Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-06956/USCOURTS-cand-3_17-cv-06956-2/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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STIP. AND [PROPOSED] ORDER Case No.: 3:17-cv-06956

Jennifer Pafiti (SBN 282790)

POMERANTZ LLP

468 North Camden Drive

Beverly Hills, CA 90210

Telephone: (818) 532-6499

E-mail: jpafiti@pomlaw.com

Attorney for Plaintiff

- additional counsel on signature page –

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

RONALD SGARLATA, Individually and on 

Behalf of All Others Similarly Situated,

Plaintiff,

v.

PAYPAL HOLDINGS, INC., DANIEL H. 

SCHULMAN, JOHN D. RAINEY JR., and 

HAMED SHAHBAZI, 

Defendants. 

Case No.: 3:17-cv-06956

STIPULATION AND [PROPOSED] 

ORDER

Date Action Filed: December 6, 2017

Case 3:17-cv-06956-EMC Document 39 Filed 03/29/18 Page 1 of 6 Case 3:17-cv-06956-EMC Document 41 Filed 03/30/18 Page 1 of 8
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STIP. AND [PROPOSED] ORDER 1 Case No.: 3:17-cv-06956

WHEREAS, the above-captioned action is a proposed class action alleging violations of 

the federal securities laws against PayPal Holdings, Inc. (“PayPal” or the “Company”), Daniel H. 

Schulman (“Schulman”), John D. Rainey Jr. (“Rainey”), and Hamed Shahbazi (“Shahbazi”)

(collectively, “Defendants”);

WHEREAS, this action is subject to the requirements of the Private Securities Litigation 

Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737 (1995) (the “PSLRA”), which sets forth 

specialized procedures for the administration of securities class actions;

WHEREAS, on December 6, 2017, pursuant to the PSLRA, counsel for plaintiff 

published a notice over Globe Newswire, advising PayPal investors of the pendency of this action 

and of their right to seek appointment as Lead Plaintiff in this action by filing a motion with the 

Court on or before February 5, 2018;

WHEREAS, on February 5, 2018, two putative class members moved the Court for 

appointment as Lead Plaintiff and approval of their respective selections of counsel: (i) Edwin 

Bell (“Bell”), proposing Pomerantz LLP (“Pomerantz”) as Lead Counsel (Dkt. No. 14); and (ii) 

Michael Eckert (“Eckert”), proposing The Rosen Law Firm, P.A. (“Rosen”) as Lead Counsel 

(Dkt. No. 10); 

WHEREAS, on March 15, 2018, the Court held a hearing with respect to the appointment 

of Lead Plaintiff and appointment of Lead Counsel in this action;

WHEREAS, on March 16, 2018, the Court entered an order appointing movants Michael 

Eckert and Edwin Bell (collectively, “Eckert and Bell”) as Interim Co-Lead Plaintiffs and 

approving their choices of Pomerantz and Rosen as Interim Co-lead Counsel (Dkt. No. 31);

WHEREAS, having found the initial PSLRA Notice did not mention a broader class 

definition, the Court ordered that notice be republished, and that the parties “to stipulate to a 

schedule for publishing an amended notice (which content shall be reviewed and approved by the 

Court), a consolidated amended complaint, and a briefing schedule for Defendants’ response to 

the consolidate amended complaint” (Dkt. No. 31);

WHEREAS, Interim Co-lead Counsel and counsel for Defendants PayPal, Schulman and 

Rainey have met and conferred with respect to the content and publication schedule of an 

Case 3:17-cv-06956-EMC Document 39 Filed 03/29/18 Page 2 of 6 Case 3:17-cv-06956-EMC Document 41 Filed 03/30/18 Page 2 of 8
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STIP. AND [PROPOSED] ORDER 2 Case No.: 3:17-cv-06956

amended PSLRA notice (the “Amended PSLRA Notice”); 

WHEREAS, since the filing of the Complaint on December 6, 2017, numerous law firms 

have issued press released advising PayPal investors that purchased securities during the Class 

