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Mandalevy v. Bofi Holding, Inc.

United States District Court, S.D. California

November 7, 2017

BAR MANDALEVY, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
BOFI HOLDING, INC.; GREGORY GARRABRANTS; and ANDREW J. MICHELETTI, Defendants.

          ORDER APPOINTING LEAD PLAINTIFFS [ECF NOS. 3, 4, 5]

          HON. GONZALO P. CURIEL, UNITED STATES DISTRICT JUDGE

         Before the Court are three motions by putative-class members seeking to be appointed as lead plaintiff: one filed by Davis Grigsby (ECF No. 3), the second filed by the Philip Ricciardi, Larry Dooley, and Linda Ostermann (ECF No. 4), and the third filed by Joseph Shepard, David Siebert, Vickie Siebert, and Chao Wang (ECF No. 5). For the reasons set forth below, the Court APPOINTS David Grigsby, Joseph Shepard, and David Siebert as lead plaintiff in this action. Appointment of class counsel is deferred pending supplemental briefing by lead plaintiffs.

         I. Class Complaint

         According to the Class Action Complaint, Bof I Holding, Inc., is a holding company for “Bank of Internet USA, ” which provides consumer and business banking products in the United States. (ECF No. at 2 ¶ 2.) The complaint alleges that during the class period-April 28, 2016, through March 30, 2017-Defendants “made materially false and misleading statements regarding the Company's business, operational and compliance policies.” (Id. at 3 ¶ 4.) In light of these false and misleading statements, the complaint alleges, Bof I's share price fell approximately 5.26%, leading to substantial losses for investors. (Id. at 13 ¶ 31-32.) The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and the Securities and Exchange Commission's Rule 10b-5. (Id. at 16-20.)

         II. Legal Standard

         Under the Private Securities Litigation Reform Act (“PSLRA”), within 20 days after the class action securities complaint is filed, a public notice must be made advising members of the putative class of the pendency of the action, the claims asserted, and that any members of the purported class may move the court to serve as lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(A)(i). Not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class. Id.

         The Court must appoint as lead plaintiff “the member or members of the purported class that the court determines to be most capable of adequately representing the interests of class members.” Id. § 78u-4(a)(3)(B)(i). The presumptively most adequate plaintiff (the “PMAP”) is the person, or group of people, that “has either filed the complaint or made a motion” to be appointed lead plaintiff, “has the largest financial interest in the relief sought by the class, ” and makes a prima facie showing that he “otherwise satisfie[s] the requirement of Rule 23 of the Federal Rules of Civil Procedure.” Id. § 78u-4(a)(3)(B)(iii)(I); Tai Jan Bao v. SolarCity Corp., No. 14-cv-01435-BLF, 2014 WL 3945879, at *3 (N.D. Cal. Aug. 11, 2014). Of the four elements listed in Rule 23, the most important inquiries for purposes of appointing lead plaintiffs in a securities suit are typicality and adequacy. In re Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002).

         The Ninth Circuit has described the foregoing analysis as follows:

In other words, the district court must compare the financial stakes of the various plaintiffs and determine which one has the most to gain from the lawsuit. It must then focus its attention on that plaintiff and determine, based on the information he has provided in his pleadings and declarations, whether he satisfies the requirements of Rule 23(a), in particular those of “typicality” and “adequacy.”

Id. “The court must examine potential lead plaintiffs one at a time, starting with the one who has the greatest financial interest, and continuing in descending order if and only if the presumptive lead plaintiff is found inadequate or atypical.” Id. at 732. This presumption may be rebutted “only upon proof by a member of the purported plaintiff class that the [PMAP] . . . 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.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).

         III. Filings

         A. Motions for Appointment

         The Court received three motions for appointment of lead plaintiff within the 60 days after notice was published.

         i. David ...


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