Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 1 of 17
`
`John T. Jasnoch (CA 281605)
`SCOTT+SCOTT ATTORNEYS AT LAW LLP
`600 W. Broadway, Suite 3300
`San Diego, CA 92101
`Telephone: 619-233-4565
`Facsimile: 619-233-0508
`jjasnoch@scott-scott.com
`[Additional Counsel on Signature Page.]
`Attorneys for Lead Plaintiff Movant Nick Patterson
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`NICK PATTERSON, Individually and on
`Case No. 5:22-cv-03600
`Behalf of All Others Similarly Situated,
`NOTICE OF MOTION AND MOTION
`OF NICK PATTERSON FOR
`Plaintiff,
`APPOINTMENT AS LEAD PLAINTIFF
`AND APPROVAL OF LEAD COUNSEL;
`MEMORANDUM OF POINTS AND
`AUTHORITIES IN SUPPORT THEREOF
`Date:
`December 15, 2022
`Time:
`9:00 a.m.
`Courtroom.:
`Courtroom 3, 5th Floor
`Judge: Hon. Beth Labson Freeman
`
`v.
`TERRAFORM LABS, PTE. LTD., JUMP
`CRYPTO, JUMP TRADING LLC, REPUBLIC
`CAPITAL, REPUBLIC MAXIMAL LLC,
`TRIBE CAPITAL, DEFINANCE CAPITAL/
`DEFINANCE TECHNOLOGIES OY,
`GSR/GSR MARKETS LIMITED, THREE
`ARROWS CAPITAL PTE. LTD., NICHOLAS
`PLATIAS, and DO KWON,
`
`Defendants.
`
`NOTICE OF MOTION & MOTION OF NICK PATTERSON FOR APPOINTMENT AS LEAD PLAINTIFF &
`APPROVAL OF LEAD COUNSEL; MEMO. IN SUPPORT THEREOF – CASE NO. 5:22-cv-03600
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 2 of 17
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`TABLE OF CONTENTS
`NOTICE OF MOTION AND MOTION .........................................................................................1
`STATEMENT OF THE ISSUES TO BE DECIDED......................................................................1
`MEMORANDUM OF POINTS AND AUTHORITIES .................................................................2
`I.
`INTRODUCTION ...................................................................................................2
`II.
`FACTUAL BACKGROUND ..................................................................................3
`III.
`ARGUMENT ...........................................................................................................5
`A.
`Patterson Should Be Appointed Lead Plaintiff ............................................5
`1.
`Patterson’s Motion Is Timely...........................................................5
`2.
`Patterson Has the Largest Financial Stake in the Relief
`Sought by the Class ..........................................................................5
`Patterson Is Otherwise Qualified Under Rule 23 .............................7
`3.
`The Court Should Approve Patterson’s Choice of Counsel ........................9
`Scott+Scott Should Be Appointed as Lead Counsel over the Non-
`Securities Claims .......................................................................................10
`CONCLUSION ......................................................................................................12
`
`B.
`C.
`
`IV.
