Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 1 of 14
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`
`
`Melissa A. Fortunato (SBN #319676)
`Marion C. Passmore (SBN #228474)
`BRAGAR EAGEL & SQUIRE, P.C.
`580 California Street, Suite 1200
`San Francisco, California 94104
`Telephone: (415) 568-2124
`Facsimile: (212) 214-0506
`Email: fortunato@bespc.com
`passmore@bespc.com
`
`
`Counsel for Movant Shing Yiu Ng and
`Proposed Lead Counsel for the Class
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`
`
`NICK PATTERSON, Individually and on
`Behalf of All Others Similarly Situated,
`
`
`Plaintiff,
`
`Case No. 5:22-cv-03600-BLF
`
`CLASS ACTION
`
`NOTICE OF MOTION AND MOTION OF
`SHING YIU NG FOR APPOINTMENT AS
`LEAD PLAINTIFF AND APPROVAL OF
`SELECTION OF LEAD COUNSEL;
`MEMORANDUM OF POINTS AND
`AUTHORITIES
`
`December 15, 2022
`Date:
`9:00 a.m.
`Time:
`Courtroom: 3 – 5th Floor
`Judge:
`Honorable 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
`CAPTIAL PTE LTD., NICHOLAS PLATIAS,
`and DO KWON,
`
`
`Defendants.
`
`
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` Case No. 5:22-cv-03600-BLF
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 2 of 14
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`TABLE OF CONTENTS
`
`NOTICE OF MOTION AND MOTION ................................................................................................ 1
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`MEMORANDUM OF POINTS AND AUTHORITIES ........................................................................ 2
`
`I.
`
`II.
`
`SUMMARY OF ARGUMENT .................................................................................................. 2
`
`STATEMENT OF ISSUES TO BE DECIDED .......................................................................... 3
`
`III.
`
`FACTUAL BACKGROUND ..................................................................................................... 3
`
`IV. ARGUMENT .............................................................................................................................. 5
`
`A.
`
`The Court Should Appoint Movant as Lead Plaintiff ..................................................... 5
`
`1.
`
`2.
`
`The Procedure Required by the PSLRA ............................................................. 5
`
`Movant Satisfies the Lead Plaintiff Provisions of the PSLRA ........................... 6
`
`a.
`
`b.
`
`Movant Filed a Timely Motion ............................................................... 6
`
`Movant Has the Largest Financial Interest in the Relief Sought ............ 7
`
`3.
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`Movant Meets Rule 23’s Typicality and Adequacy Requirements .................... 7
`
`a.
`
`b.
`
`Movant’s Claims Are Typical of the Claims the Class........................... 8
`
`Movant Will Adequately Represent the Class ........................................ 9
`
`B. Movant’s Choice of Counsel Should Be Approved ........................................................ 9
`
`V.
`
`CONCLUSION ......................................................................................................................... 10
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 3 of 14
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`TABLE OF AUTHORITIES
`
`Cases
`Abrams v. Intuitive Surgical, Inc.,
`No. 5:13-CV-01920-EJD, 2013 U.S. Dist. LEXIS 165873
`(N.D. Cal. Nov. 18, 2013) ................................................................................................................. 3
`Booth v. Strategic Realty Tr., Inc.,
`No. 13-cv-4921-JST, 2014 U.S. Dist. LEXIS 10501 (N.D. Cal. Jan. 27, 2014) .............................. 7
`In re Cavanaugh,
`306 F.3d 726 (9th Cir. 2002) ................................................................................................ 2, 6, 7, 8
`City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc.,
`No. 12-CV-06039-LHK, 2013 U.S. Dist. LEXIS 76416 (N.D. Cal. May 29, 2013) ....................... 8
`Crawford v. Honig,
`37 F.3d 485 (9th Cir. 1994) .............................................................................................................. 9
`Deinnocentis v. Dropbox, Inc.,
`19-cv-06348-BLF, 2020 U.S. Dist. LEXIS 8680 (N.D. Cal. Jan. 16, 2020) ................................ 7, 8
`Hanlon v. Chrysler Corp.,
`150 F.3d 1011 (9th Cir. 1998) .......................................................................................................... 8
`Johnson v. OCZ Tech. Grp.,
`No. CV 12-05265 RS, 2013 U.S. Dist. LEXIS 1610 (N.D. Cal. Jan. 4, 2013) ........................ 6, 7, 9
`Karinski v. Stamps.com, Inc.,
