In Re Netflix, Inc., Securities Litigation

Filing 76

Order by Hon. Samuel Conti GRANTING (32) Motion to Appoint Arkansas Teacher-Boston as Lead Plaintiff and Labaton Sucharow as Lead Counsel in case 3:12-cv-00225-SC; CONSOLIDATING Fish v. Netflix, Inc., Case No. 12-1030 LHK; DENYING Motions of Asbestos Workers 17 , Labbee 22 , Fish Group 23 , Institutional Investors 28 , and Alaska Electrical 44 .Associated Cases: 3:12-cv-00225-SC, 3:12-cv-00439-SC, 3:12-cv-00707-SC(sclc2, COURT STAFF) (Filed on 4/27/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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IN RE: NETFLIX, INC., SECURITIES
LITIGATION

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For the Northern District of California

United States District Court

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This Order Also Relates To:
ALL CONSOLIDATED ACTIONS

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and
FRANK J. FISH,

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Plaintiff,

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v.

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NETFLIX, INC., et al.,

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Defendants.

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Case No. 12-0225 SC
ORDER CONSOLIDATING CASES
AND APPOINTING LEAD
PLAINTIFF AND LEAD COUNSEL

Case No. 12-1030 LHK

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I.

INTRODUCTION
This case is a putative securities class action arising from

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allegations of false and misleading statements in violation of the

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federal securities laws.

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motions to appoint the proposed class's lead plaintiff and approve

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lead counsel, as well as a motion to consolidate Fish v. Netflix,

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Inc., et al., Case No. 12-1030-LHK (the "Fish action").

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reviewed the papers and heard oral argument, the Court GRANTS the

Now before the Court are six competing

Having

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motion of Arkansas Teacher Retirement System ("Arkansas Teacher")

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and State-Boston Retirement System ("Boston") (collectively,

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"Arkansas Teacher-Boston") and appoints them as Lead Plaintiffs.

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Accordingly, the Court DENIES the other five motions to serve as

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lead plaintiff.

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selection of the firm of Labaton Sucharow LLP ("Labaton Sucharow")

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as Lead Counsel, with Zelle Hofmann Voelbel & Mason LLP ("Zelle

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Hofmann") serving as Local Counsel.

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consolidate brought by Frank J. Fish, Anita and Roger Wilson, and

United States District Court

For the Northern District of California

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The Court APPROVES Arkansas Teacher-Boston's

The Court GRANTS the motion to

Nancy Comstock (collectively, the "Fish Group").

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II.

BACKGROUND
Defendants Reed Hastings, David B. Wells, Theodore A.

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Sarandos, Leslie J. Kilgore, and Neil D. Hunt are officers of

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Defendant Netflix, Inc. (collectively, "Netflix").

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provides a popular online service that allows subscribers to watch

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films and other content streamed over the Internet and, in the

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United States, to have such content home-delivered through the

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mail.

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held shares of Netflix stock between December 20, 2010 and October

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24, 2011 (the "class period").

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negative trends in its business, particularly regarding its

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relationships with content providers, and that the revelation of

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these negative trends resulted in a drop in Netflix's stock price

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and, thus, losses to investors.

Netflix

The Plaintiffs and Movants in this case are investors who

They allege that Netflix concealed

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On January 13, 2012, the City of Royal Oak Retirement System

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became the first investor to file suit against Netflix (the "City

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ECF No. 1.1

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of Royal Oak action").

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counsel in that case published notice of the action in the Business

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Wire, as required by the Private Securities Litigation Reform Act

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("PSLRA").

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investors of the pendency of the action and of the class period,

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generally described the factual allegations and claims, and told

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potential class members that they had sixty days to move this Court

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to be appointed lead plaintiff.

See Stocker Decl. Ex. C.2

The notice informed

Id.

Seven such motions followed.

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On the same day, plaintiff's

One of them, filed by Irina

United States District Court

For the Northern District of California

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Belenkova, was later withdrawn.

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remaining motions are now pending before the Court.

