Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-00838/USCOURTS-cand-3_18-cv-00838-0/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

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LOGAN HESSEFORT, Individually and on 

Behalf of All Others Similarly Situated,

Plaintiff,

v.

SUPER MICRO COMPUTER, INC., et al.,

Defendants.

UNITED UNION OF ROOFERS, 

WATERPROOFERS & ALLIED 

WORKERS LOCAL UNION NO. 8 WBPA 

FUND, Individually and on Behalf of All 

Others Similarly Situated,

Plaintiff,

v.

SUPER MICRO COMPUTER, INC., et al., 

Defendants.

Case No. 18-cv-00838-JST 

ORDER GRANTING MOTION TO 

CONSOLIDATE, APPOINTING LEAD 

PLAINTIFF, AND APPROVING 

SELECTION OF COUNSEL

Re: ECF Nos. 12, 29

Case No. 3:18-cv-00850-JST

In these securities class actions, the Court now considers motions for consolidation and for 

appointment as lead plaintiff and approval of selected counsel for a securities class action. The 

New York Hotel Trades Council & Hotel Association of New York City, Inc. Pension Fund 

(“NYHTC”) filed one motion. ECF No. 12. The Oklahoma Police Pension and Retirement 

System (“Oklahoma Pension”) filed the second. ECF No. 29. The Court will grant NYHTC’s 

motion and appoint the pension fund as lead plaintiff, and their selected counsel. The Court will 

also consolidate the two related cases: Hessefort v. Super Micro Computer, Inc. No 3:18-cv-838

Case 3:18-cv-00838-JST Document 46 Filed 05/25/18 Page 1 of 7
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and United Union of Roofers, Waterproofers & Allied Workers Local Union No. 8 WBPA Fund v. 

Super Micro Computer, Inc. No. 3:18-cv-850.1

I. BACKGROUND

This is a federal securities class action on behalf of persons who purchased or otherwise 

acquired shares of Defendant Super Micro Computer Inc.’s securities between August 5, 2016 and 

January 30, 2018. ECF No. 12 at 2.2 Super Micro designs, develops, manufactures, and sells 

servers, motherboards and other computer parts and accessories. Id. at 3. The complaints allege 

that Super Micro made false and misleading statements and failed to disclose adverse information 

regarding the company. Id. 

Originally, four parties filed motions seeking appointment as lead plaintiff and approval of 

their selection of counsel. ECF Nos. 12, 17, 25, 29. Two of the parties subsequently withdrew or 

chose not to oppose, leaving NYHTC and the Oklahoma Pension as the remaining competing 

plaintiffs. ECF Nos. 33, 34.

II. LEGAL STANDARD

The Private Securities Litigation Reform Act of 1995 (“PSLRA”) provides that “[n]ot later 

than 20 days after the date on which the complaint is filed,” the plaintiff shall publish a notice 

alerting members of the purported class of the pendency of the action, the claims asserted, and the 

purported class period. 15 U.S.C. § 78u-4(3)(a)(i). The notice should also inform potential class 

members 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 class.” Id.

§ 78u-4(3)(a)(i)(II).

Under the PSLRA, “[t]he ‘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 [the proposed lead 

plaintiff] meets the requirements of Rule 23” of the Federal Rules of Civil Procedure. In re 

Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002). “While the PSLRA does not specify how to 

 

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The court related the two cases on May 8, 2018. 

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There is currently a difference between the class periods in the two related cases, which will be 

resolved upon the filing of a consolidated complaint. ECF No. 12 at 2 n.1. 

Case 3:18-cv-00838-JST Document 46 Filed 05/25/18 Page 2 of 7
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calculate the largest financial interest, approximate losses in the subject securities is the preferred 

measure.” Bruce v. Suntech Power Holdings Co., No. CV 12-04061 RS, 2012 WL 5927985, at *2 

(N.D. Cal. Nov. 13, 2012) (internal citation omitted). 

After the Court determines who the presumptive lead plaintiff is, other plaintiffs in the 

class are provided with “an opportunity to rebut the presumptive lead plaintiff’s showing that it 

satisfies Rule 23’s typicality and adequacy requirements.” Cavanaugh, 306 F.3d at 730. “If, as a 

result of this process, the district court determines that the presumptive lead plaintiff does not meet 

the typicality or adequacy requirement, it then must proceed to determine whether the plaintiff 

with the next lower stake in the litigation has made a prima facie showing of typicality and 

adequacy.” Id. at 731.

“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). “[I]f the lead plaintiff has made a 

reasonable choice of counsel, the district court should generally defer to that choice,” and “should 

not reject a lead plaintiff’s proposed counsel merely because it would have chosen differently.” 