`No. CV 19-1828-R, 2019 U.S. Dist. LEXIS 227879 (C.D. Cal. June 5, 2019)................................ 9
`Krieger v. Atheros Commc’ns, Inc.,
`No. 11-CV-00640-LHK, 2011 U.S. Dist. LEXIS 147521 (N.D. Cal. Dec. 12, 2011) ..................... 8
`Vataj v. Johnson,
`19-cv-06996-HSG, 2020 U.S. Dist. LEXIS 21039 (N.D. Cal. Feb. 3, 2020) ................................... 8
`Statutes
`15 U.S.C. § 77k ....................................................................................................................................... 2
`15 U.S.C. § 77o ....................................................................................................................................... 2
`15 U.S.C. § 77z-1(a)(3)....................................................................................................................... 1, 2
`15 U.S.C. § 78j(b) ................................................................................................................................... 2
`15 U.S.C. § 78u-4(a)(3) ................................................................................................................. passim
`Regulations
`17 C.F.R. § 240.10b-5 ............................................................................................................................ 2
`
`
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 4 of 14
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`Rules
`Fed. R. Civ. P. 23(a) ...................................................................................................................... passim
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 5 of 14
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`NOTICE OF MOTION AND MOTION
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`TO THE COURT, ALL PARTIES, AND THEIR COUNSEL OF RECORD:
`PLEASE TAKE NOTICE that on December 15, 2022, at 9:00 a.m., or as soon as counsel may
`be heard, before the Honorable Beth Labson Freeman, at the United States District Court for the
`Northern District of California, San Jose Courthouse, Courtroom 3 – 5th Floor, 280 South 1st Street,
`San Jose, California 95113, Shing Yiu Ng (“Movant”) will and hereby does respectfully move this
`Court for an Order: (1) appointing Movant as Lead Plaintiff, pursuant to the lead plaintiff provisions
`of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), codified as Section 21D(a)(3)
`of the Securities Exchange Act of 1934, 15 U.S.C. § 78u-4(a)(3) and/or Section 27(a)(3) of the
`Securities Act of 1933, 15 U.S.C. § 77z-1(a)(3), on behalf of a putative Class consisting of all persons
`and entities, other than defendants and their affiliates, who purchased Terra Tokens between May 20,
`2021 and May 25, 2022, inclusive; (2) approving Movant’s selection of the law firm Bragar Eagel &
`Squire, P.C. (“BES”) as Lead Counsel for the putative Class; and (3) granting such other and further
`relief as the Court may deem just and proper.
`This Motion is made on the grounds that Movant believes he is the “most adequate plaintiff”
`under the PSLRA and, therefore, should be appointed Lead Plaintiff. Specifically, Movant believes
`that he has the “largest financial interest” in the relief sought by the Class and otherwise satisfies the
`requirements of Rule 23 of the Federal Rules of Civil Procedure because his claims are typical of other
`members of the Class and because he will fairly and adequately represent the Class.
`This Motion is made and based on this Notice, the accompanying Memorandum of Points and
`Authorities, the Declaration of Melissa A. Fortunato, the [Proposed] Order Appointing Movant as Lead
`Plaintiff and Approving Movant’s Selection of BES as Lead Counsel, and such other materials,
`evidence, and argument as may be presented at or prior to a hearing on the Motion.
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` Case No. 5:22-cv-03600-BLF
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 6 of 14
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`MEMORANDUM OF POINTS AND AUTHORITIES
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`Movant Shing Yiu Ng (“Ng” or “Movant”) hereby respectfully submits this Memorandum of
`Points and Authorities in support of his Motion for Appointment as Lead Plaintiff and Approval of
`Selection of Bragar Eagel & Squire, P.C. (“BES”) as Lead Counsel pursuant to the lead plaintiff
`provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), codified as Section
`27(a)(3) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77z-1(a)(3) (2013), and/or
`Section 21D(a)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-
`4(a)(3).1
`SUMMARY OF ARGUMENT
`I.