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were filed by: (1) Asbestos Workers Philadelphia Pension Fund

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("Asbestos Workers"), ECF No. 17; (2) Duane Labbee ("Labbee"), ECF

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No. 22; (3) the Fish Group, ECF No. 23; (4) LBBW Asset Management

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Investmentgesellschaft mbH and the Police and the Fire Retirement

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System of the City of Detroit (collectively, the "Institutional

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Investors"), ECF No. 28; (5) Arkansas Teacher-Boston, ECF No. 32;

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and (6) Alaska Electrical Pension Fund and Locals 302 and 612 of

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the International Union of Operating Engineers-Employers

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ECF Nos. 25, 67.

The six
The motions

Shortly afterwards, two other putative class actions were filed
in this district. The Court related and consolidated one of those
actions into the above-captioned action ("In re Netflix"). ECF No.
16. The other action was brought by movant Frank J. Fish and, as
explained in Section IV.A infra, shall be consolidated with In re
Netflix pursuant to this Order. In addition to the class actions,
the Court is aware that at least four derivative lawsuits have been
filed, two in this Court and two in the California Superior Court
for the County of Santa Clara. ECF No. 52. One of the federal
derivative lawsuits was already consolidated with this action. ECF
No. 74. The Court does not presently have before it any motions
concerning the other derivative lawsuits and does not address them
here.
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Attorney Michael W. Stocker of Labaton Sucharow filed a
declaration in support of Arkansas Teacher-Boston's motion.
No. 37 ("Stocker Decl.").

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ECF

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Construction Industry Retirement Trust (collectively, "Alaska

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Electrical"), ECF No. 44.

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movants -- the Institutional Investors, Alaska Electrical, and

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Asbestos Workers -- filed statements of non-opposition to Arkansas

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Teacher-Boston's motion.

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Labbee has effectively withdrawn by failing to make any filings

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after his first or appear at oral argument.

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contenders remain: the Fish Group and Arkansas Teacher-Boston.3

After the first round of motions, three

ECF Nos. 58, 59, 61.

Additionally,

Thus, only two

The Fish Group consists of three individual investors, Frank

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United States District Court

For the Northern District of California

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J. Fish, Anita and Roger Wilson, and Nancy Comstock.4

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certifies that he suffered a loss of $865,977.00.

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4, Ex. B.5

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$617,963.44.

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losses of $583,855.85.

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were made on forms bearing the logo and name of Newman Ferrara LLP

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("Newman Ferrara"), a law firm whose connection to this lawsuit is

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presently unknown.

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was signed by both Comstock and Roy Hurst, and offers as proof of

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Comstock's losses a printout of a website displaying the trading

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record for an account held by "Nancy Comstock TTEE."

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Comstock declares that she and Hurst are married; that the account

Fish

Houston Decl. ¶

The Wilsons certify that they suffered losses of
Id. ¶ 6, Ex. C.

Comstock certifies that she suffered

Id. ¶ 8, Ex. D.

All three certifications

See id. Exs. B, C, D.

Comstock's certification

Id. Ex. D.

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Their motions are fully briefed. ECF Nos. 23 ("Fish Mot."), 32
("ATB Mot.") 60 ("Fish Response"), 62 ("ATB Response"), 69 ("Fish
Reply"), 73 ("ATB Reply").
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The Fish Group treats Anita and Roger Wilson, a married couple,
as a single investor. Because the Court's decision in this matter
is unaffected by whether the Fish Group contains three or four
members, the Court accepts this figure.
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Attorney Matthew M. Houston of Harwood Feffer LLP ("Harwood
Feffer") filed a declaration in support of the Fish Group's motion.
ECF No. 23 ("Houston Decl.").

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in which they traded Netflix stock is the Nancy Comstock Trust

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("Comstock Trust"); that Comstock is the trustee of the Comstock

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Trust; that Hurst is the beneficiary of the trust and holds a Power

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of Attorney over the account; and that "[t]he account was

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principally set up in its present form for estate planning

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purposes."

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claims losses of $2,067,796.29.

