Welgus v. Trinet Group, Inc. et al
Filing
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ORDER GRANTING 17 PLAINTIFF HOWARD WELGUS' MOTION FOR APPOINTMENT AS LEAD PLAINTIFF AND APPROVAL OF SELECTION OF COUNSEL. Signed by Judge Beth Labson Freeman. (blflc2S, COURT STAFF) (Filed on 12/3/2015)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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HOWARD WELGUS,
Case No. 15-cv-03625-BLF
Plaintiff,
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v.
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TRINET GROUP, INC., et al.,
Defendants.
United States District Court
Northern District of California
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ORDER GRANTING PLAINTIFF
HOWARD WELGUS’ MOTION FOR
APPOINTMENT AS LEAD PLAINTIFF
AND APPROVAL OF SELECTION OF
COUNSEL
[Re: ECF 17]
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Before the Court is Plaintiff Howard Welgus’ unopposed Motion for Appointment as Lead
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Plaintiff and Approval of Selection of Counsel. ECF 17. Pursuant to Civil Local Rule 7-1(b), the
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Court finds this matter suitable for submission without oral argument and hereby VACATES the
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hearing scheduled for December 10, 2015. For the reasons stated herein, the Court GRANTS
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Plaintiff’s motion.
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I.
BACKGROUND
On August 7, 2015, Plaintiff Howard Welgus (“Welgus”) filed this putative securities class
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action lawsuit against Defendants TriNet Group, Inc. (“TriNet”), Burton M. Goldfield, and
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William Porter (collectively, “Defendants”). Compl., ECF 1. Welgus alleges that, from May 5,
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2014 to August 3, 2015 (“Class Period”), Defendants issued materially false and misleading
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statements and concealed material adverse facts regarding TriNet’s financial condition and growth
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prospects. Compl. ¶¶ 1, 7, 8, 33, 42. Welgus alleges that, as a result of these misrepresentations
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and omissions, “TriNet common stock traded at artificially inflated prices during the Class Period,
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reaching a high of $37.88 per share on March 3, 2015.” Id. ¶ 9. Welgus alleges that, after the
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misrepresentations and omissions became apparent, the prices “fell precipitously,” reaching a low
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of $16.33 per share on August 4, 2015. Id. ¶¶ 45, 46. As a result, Welgus filed the instant lawsuit
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for violations of the Securities Exchange Act of 1934 on behalf of all persons who purchased or
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otherwise acquired TriNet common stock during the Class Period. Id. ¶ 1.
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On October 6, 2015, Welgus filed this motion seeking appointment as lead plaintiff and
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approval of Robbins Geller Rudman & Dowd LLP (“Robbins Geller”) as lead counsel for the
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class. No other plaintiffs have sought to be named lead plaintiff, and no other law firms have
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sought to be named lead counsel.
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II. LEGAL STANDARD
A. Lead Plaintiff
The Private Securities Litigation Reform Act of 1995 (“PSLRA”) governs the procedure
for selection of lead plaintiff in all private class actions under the Securities Exchange Act of
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United States District Court
Northern District of California
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1934. 15 U.S.C. § 78u-4(a)(3). Pursuant to the PSLRA, the court shall appoint as lead plaintiff
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“the member or members of the purported plaintiff class that the court determines to be most
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capable of adequately representing the interests of class members,” also referred to as the “most
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adequate plaintiff.” Id. at § 78u-4(a)(3)(B)(i).
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The PSLRA “provides a simple three-step process for identifying the lead plaintiff.” In re
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Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002). First, the pendency of the action, the claims made,
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and the purported class period must be publicized in a “widely circulated national business-
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oriented publication or wire service.” Id.; see also 15 U.S.C. § 78u-4(a)(3)(A)(i)(I). This notice
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must be published within 20 days of the filing of the complaint. Id. It must also alert members of
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the purported class that they have 60 days to move for appointment as lead plaintiff. 15 U.S.C. §
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78u-4(a)(3)(A)(i)(II).
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Second, the court must identify the presumptive lead plaintiff. To do so, the court “must
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compare the financial stakes of the various plaintiffs and determine which one has the most to gain
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from the lawsuit.” Cavanaugh, 306 F.3d at 730. The court must then determine whether that
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individual, “based on the information he has provided in his pleadings and declarations,” satisfies
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the requirements of Rule 23(a), “in particular those of ‘typicality’ and ‘adequacy.’” Id. If the
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plaintiff with the largest financial interest satisfies these requirements, he becomes the
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“presumptively most adequate plaintiff.” Id.; see also 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).
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Finally, the other plaintiffs must have “an opportunity to rebut the presumptive lead
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plaintiff's showing that [he] satisfies Rule 23' s typicality and adequacy requirements.”
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Cavanaugh, 306 F.3d at 730. Unless a member of the purported plaintiff class provides proof that
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the presumptive plaintiff “(aa) will not fairly and adequately protect the interests of the class; or
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(bb) is subject to unique defenses that render such plaintiff incapable of adequately representing
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the class,” the court must appoint the presumptively most adequate plaintiff as lead plaintiff. 15
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U.S.C. § 78u-4(a)(3)(B)(iii)(II); see also Cavanaugh, 306 F.3d at 732.
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B. Lead Counsel
Under the PLSRA, the lead plaintiff has the right, subject to court approval, to “select and
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retain counsel to represent the class.” 15 U.S.C. § 78u–4(a)(3)(B)(v). “[T]he district court should
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United States District Court
Northern District of California
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not reject a lead plaintiff’s proposed counsel merely because it would have chosen differently.”
