United States District Court, N.D. California
ORDER DENYING SINGER'S AND JORDAN'S MOTIONS
AND GRANTING THE PLYMOUTH GROUP'S MOTION FOR APPOINTMENT
AS LEAD PLAINTIFF AND APPROVAL OF LEAD COUNSEL RE: DKT. NOS.
13, 21, 23
HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE.
December 15, 2017, Plaintiff Arlis Hampton filed this
securities class action lawsuit individually and on behalf of
others who acquired common stock of Aqua Metals, Inc.
(“Aqua Metals”) during the period between May 19,
2016 and November 9, 2017 (“Class Period”) and
consequently suffered damages. Dkt. No. 1 (“Compl.”)
¶ 1. Also on December 15, 2017, notice of this suit was
published in Business Wire. See Dkt. No. 24
(“Lavallee Decl.”) Ex. 1. The complaint asserts
claims under §§ 10(b) and 20(a) of the Exchange Act
(15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 (17
C.F.R. § 240.10b-5). Compl. ¶ 16. The complaint
names the following defendants: Aqua Metals, Inc.
(“Aqua Metals”); Aqua Metals' Chief Executive
Officer, Stephen R. Clarke; Aqua Metals' Chief Financial
Officer until August 10, 2017, Thomas Murphy; and Aqua
Metals' Chief Financial Officer from August 10, 2017
until the end of the class period, Mark Weinswig. Compl.
competing motions for appointment as lead plaintiff and
approval of lead counsel are pending: (1) a motion filed by
Andrew Singer, seeking appointment of himself as lead
plaintiff and approval of Faruqi & Faruqi, LLP as lead
counsel, Dkt. No. 13; (2) a motion filed by Paul Jordan,
seeking appointment of himself as lead plaintiff and approval
of Glancy Prongay & Murray LLP as lead counsel, Dkt. No.
21; and (3) a motion filed by the Plymouth County Retirement
Association and Denis and Theresa Taillefer's private
company 1103371 Ontario Ltd., (collectively, the
“Plymouth Group”), seeking appointment of the
Plymouth Group as lead plaintiff and approval of Berman
Tabacco and Levi & Korsinsky as co-lead counsel
(“Plymouth Mot.”). Having carefully considered the
relevant filings and authorities, the Court hereby
DENIES the Singer and Jordan motions and
GRANTS the Plymouth Group's motion.
Metals is a company purportedly formed to recycle lead
through a process called “AquaRefining.” Compl.
¶ 2. Defendants allegedly made materially false or
misleading statements and failed to disclose problems Aqua
Metals was having in ramping up their lead recycling
processes. Id. ¶ 14. As a result of
Defendants' alleged omissions, when Aqua Metals stock
price declined, Plaintiffs (who acquired Aqua Metals
securities at artificially inflated prices during the Class
Period) suffered financial losses. See Id.
¶¶ 1, 15, 54.
Plaintiffs allege that Defendants concealed:
(1) that Aqua Metals' breaking and separating process was
facing substantial obstacles due to AquaRefining's need
for a much higher degree of separation than is normal in the
industry; (2) that the Company's breaking and separating
process was not operating reliably or efficiently; (3) that
the breaking and separating obstacles and issues were
negatively impacting the Company's output; (4) that the
Company's four “operating modules” were being
used primarily for experimentation, rather than production;
(5) that module operators were assisting with lead removal;
(6) that, as a result of the foregoing, the ramp up of the
Company's recycling process was being significantly
hindered and delayed; and (7) that, as a result of the
foregoing, Defendants' statements about Aqua Metals'
business, operations, and prospects, were materially false
and/or misleading and/or lacked a reasonable basis.
Id. ¶ 14.
November 9, 2017, after a series of allegedly incomplete
disclosures in May, August, and October of 2017, Aqua Metals
made an announcement revealing its struggles to become fully
operational. Id. ¶¶ 32-33, 45. Aqua Metals
stock declined by approximately 26%, 24%, 28%, and 2%
following the May, August, October, and November
announcements, respectively. Compl. ¶¶ 32-33,
37-38, 42. By November 14, 2017, Aqua Metals's stock
closed at $3.00 per share, down from $16.65 per share in
early May. Compl. ¶¶ 5, 13.
OF LEAD PLAINTIFF
Private Securities Litigation Reform Act
(“PSLRA”) “instructs district courts to
select as lead plaintiff the one ‘most capable of
adequately representing the interests of class
members.'” In re Cavanaugh, 306 F.3d 726,
729 (9th Cir. 2002) (quoting 15 U.S.C. §
78u-4(a)(3)(B)(i)). “The ‘most capable'
plaintiff-and hence the lead plaintiff-is the one who has the
greatest financial stake in the outcome of the case, so long
as he meets the requirements of Rule 23.” See
Id. The Ninth Circuit has interpreted the PSLRA as
establishing “a simple three-step process for
identifying the lead plaintiff pursuant to these
one consists of meeting the PSLRA's notice requirement.
See Id. “The first plaintiff to file an action
covered by the [PSLRA] must post this notice ‘in a
widely circulated national business-oriented publication or
wire service.'” Id. (quoting 15 U.S.C.
§ 78u-4(a)(3)(A)(i)). The notice must be published
within twenty days of the filing of the complaint. 15 U.S.C.
§ 78u-4(a)(3)(A)(i). The notice must also alert putative
class members “(I) of the pendency of the action, the
claims asserted therein, and the purported class period; and
(II) that, 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
notice was published in Business Wire on December
15, 2017. See Lavallee Decl. Ex. 1. This clearly
complied with the PSLRA's 20-day filing deadline.
See 15 U.S.C. § 78u-4(a)(3)(A)(i). Business
Wire is “a national, business-oriented news
service.” Lavallee Decl. ¶ 2. Thus, as required,
the notice was posted “in a widely circulated national
business-oriented publication or wire service.” See
Cavanaugh, 306 F.3d at 729 (quoting 15 U.S.C. §
78u- 4(a)(3)(A)(i)). Finally, the notice announced the filing
of this class action, described the asserted claims,
specified the putative class period, and explained that any
motion to be appointed ...