`Currently pending in this District is a securities class action lawsuit (the “Action”) brought on
`behalf of a “Class” consisting of all persons and entities, other than Defendants (defined below) and
`their affiliates, who purchased Terra Tokens between May 20, 2021 and May 25, 2022, inclusive (the
`“Class Period”). The Action alleges violations of Sections 5, 12(a)(1), and 15 of the Securities Act, 15
`U.S.C. §§ 77k and 77o, and Section 10(b) of the Exchange Act, 15 U.S.C. §§ 78j(b), as well as U.S.
`Securities
`and Exchange Commission
`(“SEC”) Rule 10b-5 promulgated
`thereunder,
`17 C.F.R. § 240.10b-52, against TerraForm Labs Ptd. Ltd. (“TFL” or the “Company”), Jump Crypto,
`Jump Trading LLC, Republic Capital, Republic Maximal LLC, Tribe Capital, DeFinance
`Capital/Definance Technologies Oy, GSR Markets Limited, and Three Arrows Capital Ptd Ltd.
`(collectively, the “Luna Foundation Guard”), and individual defendants Nicholas Platias and Do Kwon
`(together with the Luna Foundation Guard and TFL, the “Defendants”).
`The PSLRA creates a rebuttable presumption that the Court should appoint as lead plaintiff the
`movant that has the largest financial interest in the litigation and has also made a prima facie showing
`that he, she, or it is an adequate class representative under Rule 23 of the Federal Rules of Civil
`Procedure (“Rule 23”). See generally In re Cavanaugh, 306 F.3d 726 (9th Cir. 2002). Movant suffered
`
`
`1 Because the lead plaintiff provisions of the Securities Act and the Exchange Act are identical, only
`citations to the Exchange Act are provided herein.
`2 The Action also includes aiding and abetting, conspiracy, and unjust enrichment claims, as well as
`allegations of violations the Racketeer Influenced and Correct Organizations Act, 18 U.S.C. §§ 1961,
`et seq.
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 7 of 14
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`a financial loss of approximately $3,559,997.02 on his purchases of Terra Tokens.3 See Abrams v.
`Intuitive Surgical, Inc., No. 5:13-CV-01920-EJD, 2013 U.S. Dist. LEXIS 165873, at *6-7 (N.D. Cal.
`Nov. 18, 2013) (comparing losses when determining largest financial interest and appointing movant
`with “substantially larger” loss). As Movant has the largest loss and thus the largest financial interest
`recoverable by the Class, he is the presumptive lead plaintiff in the Action. Moreover, Movant satisfies
`the requirements of Rule 23 in that his claims are typical of the claims of the Class, and that he will
`fairly and adequately represent the interests of the Class. As such, Movant satisfies the standard under
`the PSLRA to be appointed as Lead Plaintiff.
`Accordingly, Movant respectfully requests that he be appointed Lead Plaintiff and his selection
`of BES be approved as Lead Counsel.
`STATEMENT OF ISSUES TO BE DECIDED
`II.
`1. Whether the Court should appoint Movant as lead plaintiff under the PSLRA; and
`2. Whether the Court should approve Movant’s selection of BES as Lead Counsel for the
`proposed Class.
`FACTUAL BACKGROUND4
`III.
`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 as the
`Terra ecosystem. ¶¶ 2, 31-32. TFL’s primary focus is developing, marketing, and selling a suite of
`digital assets and financial products withing the Terra ecosystem, including 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. ¶¶ 2, 32, 45-57. These digital assets are collectively
`
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`3 A signed certification identifying Ng’s TFL transactions during the Class Period, as required by the
`PSLRA is attached to the accompanying Declaration of Melissa A. Fortunato (“Fortunato Decl.” or
`“Fortunato Declaration”) as Exhibit 1.
`4 Citations to “¶ __” are to paragraphs of the Class Action Complaint for the Violations of the Federal
`Securities Laws filed on June 17, 2022 (the “Complaint”). ECF No. 1. The allegations set forth in the
`Complaint are incorporated herein by reference.
`
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 8 of 14
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`referred to as the “Terra Tokens” and are worth tens of billions of dollars in total market cap. ¶¶ 2, 45-
`57.
`
`Investors, including the Class members, paid fiat and/or cryptocurrencies in exchange for the
`Terra Tokens with the expectation of profit from either an increase in the price of particular Terra
`Tokens like Luna and the mirrored assets or from receiving interest payments for staking UST or other
`TFL governance tokens. E.g., ¶¶ 3, 61-88. This expectation was based on the efforts of Defendants to
`maintain the Terra ecosystem. Id. Defendants sell or sold the Terra Tokens from the retained supply
`and used the proceeds from the sales to fund TFL, to reward investors, and as governance tokens. Id.
