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In re Cloudera, Inc. Securities Litigation

United States District Court, N.D. California, San Jose Division

December 16, 2019

IN RE CLOUDERA, INC. SECURITIES LITIGATION

          ORDER APPOINTING LEAD PLAINTIFF AND LEAD COUNSEL RE: DKT. NOS. 17, 26, 34, 36, 43, 48, 54

          LUCY H.KOH UNITED STATES DISTRICT JUDGE

         This case is a putative securities class action brought against Defendant Cloudera, Inc. (“Cloudera”); its former Chief Executive Officer, Thomas J. Reilly; its Chief Financial Officer, Jim Frankola; and its former Chief Strategy Officer, Michael A. Olson (collectively, “Defendants”). Plaintiffs in this action are “purchasers of Cloudera common stock between April 28, 2017 and June 5, 2019, inclusive (the ‘Class Period').” ECF No. 1 (“Compl.”) ¶ 1. Before the Court are seven motions for appointment as lead plaintiff and approval of lead counsel.

         I. BACKGROUND

         Cloudera is a software company that specializes in “the provision of data management, machine learning, and advanced analytical tools to businesses.” Id. ¶ 11. Cloudera “offers a suite of applications . . . that allows its customers-generally large enterprises-to collect, store, organize, and analyze large amounts of data to improve their businesses.” Id. Plaintiffs allege that, throughout the Class Period, Cloudera misled shareholders by failing to disclose that:

(i) Cloudera was finding it increasingly difficult to identify large enterprises interested in adopting the Company's Hadoop-based platform; (ii) Cloudera needed to expend an increasing amount of capital on sales and marketing activities to generate new revenues, even as new revenue opportunities were diminishing; and (iii) Cloudera had materially diminished sales opportunities and prospects and could not generate annual positive cash flows.

Id. at ¶ 8. Plaintiffs claim that, as the public became aware of the truth, the market value of Cloudera's stock “precipitous[ly] decline[d], ” culminating in “significant losses and damages” for shareholders. See Id. ¶¶ 3-9.

         After the instant suit was filed and notice publicized regarding the pendency of this case, the Court received ten motions to appoint lead plaintiff and lead counsel. Three movants have since withdrawn from consideration:

(1) Plaintiff Vinay Gulati, who filed his motion for appointment as lead plaintiff on August 6, 2019, ECF No. 14, filed a notice of withdrawal on August 21, 2019, ECF No. 70;
(2) Plaintiffs Ketan Doshi and Brian Alves-Scari, who filed their motion for appointment as lead plaintiff on August 6, 2019, ECF No. 22, filed a notice of withdrawal on August 20, 2019, ECF No. 63;
(3) Plaintiffs Paresh Randeria and Shefali Randeria, who filed their motion for appointment as lead plaintiff on August 6, 2019, ECF No. 29, filed a notice of withdrawal on August 19, 2019, ECF No. 62.

         Because these motions have been formally withdrawn, they are no longer before the Court.

         Accordingly, seven motions for appointment of lead plaintiff remain pending. However, four additional movants have filed notices of non-opposition that concede that other movants have larger financial interests in the litigation:

(1) Plaintiffs Miami Fire Fighters' and Police Officers' Retirement Trust and Peoria Police Pension Fund, who filed their motion for appointment as lead plaintiff on August 6, 2019, ECF No. 26, filed a notice of non-opposition on August 20, 2019, ECF No. 64;
(2) Plaintiffs Michael Abramowitz and Edwin Muniz, who filed his motion for appointment as lead plaintiff on August 6, 2019, ECF No. 36, filed a notice of non-opposition on August 15, 2019, ECF No. 60;
(3) Plaintiff Raymond Gumm, who filed his motion for appointment as lead plaintiff on August 6, 2019, ECF No. 43, filed a notice of non-opposition on August 8, 2019; and
(4) Plaintiff Mohit Mahendra, who filed his motion for appointment as lead plaintiff on August 6, 2019, ECF No. 54, filed a notice of non-opposition on August 20, 2019, ECF No. 65.

         Although these four movants did not formally withdraw their motions, in light of their concessions, the Court DENIES these motions.

         Therefore, only three movants remain in contention for appointment as lead plaintiff:

(1) Plaintiff Kinja Dixon, who moved for appointment as lead plaintiff on August 6, 2019, ECF No. 17 (“Dixon Mot.”), filed an opposition on August 20, 2019, ECF No. 67 (“Dixon Opp'n”), and filed a reply on August 27, 2019, ECF No. 75 (“Dixon Reply”);
(2) Plaintiffs Boston Retirement System (“Boston Retirement”) and the Retail Wholesale Department Store Union Local 338 Retirement Fund (“Local 338”) (collectively, the “Boston Group”), who moved for appointment as lead plaintiff on August 6, 2019, ECF No. 48 (“Boston Mot.”), filed an opposition on August 20, 2019, ECF No. 66 (“Boston Opp'n”), and filed a reply on August 27, 2019, ECF No. 76 (“Boston Reply”); and
(3) Plaintiffs Marius J. Klin and the Mariusz J. Klin MD PA 401K Profit Sharing Plan (collectively, “Klin”), who moved for appointment as lead plaintiff on August 6, 2019, ECF No. 34 (“Klin Mot.”), filed an opposition on August 20, 2019, ECF No. 69 (“Klin Opp'n”), and filed a reply on August 27, 2019, ECF No. 75 (“Klin Reply”).

         Defendants filed a response on August 19, 2019, in which they took no position as to the appointment of lead plaintiff and lead counsel. ECF No. 61.

         Finally, Dixon, the Boston Group, and Klin all included in their motion a request that the Court consolidate the instant case, formerly captioned Christie v. Cloudera, Inc., Case No. 19-CV- 03221-LHK (“Christie Case”), with two other cases: Zarantonello v. Cloudera, Inc., Case No. 19-CV-04007, and Dvornic v. Cloudera, Inc. Case No. 19-CV-04310. On September 10, 2019, the Court consolidated the three cases. ECF No. 77.

         II. LEGAL STANDARD

         The Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u-4, governs the selection of a lead plaintiff in private securities class actions. In the PSLRA's own words, this plaintiff is to be the “most capable of adequately representing the interests of class members.” 15 U.S.C. § 78u-4(a)(3)(B)(i). Under the PSLRA, a three-step process determines the lead plaintiff. In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002). First, the first plaintiff to file an action governed by the PSLRA must publicize the pendency of the action, the claims made, and the purported class period “in a widely circulated national business-oriented publication or wire service.” 15 ...


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