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Fish Group's members have ever served or sought to serve as lead

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plaintiff in a securities class action.

Comstock Decl. ¶¶ 2-3.6

Taken together, the Fish Group

Houston Decl. ¶ 9.

None of the

See id. Exs. B, C, D.

United States District Court

For the Northern District of California

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members of the Fish Group admit that they had no relationship

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before this litigation.

The

Fish Reply at 4-5.

Arkansas Teacher-Boston consists of two institutional

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investors.

Their counsel has provided a calculation of their

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respective losses using both the "First-In, First-Out" ("FIFO") and

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the "Last-In, First-Out" ("LIFO") accounting methods.

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Decl. Ex. B.

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suffered losses of $993,921.31 under either accounting method,

Stocker

According to these calculations, Arkansas Teacher

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After Arkansas Teacher-Boston filed its Response, Comstock and
Hurst jointly executed a declaration supporting the Fish Motion.
ECF No. 72 ("Comstock Decl."). Arkansas Teacher-Boston, pointing
to the PSLRA's sixty-day period to file motions for appointment as
lead plaintiff, objects to the Comstock Declaration as an untimely
supplement to the claims and information contained in the initial
Fish Motion. ATB Reply at 4 n.6 (citing Miller v. Dyadic Int’l,
Inc., No. 07-80948-CIV, 2008 WL 2465286, at *5 (S.D.Fla. Apr. 18,
2008)). But Miller, like other cases concerning supplementation,
focuses on the practice of supplementing initial motions to
manipulate the size of a group or its losses, not "supplements"
that merely clarify earlier statements. See, e.g., In re Enron
Corp. Sec. Litig., 206 F.R.D. 427, 440 (S.D. Tex. 2002) (finding
that filing of additional information after sixty-day period "did
not violate the spirit or purpose of the PSLRA and its express time
deadlines" because requisite information about group member had
been included in earlier filing and therefore amendment "did not
'supplement' the group"). The Court therefore accepts the Comstock
Declaration, although, as detailed in Section IV.B.1 infra, the
declaration does not cure the defects in the Fish Group's motion.

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while Boston suffered losses of $725,269.31 under the FIFO method

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and $438,243.26 under the LIFO method.

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Arkansas Teacher-Boston claims losses of $1,719,190.62 under the

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FIFO method or $1,432,164.56 under the LIFO method.

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Teacher certifies that, in the last three years, it has sought to

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serve as lead plaintiff in federal securities class actions ten

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times and has been appointed six times.

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certifies that, in the last three years, it has sought to serve as

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lead plaintiff in federal securities class actions six times and

Taken together,

Id. Ex. A.

Id.

Arkansas

Boston

Arkansas Teacher and Boston

United States District Court

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For the Northern District of California

Id.

Id.

has been appointed three times.

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represent that they had a pre-existing relationship before this

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litigation.

ATB Mot. at 10; ATB Response at 11; ATB Reply at 8.

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III. LEGAL STANDARD
Under the PSLRA, the Court "shall appoint as lead plaintiff

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the member or members of the purported plaintiff class that the

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court determines to be most capable of adequately representing the

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interests of the class members . . . in accordance with this

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subparagraph."

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plaintiff -- and hence the lead plaintiff -- is the one who has the

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greatest financial stake in the outcome of the case, so long as he

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meets the requirements of [Federal Rule of Civil Procedure] 23."

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In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002).

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15 U.S.C. § 78u–4(a)(3)(B)(i).

"The 'most capable'

The PSLRA directs district courts to appoint the lead

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plaintiff through a three-step process.

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first plaintiff to file an action covered by the PSLRA must

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publicize the pendency of the action, the claims made, the

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purported class period, and the right of other members of the

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In the first step, the

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purported class to move to serve as lead plaintiff.

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In re

Cavanaugh, 306 F.3d at 729.
In the second step, the district court identifies the

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presumptive lead plaintiff.

Id. at 729-30.

