Pardi v. Tricida, Inc.

Background

The court received six competing motions to serve as lead plaintiff and lead plaintiffs’ counsel in this proposed securities class action. Michael Clynes withdrew his individual motion. Geneva Acholonu filed a non-opposition, and Nancy Wang abandoned her motion by failing to file an opposition or reply. The remaining movants were Jeffrey Fiore, represented by Block & Leviton LLP; Donna Situ, represented by Pomerantz LLP; and the Tricida Investor Group, represented by Bragar Eagel & Squire PC and Bernstein Liebhard LLP.

Lead- plaintiff analysis

The court found Situ atypical. She certified under penalty of perjury that she had sold all of her Tricida securities by July 17, 2020, before the October 29, 2020 corrective disclosure alleged in the complaint. The court concluded that her sales could subject her to a unique defense concerning loss causation, meaning whether the alleged misstatement caused her claimed loss. The court relied on Situ’s certification rather than her counsel’s contrary argument in a reply-footnote that lacked a basis in the record.

The court also found the Tricida Investor Group inadequate under Federal Rule of Civil Procedure 23(a). The group had not shown that its members could function cohesively to monitor counsel and make important litigation decisions. The court noted that the members did not learn of one another until speaking with their lawyers and that Michael Clynes had filed a competing individual motion with different counsel. Although the group had the largest financial interest in the litigation, the court concluded that it did not satisfy the adequacy requirement.

The court found Fiore adequate and typical. It therefore appointed Jeffrey Fiore as lead plaintiff and denied the remaining motions for appointment as lead plaintiff, identified as docket numbers 16, 27, 31, and 32.

Lead counsel and litigation protocols

The court appointed Block & Leviton LLP as lead plaintiffs’ counsel after considering the factors in Rule 23(g)(1)(A). The court also ordered that no other law firm could work on the action for the proposed class without prior approval. Requests to approve additional plaintiffs’ counsel must identify the firm and its background, describe the proposed tasks, and explain why Block & Leviton cannot perform them. The court stated that it would not award fees for unapproved additional counsel if fees were later awarded.

The court required all people seeking fees—including staff, consultants, and experts—to keep contemporaneous billing records. Time had to be recorded no later than seven days after the work occurred. Block & Leviton had to review and approve fees and costs monthly, remove duplicative or unreasonable charges, record billing by task rather than through block billing, and enforce limits on the number of lawyers assigned to each task.