Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 1 of 20 Page ID #:142
`
`
`
`POMERANTZ LLP
`Jennifer Pafiti (SBN 282790)
`1100 Glendon Avenue, 15th Floor
`Los Angeles, CA 90024
`Telephone: (310) 405-7190
`Email: jpafiti@pomlaw.com
`
`
`Attorney for Movant the
`PharmaCielo Investor Group
`
`[Additional counsel on signature page]
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`
`No.: 2:20-cv-02182-PSG-JC
`MEMORANDUM OF POINTS
`AND AUTHORITIES IN
`SUPPORT OF MOTION OF
`THE PHARMACIELO
`INVESTOR GROUP FOR
`CONSOLIDATION,
`APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL
`OF COUNSEL
`DATE: June 29, 2020
`TIME: 1:30 p.m.
`JUDGE: Philip S. Gutierrez
`CTRM: # 6A, 6th Floor
`
`
`
`No.: 2:20-cv-03759
`
`
`
`
`
`
`
`DANIEL GABBARD, Individually and
`on behalf of all others similarly situated,
`
`
`
`Plaintiff,
`
`v.
`
`
`PHARMACIELO LTD., DAVID
`ATTARD, and SCOTT LAITINEN,
`
`)
`)
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`Defendant.
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`
`HOWARD ANDERSON, Individually
`and on Behalf of All Others Similarly
`Situated,
`
`
`
`Plaintiff,
`
`vs.
`
`
`PHARMACIELO LTD., DAVID
`ATTARD, and SCOTT LAITINEN,
`
`Defendants.
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 2 of 20 Page ID #:143
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`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`PRELIMINARY STATEMENT ......................................................................... 1
`
`STATEMENT OF FACTS .................................................................................. 2
`
`III. ARGUMENT ....................................................................................................... 4
`
`A.
`
`B.
`
`THE RELATED ACTIONS SHOULD BE CONSOLIDATED FOR
`ALL PURPOSES ...................................................................................... 4
`
`THE PHARMACIELO INVESTOR GROUP SHOULD BE
`APPOINTED LEAD PLAINTIFF ............................................................ 6
`
`1.
`
`2.
`
`3.
`
`4.
`
`The PharmaCielo Investor Group is Willing to Serve as Class
`Representative ........................................................................................7
`
`The PharmaCielo Investor Group Has the “Largest Financial
`Interest” ...................................................................................................7
`
`The PharmaCielo Investor Group Otherwise Satisfies the
`Requirements of Rule 23 of the Federal Rules of Civil Procedure.....9
`
`The PharmaCielo Investor Group Will Fairly and Adequately
`Represent the Interests of the Class and is Not Subject to Unique
`Defenses ............................................................................................... 12
`
`C.
`
`LEAD PLAINTIFF’S SELECTION OF COUNSEL SHOULD BE
`APPROVED ............................................................................................ 12
`
`IV. CONCLUSION .................................................................................................. 14
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 3 of 20 Page ID #:144
`
`
`
`Cases
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`A.F.I.K. Holding SPRL v. Fass,
`216 F.R.D. 567 (D.N.J. 2003) ........................................................................................ 8
`
`Amchem Prods., Inc. v. Windsor,
`521 U.S. 591 (1997) ..................................................................................................... 11
`
`Baby Neal v. Casey,
`43 F.3d 48 (3d Cir. 1994) ............................................................................................ 10
`
`Bassin v. Decode Genetics, Inc.,
`230 F.R.D. 313 (S.D.N.Y. 2005) ................................................................................... 5
`
`Beck v. Maximus, Inc.,
`457 F.3d 291 (3d Cir. 2006) .................................................................................. 10, 11
`
`Blackmoss Invs., Inc. v. ACA Capital Holdings, Inc.,
`252 F.R.D. 188 (S.D.N.Y. 2008) ................................................................................... 5
`
`Danis v. USN Communs., Inc.,
`189 F.R.D. 391 (N.D. Ill. 1999) ................................................................................... 10
