Vataj v. Johnson

Background

Christopher Vataj filed this securities class action on October 25, 2019, on behalf of people other than the defendants who purchased or otherwise acquired PG&E securities between December 11, 2018, and October 11, 2019. The complaint alleged that, after PG&E’s bankruptcy following California wildfires, PG&E began rolling power outages to reduce the risk of future wildfires. It further alleged that individual PG&E officers made materially false or misleading statements by failing to disclose that PG&E’s wildfire-prevention and safety protocols were inadequate and that the company was unprepared for the outages.

Three movants initially sought appointment as lead plaintiff and approval of lead counsel under the Private Securities Litigation Reform Act of 1995 and the court’s local rules: Iron Workers Local 580 Joint Funds and Ironworkers Locals 40, 361 & 417 Union Security Funds, Robert Allustiarti, and Bob Vavla. Vavla later withdrew his motion. The Iron Workers Funds and Allustiarti then stipulated to serve as co-lead plaintiffs and selected Pomerantz LLP and The Rosen Law Firm, P.A. as co-lead counsel.

Appointment of Co-Lead Plaintiffs

The court applied the three-step process used to select a lead plaintiff in a securities class action:

1. Notice. The court found that notice of the case was published in Globe Newswire on the same day the complaint was filed, within the required 20-day period. The notice described the action, the asserted claims, the proposed class period, and the deadline for seeking appointment as lead plaintiff.

2. Presumptive lead plaintiff. The Iron Workers Funds and Allustiarti timely filed their motions. Together, they alleged approximately $768,000 in losses from purchases of PG&E securities. Because Vavla withdrew his motion, their stipulation was unopposed, and no other person claimed greater losses, the court found that they had the most to gain from the lawsuit.

The court also found that the proposed co-lead plaintiffs satisfied Rule 23(a)’s typicality and adequacy requirements. Their claims were typical because, like other proposed class members, they alleged that they bought PG&E securities at prices inflated by material misrepresentations and omissions and suffered damages. The court found them adequate because they represented that they had no conflicting interests with other class members, and their financial stake, timely motions, and briefing showed that they were motivated and capable of pursuing the litigation.

3. Opportunity to oppose. The court found that no one rebutted the proposed co-lead plaintiffs’ presumptive status. It therefore concluded that appointing the Iron Workers Funds and Allustiarti as co-lead plaintiffs was appropriate.

Appointment of Co-Lead Counsel

The court approved the selection of Pomerantz and The Rosen Law Firm, P.A. as co-lead counsel. It deferred to the co-lead plaintiffs’ choice because it found no serious reason to doubt the firms’ willingness or ability to perform their responsibilities. The court noted the firms’ experience in securities class actions and found that they would work cooperatively to represent the proposed class efficiently.

The court did not assign the two firms specific roles in the litigation. It ordered, however, that defense counsel could rely on agreements made with any appointed counsel or another authorized representative of appointed counsel, and that those agreements would bind all plaintiffs.

Disposition

The court granted the stipulation appointing co-lead plaintiffs and approving the selection of co-lead counsel. The order also terminated Docket Nos. 19 and 23. The excerpt provided ends during a further direction concerning filings within ten days of the order, so that direction is incomplete in the available text.