Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_23-cv-01816/USCOURTS-caed-2_23-cv-01816-10/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:78m(a) Securities Exchange Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

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In re ORIGIN MATERIALS, INC. 

SECURITIES LITIGATION

No. 2:23-cv-01816 WBS JDP

MEMORANDUM AND ORDER RE: 

MOTIONS TO APPOINT LEAD 

PLAINTIFF AND COUNSEL

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Unnamed plaintiffs in these consolidated putative class 

actions allege that defendant Origin Materials, Inc. and certain 

of its officers violated the Securities and Exchange Act. Before 

the court are five motions to appoint a lead plaintiff and 

approve their selection of class counsel, filed by movants 

Nicholas Agapis (Docket No. 13), Carter Family Investors (Docket 

No. 14), FNY Partners Fund LP and Peter Di Murro (“FNY Group”) 

(Docket No. 17), Todd Frega (Docket No. 20), and Steven Park 

(Docket No. 21).1 

1 Agapis and Park subsequently filed statements of nonopposition to the competing motions. (Docket Nos. 24, 31.) The 

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I. Lead Plaintiff

The Private Securities Litigation Reform Act of 1995

(“PSLRA”) establishes a three-step process for selecting a lead 

plaintiff. “In step one, notice of the action must be posted so 

purported class members can move for lead plaintiff appointment.” 

In re Mersho, 6 F.4th 891, 899 (9th Cir. 2021) (citing 15 U.S.C. 

§ 78u-4(a)(3)(A)(i)(I)–(II)). Upon publication of the notice, 

members of the putative class have 60 days to move for 

appointment as lead plaintiff. 15 U.S.C. § 78u4(a)(3)(A)(i)(II).

“In step two, the district court must determine which 

movant is the ‘most adequate plaintiff,’ which is defined as the 

plaintiff ‘most capable of adequately representing the interests 

of class members.’” Id. (quoting 15 U.S.C. § 78u-4(a)(3)(B)(i)). 

“To do so, the district court must ‘adopt a presumption that the 

most adequate plaintiff’ is the movant with the largest financial 

interest who ‘otherwise satisfies the requirements of Rule 23 of 

the Federal Rules of Civil Procedure.’” Id. (quoting 15 U.S.C. § 

78u-4(a)(3)(B)(iii)(I)). “This means the district court must 

identify which movant has the largest alleged losses and then 

determine whether that movant has made a prima facie showing of 

adequacy and typicality. Once the district court has determined 

that the movant with the largest stake has made a prima facie 

showing of adequacy and typicality, that movant ‘becomes the 

presumptively most adequate plaintiff.’” Id. (quoting In re 

Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002)). “If the movant 

court will therefore deny their motions. (Docket Nos. 13, 21.)

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with the largest losses does not satisfy the Rule 23 

requirements, the district court must then look to the movant 

with the next largest losses and repeat the inquiry. At this 

step, the process is not adversarial, so the Rule 23 

determination should be based on only the movant’s pleadings and 

declarations.” Id.

“At step three, the process ‘turns adversarial.’” Id.

(quoting Cavanaugh, 306 F.3d at 730). “The presumption may be 

rebutted ‘only upon proof by a member of the purported plaintiff 

class 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. (quoting 15 

U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa)–(bb)).

A. Step One

The required notice was published on August 25, 2023. 

(See Docket No. 13-2.) The potential lead plaintiffs timely 

filed motions on August 24, 2023, which is sixty days from the 

date of publication. (See Docket Nos. 13, 14, 17, 20, 21.) The

procedural requirements of step one have therefore been 

satisfied.

B. Step Two

It is undisputed that FNY Group has the largest 

financial stake, with $765,110.88 in reported losses. (See

Docket No. 18-3 at 5.) Frega reported $275,912 in losses and 

Carter Family Investors reported $196,003.07 in losses. (See

Docket No. 20-5 at 8; Docket No. 15-5 at 2-11.) Agapis and Park 

have filed statements of non-opposition to the competing motions, 

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acknowledging that they lack the largest financial interest. 

(See Docket Nos. 24, 31.) 

Having concluded that FNY Group has the largest 

financial stake, the court next determines whether FNY Group has 

made a prima facie showing of typicality and adequacy. 

Typicality requires that named plaintiffs have claims 

“reasonably coextensive with those of absent class members,” but 

their claims do not have to be “substantially identical.” Hanlon 

v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)), 

overruled on other grounds by Wal-Mart Stores, Inc. v. Dukes, 564 

U.S. 338 (2011). The test for typicality “is whether other 

members have the same or similar injury, whether the action is 

based on conduct which is not unique to the named plaintiffs, and 

whether other class members have been injured by the same course 

of conduct.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th 

Cir. 1992) (internal citation omitted).