`
`Fischler v. Amsouth Bancorporation,
`176 F.R.D. 583 (M.D. Fla. 1997) .................................................................................. 9
`
`Gluck v. Cellstar Corp.,
`976 F. Supp. 542 (N.D. Tex. 1997) ............................................................................... 9
`
`Greebel v. FTP Software,
`939 F. Supp. 57 (D. Mass. 1996) ................................................................................... 9
`
`In re Am. Bus. Fin. Servs., Inc. Sec. Litig.,
`2004 U.S. Dist. LEXIS 10200 (E.D. Pa. Jun. 3, 2004) ................................................. 8
`
`In re Comverse Tech., Inc., Sec. Litig.,
`2007 U.S. Dist. LEXIS 14878 (E.D.N.Y. Mar. 2, 2007) ............................................... 8
`
`In re GE Sec. Litig.,No. 09 Civ. 1951 (DC),
`2009 U.S. Dist. LEXIS 69133 (S.D.N.Y. July 29, 2009) .............................................. 5
`
`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 4 of 20 Page ID #:145
`
`
`
`In re Olsten Corp. Sec. Litig.,
`3 F. Supp.2d 286 (E.D.N.Y. 1998) .......................................................................... 8, 10
`
`In re Oxford Health Plans, Inc. Sec. Litig.,
`182 F.R.D. 42 (S.D.N.Y. 1998) ..................................................................................... 9
`
`In re Tronox, Inc. Sec. Litig.,
`262 F.R.D. 338 (S.D.N.Y. 2009) ................................................................................... 5
`
`In re Vicuron Pharms., Inc. Sec. Litig.,
`225 F.R.D. 508 (E.D. Pa. 2004) ..................................................................................... 8
`
`Janovici v. DVI, Inc., No. 03-4795,
`2003 U.S. Dist. LEXIS 22315 (E.D. Pa. Nov. 25, 2003) .............................................. 8
`
`Johnson v. Celotex Corp.,
`899 F.2d 1281 (2d Cir. 1990) ........................................................................................ 4
`
`Lax v. First Merch. Acceptance Corp.,
`1997 U.S. Dist. LEXIS 11866 (N.D. Ill. Aug. 6, 1997) ................................................ 8
`
`Malcolm v. Nat’l Gypsum Co.,
`995 F.2d 346 (2d Cir. 1993) .......................................................................................... 4
`
`Osher v. Guess ?, Inc.,
`2001 U.S. Dist. LEXIS 6057 (C.D. Cal. Apr. 26, 2001) ............................................. 12
`
`Riordan v. Smith Barney,
`113 F.R.D. 60 (N.D. Ill. 1986) ..................................................................................... 11
`
`15 U.S.C. § 78u-4(a)(3)(B)(i) &(ii) ........................................................................... passim
`
`Statutes
`
`Rules
`
`Federal Rules of Civil Procedure Rule 23 ................................................................. passim
`
`Federal Rules of Civil Procedure Rule 42 ...................................................................... 1, 4
`
`
`
`
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 5 of 20 Page ID #:146
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`
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`Movants Howard Anderson and Pamela Que1 (collectively, the “PharmaCielo
`
`Investor Group”) respectfully submit this Memorandum of Law in support of their
`
`motion, pursuant to Section 21D(a)(3) of the Securities Exchange Act of 1934 (the
`
`“Exchange Act”), 15 U.S.C. § 78u-4(a)(3), as amended by the Private Securities
`
`Litigation Reform Act of 1995 (the “PSLRA”) and Rule 42 of the Federal Rules of Civil
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`Procedure, for the entry of an Order: (1) consolidating the above-captioned related
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`actions (the “Related Actions”); (2) appointing the PharmaCielo Investor Group as Lead
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`Plaintiff on behalf of all persons or entities who purchased or otherwise acquired
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`PharmaCielo Ltd. (“PharmaCielo” or the “Company”) securities between June 21, 2019
`
`and March 2, 2020, both dates inclusive (the “Class Period”); and (3) approving Lead
`
`Plaintiff’s selection of Pomerantz LLP (“Pomerantz”) as Lead Counsel for the Class.
`
`I.