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 3 of 17
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Cases
`
`Cohen v. U.S. Dist. Ct. for N. Dist. of Cal.,
`586 F.3d 703 (9th Cir. 2009) .....................................................................................................9
`
`Combs, et. al., v. Safemoon, LLC,
`No. 2:22-cv-01108-SVW-MRW (C.D. Cal) (ECF No. 52) .....................................................11
`
`Cornwell v. Credit Suisse Grp.,
`No. 08-cv-03758, 2011 WL 13263367 (S.D.N.Y. July 20, 2011) .............................................9
`
`Feyko v. Yuhe Int’l Inc.,
`No. CV 11-05511, 2012 WL 682882 (C.D. Cal. Mar. 2, 2012) ................................................6
`
`In re AT&T Mobility Wireless Data Servs. Tax Litig.,
`MDL No. 2147, ECF No. 47 (N.D. Ill. June 23, 2010) ..........................................................11
`
`In re Cavanaugh,
`306 F.3d 726 (9th Cir. 2002) .............................................................................................2, 6, 9
`
`In re Cendant Corp. Litig.,
`264 F.3d 201 (3d Cir. 2001).......................................................................................................9
`
`In re Facebook, Inc., IPO Sec. and Deriv. Litig.,
`288 F.R.D. 26 (S.D.N.Y. 2012) ...............................................................................................11
`
`In re Interest Rate Swaps Antitrust Litig.,
`No. 16-MD-2704, 2016 WL 4131846 (S.D.N.Y. Aug. 3, 2016) .............................................11
`
`In re Olsten Corp. Sec. Litig.,
`3 F. Supp. 2d 286 (E.D.N.Y. 1998) ...........................................................................................6
`
`In re Terazosin Hydrochloride,
`220 F.R.D. 672 (S.D. Fla. 2004) ..............................................................................................11
`
`Knox v. Yingli Green Energy Holding Co. Ltd.,
`136 F. Supp. 3d 1159 (C.D. Cal. 2015) .....................................................................................6
`
`Lax v. First Merchs. Acceptance Corp.,
`No. 97 C 2715, 1997 WL 461036 (N.D. Ill. Aug. 11, 1997) .....................................................6
`
`Miami Police Relief & Pension Fund v. Fusion-io, Inc.,
`No. 13-CV-05368, 2014 WL 2604991 (N.D. Cal. June 10, 2014) ............................................5
`
`Richardson v. TVIA, Inc.,
`No. C 06 06304, 2007 WL 1129344 (N.D. Cal. Apr. 16, 2007)................................................6
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`NOTICE OF MOTION & MOTION OF NICK PATTERSON FOR APPOINTMENT AS LEAD PLAINTIFF &
`APPROVAL OF LEAD COUNSEL; MEMO. IN SUPPORT THEREOF – CASE NO. 5:22-cv-03600
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`Russo v. Finisair Corp.,
`No. 5:CV11-01252, 2011 WL 5117560 (N.D. Cal. Oct. 27, 2011) ...........................................8
`
`Westley v. Oclaro, Inc.,
`No. C-11-2448, 2011 WL 4079178 (N.D. Cal. Sept. 12, 2011) ............................................7, 8
`
`Statutes, Rules, and Regulations
`
`15 U.S.C.
`§77z-1(a)(3)(A)(i) ......................................................................................................................5
`§77z-1(a)(3)(A)(i)(II) .................................................................................................................5
`§77z-1(a)(3)(A)-(B) ...................................................................................................................5
`§77z-1(a)(3)(B) ......................................................................................................................2, 7
`§77z-1(a)(3)(B)(i) ......................................................................................................................6
`§77z-1(a)(3)(B)(iii) ....................................................................................................................2
`§77z-1(a)(3)(B)(iii)(I)(bb) .........................................................................................................6
`§77z-1(a)(3)(B)(iii)(I)(cc) ..........................................................................................................7
`§77z-1(a)(3)(B)(iii)(II)(aa) ........................................................................................................9
`§77z-1(a)(3)(B)(v) .................................................................................................................2, 9
`§78u-4(a)(3)(B) ..........................................................................................................................1
`§78u-4(a)(3)(B)(v) .....................................................................................................................2
`
`Securities Act of 1933
`§5................................................................................................................................................3
`§12(a)(1) ....................................................................................................................................3
`§15..............................................................................................................................................3
`
`Securities Exchange Act of 1934
`§10(b) .........................................................................................................................................3
`
`Federal Rules of Civil Procedure
`Rule 23 ............................................................................................................................. passim
`Rule 23(a)...................................................................................................................................7
`Rule 23(a)(3) ..............................................................................................................................8
`Rule 23(g)(1)(A) ......................................................................................................................11
`
`Other Authorities
`
`MANUAL FOR COMPLEX LITIGATION
`§10.221.....................................................................................................................................10
`§10.224.....................................................................................................................................11
`
`NEWBERG ON CLASS ACTIONS (4th ed. 2008)
`§3:13 ..........................................................................................................................................8
`
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 5 of 17
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`NOTICE OF MOTION AND MOTION
`TO: ALL PARTIES AND THEIR RESPECTIVE COUNSEL OF RECORD
`PLEASE TAKE NOTICE that Lead Plaintiff movant Nick Patterson (“Patterson” or
`“Movant”), by and through his undersigned counsel, hereby moves this Court before the Honorable
`Beth Labson Freeman in Courtroom 3, 5th Floor, of the U.S. District Court for the Northern
`District of California, San Jose Courthouse, 80 South 1st Street, San Jose, California 95113, on
`December 15, 2022, at 9:00 a.m., or as soon thereafter as the matter may be heard, for the entry of
`an order: (1) appointing Patterson as Lead Plaintiff for the putative Class, pursuant to §21D of the
`Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §78u-4(a)(3)(B), as amended by
`the Private Securities Litigation Reform Act of 1995 (“PSLRA”); (2) approving his selection of
`Scott+Scott Attorneys at Law LLP (“Scott+Scott”) as Lead Counsel for the putative Class; and
`(3) appointing Scott+Scott as lead counsel over the non-securities claims asserted in the complaint.
