comply

15

with any such process and fully prepared to serve as lead plaintiff even if his or her present

16

counsel is not selected and/or approved as class counsel.

17

With the benefit of the foregoing information, please answer the following questions:

18

1.

19

____________________________________________________________________________

20

____________________________________________________________________________

21

____________________________________________________________________________

22

2.

23

____________________________________________________________________________

24

____________________________________________________________________________

25

____________________________________________________________________________

26

____________________________________________________________________________

State your name, address, and phone number.

What are your qualifications to be the lead plaintiff?

27
28
3

1

3.

If you are an institutional investor or other organization, identify the individual who

2

would primarily be in charge of managing your litigation responsibilities as the lead

3

plaintiff and the individual’s experience and qualifications. State the location of the

4

individual’s workplace.

5

____________________________________________________________________________

6

____________________________________________________________________________

7

____________________________________________________________________________

8

____________________________________________________________________________

9

4.

What experience have you had in managing litigation? If you are an institution or
organization, do you have an in-house counsel and, if so, what would be his or her role

11
For the Northern District of California

United States District Court

10

in this case if you were selected as lead plaintiff?

12

____________________________________________________________________________

13

____________________________________________________________________________

14

____________________________________________________________________________

15

____________________________________________________________________________

16

5.

List each transaction you made in the securities at issue up to the present (not just

17

during the class period), including the dollar amounts, the number of shares, the price,

18

and the dates. As to each, were they open-market transactions or negotiated

19

transactions? To what extent were your transactions in the United States versus

20

abroad?

21

____________________________________________________________________________

22

____________________________________________________________________________

23

____________________________________________________________________________

24

____________________________________________________________________________

25
26
27
28
4

1

6.

Are there any circumstances that might give rise to possible issues asserted against you

2

that would not generally apply against the rest of the class? Have you ever been

3

convicted of a crime? If so, state the circumstances. Have you ever been sued in a

4

fraud suit? If so, state the circumstances.

5

____________________________________________________________________________

6

____________________________________________________________________________

7

____________________________________________________________________________

8

____________________________________________________________________________

9

7.

lead-plaintiff responsibilities described above?

11
For the Northern District of California

United States District Court

10

Do you have the time and are you willing to travel as needed to carry out the

____________________________________________________________________________

12

____________________________________________________________________________

13

____________________________________________________________________________

14

____________________________________________________________________________

15

8.

16

Is your willingness to serve as a lead plaintiff contingent on being reimbursed by
counsel for your expenses in the event there is no recovery in the case?

17

____________________________________________________________________________

18

____________________________________________________________________________

19

____________________________________________________________________________

20

____________________________________________________________________________

21

9.

22

Who prepared and/or reviewed the answers given above? Did any lawyer assist in any
way? If so, identify each such lawyer.

23

____________________________________________________________________________

24

____________________________________________________________________________

25

____________________________________________________________________________

26

____________________________________________________________________________

27
28
5

1

10.

2

____________________________________________________________________________

3

____________________________________________________________________________

4

____________________________________________________________________________

5

____________________________________________________________________________

6
7

Read the following and if you agree with the following, insert your name in the blank
and then sign below.

8
9

List each previous case in which the lead-plaintiff candidate has been a lead plaintiff.

I have read and understand the above, including the duties of lead plaintiff and
the procedure for selecting and approving class counsel. I agree and promise to faithfully
execute those provisions. Once class counsel are selected and approved, I will work and

11
For the Northern District of California

United States District Court

10

cooperate fully with such counsel for the benefit of the investor class and will do so

12

regardless of whether the selection-and-approval process for counsel results in

13

appointment of lawyers other than my initial choice.

14

I certify under penalty of perjury that the foregoing is true and correct.

15
16
17
18
Dated:
19

Lead-Plaintiff Candidate

20
21
________________________________________
Name of Lead-Plaintiff Candidate if Organization

22
23
24

________________________________________
Title of Person Signing on Behalf of Organization

25
26
27
28
6