`
`PRELIMINARY STATEMENT
`
`The Related Actions are on behalf of all persons and entities that purchased or
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`otherwise acquired PharmaCielo securities during the Class Period. Each of the Related
`
`Actions raises substantially similar allegations: defendants violated federal securities
`
`laws by issuing false and misleading statements. Accordingly, consolidation of the
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`Related Actions is appropriate.
`
`
`1 Pamela Que pursues claims in this litigation in connection with transactions in
`PharmaCielo securities made by her partner, Farrell Dorsey. Farrell Dorsey has duly
`assigned to Pamela Que the right to pursue such claims. See Declaration of Jennifer
`Pafiti in Support of Motion (“Pafiti Decl.”), Ex. A.
`
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 6 of 20 Page ID #:147
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`
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`Pursuant to the PSLRA, the Court is to appoint as Lead Plaintiff the movant who
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`possesses the largest financial interest in the outcome of the action and who satisfies the
`
`requirements of Rule 23 of the Federal Rules of Civil Procedure. 15 U.S.C. § 78u-
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`4(a)(3)(B)(iii)(I). The PharmaCielo Investor Group, with losses of approximately
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`$166,752 calculated on a first-in, first-out (“FIFO”) basis and $162,470 calculated on a
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`last-in, first-out (“LIFO”) basis in connection with its purchases of PharmaCielo
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`securities, has the largest financial interest in the relief sought in this action to its
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`members’ knowledge. See Pafiti Decl., Ex. B. The PharmaCielo Investor Group further
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`satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure as its
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`members are adequate representatives with claims typical of the other Class members.
`
`Accordingly, the PharmaCielo Investor Group respectfully submits that it should be
`
`appointed Lead Plaintiff.
`
`II.
`
`STATEMENT OF FACTS
`
`PharmaCielo, through its subsidiary, PharmaCielo Colombia Holdings S.A.S.,
`
`purports to cultivate, process, produce, and supply medicinal-grade cannabis oil extracts
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`and related products in Colombia and internationally.
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`Throughout the Class Period, defendants made false and/or misleading statements
`
`and/or failed to disclose that: (i) PharmaCielo engaged in undisclosed related party
`
`transactions with General Extract; (ii) PharmaCielo engaged in misleading transactions
`
`and loans with General Extract; (iii) PharmaCielo had significantly overstated the
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 7 of 20 Page ID #:148
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`
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`efficacy and competitiveness of the Company’s business and operations in South
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`America, including Peru and Colombia; (iv) PharmaCielo’s Research Technology and
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`Processing Centre was never on-schedule and is delayed; (v) the Rionegro facility is
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`located on a floodplain and contaminated with mold and pesticides from its previous
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`tenants; (vi) PharmaCielo’s Cauca Department land has never been utilized by the
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`Company and is idle; and (vii) as a result, Defendants’ public statements were materially
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`false and/or misleading at all relevant times.
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`On January 9, 2020, Marijuana Business Daily (“MBD”) published an article
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`entitled “New medical cannabis sales opportunities in Peru face downward price
`
`pressure after winning company’s very low bid” (the “MBD Article”). According to that
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`article, “[t]he price offered by the winner of the first bidding process to supply medical
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`cannabis in Peru came in well below that of other applicants,” including PharmaCielo,
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`which, “[t]o comply with the purity requirement . . . offered CBD isolate in powder
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`form,” and was disqualified “because the company didn’t make an offer in ‘liquid’ form
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`as required.”
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`On this news, shares of PharmaCielo fell $0.122 per share, or 4.80%, to close at
`
`$2.42 per share on January 10, 2020. However, PharmaCielo’s shares continued to trade
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`at artificially inflated prices as a result of Defendants’ continued misrepresentations and
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`misstatements throughout the rest of the Class Period.
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 8 of 20 Page ID #:149
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`Then, on March 2, 2020, Hindenburg Research published a report explaining that
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`PharmaCielo had failed to disclose: (i) transactions with related parties; (ii) misleading
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`business transactions and loans with General Extract and XPhyto; (iii) the delayed state
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`of its Research Technology and Processing Centre’s construction; and (iv) the poor state
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`of its Rionegro Growing Facility.
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`On this news, shares of PharmaCielo fell $0.5132 per share over the next two
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`trading days, or 36.14%, to close at $0.9068 per share on March 3, 2020, damaging
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`investors.
