Johnson et al v. OCZ Technology Group, Inc. et al

Filing 30

AMENDED ORDER CONSOLIDATING CASES AND APPOINTING OCZ TECHNOLOGY GROUP AS LEAD PLAINTIFF. Signed by Judge Richard Seeborg on 1/4/13. (cl, COURT STAFF) (Filed on 1/4/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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For the Northern District of California

United States District Court

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SHANE A. JOHNSON et al. Individually and
on Behalf of All Others Similarly Situated,

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AMENDED
ORDER CONSOLIDATING CASES
AND APPOINTING OCZ
TECHNOLOGY GROUP AS LEAD
PLAINTIFF

Plaintiffs,
v.

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No. CV 12-05265 RS

OCZ TECHNOLOGY GROUP, INC. et al.,
Defendants.
____________________________________/

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I.

INTRODUCTION

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Nine related securities class action lawsuits are currently pending. The actions are

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brought on behalf of all those who purchased or otherwise acquired the securities of OCZ

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Technology Group, Inc. (“OCZ”) between July 10, 2012 and October 11, 2012, inclusive (“the

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Class Period”). The class seeks to recover damages under the Securities Exchange Act of 1934

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(“Exchange Act”) for failing to disclose and/or materially misleading the investing public

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concerning customer incentive programs that negatively impacted revenues. After four partial

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corrective disclosures, OCZ stock fell from $5.36 per share to $1.47 per share.

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CV 12-05265 RS
ORDER

Four different plaintiffs timely moved for appointment as lead plaintiff and approval of

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their respective selections of counsel. Two of those plaintiffs have since withdrawn their

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motions. A third has conceded it does not have the largest financial interest, but remains ready

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and willing to serve should the remaining plaintiff not meet the requirements of Rule 23. Thus

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only one motion for appointment remains to be considered. In conjunction with their motions for

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appointment as lead plaintiff, plaintiffs have also filed motions for consolidation. Pursuant to

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Civil Local Rule 7-1(b), this matter has been taken under submission and decided without oral

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argument.
II.

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LEGAL STANDARD

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A. Consolidation

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For the Northern District of California

United States District Court

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Rule 42(a) of the Federal Rules of Civil Procedure grants the court discretion to

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consolidate “actions involving a common question of law or fact.” The Private Securities

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Litigation Reform Act (“PSLRA”) requires that, when “more than one action on behalf of a class

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asserting substantially the same claim or claims arising under this title has been filed, and any

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party has sought to consolidate those actions” the court shall not make a determination of lead

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plaintiff until after a decision on the motion to consolidate is rendered.

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B. Appointment of Lead Plaintiff

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The PSLRA requires the court to appoint as lead plaintiff “the member or members of the

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purported plaintiff class that the court determines to be the most capable of adequately

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representing the interests of the class members.” 15 U.S.C. §78u-4(a)(3)(B)(I); Hodges v.

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Akeena Solar, Inc., 263 F.R.D. 528, 531 (N.D. Cal. 2009). The Act creates a rebuttable

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presumption that the most adequate plaintiff is the “person or group of persons” that (i) either

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filed the complaint or made a motion in response to the published notice; (ii) in the determination

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of the court, has the largest financial interest in the relief sought; and (iii) otherwise satisfies the

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requirements of Rule 23 of the Federal Rules of Civil Procedure. 15 U.S.C. § 78u–4(a)(3)(B)(iii).

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The Ninth Circuit has articulated a three-part test to determine which plaintiff meets these

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criteria. First, the court must determine whether the first plaintiff to file an action issued a notice

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ORDER

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publicizing the pendency of the action. Id. at 729 (citing 15 U.S.C. §78u-4(a)(3)(A)). Second,

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the court must decide which plaintiff has the most to gain financially from the lawsuit, and

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whether this plaintiff satisfies the requirements of Rule 23 of the Federal Rules of Civil

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Procedure. Id. at 730. Finally, the court must consider competing plaintiffs’ attempts to rebut the

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presumptive plaintiff’s showing that it satisfies Rule 23 of the Federal Rules of Civil Procedure.

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Id. Rule 23 provides that a party may serve as a class representative if the claims or defenses of

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the representative parties are typical of claims or defenses of the class and the representative

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parties fairly and adequately protect the interests of the class. Fed. R. Civ. Proc. 23(a).

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As long as the plaintiff with the largest losses satisfies the typicality and adequacy

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requirements, he is entitled to lead plaintiff status. In re Cavanaugh, 306 F.3d 726, 732 (9th Cir.

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For the Northern District of California

United States District Court

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2002). The district court may not overcome this statutory presumption, even if it thinks a

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different plaintiff would do a better job. Id. Nor may the district court consider the relative

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merits of the plaintiffs seeking lead status. Id. Rather, the process is sequential, starting with the

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potential plaintiff with the greatest financial interest. Id.