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rebuttable presumption that the lead plaintiff shall be the one

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who: (1) filed the first complaint or brought a motion for

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appointment of lead counsel in response to the publication of

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notice; (2) possesses the "largest financial interest" in the

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relief sought by the class; and (3) otherwise satisfies the

The PSLRA creates a

United States District Court

For the Northern District of California

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requirements of FRCP 23.

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(cc).

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"the court may select accounting methods that are both rational and

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consistently applied."

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district court's Rule 23 inquiry focuses on the requirements of

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"typicality" and "adequacy."

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15 U.S.C. § 78u–4(a)(3)(B)(iii)(I)(aa)–

To determine the size of each movant's financial interest,

In re Cavanaugh, 306 F.3d at 730 n.4.

The

Id. at 730.

In the third step, other candidates have the opportunity to

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rebut the presumption that the putative lead plaintiff identified

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in step two can adequately represent the class.

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this presumption is rebuttable in only two ways: proof that the

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presumptive plaintiff either (1) will not fairly and adequately

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protect the interests of the class or (2) is subject to "unique

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defenses" that make the plaintiff unable to adequately represent

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the class.

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presumption is successfully rebutted, the district court must turn

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to the movant with the next-largest financial interest and repeat

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the process, continuing sequentially until it identifies the most

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capable plaintiff.

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Id.

By statute,

15 U.S.C. § 78u–4(a)(3)(B)(iii)(II)(aa)–(bb).

If the

In re Cavanaugh, 306 F.3d at 731.

Once a lead plaintiff is appointed, the PLSRA gives the lead

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plaintiff the right, subject to court approval, to "select and

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retain counsel to represent the class."

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4(a)(3)(B)(v).

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choice of counsel, the district court should generally defer to

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that choice."

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Cir. 2009).

15 U.S.C. § 78u–

"[I]f the lead plaintiff has made a reasonable

Cohen v. U.S. Dist. Court, 586 F.3d 703, 712 (9th

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IV.

A.

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United States District Court

Consolidation

"In securities actions where the complaints are based on the

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For the Northern District of California

DISCUSSION

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same public statements and reports[,] consolidation is appropriate

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if there are common questions of law and fact and the defendants

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will not be prejudiced."

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577, 583 (N.D. Cal. 1999).

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appropriate for consolidation.

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cases are based on the same public statements and reports, propose

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the same class period, set forth substantially identical legal

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claims and factual allegations, and name the same defendants.

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There has been no suggestion that consolidation will prejudice

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Netflix.

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action with In re Netflix.

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comply with the Court's previous consolidation order in In re

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Netflix.

Wenderhold v. Cylink Corp., 188 F.R.D.
In re Netflix and the Fish action are
The operative complaints in both

Accordingly, the Court hereby CONSOLIDATES the Fish
The parties in the Fish action shall

ECF No. 16.

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B.

Appointment of Lead Plaintiff

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The first step of the PSLRA's lead-plaintiff selection process

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is for the plaintiff who filed the first class action under the

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statute to publicize the action.

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729.

See In re Cavanaugh, 306 F.3d at

This step was completed on January 13, 2012, when plaintiff's

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counsel in the City of Royal Oak action published their notice in

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the Business Wire.

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of the selection process and "compare[s] the financial stakes of

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the various plaintiffs and determine[s] which one has the most to

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gain from the lawsuit."

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1.

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The Court therefore proceeds to the second step

Id. at 730.

The Fish Group

The Fish Group stakes its claim to being the presumptive lead

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plaintiff on the aggregated losses of its three members, which they

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calculate to be roughly $2 million.

If accepted, this figure would

United States District Court

For the Northern District of California

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surpass Arkansas Teacher-Boston's aggregated losses of roughly $1.7

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million and make the Fish Group the presumptive lead plaintiff,

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assuming that the Fish Group could satisfy Rule 23.

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courts of this circuit uniformly refuse to aggregate the losses of

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individual investors with no apparent connection to each other

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aside from their counsel.

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Litig., 76 F. Supp. 2d 1017, 1019-1027 (N.D. Cal. 1999); Aronson v.

