Malhotra v. Sonim Technologies, Inc.

Background

Ajay Malhotra's complaint, filed on behalf of a putative class, asserts claims under Sections 11 and 15 of the Securities Act against Sonim Technologies, Inc. and other defendants. Three sets of movants sought appointment as lead plaintiff and approval of lead counsel: David Sterrett; Lyndon Maither; and Ajay Malhotra and Andre Ling Bin Zulkifli.

Sterrett opposed Maither's motion, and Maither opposed Sterrett's motion. Malhotra and Zulkifli stated that they did not oppose the other motions. The court was not deciding the lead-plaintiff motions in this order. Instead, it addressed whether Maither should be allowed to respond to new material Sterrett submitted with his reply.

Legal standard and court's observations

Under the Private Securities Litigation Reform Act, the court must appoint the class member or members most capable of adequately representing the class. The court explained that, under Ninth Circuit precedent, the most capable plaintiff generally has the greatest financial stake, as long as the plaintiff satisfies Federal Rule of Civil Procedure 23's requirements of typicality and adequacy.

The court stated that it was undisputed Sterrett had the greatest loss. The filings asserted losses of $43,441.90 for Sterrett and between $15,200.39 and $19,951.65 for Maither. The court also found Sterrett's claims typical because he allegedly purchased Sonim shares after false or misleading statements about Sonim's financial condition and continued to hold the shares when the price allegedly fell after truthful disclosures.

For adequacy, Sterrett relied on statements that he had selected experienced counsel, had not purchased the securities at counsel's direction, and was willing to serve as a class representative and testify in support of the claims. Maither argued that Sterrett's motion lacked basic information about his background. Sterrett supplied additional background information in his reply, and the court said those facts, considered with the original motion, appeared sufficient to show that he could adequately represent the class.

Order

Because Sterrett first provided the additional background information in his reply, the court concluded that Maither had not had an opportunity to respond. The court afforded Maither a limited opportunity to file a surreply, restricted to three pages excluding exhibits, by January 15, 2020. Unless otherwise advised, the motions would stand submitted on that date. The court also vacated the January 10, 2020 hearing.

This order did not state a final decision appointing Sterrett, Maither, Malhotra, or Zulkifli as lead plaintiff, and it did not state a final ruling approving lead counsel.