Cohen v. U.S. Dist. Court for N. Dist. of California, 586 F.3d 703, 711-12 (9th Cir. 2009).

III. DISCUSSION

A. Consolidation

Under the PSLRA, the Court must decide whether to consolidate related actions prior to 

selecting a plaintiff. 15 U.S.C. § 78u-4(a)(3)(B)(ii). 

NYHTC argues the Court should consolidate the cases under Federal Rule of Civil 

Procedure Rule 42(a) because both involve “virtually identical factual and legal issues.” ECF No. 

12 at 5. The Oklahoma Pension argues the case should be consolidated for similar reasons. ECF 

No. 29-1 at 18. No party opposes the motions to consolidate. ECF No. 37 at 7 n.1.

Rule 42(a) provides that a court may consolidate cases which “involve a common question 

of law or fact.” Fed. R. Civ. P. 42(a). “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.’” Zhu v. UCBH Holdings, Inc., 682 F. Supp. 2d 1049, 1052 (N.D. Cal. 2010) 

(quoting Southwest Marine, Inc. v. Triple A Machine Shop, Inc., 720 F. Supp. 805, 806–807 (N.D. 

Case 3:18-cv-00838-JST Document 46 Filed 05/25/18 Page 3 of 7
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Cal. 1989)). “Courts have recognized that class action shareholder suits are particularly well 

suited to consolidation pursuant to Rule 42(a) because unification expedites pretrial proceedings, 

reduces case duplication, avoids the need to contact parties and witnesses for multiple 

proceedings, and minimizes the expenditure of time and money for all parties involved.” Miami 

Police Relief & Pension Fund v. Fusion-io, Inc., No. 13-CV-05368-LHK, 2014 WL 2604991, at 

*3 (N.D. Cal. June 10, 2014) (citing In re Equity Funding Corp. of Am. Sec. Litig., 416 F. Supp. 

161, 176 (C.D. Cal. 1976)).

These related cases address nearly identical factual issues and legal claims. Given this 

factual and legal overlap, judicial convenience and a just resolution of the parties’ claims would be 

best served through consolidation. The Court grants the motions for consolidation. 

B. Largest Financial Interest

NYHTC argues it is the most adequate plaintiff because it sustained $180,622 in losses. 

ECF No. 12 at 7. The Oklahoma Pension sustained $172,826 in losses. ECF No. 29-1 at 8. The 

Oklahoma Pension argues that the difference in losses is de minimis and therefore should not 

control the selection of lead plaintiff. ECF No. 36 at 3, 7-8. Neither has the Court found 

persuasive authority, nor have the parties provided any to the Court, suggesting that the Court 

should not determine that a plaintiff has largest financial share when its lead is small. To the 

contrary, courts in this circuit have concluded that any financial difference is meaningful in 

determining a lead plaintiff. See, e.g., Hall v. Medicis Pharm. Corp., No. CV08-1821PHX-GMS, 

2009 WL 648626, at *6 (D. Ariz. Mar. 11, 2009) (“[T]he Court cannot rely on the fact that the 

difference between Steamfitters and Rand is only a few hundred dollars. Rand has a greater 

financial stake in the controversy, however minute that greater stake may be in relation to the 

overall damage claim.”); Ferrari v. Gisch, 225 F.R.D. 599, 605 (C.D. Cal. 2004) (“Although the 

Massachusetts Group concludes that the ‘de minimus’ difference of $26,000 should not be 

conclusive on the financial interest determination, the Ninth Circuit has given no indication that 

courts are free to ignore the statutory presumption given to the plaintiff with the “largest financial 

interest in the relief sought by the class.”) (citing Cavanaugh, 306 F.3d at 732). The Court 

concludes that NYHTC has the greatest financial stake in the outcome of the case, and is the 

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presumptive lead plaintiff. 

C. Rule 23

Once a movant has demonstrated that it has the largest financial interest, it need only make 

a prima facie showing of its typicality and adequacy. See Cavanaugh, 306 F.3d at 730-31. “The 

test of 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.” City of Royal Oak Ret. Sys. v. Juniper 

Networks, Inc., No. 5:11-CV-04003-LHK, 2012 WL 78780, at *5 (N.D. Cal. Jan. 9, 2012) (citing 

Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992)). “The test for adequacy is 

whether the class representative and his counsel ‘have any conflicts of interest with other class 

members’ and whether the class representative and his counsel will ‘prosecute the action 

vigorously on behalf of the class.’” Id. (quoting Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir.

2003)).