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`III. ARGUMENT
`
`A. THE RELATED ACTIONS SHOULD BE CONSOLIDATED FOR
`ALL PURPOSES
`
`
`
`Consolidation of related cases is appropriate, where, as here, the actions involve
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`common questions of law and fact, and therefore consolidation would avoid unnecessary
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`cost, delay and overlap in adjudication:
`
`Where actions involving a common question of law or fact are pending
`before the court, it may order a joint hearing or trial of any or all of the
`matters at issue in the actions; it may order all the actions consolidated; and
`it may make such order concerning proceedings therein as may tend to
`avoid unnecessary costs or delay.
`
`Fed. R. Civ. P. 42(a). See also Manual for Complex Litigation (Third), § 20.123 (1995).
`
`Consolidation is appropriate when the actions before the court involve common
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`questions of law or fact. See Fed. R. Civ. P. 42 (a); Malcolm v. Nat’l Gypsum Co., 995
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`F.2d 346, 350 (2d Cir. 1993) (citing Johnson v. Celotex Corp., 899 F.2d 1281, 1284 (2d
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 9 of 20 Page ID #:150
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`Cir. 1990)); In re Tronox, Inc. Sec. Litig., 262 F.R.D. 338, 344 (S.D.N.Y. 2009)
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`(consolidating securities class actions); Blackmoss Invs., Inc. v. ACA Capital Holdings,
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`Inc., 252 F.R.D. 188, 190 (S.D.N.Y. 2008) (same). Differences in causes of action,
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`defendants, or the class period do not render consolidation inappropriate if the cases
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`present sufficiently common questions of fact and law, and the differences do not
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`outweigh the interest of judicial economy served by consolidation. See In re GE Sec.
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`Litig., No. 09 Civ. 1951 (DC), 2009 U.S. Dist. LEXIS 69133, at *4–8 (S.D.N.Y. July 29,
`
`2009) (consolidating actions asserting different claims against different defendants over
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`different class periods).
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`The Related Actions at issue here clearly involve common questions of law and
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`fact. Each action was brought against the Company, as well as certain officers and
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`directors of the Company, in connection with violations of the federal securities laws.
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`Accordingly, the Related Actions allege substantially the same wrongdoing, namely that
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`Defendants issued materially false and misleading statements and omissions that
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`artificially inflated the price of PharmaCielo’s securities and subsequently damaged the
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`Class when the Company’s share price crashed as the truth emerged. Consolidation of
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`the Related Actions is therefore appropriate. See Bassin v. Decode Genetics, Inc., 230
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`F.R.D. 313, 315 (S.D.N.Y. 2005) (consolidation of securities class actions is particularly
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`appropriate in the context of securities class actions where the complaints are based on
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`the same statements and the defendants will not be prejudiced); In re GE, 2009 U.S.
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 10 of 20 Page ID #:151
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`Dist. LEXIS 69133), at *5 (“Consolidation promotes judicial convenience and avoids
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`unnecessary costs to the parties.”).
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`B.
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`THE PHARMACIELO INVESTOR GROUP SHOULD BE
`APPOINTED LEAD PLAINTIFF
`
`
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`The PharmaCielo Investor Group should be appointed Lead Plaintiff because, to
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`its members’ knowledge, it has the largest financial interest in the Action and otherwise
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`meets the requirements of Rule 23. Section 21D(a)(3)(B) of the PSLRA sets forth
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`procedures for the selection of lead plaintiff in class actions brought under the Exchange
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`Act. The PSLRA directs courts to consider any motion to serve as lead plaintiff filed by
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`class members in response to a published notice of the class action by the later of (i) 90
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`days after the date of publication, or (ii) as soon as practicable after the Court decides
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`any pending motion to consolidate. See 15 U.S.C. § 78u-4(a)(3)(B)(i) &(ii).