`Even though the Terra Tokens bear all the hallmarks of being investment contracts and, thus, securities
`under the Howey test, no registration statements have been filed with the SEC with respect to the various
`Terra Tokens. Id.
`In addition to selling unregistered securities with the Terra Tokens, Defendants made a series
`of false and misleading statements regarding the largest Terra ecosystem digital assts by market cap,
`UST and LUNA, in order to induce investors into purchased these digital assets at inflated rates. E.g.,
`¶¶ 4, 89-123.
`TFL repeatedly touted the stability of UST as an “algorithmic” stablecoin that is paired to 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. E.g., ¶¶ 5, 89-123. As a part of this promotional campaign,
`TFL formed the Luna Foundation Guard – a group six venture capital groups that 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. ¶¶ 5, 38-44, 58-60. The Luna Foundation
`Guard and its members 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. E.g., ¶¶ 4-5, 58-60, 89-123.
`
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 9 of 14
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`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. ¶ 6. 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. Id.
`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. ¶¶ 7, 125-31. 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 UST and LUNA collapsed by approximately
`91% and 99.7%, respectively. Id.
`ARGUMENT
`IV.
`A.
`The Court Should Appoint Movant as Lead Plaintiff
`1.
`The Procedure Required by the PSLRA
`The PSLRA mandates that the Court decide the lead plaintiff issue “[a]s soon as practicable.”
`15 U.S.C. § 78u-4(a)(3)(B)(ii). The PSLRA establishes the procedure for appointment of the lead
`plaintiff in “each private action arising under [the Exchange Act] that is brought as a plaintiff class
`action pursuant to the Federal Rules of Civil Procedure.” 15 U.S.C. § 78u-4(a) and (a)(3)(B).
`The plaintiff who files the initial action must publish notice to the class within 20 days after
`filing the action, informing class members of their right to file a motion for appointment as lead
`plaintiff. 15 U.S.C. § 78u-4(a)(3)(A). The PSLRA requires the Court to consider, within 90 days of
`the publication date, all motions filed within 60 days after publication of that notice by any person or
`group of persons who are members of the proposed class to be appointed lead plaintiff. 15 U.S.C.
`§§ 78u-4(a)(3)(A)(i)(II) and (a)(3)(B)(i).
`The PSLRA creates a rebuttable presumption that the most “adequate plaintiff” to serve as lead
`plaintiff is the “person or group of persons” that:
`has either filed the complaint or made a motion in response to a notice;
`(aa)
`(bb)
`in the determination of the court, has the largest financial interest in the
`relief sought by the class; and
`
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
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`otherwise satisfies the requirements of Rule 23 of the Federal Rules of
`Civil Procedure.
`15 U.S.C. § 78u-4(a)(3)(B)(iii)(I); see also Cavanaugh, 306 F.3d at 729-30. The presumption may be
`rebutted only upon proof by a class member that the presumptively most adequate plaintiff “will not
`fairly and adequately protect the interests of the class” or “is subject to unique defenses that render such
`plaintiff incapable of adequately representing the class.” Id. at 741; 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II);
`Johnson v. OCZ Tech. Grp., No. CV 12-05265 RS, 2013 U.S. Dist. LEXIS 1610, at *4-5 (N.D. Cal.
`Jan. 4, 2013) (describing the Ninth Circuit’s three-part test to determine the most adequate plaintiff
`under the PSLRA).
`As set forth below, Movant has complied with the procedural prerequisites of the PSLRA and
`has, what is to the best of his knowledge, the largest financial interest in the litigation of any other Class
`member(s) seeking appointment as lead plaintiff. Movant is also unaware of any unique defenses
`against him that Defendants could raise. Therefore, Movant is entitled to the presumption that he is the
`most adequate plaintiff to represent the Class and, as a result, should be appointed lead plaintiff in the
`Action.
`
`Movant Satisfies the Lead Plaintiff Provisions of the PSLRA
`2.
`As described in further detail below, Movant should be appointed lead plaintiff because he
`satisfies all of the requirements of the PSLRA. Movant filed a timely motion to be appointed lead
`plaintiff, holds the largest financial interest in the relief sought by the Class, and satisfies the typicality
`and adequacy requirements of Rule 23.
