Abadilla v. Precigen, Inc.

Background

Martin Joseph Abadilla filed a securities class action against Precigen, Inc., formerly known as Intrexon Corporation, and Precigen Chairman and CEO Randal J. Kirk and CFO Rick K. Sterling. The complaint alleged that, between May 10, 2017, and September 25, 2020, the defendants made materially false or misleading statements or failed to disclose material adverse facts concerning the feedstock used for the company’s methanotroph bioconversion platform, the platform’s yields, the company’s financial statements for the quarter ending March 31, 2018, and weaknesses in its internal controls over financial reporting.

Two other securities-fraud suits alleging substantially similar facts and legal theories were filed against Precigen. The court consolidated the three cases on March 4, 2021. Four plaintiffs then sought appointment as lead plaintiff and approval of lead counsel: Raju Shah, Kenneth R. Clayton, the Lorino Plaintiffs—Chris Lorino, Michael Lorino, George Shehata, and Harold B. Obstfeld—and Joseph Seppen.

Lead- Plaintiff Standard

The Private Securities Litigation Reform Act requires the court to appoint the plaintiff or plaintiffs most capable of adequately representing the class. The court applied a three-step process: confirming the required notice, identifying the movant with the largest financial interest, and determining whether that movant met the class-representation requirements of Federal Rule of Civil Procedure 23, particularly typicality and adequacy.

The reported approximate losses were $413,484.49 for Shah, $405,155 for the Lorino Plaintiffs, $134,293.08 for Clayton, and $90,000 for Seppen. The court rejected the Lorino Plaintiffs’ argument that Shah improperly included losses associated with his wife. Because the shares were purchased from a joint account and the evidence supported Shah’s ownership interest in the losses, the court found that Shah had the largest financial interest.

The court also found that Shah preliminarily satisfied Rule 23’s typicality and adequacy requirements. His claims arose from the same alleged conduct as the other class members’ claims, and the court found no evidence that he was antagonistic to the class. The court also noted that he had selected counsel with significant experience in securities class actions. The court had previously rejected the Lorino Plaintiffs’ and Seppen’s objections concerning Shah’s ability to satisfy these requirements.

Lead Counsel

Under the Act, the lead plaintiff may select and retain counsel, subject to court approval. No party objected to Shah’s selection of Scott+Scott. After reviewing the firm’s profile, the court found that Shah had made a reasonable choice and approved Scott+Scott as lead counsel.

Disposition

The court GRANTED Shah’s motion at ECF 11 to appoint lead plaintiff and approve the selection of lead counsel. It DENIED the competing motions at ECF 16, 21, and 22, filed by Clayton, the Lorino Plaintiffs, and Seppen. Judge Beth Labson Freeman signed the order on April 8, 2021.