To resolve the question of adequacy, the court must 

consider two factors: (1) whether the named plaintiff and her 

counsel have any conflicts of interest with other class members, 

and (2) whether the named plaintiff and her counsel will 

vigorously prosecute the action on behalf of the class. In re 

Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 566 (9th Cir. 

2019). 

While the PSLRA “expressly allows a ‘group of persons’ 

to move for appointment,” Mersho, 6 F.4th at 899 (quoting 14

U.S.C. § 78u-4(a)(3)(B)(iii)(I)), a court may scrutinize a 

plaintiff group’s “cohesion” as part of the adequacy analysis at 

step two, see id. at 901. “Many district courts have considered 

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the lack of a pre-litigation relationship as part of their 

adequacy analysis at step two because it may indicate that 

members may not work together well to vigorously prosecute the 

litigation or they might not be able to control counsel.” Id.

“District courts often consider a pre-litigation relationship 

along with other factors such as the size of the group, how the 

members found their counsel, and the prosecution procedures set 

out in their filings.” Id.

The court concludes that FNY Group has failed to 

establish that its members will operate cohesively in prosecuting 

the case. There is nothing in the record explaining how FNY 

Partners Fund, an investment fund based in New York, and Di 

Murro, an individual investor based in Ontario, Canada, became 

acquainted or what their relationship is. They do not even share

the same counsel, instead proposing that two law firms serve as 

lead counsel. Their joint declaration provides bare assertions 

that they will “provide comprehensive, responsible, and vigorous 

representation of the class” and “work jointly to monitor and 

direct the efforts and activities of our proposed lead counsel.” 

(Docket No. 18-4 ¶¶ 5-6). They state that they discussed their 

“joint leadership, decision-making, and oversight of this 

litigation.” (Id. ¶ 7.) Yet there is no explanation of how 

their relationship and the relationship between the two firms 

will actually operate, particularly in the event of potential 

disagreements.

Given this dearth of information, it appears possible 

that vigorous prosecution of the action would be disrupted by 

decision-making conflicts between FNY Partners Fund and Di Murro

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or between their counsel. For those reasons, the court therefore 

concludes that FNY Group has not made a prima facie showing of 

adequacy because “it has not sufficiently justified its 

composition of unrelated investors with no disclosed decisionmaking structure.” See In re Cloudera, Inc. Sec. Litig., No. 19-

cv-03221 LHK, 2019 WL 6842021, at *6 (N.D. Cal. Dec. 16, 2019)

(cited with approval in Mersho, 6 F.4th at 901–02).2

The court next turns to Frega, the movant with the 

second largest financial stake. Frega, an individual investor,

purchased Origin securities during the class period and allegedly

suffered damages due to defendants’ misrepresentations. (See

Docket Nos. 20-4, 20-5.) Frega has therefore made a prima facie 

showing of typicality because he acted similarly and suffered a 

similar injury to other putative class members due to the same 

course of conduct by defendants. See Hanon, 976 F.2d at 508. 

Further, Frega has the same interests as other putative class 

members and his substantial financial interest incentivizes him 

to vigorously pursue the interests of the class. Frega’s 

selected counsel appear to be experienced in securities 

litigation. (See Docket Nos. 20-6, 20-7.) Frega’s motion and 

supporting evidence thus indicate that there are no conflicts of 

interest with other class members and that he and his counsel 

will vigorously prosecute the action. See Hyundai & Kia, 926 

F.3d at 566. Frega has therefore made a prima facie showing of 

adequacy. Accordingly, the court concludes that Frega is the 

presumptive lead plaintiff. 

2 Because FNY Group has failed to make a prima facie 

showing of adequacy, the court need not consider its typicality.

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C. Step Three

To rebut the presumption that Frega is the most 

adequate plaintiff, competing movant Carter Family Investors 

argues that Frega is atypical because he is susceptible to the 

day trader defense. Investors subject to the day trader defense

“are those who ‘purchased stock during the period of 

misrepresentation but sold it before any disclosure which either 

partially or completely corrected the misrepresentation.’” Hurst 

v. Enphase Energy, Inc., No. 20-cv-04036 BLF, 2020 WL 7025085, at 

*7 (N.D. Cal. Nov. 30, 2020) (quoting Wool v. Tandem Comput., 

Inc., 818 F.2d 1433, 1437 (9th Cir. 1987), overruled on other 

grounds by Holligner v. Titan Capital Corp., 914 F.2d 1564, 1575 

(9th Cir. 1990)). “Courts have long recognized an inherent 

conflict between the interests of day or in-and-out traders and 

those of retention traders,” id., because day traders “typically 

focus on technical price movements . . . and therefore are 

subject to a defense th[at] they would have purchased the stock 

at issue regardless of the misstatement/omission,” Applestein v. 