`a.
`Movant Filed a Timely Motion
`On June 20, 2022, the plaintiff caused a notice (the “Notice”) to be published pursuant to
`Section 21D(a)(3)(A) of the Exchange Act, which announced that a securities class action had been
`filed against Defendants, and which advised putative Class members that they had 60 days to file a
`motion to seek appointment as a lead plaintiff in the Action.5
`Pursuant to the PSLRA and within the requisite time frame after publication of the required
`
`
`5 The Notice was published over Business Wire, a widely-circulated national business-oriented wire
`service. A copy of the Notice is attached as Exhibit 2 to the Fortunato Declaration.
`
`6
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`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 11 of 14
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`notice, Movant timely moves this Court to be appointed lead plaintiff on behalf of all members of the
`Class. Johnson, 2013 U.S. Dist. LEXIS 1610, at *6; see also 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I) (to be
`considered as lead plaintiff, person can “either file[] the complaint or [make] a motion in response to a
`notice”).
`
`Movant Has the Largest Financial Interest in the Relief Sought
`b.
`As demonstrated herein, Movant has the largest known financial interest in the relief sought by
`the Class. The movant who has the largest financial interest in this litigation and meets the adequacy
`and typicality requirements of Rule 23 is presumptively the lead plaintiff. Booth v. Strategic Realty
`Tr., Inc., No. 13-cv-04921-JST, 2014 U.S. Dist. LEXIS 10501, at *3-4 (N.D. Cal. Jan. 27, 2014) (citing
`Cavanaugh, 306 F.3d at 726-30).
`During the Class Period, Movant purchased Terra Tokens in reliance upon the materially false
`and misleading statements issued by Defendants and was injured thereby. Movant suffered a
`substantial loss of approximately $3,559,997.02. Movant thus has the greatest financial interest in the
`outcome of this Action. To the best of Movant’s knowledge, there are no other applicants who have
`sought, or are seeking, appointment as lead plaintiff that have a larger financial interest and also satisfy
`Rule 23.
`
`Movant Meets Rule 23’s Typicality and Adequacy Requirements
`3.
`According to 15 U.S.C. § 78u-4(a)(3)(B), in addition to possessing the largest financial interest
`in the outcome of the litigation, the lead plaintiff must also “otherwise satisf[y] the requirements of
`Rule 23 of the Federal Rules of Civil Procedure.” Rule 23(a) provides that a party may serve as a class
`representative 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 to class certification outlined in Rule 23, only two—typicality and
`adequacy—are recognized as appropriate for consideration at this stage. See Cavanaugh, 306 F.3d at
`730, n.5, 732; Deinnocentis v. Dropbox, Inc., No. 19-cv-06348-BLF, 2020 U.S. Dist. LEXIS 8680, at
`
`
`
` Case No. 5:22-cv-03600-BLF
`7
`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 12 of 14
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`*10-11 (N.D. Cal. Jan. 16, 2020). Furthermore, only a “preliminary showing” of typicality and
`adequacy is required at this stage. See Krieger v. Atheros Commc’ns, Inc., No. 11-CV-00640-LHK,
`2011 U.S. Dist. LEXIS 147521, at *8 (N.D. Cal. Dec. 12, 2011). The Court should limit its inquiry to
`the typicality and adequacy prongs of Rule 23(a), and defer examination of the remaining requirements
`until the lead plaintiff moves for class certification. See Cavanaugh, 306 F.3d at 732; Dropbox, 2020
`U.S. Dist. LEXIS 8680, at *10-11.
`As detailed below, Movant satisfies both the typicality and adequacy requirements of Rule 23,
`thereby justifying his appointment as Lead Plaintiff.
`a.
`Movant’s Claims Are Typical of the Claims the Class
`Under Rule 23(a)(3), typicality exists where “the claims . . . of the representative parties” are
`“typical of the claims . . . of the class.” Movant plainly meets the typicality requirement of Rule 23
`because: (i) he suffered the same injuries as the absent Class members; (ii) he suffered the injury as a
`result of the same course of conduct by Defendants; and (iii) his claims are based on the same legal
`issues. See City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Align Tech., Inc., No. 12-CV-
`06039-LHK, 2013 U.S. Dist. LEXIS 76416, at *11 (N.D. Cal. May 29, 2013); see also Hanlon v.
`Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998); Vataj v. Johnson, No. 19-cv-06996-HSG, 2020
`U.S. Dist. LEXIS 21039, at *6 (N.D. Cal. Feb. 3, 2020). Rule 23 does not require that the named
`plaintiff be identically situated with all class members. It is enough if his situation shares a common
`issue of law or fact. See id.
`In this case, the typicality requirement is met because Movant’s claims are typical, if not
`identical to the Class, and neither compete nor conflict with the claims of the other Class members.
`Movant, like the other members of the Class, acquired Terra Tokens during the Class Period at prices
`artificially inflated by Defendants’ materially false and misleading statements and was damaged
`thereby. Thus, Movant’s claims are typical, if not identical, to those of the other members of the Class
`because Movant suffered losses similar to those of other Class members and his losses result from
`Defendants’ common course of wrongful conduct. Accordingly, Movant satisfies the typicality
`requirement of Rule 23(a)(3).
`
`
`
` Case No. 5:22-cv-03600-BLF
`8
`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 13 of 14
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`Movant Will Adequately Represent the Class
`b.
`Under Rule 23(a)(4), the representative party must “fairly and adequately protect the interests
`of the class.” The PSLRA directs the Court to limit its inquiry regarding the adequacy of the movant
`to whether the interests of the movant are clearly aligned with the members of the putative Class and
`whether there is evidence of any antagonism between the interests of the movant and other members
`of the Class. 15 U.S.C. § 78u-4(a)(3)(B); see Karinski v. Stamps.com, Inc., No. CV 19-1828-R, 2019
`U.S. Dist. LEXIS 227879, at *4 (C.D. Cal. June 5, 2019); Crawford v. Honig, 37 F.3d 485, 487 (9th
`Cir. 1994) (citation omitted).
`Movant’s interests are clearly aligned with those of the other members of the Class. Movant
`has a significant and compelling interest in prosecuting the Action based on the large financial losses
`he suffered as a result of the wrongful conduct alleged in the Action. This motivation, combined with
`Movant’s identical interest with the members of the Class, demonstrates that Movant will vigorously
`pursue the interests of the Class. See Johnson, 2013 U.S. Dist. LEXIS 1610, at *8 (adequacy satisfied
`where interests are aligned with the class and where movant has compelling interest in resolving action
`due to heavy losses). There is no evidence of any antagonism between Movant’s interests and the
`Class’s.
`In addition, Movant has retained counsel highly experienced in prosecuting securities class
`actions and has submitted his choice to the Court for approval pursuant to 15 U.S.C. § 78u-
`4(a)(3)(B)(v). Therefore, Movant will prosecute the Action vigorously on behalf of the Class.
`Accordingly, at this stage of the proceedings, Movant has made the preliminary showing
`necessary to satisfy the typicality and adequacy requirements of Rule 23 and, therefore, satisfies
`15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).
`B. Movant’s Choice of Counsel Should Be Approved
`The PSLRA vests authority in the lead plaintiff to select and retain lead counsel, subject to
`Court approval. 15 U.S.C. § 78u-4(a)(3)(B)(v). The Court should not interfere with the lead plaintiff’s
`selection of counsel unless it is necessary “to protect the interests of the class.” 15 U.S.C. § 78u-
`4(a)(3)(B)(iii)(II)(aa).
`
`
`
` Case No. 5:22-cv-03600-BLF
`9
`NOTICE OF MOTION AND MOTION OF SHING YIU NG FOR APPOINTMENT AS LEAD
`PLAINTIFF AND APPROVAL OF SELECTION OF LEAD COUNSEL; MEMORANDUM OF
`POINTS AND AUTHORITIES
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`Case 5:22-cv-03600-BLF Document 28 Filed 08/19/22 Page 14 of 14
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`Movant has selected and retained BES as proposed Lead Counsel for the Class. The members
`of BES have extensive experience in successfully prosecuting complex securities class actions such as
`this, and are well-qualified to represent the Class. See Fortunato Decl., Ex. 4 (BES firm résumé).
`CONCLUSION
`V.
`For the foregoing reasons, Movant respectfully requests that this Court: (1) appoint Ng as Lead
`Plaintiff for the Class in the Action; (2) approve BES as Lead Counsel for the Class; and (3) grant such
`other and furth