`This motion is made on the grounds that Patterson timely filed this motion and is the “most
`adequate plaintiff.” Based on the information presently available, Patterson has the largest
`financial interest in the relief sought by the Class amongst movants for lead plaintiff, meets the
`requirements of Rule 23 of the Federal Rules of Civil Procedure (“Rule 23”), as his claims are
`typical of the claims of the Class, and he will fairly and adequately represent the interests of the
`Class. In addition, Patterson has selected and retained Scott+Scott, a law firm with substantial
`experience in prosecuting securities class actions, to serve as Lead Counsel.
`This motion is based on this notice of motion and memorandum of points and authorities
`herein, the Declaration of John T. Jasnoch (“Jasnoch Decl.”) filed concurrently herewith and in
`support hereof, including Exhibits A-C attached thereto, the pleadings and other files and records
`previously entered in these actions, and such other written or oral argument as may be presented
`to the Court.
`
`STATEMENT OF THE ISSUES TO BE DECIDED
`Whether the Court should appoint Patterson as Lead Plaintiff pursuant to 15 U.S.C.
`1.
`§78u-4(a)(3)(B).
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`Whether the Court should approve Patterson’s selection of Scott+Scott as Lead
`2.
`Counsel for the Class pursuant to 15 U.S.C. §78u-4(a)(3)(B)(v).
`3.
`Whether the Court should appoint Scott+Scott as Lead Counsel for the non-
`securities claims.
`
`I.
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`The above-captioned case (the “Action”) is a securities class action on behalf of all those
`who purchased Terra ecosystem tokens from May 20, 2021 and May 25, 2022. Movant purchased
`Terra tokens and suffered significant damages as a result of the conduct alleged by the Action.
`Movant respectfully submits this memorandum of points and authorities in support of his motion
`for: (1) appointment as Lead Plaintiff pursuant to §27 of the Securities Act, 15 U.S.C. §77z-
`1(a)(3)(B), as amended by the PSLRA; and (2) approval of his selection of Scott+Scott to serve as
`Lead Counsel for the putative Class.
`The PSLRA provides that the Court is to appoint as lead plaintiff the member of the
`purported plaintiff class with the largest financial interest in the action that otherwise satisfies the
`requirements of Rule 23. 15 U.S.C. §77z-1(a)(3)(B)(iii). As demonstrated below, Movant should
`be appointed to serve as Lead Plaintiff for this litigation because: (1) his motion for appointment
`is timely filed; (2) based on information presently available, he has the largest financial interest in
`this litigation; and (3) he is an adequate and typical Class member. See 15 U.S.C. §77z-
`1(a)(3)(B)(iii) (describing the PSLRA standard for lead plaintiff appointment); In re Cavanaugh,
`306 F.3d 726, 729-30 (9th Cir. 2002) (same). In addition, Movant’s selection of Scott+Scott to
`serve as Lead Counsel for the putative Class should be approved. See 15 U.S.C. §77z-
`1(a)(3)(B)(v) (“The most adequate plaintiff shall, subject to the approval of the court, select and
`retain counsel to represent the class.”). Scott+Scott has a long history of successfully litigating
`securities class actions and possesses the necessary resources to aggressively prosecute this action
`on behalf of the putative Class.
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 7 of 17
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`II.