Period of their right to seek appointment as lead plaintiff, but no putative class members other 

than Bell and Eckert have sought appointment; 

WHEREAS, with respect to the Amended PSLRA Notice, the Court has authority to order

a shorter period within which to move the Court for appointment as lead plaintiff than the sixty 

(60) days provided in the PSLRA;

WHEREAS, Interim Co-lead Counsel have communicated with counsel for defendant 

Shahbazi, a resident of Canada, with respect to service of summons and the complaint in the 

Action, are advised that Shahbazi’s counsel is not currently authorized to accept service, and are 

working to negotiate an arrangement by which Shahbazi will agree to accept service or effect 

service under the Hague Convention;

IT IS ACCORDINGLY STIPULATED, by and between the undersigned counsel for the 

parties, that:

1. Defendants PayPal, Schulman and Rainey hereby accept service of the summons and 

initial complaint in this action (Dkt. No. 1, 5);

2. A copy of the proposed Amended PSLRA Notice is submitted herewith as Exhibit A 

for the Court’s review and approval;

3. Within three (3) days after entry of an order approving the Amended PSLRA Notice, 

Interim Co-Lead Counsel shall publish the Amended PSLRA Notice over a national 

wire service;

4. Per the Amended PSLRA Notice, any additional motions for appointment as lead 

plaintiff and approval of lead counsel shall be due within sixty (60) days, or such other 

period that the Court deems appropriate, after publication of the Amended PSLRA 

Notice, and the parties do not object to an order providing for a shorter period of 

notice;

5. Interim Co-Lead Plaintiffs shall file an amended complaint within forty-five (45) days 

Case 3:17-cv-06956-EMC Document 39 Filed 03/29/18 Page 3 of 6

seventy-five (75) days

Case 3:17-cv-06956-EMC Document 41 Filed 03/30/18 Page 3 of 8
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STIP. AND [PROPOSED] ORDER 3 Case No.: 3:17-cv-06956

after the entry of an order by the Court approving this stipulation;C; 

6. Defendants PayPal, Schulman and Rainey shall file their response(s) to the amended 

complaint within thirty (30) days after the filing of the amended complaint;

7. If Defendants PayPal, Schulman or Rainey move to dismiss the amended complaint, 

Interim Co-Lead Plaintiffs’ opposition shall be due within thirty (30) days after the 

filing of the motion(s) to dismiss; and any replies shall be due within twenty (20) days 

after the filing of Interim Co-Lead Plaintiffs’ opposition.

Dated: March 29, 2018 POMERANTZ LLP

By: /s/ Louis Ludwig

Jennifer Pafiti

468 North Camden Drive

Beverly Hills, CA 90210

Phone: 818.532.6499

Email: jpafiti@pomlaw.com

Jeremy A. Lieberman

J. Alexander Hood II

600 Third Avenue, 20th Floor

New York, NY 10016

Phone: 212.661.1100

Fax: 212.661.8665

Email: jalieberman@pomlaw.com

ahood@pomlaw.com

Patrick V. Dahlstrom

Louis C. Ludwig

Ten South La Salle Street, Suite 3505

Chicago, IL 60603

Phone: 312.377.1181

Fax: 312.377.1184

Email: pdahlstrom@pomlaw.com

lcludwig@pomlaw.com

Interim Co-Lead Counsel

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STIP. AND [PROPOSED] ORDER 4 Case No.: 3:17-cv-06956

Dated: March 29, 2018 THE ROSEN LAW FIRM, P.A.

By: /s/ Laurence Rosen

Laurence Rosen

355 South Grand Avenue, Suite 2450

Los Angeles, CA 90071

Telephone: (213) 785-2610

Facsimile: (213) 226-4684

Email: lrosen@rosenlegal.com

Interim Co-Lead Counsel

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STIP. AND [PROPOSED] ORDER 5 Case No.: 3:17-cv-06956

Pursuant to Civil L.R. 5-1(i)(3), all signatories concur in filing this stipulation.

