United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOVANT KURAICA'S MOTION FOR
CONSOLIDATION OF ACTIONS, APPOINTMENT AS LEAD PLAINTIFF, AND
APPROVAL OF LEAD COUNSEL; TERMINATING COMPETING MOTIONS [RE:
ECF 28, 32, 36, 38]
LABSON FREEMAN UNITED STATES DISTRICT JUDGE
securities class action is brought on behalf of those who
purchased, or otherwise acquired Dropbox, Inc. stocks
pursuant to Dropbox Inc.'s (“Dropbox”)
registration statement issued in connection with the
Company's March 23, 2018 initial public offering (the
“IPO”). The complaint asserts claims under the
Securities Act of 1933 against Dropbox, the Company's
senior executive officers and directors, and the venture
capital sponsors of the IPO.
the Court are four competing motions to consolidate this
action with the related case Pikal v. Dropbox, Inc., et
al., No. 3:19-cv-06360-BLF (“Pikal Action”),
appoint lead plaintiff, and approve lead counsel. ECF 28, 32,
36, 38. Pursuant to Civil Local Rule 7-1(b), the Court finds
this matter suitable for submission without oral argument and
hereby VACATES the hearing set on January 30, 2020.
reasons stated below, the Court GRANTS Ognjen Kuraica's
motion for consolidation, APPOINTS Kuraica as lead plaintiff,
and APPROVES Levi & Korsinsky, LLP as lead counsel. The
competing motions are TERMINATED because (1) Luis Chavez has
withdrawn his motion and (2) Xiangqun Miao and Rick Gammiere
have informed the Court that they do not oppose Kuraica's
is a software and technology company, founded in 2007, and is
commonly known for its eponymous filesharing service.
Complaint (“Compl.”) ¶¶ 24-25, ECF 1.
Dropbox's Class A common stock trades on the NASDAQ under
the ticker symbol “DBX.” Id. ¶ 24.
On February 23, 2018, Dropbox filed a registration statement
for the IPO on Form S-1, which, after several amendments, was
declared effective on March 22, 2018 (the “Registration
Statement”). Id. ¶ 29. The Complaint
alleges that the Registration Statement “was
negligently prepared and, as a result, contained untrue
statements of material fact or omitted to state other facts
necessary to make the statements made not misleading and was
not prepared in accordance with the rules and regulations
governing its preparation.” Id. ¶ 30.
According to the Complaint, once “the truth”
emerged, Dropbox's stock fell 16% from the IPO price.
Id. ¶ 42.
October 4, 2019, Plaintiff Jason Michael Deinnocentis filed
this class action lawsuit individually and on behalf of all
persons who purchased Dropbox Class A common stock pursuant
or traceable to the Registration Statement. Compl. ¶ 1.
The action asserts claims under the Securities Act of 1933
(“Securities Act”) against Dropbox, the
Company's senior executive officers and directors, and
venture capital sponsors of the IPO. Id. On October
4, 2019, counsel for Deinnocentis caused a notice (the
“Notice”) to be published pursuant to Section
27(a)(3)(A) of the Exchange Act, which announced that a
securities class action had been filed against Dropbox and
certain of its officers, and advised putative class members
that they had 60 days to file a motion to seek appointment as
a lead plaintiff in the action. Declaration of Adam McCall
(“McCall Decl.”), Exh. C, ECF 33-3.
December 3, 2019, Xiangqun Miao, Ognjen Kuraica, Rick
Gammiere, and Luis Chavez filed competing motions for
appointment of lead plaintiff and lead counsel. ECF 28, 32,
36, 38. On December 16, 2019, Miao filed a notice of
non-opposition to the competing motions, noting that
“[h]aving reviewed the competing motions before the
Court, Miao does not appear to have the largest financial
interest in this litigation within the meaning of the
PSLRA.” ECF 55 at 1. On December 17, 2019, Chavez,
Kuraica, and Gammiere timely filed oppositions to the
competing lead plaintiff movants. ECF 56, 57, 59. On December
23, 2019, Gammiere filed a non-opposition to the appointment
of Kuraica as the lead plaintiff. ECF 60 at 2. On December
24, 2019, Chavez withdrew his motion for lead plaintiff. ECF
No. 61. Accordingly, Kuraica's motion is unopposed.
moves the Court to (1) consolidate this action with the Pikal
Action, (2) appoint Ognjen Kuraica as lead plaintiff, and (3)
approve Levi & Korsinsky, LLP as lead counsel. ECF 32.
All parties in the Pikal Action have consented to the
consolidation. See Pikal Action, ECF 21, 27, 30, 31.
Private Securities Litigation Reform Act of 1995
(“PSLRA”) provides that “[i]f more than one
action on behalf of a class asserting substantially the same
claim or claims arising under this subchapter has been filed,
” the Court shall not make the determination of the
most adequate plaintiff until “after the decision on
the motion to consolidate is rendered.” 15 U.S.C.
§ 77z-1(a)(3)(B)(ii). “As soon as practicable
after [the consolidation] decision is rendered, the court
shall appoint the most adequate plaintiff as lead plaintiff
for the consolidated actions[.]” Id.
actions before the court involve a common question of law or
fact, the court may . . . consolidate the actions.”
Fed.R.Civ.P. 42(a). District Courts have “broad
discretion under [Rule 42(a)] to consolidate cases pending in
the same district.” Investors Research Co. v. U.S.
Dist. Court for Cent. Dist. of California, 877 F.2d 777,
777 (9th Cir. 1989). “In determining whether or not to
consolidate cases, the Court should weigh the interest of
judicial convenience against the potential for delay,
confusion and prejudice.” Bodri v. Gopro,
Inc., 2016 WL 1718217, at *1 (N.D. Cal. Apr. 28, 2016)
(internal quotation marks and citation omitted).
case and the Pikal Action, both pending before this Court,
present similar factual and legal issues, as they each
involve the same subject matter and are based on the same
alleged wrongful course of conduct. Compare Compl.
with Pikal Action, ECF 1. Both cases bring claims
under the Securities Act of 1933 against Dropbox, the
Company's senior executive officers and directors, and
venture capital sponsors of the IPO, while the Pikal Action
also includes the underwriters of the IPO. Because the both
actions arise from the same facts and circumstances (namely,
statements made in Dropbox's Registration Statement) and
involve the same subject matter and the same class (persons
and entities who purchased Dropbox Class A common stock
pursuant the Registration Statement), the same discovery and
similar class certification issues will be relevant to all
related actions. Moreover, all parties in the Pikal Action
consent to the consolidation. See Pikal Action, ECF
21, 27, 30, 31. Accordingly, consolidation under Rule 42(a)