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`Further, under 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I), the Court is directed to consider
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`all motions by plaintiffs or purported class members to appoint lead plaintiff filed in
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`response to any such notice. Under this section, the Court “shall” appoint “the
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`presumptively most adequate plaintiff” to serve as lead plaintiff and shall presume that
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`plaintiff is the person or group of persons, that:
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`(aa) has either filed the complaint or made a motion in
`response to a notice . . .;
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`(bb) in the determination of the Court, has the largest financial
`interest in the relief sought by the class; and
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` (cc) otherwise satisfies the requirements of Rule 23 of the
`Federal Rules of Civil Procedure.
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 11 of 20 Page ID #:152
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`15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).
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`As set forth below, the PharmaCielo Investor Group satisfies all three of these
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`criteria and thus is entitled to the presumption that it is the most adequate plaintiff of the
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`Class and, therefore, should be appointed Lead Plaintiff for the Class.
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`1.
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`The PharmaCielo Investor Group is Willing to Serve as Class
`Representative
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`On March 6, 2020, counsel for a plaintiff in the first of the Related Actions to be
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`filed caused a notice to be published pursuant to Section 21D(a)(3)(A)(i) of the PSLRA,
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`which announced that a securities class action had been filed against the defendants
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`herein, and advised investors of PharmaCielo securities that they had 60 days—i.e., until
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`May 5, 2020—to file a motion to be appointed as Lead Plaintiff. See Pafiti Decl., Ex. C.
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`The PharmaCielo Investor Group has filed the instant motion pursuant to the
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`Notice, and its members have attached sworn Certifications attesting that they are willing
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`to serve as representatives for the Class and to provide testimony at deposition and trial,
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`if necessary. See Pafiti Decl., Ex. D. Accordingly, the PharmaCielo Investor Group
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`satisfies the first requirement to serve as Lead Plaintiff of the Class.
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`2.
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`The PharmaCielo Investor Group Has the “Largest Financial
`Interest”
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`The PSLRA requires a court to adopt a rebuttable presumption that “the most
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`adequate plaintiff . . . is the person or group of persons that . . . has the largest financial
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`interest in the relief sought by the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii).
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 12 of 20 Page ID #:153
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`As of the time of the filing of this motion, the PharmaCielo Investor Group’s
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`members believe that they have the largest financial interest of any of the Lead Plaintiff
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`movants based on the four factors articulated in the seminal case Lax v. First Merch.
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`Acceptance Corp., 1997 U.S. Dist. LEXIS 11866, at *7-*8 (N.D. Ill. Aug. 6, 1997)
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`(financial interest may be determined by (1) the number of shares purchased during the
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`class period; (2) the number of net shares purchased during the class period; (3) the total
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`net funds expended during the class period; and (4) the approximate losses suffered).2
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`The most critical among the Lax Factors is the approximate loss suffered. See, e.g., In re
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`Vicuron Pharms., Inc. Sec. Litig., 225 F.R.D. 508, 511 (E.D. Pa. 2004); Janovici v. DVI,
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`Inc., No. 03-4795, 2003 U.S. Dist. LEXIS 22315, at *39 (E.D. Pa. Nov. 25, 2003); In re
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`Am. Bus. Fin. Servs., Inc. Sec. Litig., 2004 U.S. Dist. LEXIS 10200, at *2–3 (E.D. Pa.
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`Jun. 3, 2004); A.F.I.K. Holding SPRL v. Fass, 216 F.R.D. 567, 572 (D.N.J. 2003).
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`During the Class Period, the PharmaCielo Investor Group (1) purchased 83,730
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`shares of PharmaCielo stock; (2) expended $315,213 on its purchases of PharmaCielo
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`securities; (3) retained 61,355 shares of PharmaCielo stock; and (4) as a result of the
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`disclosures of the fraud, suffered a loss of $166,752 on a FIFO basis and $162,470 on a
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`LIFO basis in connection with its purchases of PharmaCielo securities. See Pafiti Decl.,
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`Ex. B. Because the PharmaCielo Investor Group possesses the largest financial interest
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`2 See also In re Olsten Corp. Sec. Litig., 3 F. Supp.2d 286, 296 (E.D.N.Y. 1998).
`Accord In re Comverse Tech., Inc., Sec. Litig., 2007 U.S. Dist. LEXIS 14878, at *22-
`*25 (E.D.N.Y. Mar. 2, 2007) (collectively, the “Lax-Olsten” factors).