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McKesson HBOC, Inc., 79 F. Supp. 2d 1146, 1152-1154 (N.D. Cal.

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1999); Wenderhold v. Cylink Corp., 188 F.R.D. 577, 586 (N.D. Cal.

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1999).

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However, the

See, e.g., In re Network Assocs. Sec.

As one court recently explained:

The rationale of courts in declining to appoint a group
of unrelated persons as lead plaintiff varies widely.
Some courts focus primarily on the underlying purposes of
the PSLRA, which is to prevent lawyer-driven litigation,
and which is undermined by allowing lawyers to designate
unrelated plaintiffs as a "group" and aggregate their
financial stakes because such a practice would allow and
encourage lawyers to direct the litigation. [Citation.]
Other courts have explained that one of the principal
purposes of the PSLRA is to allow for institutional
plaintiffs with big financial stakes and expertise in the
area to serve as lead plaintiff and control the
litigation.
[Citation.]
Other courts have found that
unrelated groups of individuals, brought together solely
for the purpose of aggregating their claims in an effort
to become the presumptive lead plaintiff fail to meet the
adequacy prong of Rule 23. [Citation.] Irrespective of

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whether courts reject the formulation because it is
contrary to legislative intent or because it fails under
Rule 23, the analysis and results are the same because
acting contrary to the purposes of the PSLRA, which was
designed to benefit class members, would also threaten
the interests of the purported class.

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Frias v. Dendreon Corp., No. C11-1291JLR, 2011 WL 6330179, at *4, -

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-- F. Supp. 2d --- (W.D. Wash. Dec. 19, 2011) (internal quotation

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marks omitted).

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2

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The Court determines that the Fish Group is an unrelated group

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of individuals and accordingly declines to aggregate their

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individual losses.

The Fish Group has made no showing of former

United States District Court

For the Northern District of California

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ties or current cohesion.

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Fish Group having been recruited by one law firm, Newman Ferrara,

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and then transferred for reasons unknown to their present counsel,

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Harwood Feffer.

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the contrary or issued a denial, despite having been challenged on

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this point by Arkansas Teacher-Boston both in the papers and at

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oral argument.

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admission, and finds it to be a sufficient reason to decline to

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aggregate the individual claims of the Fish Group's members.

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On the contrary, all signs point to the

The Fish Group has not marshaled any evidence to

ATB Response at 8.

The Court takes this as an

Even if the Court were to aggregate the Fish Group members'

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losses, the Court determines that the Fish Group could not satisfy

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the PSLRA's requirement that lead plaintiffs be subject to no

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"unique defenses."

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no requirement at this early stage to prove a defense, only to show

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a degree of likelihood that a unique defense might play a

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significant role at trial.

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300 (3d Cir. 2006); see also Eichenholtz v. Verifone Holdings,

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Inc., No. C07-06140MHP, 2008 WL 3925289, at *10-11 (N.D. Cal. Aug.

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22, 2008) (refusing to appoint group that included day trader whose

15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).

There is

Beck v. Maximus, Inc., 457 F.3d 291,

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presence might subject class to additional defenses).

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this requirement is not to adjudicate the case before it has even

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begun, but rather to protect the absent class members from the

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expense of litigating defenses applicable to lead plaintiffs but

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not to the class as a whole.

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F.2d 497, 508 (9th Cir. 1992).

7

The point of

See Hanon v. Dataproducts Corp., 976

The Court finds a substantial likelihood that a unique defense

Teacher-Boston points out that Comstock is not actually the legal

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United States District Court

could be raised against a member of the Fish Group.

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For the Northern District of California

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entity who held the account on which her calculation of losses is

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based.

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Court need not decide whether this fact would result in a valid

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defense, only whether it is substantially likely that the Fish

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Group -- and hence, the putative class -- could be forced to

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litigate against defenses arising from it.

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among the Fish Group could subject the class to the burden of

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litigation focused on her standing.

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appear in the Fish Group's initial motion and did not assign its

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claims to Comstock.