`
`FACTUAL BACKGROUND
`On June 17, 2022, this putative class action was filed against Defendants TerraForm Labs
`Pte. Ltd (“TFL”), Jump Crypto, Jump Trading LLC, Republic Capital, Republic Maximal LLC,
`Tribe Capital, DeFinance Capital, DeFinance Technologies, GSR/GSR Market Limited, Three
`Arrows Capital Pte. Ltd, TFL’s co-founder and Chief Executive Officer, Do Kwon, and its Head
`of Research, Nicholas Platias. The Action asserts claims under §§5, 12(a)(1), and 15 of the
`Securities Act of 1933 (the “Securities Act”), as well as under §10(b) of the Securities Exchange
`Act of 1934 (the “Exchange Act”), on behalf of a class consisting of all persons and entities, other
`than Defendants and their affiliates, who purchased so-called Terra Tokens from May 20, 2021,
`and May 25, 2022 inclusive (the “Class Period”), and who were damaged thereby.
`TFL is a company that operates the Terra blockchain and its related protocol, which hosts,
`supports, and funds a community of decentralized financial applications and products known
`collectively as the Terra ecosystem. TFL’s primary focus is developing, marketing, and selling a
`suite of digital assets and financial products within the Terra ecosystem, including the native and
`governance tokens within the Terra ecosystem, so-called “stablecoins,” a bevy of financial
`products such as “mirrored assets,” bonded assets, liquidity pool tokens, along with various
`protocols (e.g., Anchor, Mirror, etc.) to support and facilitate their sale. These digital assets are
`collectively referred to as the “Terra Tokens” and are worth tens of billions of dollars in total
`market cap. Terra tokens include the unregistered securities known as: UST, LUNA, KRT, ANC,
`WHALE, ASTRO, APOLLO, XDEFI, MINE, aUST, vUST, MIR, Mirrored Assets (e.g., mBTC,
`mETH, mVIXY, mTSLA, etc.), Liquidity Pool tokens (e.g., UST-mVIXY-LP, bLUNA-LUNA-
`LP, XDEFI-UST-LP, etc.) and/or Bonded Assets (e.g., bLUNA and bETH).
`TFL repeatedly touted the stability of UST as an “algorithmic” stablecoin that is paired
`with the Terra ecosystem’s native token LUNA and the sustainability of the Anchor Protocol
`(“Anchor”) – a type of high-yield savings account whereby investors can “stake” or deposit UST
`with TFL in exchange for a guaranteed 20% APY interest rate. As a part of this promotional
`campaign, TFL formed the Luna Foundation Guard – a group of six venture capital groups that
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`APPROVAL OF LEAD COUNSEL; MEMO. IN SUPPORT THEREOF – CASE NO. 5:22-cv-03600
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 8 of 17
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`promised to support and fund the Terra ecosystem and to “defend the peg” in the event that high
`volatility caused the UST/LUNA pair to become untethered from one another. The Luna
`Foundation Guard and its members, Defendants Jump Crypto, Tribe Capital, Republic Capital,
`GSR, DeFinance Capital, and Three Arrows Capital acted on behalf of TFL to promote the stability
`of UST and mislead investors into believing that (1) the Luna Foundation Guard’s reserve pool
`would be sufficient to defend the peg against a proverbial run on the bank by UST/LUNA
`investors, and (2) that the Luna Foundation Guard would be able to maintain interest payments
`from the Anchor Protocol through a well-capitalized “Anchor Yield Reserve” fund.
`These promotions, along with the announcement of financial backing of major venture
`capitalists in the sector, were a siren song to both veteran and rookie crypto investors alike, luring
`them in with a purportedly “stable” digital asset in UST that would nevertheless provide outsized
`returns on investment via Anchor. The marketing of UST and Anchor was so effective that
`approximately $14 billion of UST’s market cap (75%) was deposited into Anchor at its peak.
`Between May 6, 2022 and May 9, 2022, however, structural infirmities specific to the Terra
`ecosystem exposed a crack in UST’s ability to maintain its peg to $1. The truth regarding the
`stability and sustainability of the UST/LUNA pair and the Anchor Protocol could not be hidden
`any longer from investors, and within a week, the price of Terra tokens plummeted, with UST and
`LUNA collapsing by approximately 91% and 99.7%, respectively.