Dated: March 29, 2018 ORRICK, HERRINGTON & SUTCLIFFE LLP

By: /s/ Alexander K. Talarides

 ALEXANDER K. TALARIDES

 The Orrick Building

 405 Howard Street

 San Francisco, CA 94105-2669

 Telephone: (415) 773-5700

 Facsimile: (415) 773-5759

Counsel for Defendants PayPal Holdings, Inc., 

Daniel H. Schulman, and John D. Rainey Jr.

[PROPOSED] ORDER

PURSUANT TO STIPULATION, IT IS SO ORDERED.

Dated: 

Hon. Edward M. Chen

United States District Court Judge

Case 3:17-cv-06956-EMC Document 39 Filed 03/29/18 Page 6 of 6

(as modified on p. 2) 3/20/18

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IT IS SO ORDERED

AS MODIFIED

Judge Edward M. Chen

Case 3:17-cv-06956-EMC Document 41 Filed 03/30/18 Page 6 of 8
 

Pomerantz LLP and the Rosen Law Firm Announce the Pendency of a Class Action 

Against PayPal Holdings, Inc. and Certain Officers – PYPL

 

NEW YORK, [DATE] (GLOBENEWSWIRE) Pomerantz LLP and the Rosen Law 

Firm, interim Lead Counsel for Interim Lead Plaintiffs, announce that a class action 

lawsuit is pending against PayPal Holdings, Inc. (“PayPal” or the “Company”) 

(NASDAQ: PYPL) and certain of its officers. The class action was filed in United 

States District Court, for the Northern District of California, and docketed under 17-

cv-06956. Interim Lead Plaintiffs seek to represent a class consisting of investors who 

purchased or otherwise acquired common shares or options for common shares of 

PayPal between February 14, 2017 and December 1, 2017, both dates inclusive (the 

“Class Period”). Plaintiffs seek to recover compensable damages caused by 

Defendants’ violations of the federal securities laws and to pursue remedies under 

Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 

and Rule 10b-5 promulgated thereunder.

If you purchased or otherwise acquired PayPal common shares or options for 

common shares between February 14, 2017, and December 1, 2017, both dates 

inclusive, you have until [DATE], 2018, to ask the Court to appoint you as Lead 

Plaintiff for the class. 

PayPal operates as a technology platform company that provides online 

payment systems through a variety of services on behalf of consumers and 

merchants. On February 14, 2017, PayPal announced an agreement to purchase TIO 

Networks Corp. (“TIO”) for $233 million (the “TIO Acquisition”). TIO is a bill-pay 

management company that processed roughly $7 billion in bill payments on behalf of

14 million customers in 2016. On July 18, 2017, PayPal announced the completion of 

the TIO Acquisition.

The Complaint alleges that throughout the Class Period, Defendants made 

materially false and misleading statements regarding the Company’s business, 

operational and compliance policies. Specifically, Defendants made false and/or 

misleading statements and/or failed to disclose that: (i) TIO’s data security program 

was inadequate to safeguard the personally identifiable information of its users; (ii) 

the foregoing vulnerabilities threatened continued operation of TIO’s platform; (iii) 

PayPal’s revenues derived from its TIO services were thus unsustainable; (iv) 

consequently, PayPal had overstated the benefits of the TIO Acquisition; and (v) as a 

result, PayPal’s public statements were materially false and misleading at all relevant 

times.

Case 3:17-cv-06956-EMC Document 39-1 Filed 03/29/18 Page 1 of 2 Case 3:17-cv-06956-EMC Document 41 Filed 03/30/18 Page 7 of 8
On November 10, 2017, PayPal suspended its TIO services, pending a security 

review, stating that it had discovered security vulnerabilities on the TIO platform and 

that the TIO data security program did not meet PayPal’s standards.

On December 1, 2017, post-market, PayPal disclosed that personally 

identifiable information—including names, addresses, bank-account details, and 

Social Security numbers—for roughly 1.6 million TIO users had potentially been 

compromised as a result of the previously announced security vulnerabilities.

On this news, PayPal’s share price fell $4.33, or 5.75%, to close at $70.97 on 

December 4, 2017, the following trading day.

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