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& Touche LLP, 549 F.3d 100, 106-07 (2d Cir. 2008); see also In re

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Herley Indus. Inc. Sec. Litig., CIV.A. 06-2596, 2009 WL 3169888, at

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*12 (E.D. Pa. Sept. 30, 2009) (refusing to appoint as lead

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plaintiff an investment adviser who possibly lacked third-party

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standing).

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may raise a colorable issue of whether Comstock herself, as a legal

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entity distinct from the Comstock Trust, has standing to bring a

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claim.

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members' individual claims, the Fish Group would not satisfy the

Rather, the Comstock Trust is.

Arkansas

ATB Response at 6.

The

Comstock's presence

The Comstock Trust does not

See W.R. Huff Asset Mgmt. Co., LLC v. Deloitte

Arkansas Teacher-Boston argues persuasively that this

Thus, even if the Court were to aggregate the Fish Group

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PSLRA's typicality requirement.

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the movant with the next-largest financial interest in the

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litigation.
2.

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5

Accordingly, the Court looks to

Arkansas Teacher-Boston

It is undisputed that Arkansas Teacher-Boston has the largest

Arkansas Teacher, taken individually, has the largest loss of any

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individual movant.

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Arkansas Teacher and Boston's losses is appropriate (which could

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United States District Court

total losses of any group other than the Fish Group and that

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For the Northern District of California

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result in appointment of the Arkansas Teacher-Boston group as a

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single lead plaintiff) or whether to treat the two institutional

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investors separately.

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Boston out of the running and place Arkansas Teacher, as the movant

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with the greatest individual losses, solely in the pole position.

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The Court must determine whether aggregation of

The latter course would effectively put

The Court determines that aggregation of Arkansas Teacher and

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Boston's losses is appropriate in this case because the two

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entities have shown a pre-existing relationship which indicates

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their cohesion and ability to "adequately control and oversee the

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litigation."

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omitted).

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institutional investors, the lead-plaintiff group currently

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prosecuting the ongoing Colonial Bancgroup securities fraud class

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action, In re Colonial Bancgroup, Inc. Securities Litigation, No.

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09-CV-104 (M.D. Ala.) ("In re Colonial").

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Arkansas Teacher and Boston something more than unaffiliated

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strangers.

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that the district court overseeing In re Colonial has preliminarily

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approved a partial settlement in that case.

Eichenholtz, 2008 WL 3925289, at *8 (citations

Arkansas Teacher and Boston comprise, along with other

This collaboration makes

Moreover, this Court takes judicial notice of the fact

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This evidence

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demonstrates Arkansas Teacher and Boston's ability to adequately

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prosecute complex securities litigation on behalf of a settlement

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class and further confirms the propriety of aggregating Arkansas

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Teacher and Boston's losses for purposes of the instant case.

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Turning to the requirements of Rule 23, the Court finds that

prongs.

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lead plaintiff has suffered the same injuries as absent class

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members, as a result of the same conduct by the defendants."

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United States District Court

Arkansas Teacher-Boston satisfies both the typicality and adequacy

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For the Northern District of California

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Diamond Foods, Inc., Sec. Litig., No. C 11-05386 WHA, 2012 WL

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934030, at *3, --- F. Supp. 2d --- (N.D. Cal. Mar. 20, 2012)

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(citing Hanon, 976 F.2d at 508).

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Boston's purchases and sales of Netflix stock occurred in their own

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names and during the class period.

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losses they suffered arose from the same events as those of the

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class and give rise to the same claims.

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court inquires "whether the class representative and [its] counsel

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have any conflicts of interest with other class members and whether

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the class representative and its counsel will prosecute the action

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vigorously on behalf of the class."

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934030, at *3 (quoting Staton v. Boeing Co., 327 F.3d 938, 957 (9th

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Cir. 2003) (internal quotation marks omitted)).

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and Boston have the same interest in the litigation as the absent

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class members -- to recover their losses.

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that Arkansas Boston-Teacher or its counsel will fail to prosecute

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the action vigorously.