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 13 of 20 Page ID #:154
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`in the outcome of this litigation, it may be presumed to be the “most adequate” plaintiff.
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`15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb).
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`3.
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`The PharmaCielo Investor Group Otherwise Satisfies the
`Requirements of Rule 23 of the Federal Rules of Civil Procedure
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`Section 21D(a)(3)(B)(iii)(I)(cc) of the PSLRA further provides that, in addition to
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`possessing the largest financial interest in the outcome of the litigation, Lead Plaintiff
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`must “otherwise satisfy the requirements of Rule 23 of the Federal Rules of Civil
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`Procedure.” Rule 23(a) generally provides that a class action may proceed if the
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`following four requirements are satisfied:
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`(1) the class is so numerous that joinder of all members is
`impracticable, (2) there are questions of law or fact common to
`the class, (3) the claims or defenses of the representative
`parties are typical of the claims or defenses of the class, and
`(4) the representative parties will fairly and adequately protect
`the interests of the class.
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`In making its determination that Lead Plaintiff satisfies the requirements of Rule
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`23, the Court need not raise its inquiry to the level required in ruling on a motion for
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`class certification; instead a prima facie showing that the movant satisfies the
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`requirements of Rule 23 is sufficient. Greebel v. FTP Software, 939 F. Supp. 57, 60 (D.
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`Mass. 1996). Moreover, “typicality and adequacy of representation are the only
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`provisions relevant to a determination of lead plaintiff under the PSLRA.” In re Oxford
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`Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 49 (S.D.N.Y. 1998) (citing Gluck v.
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`Cellstar Corp., 976 F. Supp. 542, 546 (N.D. Tex. 1997) and Fischler v. Amsouth
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 14 of 20 Page ID #:155
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`Bancorporation, 176 F.R.D. 583 (M.D. Fla. 1997)); In re Olsten Corp. Sec. Litig., 3 F.
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`Supp. 2d at 296.
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`The typicality requirement of Fed. R. Civ. P. 23(a)(3) is satisfied where the named
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`representative’s claims have the “same essential characteristics as the claims of the class
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`at large.” Danis v. USN Communs., Inc., 189 F.R.D. 391, 395 (N.D. Ill. 1999). In other
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`words, “the named plaintiffs’ claims [must be] typical, in common-sense terms, of the
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`class, thus suggesting that the incentives of the plaintiffs are aligned with those of the
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`class.” Beck v. Maximus, Inc., 457 F.3d 291, 295-96 (3d Cir. 2006) (quoting Baby Neal
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`v. Casey, 43 F.3d 48, 55 (3d Cir. 1994) (noting that “factual differences will not render a
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`claim atypical if the claim arises from the same event or practice or course of conduct
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`that gives rise to the claims of the class members, and if it is based on the same legal
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`theory”)).
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`The claims of the PharmaCielo Investor Group are typical of those of the Class.
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`The PharmaCielo Investor Group alleges, as do all class members, that defendants
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`violated the Exchange Act by making what they knew or should have known were false
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`or misleading statements of material facts concerning PharmaCielo, or omitted to state
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`material facts necessary to make the statements they did make not misleading. The
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`PharmaCielo Investor Group, as did all members of the Class, purchased PharmaCielo
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`securities during the Class Period at prices artificially inflated by defendants’
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`misrepresentations or omissions and was damaged upon the disclosure of those
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 15 of 20 Page ID #:156
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`misrepresentations and/or omissions. These shared claims, which are based on the same
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`legal theory and arise from the same events and course of conduct as the Class claims,
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`satisfy the typicality requirement of Rule 23(a)(3).
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`The adequacy of representation requirement of Rule 23(a)(4) is satisfied where it
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`is established that a representative party “will fairly and adequately protect the interests
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`of the class.” The class representative must also have “sufficient interest in the outcome
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`of the case to ensure vigorous advocacy.” Riordan v. Smith Barney, 113 F.R.D. 60, 64
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`(N.D. Ill. 1986); Beck, 457 F.3d at 296 (emphasizing that the adequacy inquiry “‘serves
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`to uncover conflicts of interest between named parties and the class they seek to
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`represent’”) (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997)).