Medivation Inc., No. 10-cv-00998 MHP, 2010 WL 3749406, at *3 

(N.D. Cal. Sept. 20, 2010) (internal quotation marks and 

alteration omitted).

Frega did exhibit trading behavior involving the 

purchase and sale of Origin stock within the same day. (See

Docket Nos. 20-4, 20-5.) However, it does not appear that Frega 

was exclusively a day trader in the relevant sense. Frega

consistently held tens of thousands of shares throughout the 

class period, including after Origin’s corrective disclosure. 

(See id.) After Frega’s initial purchases totaling 40,000 

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shares, he continued to buy and sell shares throughout the class 

period. (See Docket No. 20-4.) Based on the court’s 

calculations, his balance of shares following each sale ranged 

from 42,000 to 77,380. (See id.) As of August 9, 2023, the date 

of the corrective disclosure, he held more than 70,000 shares. 

(See id.) Frega only liquidated his position months following 

the corrective disclosure. (See Docket No. 20-5.)

Frega’s trading history indicates that he was a longerterm investor in Origin who would have relied on more than merely 

daily price fluctuations, and thus would not be subject to the 

day trader defense. See In re Snap Inc. Sec. Litig., 334 F.R.D. 

209, 228 (C.D. Cal. 2019) (plaintiffs with history of frequent 

trading were not atypical because they also maintained shares 

during class period and liquidated position only after corrective

disclosure); Stoopler v. Direxion Shares ETF Tr., No. 09-cv-8011 

RJH, 2010 WL 3199679, at *4 (S.D.N.Y. Aug. 12, 2010), as 

corrected (Aug. 16, 2010) (plaintiff who day traded was not 

atypical because he also “purchased and held a large number of 

shares over a longer time period, and [therefore] suffered the 

same types of losses [as other putative class members]”).

Competing movants have therefore failed to offer proof that Frega 

is atypical. See Hanon, 976 F.2d at 509 (“the defense of nonreliance is not a basis for” finding that a plaintiff is atypical 

unless “a major focus of the litigation will be on a defense 

unique to him”).

Because the court finds that Frega is the most adequate 

plaintiff, the court appoints Frega as lead plaintiff in this 

action.

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II. Class Counsel

“The most adequate plaintiff shall, subject to the 

approval of the court, select and retain counsel to represent the 

class.” 15 U.S.C. § 78u–4(a)(3)(B)(v). “Although this power is 

subject to court approval and is therefore not absolute, it 

plainly belongs to the lead plaintiff.” Cohen v. U.S. Dist. 

Court for the Northern Dist. of Cal., 586 F.3d 703, 709 (9th Cir.

2009).

The court has reviewed the resumes of Frega’s selected 

lead counsel, New-York based firm Bernstein Liebhard LLP, and 

liaison counsel,3 San Francisco-based firm Bragar Eagel & Squire, 

P.C., and is satisfied that the lead plaintiff has made a 

reasonable choice of counsel. (See Docket Nos. 20-6, 20-7.) 

Accordingly, the court will approve the lead plaintiff’s 

selection of counsel.

IT IS THEREFORE ORDERED THAT movant Todd Frega’s motion 

for appointment of lead plaintiff and counsel (Docket No. 20) be, 

and the same hereby is, GRANTED. Frega is appointed as lead 

plaintiff. Bernstein Liebhard LLP is appointed as lead counsel 

and Bragar Equal & Squire, P.C., is appointed as liaison counsel.

The competing motions for appointment of lead plaintiff 

and counsel (Docket Nos. 13, 14, 17, 21) are DENIED.

Dated: December 14, 2023

3 “Liaison counsel” is equivalent to local counsel. See

Lamontagne v. Tesla, Inc., No. 23-cv-00869 AMO, 2023 WL 4353146, 

at *3 (N.D. Cal. July 5, 2023) (quoting Manual for Complex 

Litigation (Fourth) § 10.221 (2004)) (liaison counsel serves an 

“administrative role” and “‘will usually have offices in the same 

locality as the court’”).

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