`The complaint alleges that Defendants violated provisions of the Exchange Act by carrying
`out a plan, scheme, and course of conduct that TFL intended to and did deceive retail investors
`and thereby caused them to purchase Terra Tokens at artificially inflated prices; endorsed false
`statements they knew or recklessly should have known were materially misleading; and, made
`untrue statements of material fact and omitted to state material facts necessary to make the
`statements made not misleading. The complaint alleges that TFL and the Individual Defendants
`also violated provisions of the Securities Act by selling non-exempt security without registering
`it. The complaint alleges that the TFL and Individual Defendants also violated provisions of the
`Securities Act by participating in TFL’s failure to register the Terra Tokens. The complaint further
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 9 of 17
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`alleges non-securities claims, such as California common law claims for aiding and abetting and
`for civil conspiracy. Finally, the complaint alleges that all Defendants violated provisions of the
`Racketeer Influenced and Corrupt Organizations Act (“RICO”) by conducting the affairs of an
`enterprise through a pattern of racketeering activity. The complaint further alleges that the
`Defendants violated provisions of California Common Law by possessing the monetary value of
`Terra Tokens at inflated value which rightfully belong to the Plaintiff and members of the Class.
`III.
`ARGUMENT
`A.
`Patterson Should Be Appointed Lead Plaintiff
`
`Patterson’s Motion Is Timely
`1.
`Within 20 days of filing a securities class action, the plaintiff must publish a notice
`informing putative class members of his right to file a motion for appointment as lead plaintiff (the
`“Early Notice”). 15 U.S.C. §77z-1(a)(3)(A)(i). Following the commencement of the Action, on
`August 11, 2021, Counsel for Plaintiff published notice of pendency of the action via PRNewswire.
`See Jasnoch Decl., Ex. A. Because the Early Notice was published within 20 days of the Action,
`notice was timely. See Miami Police Relief & Pension Fund v. Fusion-io, Inc., No. 13-CV-05368,
`2014 WL 2604991, at *4 (N.D. Cal. June 10, 2014) (finding notice “timely because it was
`published within 20 days after the filing of the complaint”).
`All putative Class members seeking to be appointed lead plaintiff in this matter are required
`to move for appointment within 60 days of publication of the Early Notice, or August 19, 2022.
`15 U.S.C. §77z-1(a)(3)(A)-(B). Since the instant motion was filed within 60 days from the
`publication of the Early Notice, it is timely. 15 U.S.C. §77z-1(a)(3)(A)(i)(II). Moreover, Movant
`has submitted a certification stating his willingness to serve as a representative party on behalf of
`the Class. See Jasnoch Decl., Ex. B.
`2.
`Patterson Has the Largest Financial Stake in the Relief Sought by the
`Class
`
`The PSLRA provides that courts: “shall appoint as lead plaintiff the member or members
`of the purported plaintiff class that the court determines to be most capable of adequately
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`representing the interests of class members (hereafter in this paragraph referred to as the ‘most
`adequate plaintiff’) in accordance with this subparagraph.” 15 U.S.C. §77z-1(a)(3)(B)(i).
`Furthermore, there is a “rebuttable presumption that the most adequate plaintiff in any private
`action arising under this [title]” is the movant that “has the largest financial interest in the relief
`sought by the class[.]” 15 U.S.C. §77z-1(a)(3)(B)(iii)(I)(bb); see also Richardson v. TVIA, Inc.,
`No. C 06 06304, 2007 WL 1129344, at *2 (N.D. Cal. Apr. 16, 2007) (discussing the PSLRA lead
`plaintiff appointment process); Feyko v. Yuhe Int’l Inc., No. CV 11-05511, 2012 WL 682882, at
`*2 (C.D. Cal. Mar. 2, 2012) (same) (citing Cavanaugh, 306 F.3d at 730). “District courts have
`typically considered the Olsten-Lax factors to determine who has the largest financial interest:
`(1) the number of shares purchased during the class period; (2) the number of net shares purchased
`during the class period; (3) the total net funds expended during the class period; and (4) the
`approximate losses suffered.”’ Knox v. Yingli Green Energy Holding Co. Ltd., 136 F. Supp. 3d
`1159, 1163 (C.D. Cal. 2015) (quoting In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 295
`(E.D.N.Y. 1998), and Lax v. First Merchs. Acceptance Corp., No. 97 C 2715, 1997 WL 461036,
`at *5 (N.D. Ill. Aug. 11, 1997)). “Of the Olsten-Lax factors, courts consider the fourth factor, the
`approximate losses suffered, as most determinative in identifying the plaintiff with the largest
`financial loss.” Richardson, 2007 WL 1129344, at *4.