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III.

DISCUSSION

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A. Consolidation of Cases

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The following actions have been related:

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12-05288; 12-05296; 12-05329; 12-05345; 12-05381;

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12-05423; 12-05476; 12-05684.

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Together this group of cases satisfies the requirements of Fed. R. Civ. Proc. 42(a).

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Additionally, the parties in the actions are substantially the same. Accordingly, for pre-trial

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purposes, the actions are consolidated into In re OCZ Technology Group, Inc. Securities

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Litigation., C 12-05265. All filings hereafter shall be made exclusively in Case No. C 12-

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05265. The Clerk shall close the files of the other cases listed above. Plaintiff shall file a

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consolidated class action complaint.

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B. Appointment of Lead Plaintiff

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The OCZ Investor Group is comprised of Leo Jegen, Vincent M. Monnier, Shih Leng

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ORDER

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Tan, and Len C. Villacres. The Group has made a timely motion in response to the PSLRA early

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notice requirement. Thus, the first prong of the inquiry is satisfied. The next question is to

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determine if the OCZ Investor Group indeed has the largest financial interest. The Group

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suffered an alleged loss of approximately $1,083,666.93. This amount was determined by

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calculating how many shares were acquired during the Class Period, and then determining how

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many of those shares were held through each of the four partial disclosures. The loss calculation

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results from comparing the purchase price with the price drop attributable to each of the four

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partial disclosures, as contemplated in Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347

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(2005). No plaintiff challenges this calculation, or that it results in the largest investor interest.

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The final factor focuses on whether the OCZ Investor Group satisfies the requirements of

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For the Northern District of California

United States District Court

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Rule 23 for typicality and adequacy. The Group purchased OCZ securities and allegedly

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suffered damages resulting from defendants’ misrepresentations and omissions. The Group’s

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claims and injuries thus “arise from the same conduct from which the other class members’

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claims and injuries arise.” In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 50

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(S.D.N.Y. 1998); see also In re Chase Bank United States, N.A., 274 F.R.D. 286, 292 (N.D. Cal.

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2011). The Group further declares it is not subject to any unique or special defenses. The OCZ

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Investor Group therefore meets the typicality requirement of Rule 23 because its claims are the

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same as the claims of all other class members. A plaintiff meets the adequacy requirement if its

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interests are aligned with those of other members of the Class and he or she is able to prosecute

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the action vigorously through qualified counsel. See Lerwill v. Inflight Motion Pictures, Inc.,

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582 F.2d 507, 512 (9th Cir. 1978). The OCZ Investor Group maintains it has a compelling

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interest in resolving this action due to the large financial losses suffered by the members of the

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Group. It further declares it has chosen competent counsel to represent the class in this action.

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In support of this declaration, it has submitted documents touting the expertise of its selected

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counsel. As a result, the OCZ Investor Group adequately represents the class.

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The OCZ Investor Group consists of four sophisticated investors. Small, cohesive groups
similar to the OCZ Investor Group are routinely appointed as Lead Plaintiff in securities actions

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ORDER

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when they have shown their ability to manage the litigation effectively in the interests of the

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class without undue influence of counsel. See, e.g., In re Versata, Inc. Sec. Litig., 2001 WL

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34012374, at *6-7 (N.D. Cal. Aug. 20, 2001). In support of its motion for appointment as lead

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plaintiff, the OCZ Investor Group has submitted declarations from each of the four individuals

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comprising the Group professing the readiness to serve as a representative party on behalf of the

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class. They further aver they will work together to direct and supervise the activities of counsel

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to best vindicate the interests of all shareholders. Additionally, they have been in contact to

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discuss how information will be shared and how the litigation will be managed on a day-to-day

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basis. The Group has agreed that Leo Jegen will serve as the spokesperson and liaison with

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For the Northern District of California

United States District Court

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counsel and the Court.
Once a lead plaintiff is chosen, that plaintiff may select its counsel, subject to approval of

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the court. 15 U.S.C. §78u-4(a)(3)(B)(iv). The OCZ Investor Group has selected Levi &

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Korinsky LLP to serve as lead counsel. The Group has additionally chosen Punzalan Law to

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serve as local counsel and Brower Piven to serve as additional counsel. These designations are

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approved.
IV.

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CONCLUSION

For the foregoing reasons, the OCZ Investor Group is appointed as lead plaintiff in this

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securities class action. Levi & Korinsky LLP will serve as lead counsel, Punzalan Law will

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serve as local counsel, and Brower Piven will serve as additional counsel. The unopposed

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motion to consolidate the actions listed above is granted. Plaintiff shall file a consolidated class

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action complaint.

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IT IS SO ORDERED.

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Dated: 1/4/13
RICHARD SEEBORG
UNITED STATES DISTRICT JUDGE

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12-CV-05265 RS
ORDER

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