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Cohen v. U.S. Dist. Court, 586 F.3d 703, 711 (9th Cir. 2009) (citation omitted). “[I]f the lead
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plaintiff has made a reasonable choice of counsel, the district court should generally defer to that
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choice.” Id. at 712 (citations omitted).
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III.
ANALYSIS
A. Procedural Requirements
Pursuant to the PSLRA, Welgus published a notice of the pending action on August 7,
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2015, the same date that he filed the complaint in this case. See 15 U.S.C. § 78u-4(a)(3)(A)(i); see
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also O’Mara Decl. Exh. C, ECF 18-3. The notice announced the pendency of this action, listed the
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claims, specified the class period, and advised putative class members that they had 60 days from
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the date of the notice to file a motion to seek appointment as lead plaintiff in the lawsuit. Id. Thus,
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the notice complied with the PSLRA’s requirements. See 15 U.S.C. § 78u–4(a)(3)(A).
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As noted above, Welgus then filed this motion on October 6, 2015, the last day within the
60 day deadline. Welgus has therefore met the statutory notice requirements.
B. Financial Interest
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The Court must next determine whether Welgus qualifies as the most adequate plaintiff.
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To make this determination, the Court must first consider Welgus’ financial interest in the relief
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sought. See Cavanaugh, 306 F.3d at 730.
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Welgus has submitted a sworn certification establishing that he made seven purchases,
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totaling 1,453 shares, of TriNet stock over the Class Period. See O’Mara Decl. Exh. A, ECF 18-1.
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Welgus also made four sales, totaling 520 shares. Id. Welgus’ loss over the Class Period amounted
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to $3,574.72. Id.; see also O’Mara Decl. Exh. B, ECF 18-2.
Because Welgus was the only movant for appointment as lead counsel and the motion is
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unopposed, Welgus is necessarily the prospective lead plaintiff with the greatest financial interest
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in the litigation. See Notice of Non-Opposition, ECF 23 at 1. See also City of Dearborn Heights
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Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc., No. 12-CV-06039-LHK, 2013 WL 2368059,
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at *3 (N.D. Cal. May 29, 2013) (quoting Bassin v. Decode Genetics, Inc., 230 F.R.D. 313, 316
(S.D.N.Y.2005)) (“Without access to financial information from other parties, the Court is
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United States District Court
Northern District of California
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constrained to conclude that the [proposed plaintiff's] alleged loss best qualifies it to serve as lead
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plaintiff.”).
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C. Rule 23 Requirements
Having determined that Welgus is the prospective lead plaintiff with the greatest financial
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stake in this litigation, the Court must next consider whether Welgus satisfies the typicality and
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adequacy requirements of Rule 23(a).1 “When the court makes [this] initial determination, it must
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rely on the presumptive lead plaintiff's complaint and sworn certification; there is no adversary
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process to test the substance of those claims.” Cavanaugh, 306 F.3d at 730. As such, Welgus
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need only make a prima facie showing that he satisfies the Rule 23 requirements of typicality and
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adequacy. See id. at 731.
In determining whether typicality is satisfied, a Court inquires “whether other members
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have the same or similar injury, whether the action is based on conduct which is not unique to the
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named plaintiffs, and whether other class members have been injured by the same course of
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conduct.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). In this case, like all
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Federal Rule of Civil Procedure 23(a) sets forth four requirements for class certification: (1)
numerosity, (2) commonality, (3) typicality, and (4) adequacy. Fed. R. Civ. P. 23(a). At the
appointment of lead plaintiff stage, courts need only consider typicality and adequacy, as the
failure to satisfy numerosity or commonality would preclude certifying a class action at all.
Cavanaugh, 306 F.3d at 730 n.5.
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other members of the purported class, Welgus purchased TriNet stocks during the Class Period,
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when TriNet’s stock prices were allegedly artificially inflated by Defendants’ misrepresentations
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and/or omissions, and Welgus allegedly suffered damages when those misrepresentations and/or
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omissions came to light. Welgus’ claims thus appear to be typical, if not identical, to the claims of
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other members of the putative class.
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The test for adequacy asks whether the lead plaintiff and his counsel “have any conflicts of
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interest with other class members” and whether the lead plaintiff and his counsel will “prosecute
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the action vigorously on behalf of the class.” Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir.
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2003). Here, there is no indication of conflicts between Welgus and other class members and
Welgus’ diligence in seeking appointment as lead plaintiff suggests that he and his counsel will
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United States District Court
Northern District of California
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prosecute this action vigorously. Thus, Welgus has made a prima facie showing of typicality and
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adequacy, as required at this stage, and the Court finds that Welgus qualifies as the presumptively
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most adequate plaintiff under the PSLRA.
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D. Opportunity to Rebut
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Welgus’ motion is unopposed and no member of the purported plaintiff class has provided
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proof that Welgus “will not fairly and adequately protect the interests of the class” or that Welgus
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“is subject to unique defenses that render [him] incapable of adequately representing the class.” 15
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U.S.C. § 78u-4(a)(3)(B)(iii)(II). Accordingly, the Court APPOINTS Welgus to serve as lead
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plaintiff.
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E. Lead Counsel
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No parties have objected to Welgus’ selection of Robbins Geller as counsel. The Court
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has reviewed the firm’s resume, O’Mara Decl. Exh. D, and is satisfied that Welgus has made a
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reasonable choice of counsel. Accordingly, the Court APPROVES Welgus’ selection of Robbins
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Geller as lead counsel.
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IT IS SO ORDERED.
Dated: December 3, 2015
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BETH LABSON FREEMAN
United States District Judge
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