`Based on the information presently available, Patterson is the class member with the largest
`financial interest in the relief sought in this litigation. As set forth in Patterson’s certification,
`Patterson made the following purchases of Terra tokens with U.S. dollars, which were then
`swapped into other various assets in the Terra ecosystem:
`Date
`Transaction Asset
`Amount
`
`1/31/2022 Buy
`3/4/2022 Buy
`3/5/2022 Buy
`3/5/2022 Buy
`3/5/2022 Buy
`3/10/2022 Buy
`3/10/2022 Buy
`
`LUNA
`LUNA
`LUNA
`LUNA
`LUNA
`LUNA
`LUNA
`
`3.99
`8
`2.89
`5
`16.1
`40
`16
`
`Price Per
`Token/
`SWAP Cost
`$51.97
`$91.03
`$82.44
`$82.37
`$87.14
`$101.50
`$96.49
`
`Dollar
`Estimate
`
`$207.40
`$728.30
`$238.27
`$411.87
`$1,403.01
`$4,060.24
`$1,543.97
`
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 11 of 17
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`3/10/2022 Buy
`4/12/2022 Buy
`4/20/2022 Buy
`4/25/2022 Buy
`5/5/2022 Buy
`5/11/2022 Buy
`
`LUNA
`LUNA
`LUNA
`LUNA
`UST
`LUNA
`
`40
`15
`2.1
`5
`11,624.31
`60
`
`$101.50
`$86.25
`$94.45
`$96.53
`$0.9956
`$7.86
`
`$4,060.24
`$1,293.78
`$198.35
`$482.69
`$11,675
`$471.77
`
`With these transactions, Patterson alleges that he purchased an estimated $26,774.89 worth
`of LUNA and UST using U.S. dollars. See Jasnoch Decl., Ex. B. Patterson used these purchases
`of LUNA and UST to swap into the other Terra tokens that are the subject of the complaint,
`including aUST, ANC-UST_LP, XDEFI, MINE, mVIXY, bLUNA, WHALE, ASTRO, mETH,
`mBTC, ANC, bETH, kUST, wETH, Apollo, and MIR. Id. Given that Movant has the largest
`financial interest in this litigation, has standing to bring the claims associated with all of the Terra
`tokens at issue (as opposed to only holding, for example, UST or LUNA), and, as discussed below,
`satisfies all of the PSLRA prerequisites for appointment as lead plaintiff, he should be appointed
`Lead Plaintiff pursuant to 15 U.S.C. §77z-1(a)(3)(B).
`3.
`Patterson Is Otherwise Qualified Under Rule 23
`Pursuant to §27(a)(3)(B) of the Securities Act, a proposed lead plaintiff must also
`“otherwise satisf[y] the requirements of Rule 23.” 15 U.S.C. §77z-1(a)(3)(B)(iii)(I)(cc). Rule
`23(a) provides that a party may serve as a class representative only if the following four
`requirements are satisfied: “(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.” Fed. R. Civ. P.
`23(a). Of the four prerequisites, only two – typicality and adequacy – directly address the personal
`characteristics of the class representative. Consequently, in deciding a motion to serve as lead
`plaintiff, the court need only make findings as to the typicality and adequacy of the proposed lead
`plaintiff and, at this stage, those findings need only be “preliminary.” See, e.g., Westley v. Oclaro,
`
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`NOTICE OF MOTION & MOTION OF NICK PATTERSON FOR APPOINTMENT AS LEAD PLAINTIFF &
`APPROVAL OF LEAD COUNSEL; MEMO. IN SUPPORT THEREOF – CASE NO. 5:22-cv-03600
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 12 of 17
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`Inc., No. C-11-2448, 2011 WL 4079178, at *2 (N.D. Cal. Sept. 12, 2011) (noting that only a
`“preliminary showing” of typicality and adequacy satisfies Rule 23 at the lead plaintiff stage).