NYHTC argues that it is a typical plaintiff because it purchased Super Micro securities and 

suffered harm when defendants’ alleged misconduct was revealed, and it “is not aware of any 

conflicts between its claims and those asserted on behalf of the putative class and is not subject to 

any unique defenses.” ECF No. 12 at 8. As for adequacy, NYHTC argues that it is a sophisticated 

institutional investor with a substantial interest in the litigation. Id. at 7-8. 

According to the Oklahoma Pension, a post-disclosure stock purchase by NYHTC raises 

“potential concerns” regarding NYHTC’s “ability to adequately represent the proposed class.” 

ECF No. 36 at 4. Super Micro announced on August 29, 2017 that it would not timely file its 

Form 10-K, and NYHTC purchased 1,581 shares the next day, incurring $11,000 in losses. Id. at 

3. According to the Oklahoma Pension, this post-disclosure purchase subjects NYHTC to unique 

defenses. Id. 

The weight of authority is substantially against Oklahoma Pension’s argument and 

“favor[s] the position that the purchase of stock after a partial disclosure is not a per-se bar to 

satisfying the typicality requirement.” In re Connetics Corp. Sec. Litig., 257 F.R.D. 572, 577 

(N.D. Cal. 2009) (concluding as much at the more rigorous class certification stage); see also

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Hufnagle v. Rino Int’l Corp., No. CV 10-8695-VBFVBKX, 2011 WL 710704, at *8 (C.D. Cal. 

Feb. 14, 2011), adopted, No. CV 10-1754-VBFVBKX, 2011 WL 710676 (C.D. Cal. Feb. 16, 

2011) (concluding purchases after disclosures do not destroy typicality). Moreover, “other class 

members also presumably purchased after [the] first corrective disclosure and during the 

disclosure period.” In re Countrywide Fin. Corp. Sec. Litig., 273 F.R.D. 586, 602 (C.D. Cal. 

2009). Oklahoma Pension quotes selectively from Faris v. Longtop Fin.Techs. Ltd., No. 11 Civ. 

3658-SAS, 2011 WL 4597553, at *8 (S.D.N.Y. Oct. 4, 2011) to suggest the case held that that 

court saw “‘no reason to subject the class to this potential defense where there is another movant’ 

that does not suffer from the same potential unique defenses arising from post-disclosure trading.” 

ECF No. 38 at 5-6. But in fact, the Faris court appointed a lead plaintiff that did purchase some of 

its shares after a corrective disclosure, as the full quote from the case makes clear. Faris, 2011 

WL 4597553, at *8 (“But this Court sees no reason to subject the class to this potential defense 

where there is another movant, Danske–Local One, that purchased the vast majority of its Longtop 

shares before the first corrective disclosure was made on April 26, 2011.”). 

Moreover, even as compared to the few cases which have concluded that post-disclosure 

purchases defeated typicality, NYHTC purchased a much smaller percentage – less than 5% of its 

total shares – after the disclosure than did other plaintiffs who were disqualified. See In re 

Valence Tech. Sec. Litig., No. C 95-20459 JW, 1996 WL 119468, at *5 (N.D. Cal. Mar. 14, 1996)

(finding plaintiff who tripled their shares post-disclosure was atypical); Faris, 2011 WL 4597553, 

at *8 (purchasing 87% of shares post-disclosure can render plaintiff atypical).

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The Court 

concludes that, at least at this preliminary stage, NYHTC has demonstrated adequacy and 

typicality. 

D. Selection of Counsel

“Once a lead plaintiff is chosen, that plaintiff may select its counsel, subject to approval of 

the court.” Suntech Power Holdings Co., 2012 WL 5927985, at *3 (citing 15 U.S.C. § 78u–

 

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Similarly, the case on which the Oklahoma Pension heavily relies, Erickson v. Snap, Inc., 2:17-

cv-3679-SVW-AGR (C.D. Cal. Sept. 18, 2017), ECF No. 54 at 4, involved a 60% purchase after a 

disclosure. 

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4(a)(3) (B)(iv)). So long as the lead plaintiff has made “a reasonable choice of counsel, the district 

court should generally defer to that choice.” Cohen, 586 F.3d at 712. NYHTC selected Robbins 

Geller Rudman & Dowd, LLP to serve as led counsel, and this designation is approved. ECF No. 

12 at 8. Robbins Geller has experience as lead counsel in securities class action lawsuits, 

including lawsuits in this district. Id. The Court approves lead plaintiff’s choice of counsel. 

CONCLUSION

The Court grants the motions to consolidate the cases. The Court also grants NYHTC’s 

motion for appointment as lead counsel and approval of selection of counsel. The Court denies 

the Oklahoma Pension’s motion for appointment as lead plaintiff and approval of selection of 

counsel. 

IT IS SO ORDERED.

Dated: May 25, 2018

______________________________________

JON S. TIGAR

United States District Judge

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