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`The PharmaCielo Investor Group is an adequate representative for the Class.
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`There is no antagonism between the interests of the PharmaCielo Investor Group and
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`those of the Class, and its losses demonstrate that it has a sufficient interest in the
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`outcome of this litigation. Moreover, the PharmaCielo Investor Group has retained
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`counsel highly experienced in vigorously and efficiently prosecuting securities class
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`actions such as these Related Actions, and submits its choice to the Court for approval
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`pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v).
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 16 of 20 Page ID #:157
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`4.
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`The PharmaCielo Investor Group Will Fairly and Adequately
`Represent the Interests of the Class and is Not Subject to Unique
`Defenses
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`The presumption in favor of appointing the PharmaCielo Investor Group as Lead
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`Plaintiff may be rebutted only upon proof “by a purported member of the plaintiffs’
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`class” that the presumptively most adequate plaintiff:
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`(aa) will not fairly and adequately protect the interest of the
`class; or
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` (bb) is subject to unique defenses that render such plaintiff
`incapable of adequately representing the class.
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`15 U.S.C. § 78u-4(a)(3)(b)(iii)(I).
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`The ability and desire of the PharmaCielo Investor Group to fairly and adequately
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`represent the Class has been discussed above. The PharmaCielo Investor Group is not
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`aware of any unique defenses defendants could raise that would render it inadequate to
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`represent the Class.
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`C. LEAD PLAINTIFF’S SELECTION OF COUNSEL SHOULD BE
`APPROVED
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`The PSLRA vests authority in the Lead Plaintiff to select and retain lead counsel,
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`subject to the approval of the Court. See 15 U.S.C. § 78u-4(a)(3)(B)(v); Osher v.
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`Guess?, Inc., 2001 U.S. Dist. LEXIS 6057, at *15 (C.D. Cal. Apr. 26, 2001). The Court
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`should interfere with Lead Plaintiff’s selection only when necessary “to protect the
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`interests of the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa).
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 17 of 20 Page ID #:158
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`The PharmaCielo Investor Group has selected Pomerantz as Lead Counsel for the
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`Class. Pomerantz is highly experienced in the area of securities litigation and class
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`actions and has successfully prosecuted numerous securities litigations and securities
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`fraud class actions on behalf of investors, as detailed in the firm’s resume. Pomerantz
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`recently secured a recovery of $3 billion on behalf of investors in the securities of
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`Petróleo Brasileiro S.A. — Petrobras, the largest class action settlement in a decade and
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`the largest settlement ever in a class action involving a foreign issuer. See Pafiti Decl.,
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`Ex. E. Petrobras is part of a long line of record-setting recoveries led by Pomerantz,
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`including the $225 million settlement in In re Comverse Technology, Inc. Securities
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`Litigation, No. 06-CV-1825 (E.D.N.Y.), in June 2010. See id. Most recently,
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`Pomerantz announced as Lead Counsel on behalf of a class of Fiat Chrysler Automobiles
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`N.V. investors that it has reached a $110 million settlement with the company. See id.
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`As a result of Pomerantz’s extensive experience in litigation involving issues similar to
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`those raised in the Related Actions, the PharmaCielo Investor Group’s counsel have the
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`skill and knowledge which will enable them to prosecute the Related Actions effectively
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`and expeditiously. Thus, the Court may be assured that by approving the selection of
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`Lead Counsel by the PharmaCielo Investor Group, the members of the class will receive
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`the best legal representation available.
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Case 2:20-cv-02182-PSG-JC Document 15 Filed 05/05/20 Page 18 of 20 Page ID #:159
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`IV. CONCLUSION
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`For the foregoing reasons, the PharmaCielo Investor Group respectfully requests
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`that the Court issue an Order: (1) consolidating the Related Actions; (2) appointing the
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`PharmaCielo Investor Group as Lead Plaintiff for the Class; and (3) approving
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`Pomerantz as Lead Counsel for the Class.
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`Dated: May 5, 2020
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`POMERANTZ LLP
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`/s/ Jennifer Pafiti
`Jennifer Pafiti (SBN 282790)
`1100 Glendon Avenue, 15th Floor
`Los Angeles, CA 90024
`T