KRANZLER v. INTERCLOUD SYSTEMS, INC. et al

Filing 36

MEMORANDUM ands ORDER: ORDERED that Plaintiffs Motion for Appointment as Lead Plaintiff and Approval of Selection of Counsel 12 shall be, and hereby is, GRANTED; Robbins Geller Rudman & Dowd LLP shall serve as Lead Counsel, and Cohn Lifland Pearlman Herrmann & Knop fLLP shall serve as Liason Counsel with respect to the pending actions; and it is further ORDERED that QuantXs application for appointment as lead plaintiff shall be, and hereby is, DENIED; and it is further ORDERED that movants Lornartras and Traversari Groups Motions to Appoint Lead Plaintiff, Counsel and Liaison Counsel 10 and 13 shall be, and hereby are, DISMISSED as moot. Signed by Judge Peter G. Sheridan on 11/3/2014. (kas, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

In re INTERCLOUS SYSTEMS, INC.
SECURITIES LITIGATION

THIS DOCUMENT RELATES TO:

Civil Action No. 14-cv-.01982 (PGS)(DEA)

MEMORANDUM AND
ORDER

ALL ACTIONS

WHEREAS, this matter having come before the Court on Movant Charles R. Gilbert,

Jr.’s (“Gilbert”) Motion for Appointment as Lead Plaintiff and Approval of Selection of Counsel
(ECF 12), in which Gilbert seeks an Order of this Court appointing him as lead plaintiff with
respect to the related actions pending before this Court, and approving his selection of Robbins
Geller Rudman & Dowd LLP to serve as Lead Counsel, and Cohn Lifland Peariman Herrmann
& Knopf LLP to serve as Liason Counsel with respect to the pending actions;’ and
WHEREAS, Gilbert argues, in support of his motion that he be appointed lead plaintiff,
that he is the movant with the largest financial interest in the litigation that also meets the
typicality and adequacy prongs of Federal Rule of Civil Procedure 23; see 15 U.S.C.

§ 78u-

4(a)(3)(B)(iii); In re Cendant Corp. Sec. Litig., 265 F.3d 201, 263 (3d Cir. 2001); and

There were, initially, five motions filed in which various movants sought appointment as Lead
Plaintiff with respect to the related actions pending before the Court. Movant Scott Krankler
withdrew his motion on June 6, 2014 (ECF 15); movant Traversari Group effectively withdrew
its application for appointment as lead plaintiff, acknowledging, in its responsive brief filed June
23, 2014 (ECF 21), that it “does not possess the largest financial interest in the relief sought by
the class and, therefore, does not qualify for the [Private Securities Litigation Reform ActJ’s
presumption of adequacy”; for similar reasons, movant Louis Lornartra (“Lomartra”) withdrew
his application for appointment as lead plaintiff on June 30, 2014 (ECF 25). Accordingly, the
only remaining movants seeking appointment as lead plaintiff are Gilbert and QuantX
Management LLP (“QuantX”).
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WHEREAS, Movant QuantX opposes Gilbert’s motion, and further contends that it is

the presumptive lead plaintiff on the ground that it suffered the largest financial loss as a result of
the underlying misconduct alleges, and satisfies the typicality and adequacy prongs of Federal
Rule of Civil Procedure 23; and
WHEREAS, the typicality analysis to be undertaken by the Court, both at the lead
plaintiff stage and, later, at class certification, requires that the Court weigh whether the
presumptive lead plaintiff’s circumstances “are markedly different or the legal theory upon
which the claims of that movant are based differed from that upon which the claims of other
class members will perforce be based,” Cendant, 264 F.3d at 265; and
WHEREAS, the Court finds that substantial questions impinging upon the Court’s

typicality analysis are presented by QuantX’s seemingly unique trading strategy, which
incorporates, among other things, an algorithmic trading approach, complex mathematical
formulae, and other mechanisms and methodologies that do not rely, as the majority of
individual lay investors do, on information made available to the public intended to influence
investor decisionmaking; and
WHEREAS, the Court finds that QuantX’s unique trading strategy renders it susceptible
to unique defenses that may threaten to become the focus of the litigation, thereby rendering
QuantX atypical of the class; and
WHEREAS, the Court concludes that, although Gilbert engaged in a large volume of

transactions during the relevant time period, such activity, without more, is insufficient to
support a finding that Gilbert fails to satisfy the typicality and adequacy prongs of Federal Rule
of Civil Procedure 23; and

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WHEREAS, the Court concludes that Gilbert is the movant with the largest financial

interest in the litigation that also satisfies the typicality and adequacy prongs of Federal Rule of
Civil Procedure 23;
IT IS on this 3rd day of November, 2014,

ORDERED that Plaintiff’s Motion for Appointment as Lead Plaintiff and Approval of
Selection of Counsel (ECF 12) shall be, and hereby is, GRANTED; Robbins Geller Rudman &
Dowd LLP shall serve as Lead Counsel, and Cohn Lifland Pearlman Herrmann & KnopfLLP
shall serve as Liason Counsel with respect to the pending actions; and it is further
ORDERED that QuantX’s application for appointment as lead plaintiff shall be, and
hereby is, DENIED; and it is further
ORDERED that movants Lornartra’s and Traversari Group’s Motions to Appoint Lead
Plaintiff, Counsel and Liaison Counsel (ECF 10, 13) shall be, and hereby are, DISMISSED as
moot.

DATED: November 3, 2014

PETER G. SHERIDAN, U.S.D.J.

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