`The typicality requirement of Rule 23(a)(3) is satisfied when the representative party ‘“has
`suffered the same injuries as other class members as a result of the same conduct by defendants
`and has claims based on the same legal issues.’” Id. Here, Patterson’s claims are typical of the
`claims of the other members of the putative Class because, like all other Class members, he:
`(1) purchased Terra tokens between May 20, 2021 and May 25, 2022; (2) was adversely affected
`by Defendants’ alleged misconduct; and (3) suffered damages as a result thereof. See Russo v.
`Finisair Corp., No. 5:CV11-01252, 2011 WL 5117560, at *4 (N.D. Cal. Oct. 27, 2011) (discussing
`ways in which a lead plaintiff movant can meet the typicality requirement). Since the claims
`asserted by Movant are based on the same legal theories and arise “from the same event or practice
`or course of conduct that gives rise to the claims of other class members,” typicality is satisfied.
`NEWBERG ON CLASS ACTIONS §3:13 (4th ed. 2008).
`With respect to adequacy, a movant is an adequate class representative when they possess
`common interests and an absence of conflict with fellow class members and movant’s attorneys
`are qualified, experienced, and vigorously able to conduct the litigation. See Westley, 2011 WL
`4079178, at *2 (explaining that, with regard to the adequacy requirement, a court must evaluate
`‘“whether: (1) the lead plaintiff’s claims conflict with those of the class; and (2) class counsel is
`qualified, experienced, and generally able to conduct the litigation’”). Patterson satisfies the
`“adequacy” requirement in the instant litigation because his interests are clearly aligned with the
`interests of the putative Class. Moreover, Movant, like all other members of the Class, suffered
`losses as a result of purchasing Terra tokens. Patterson will, therefore, benefit from the same relief
`as other Class members. In short, there is absolutely no evidence of antagonism between Patterson
`and the putative Class.
`Patterson has also demonstrated that he is an adequate representative in this matter by
`retaining competent and experienced counsel. As shown below, Scott+Scott is highly qualified,
`experienced, and able to conduct this complex litigation in a professional manner. Accordingly,
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`NOTICE OF MOTION & MOTION OF NICK PATTERSON FOR APPOINTMENT AS LEAD PLAINTIFF &
`APPROVAL OF LEAD COUNSEL; MEMO. IN SUPPORT THEREOF – CASE NO. 5:22-cv-03600
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`Case 5:22-cv-03600-BLF Document 25 Filed 08/19/22 Page 13 of 17
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`Movant has made a prima facie showing that he satisfies all of the requirements of Rule 23 for the
`purposes of this motion.
`B.
`The Court Should Approve Patterson’s Choice of Counsel
`The PSLRA vests authority in the lead plaintiff to select and retain lead counsel, subject to
`this Court’s approval. See 15 U.S.C. §77z-1(a)(3)(B)(v); Cavanaugh, 306 F.3d at 734-35. As
`such, this Court should not disturb the lead plaintiff’s choice of counsel unless necessary to
`“protect the interests of the class[.]” 15 U.S.C. §77z-1(a)(3)(B)(iii)(II)(aa); see also Cohen v. U.S.
`Dist. Ct. for N. Dist. of Cal., 586 F.3d 703, 712 (9th Cir. 2009) (“[I]f the lead plaintiff has made a
`reasonable choice of counsel, the district court should generally defer to that choice.”) (citing In
`re Cendant Corp. Litig., 264 F.3d 201, 276 (3d Cir. 2001)); Cavanaugh, 306 F.3d at 733 n.12.
`Patterson has selected the law firm of Scott+Scott to represent the Class. Scott+Scott has
`substantial experience in the prosecution of securities fraud class actions and possesses the
`necessary resources to efficiently conduct this litigation. See Jasnoch Decl., Ex. D. Specifically,
`Scott+Scott has served as lead counsel in many high-profile class actions and recovered hundreds
`of millions of dollars for victims of corporate fraud.1
`Scott+Scott’s efforts have not gone unnoticed by the courts. For instance, in Cornwell v.
`Credit Suisse Grp., No. 08-cv-03758, 2011 WL 13263367, at *2 (S.D.N.Y. July 20, 2011), a case
`in which Scott+Scott served as Lead counsel and recovered $70 million for the class, the Court
`stated:
`
`Lead Plaintiff’ counsel demonstrated that notwithstanding the barriers erected by
`the PSLRA, they would develop evidence to s