18th Annual Workplace Class Action Report - 2022 Edition

464 Annual Workplace Class Action Litigation Report: 2022 Edition appointment of lead counsel status to: (i) Mark P. Chalos of Lieff Cabraser Heimann & Bernstein, LLP; and (ii) Tarek H. Zohdy of Capstone Law APC. The Court granted class counsel all responsibilities to efficiently manage and direct all aspects of the litigation on behalf of Plaintiffs and the putative classes. Wasa Medical Holdings, et al. v. Sorrento Therapeutics, Inc., 2021 U.S. Dist. LEXIS 27438 (S.D. Cal. Feb. 12, 2021). Plaintiffs, a group of Sorrento Therapeutics investors in two separate cases, filed class action alleging that Defendants violated the Securities Exchange Act of 1934. Specifically, Defendants announced that Sorrento had discovered an antibody demonstrating 100% inhibition to the COVID-19 virus, and its President, another Defendant in this action, subsequently stated that the company found a “cure” to the virus. Id. at *3. According to Plaintiffs, these statements caused Sorrento’s stock price to artificially inflate, which was followed by a stock price decrease after Sorrento’s President amended his statement by saying that the company’s antibody was a potential cure. Plaintiffs filed a motion to consolidate the two separate class actions, as well as motions to appoint the Lead Plaintiff and the Lead Counsel. The Court granted the motion to consolidate, as it found that the two separate actions asserted analogous claims and involved common questions of law and fact. As to the motion to appoint the Lead Plaintiff, the Court considered three potential Lead Plaintiffs, including Plaintiff Li, Plaintiff Zenoff, and the SRNE Inventor Group. In assessing the parties’ financial interests, the Court noted that Plaintiff Li had the largest claim of loss at $454,341.00, followed by the SRNE Investor Group claiming $380,908.82 worth of loss, and Plaintiff Zenoff claiming $195,500. Id. at *8. The Court opined that this created a presumption for Plaintiff Li as the Lead Plaintiff, though it could be rebutted by evidence that Plaintiff Li did not meet Rule 23’s typicality and adequacy requirements. To that end, the Court reasoned that Plaintiff Li failed to satisfy the adequacy requirement because she offered minimal details regarding her professional background and only possessed three years of investing experience. The Court also considered the SRNE Investor Group as the Lead Plaintiff, but concluded this this group also failed to satisfy the adequacy requirement because applicable securities laws generally disfavor groups of unrelated investors consolidated for the sole purpose of litigation, and here, the Court found that the members of the SRNE Investor Group had no preexisting relationship and formed the group only after a conference call with counsel. As the Court reasoned, when “unrelated investors are cobbled together, the clear implication is that counsel, rather than the parties, are steering the litigation.” Id. at *15. After removing Plaintiff Li and the SRNE Investor Group from consideration, the Court found Plaintiff Zenoff to be an appropriate Lead Plaintiff since his claims were typical of the putative class members’ claims and he possessed 20 years of investing experience. Additionally, the Court appointed Plaintiff Zenoff’s counsel, Robbins Geller, as the Lead Counsel in light of the firm’s successful history of prosecuting securities class actions on behalf of investors. Therefore, the Court granted the motion to consolidate, and appointed Plaintiff Zenoff as the Lead Plaintiff and Robbins Geller as the Lead Counsel. (vii) Ascertainability Issues Under Rule 23 Cherry, et al. v. Dometic Corp., 986 F.3d 1296 (11th Cir. 2021). Plaintiffs, a group of owners of allegedly defective refrigerators manufactured by Defendant, filed a class action alleging violation of the Magnuson-Moss Warranty Act and various state laws. Plaintiffs filed a motion for class certification pursuant to Rule 23, which the District Court denied based on the failure to prove administrative feasibility. The District Court also dismissed the action, holding that the denial of class certification divested it of subject-matter jurisdiction. On appeal, the Eleventh Circuit reversed and vacated the District Court’s ruling. The Eleventh Circuit noted that the appeal turned on whether the text of Rule 23(a) or (b) necessarily requires proof of administrative feasibility. The Eleventh Circuit determined that administrative feasibility does not follow from the text of Rule 23(a) and because it has no connection to Rule 23(a), it is not part of the ascertainability inquiry. The Eleventh Circuit also reasoned that administrative feasibility is a requirement of Rule 23(b), and therefore, administrative difficulties alone do not require denial of a motion for certification. Accordingly, the Eleventh Circuit held that administrative feasibility is not a requirement for certification under Rule 23, and thus ascertainability should be limited to whether a class was adequately defined such that its membership is capable of determination. Id . at 1304. The Eleventh Circuit explained that the District Court must evaluate this issue in comparative terms of whether a class action would create more manageability problems than any alternatives, and how the manageability concerns compared with the other advantages or disadvantages of a class action. Id . at 1305. The Eleventh Circuit concluded that administrative feasibility alone would seldom be dispositive. Finally, the Eleventh Circuit ruled that even if the District Court’s decision deny class certification was correct, its dismissal of the entire action still would be incorrect because “federal jurisdiction under the Class Action Fairness Act does not depend