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extensive lead-plaintiff experience, including their current

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prosecution of In re Colonial, suggests that the group will be able

"The typicality requirement is satisfied when the putative

In re

Both Arkansas Teacher and

See Stocker Decl. Ex. A.

The

As to adequacy, a district

In re Diamond Foods, 2012 WL

Arkansas Teacher

No showing has been made

Moreover, Arkansas Teacher-Boston's

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to effectively and efficiently control and oversee the litigation

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on behalf of the putative class.
The Fish Group argues that this very experience disqualifies

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the members of Arkansas Teacher-Boston as professional plaintiffs.

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The argument misapprehends both the spirit and the letter of the

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PSLRA.

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to encourage institutional investors such as Arkansas Teachers-

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Boston to take the lead in private securities class actions.

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Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 321

It is beyond dispute that Congress passed the PSLRA in part

United States District Court

For the Northern District of California

10

(2007); H.R. Conf. Rep. 104-369, at 33-35, reprinted in 1995

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U.S.C.C.A.N. at 732-34.

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discretionary bar against professional plaintiffs, codified at 15

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U.S.C. § 78u-4(a)(3)(B)(vi),7 "is to favor institutional investors

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over individuals such that a repeat individual lead-plaintiff

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candidate may be prevented from exceeding the statutory limit."

16

re Diamond Foods, 2012 WL 934030, at *4.

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its plain language, discretionary, not absolute.

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moved to disqualify Arkansas Teacher or Boston as a professional

19

plaintiff only to turn and appoint the unrelated strangers of the

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Fish Group.

And the purpose of the PSLRA's

In

Moreover, the bar is, by
The Court is not

The Fish Group raises one last challenge to Arkansas Teacher-

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22

Boston's appointment.

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Court to measure the "largest financial stake" as a percentage of

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7

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26
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At oral argument, the Fish Group urged the

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).

14

1

losses relative to the investor's overall portfolio, on the premise

2

that a small investor who has lost a greater percentage of her

3

portfolio will be more motivated to pursue relief on behalf of the

4

class than a relatively deep-pocketed investor whose losses, even

5

if larger in an absolute sense, are smaller proportionally.

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argument is unavailing.

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proportional measure would result in individual investors nearly

8

always having the largest financial stake relative to institutional

9

investors whose holdings frequently amount to hundreds of millions

The

As Arkansas Teacher-Boston points out, a

United States District Court

For the Northern District of California

10

of dollars.

Such a result would defeat the PSLRA's aim of putting

11

institutional investors at the helm of more private securities

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class actions.

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Because Arkansas Teacher-Boston satisfies Rule 23 and has

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combined losses that exceed those of any remaining movant, and

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because no movant has rebutted the presumption that Arkansas

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Teacher-Boston is the lead plaintiff in this putative class action,

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the Court appoints Arkansas Teacher-Boston as Lead Plaintiffs.

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Also, having reviewed the qualifications of Arkansas Teacher-

19

Boston's counsel and observed them at oral argument, the Court

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approves Arkansas Teacher-Boston's selection of Labaton Sucharow as

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Lead Counsel, with Zelle Hofmann serving as Local Counsel.

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23

V.

CONCLUSION

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For the foregoing reasons, the Court GRANTS the motion of

25

Arkansas Teacher Retirement System and State-Boston Retirement

26

System and appoints them as Lead Plaintiffs.

27

Court DENIES the other five groups' motions to serve as lead

28

plaintiff.

Accordingly, the

The Court APPROVES Labaton Sucharow LLP as Lead

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1

Counsel, with Zelle Hofmann Voelbel & Mason LLP serving as Local

2

Counsel.

3

The Court GRANTS the Fish Group's motion to consolidate.

Lead Plaintiffs' counsel shall file a consolidated complaint

4

within thirty (30) calendar days of this Order.

Netflix may then

5

file an answer or motion to dismiss within thirty (30) calendar

6

days after filing of the consolidated complaint.

7
8

IT IS SO ORDERED.

9

United States District Court

For the Northern District of California

10
11

Dated:

April 26, 2012
UNITED STATES DISTRICT JUDGE

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