Jaszczyszyn v. SunPower Corporation

Background

The case is a putative securities class action against SunPower Corporation and other defendants. Three proposed plaintiffs or groups sought appointment as lead plaintiff under the Private Securities Litigation Reform Act: Deming Song, the Steamfitters Local 449 Pension & Retirement Security Funds (the “Pension & Retirement Funds”), and James and Karla Fillinger. The court held a hearing on October 6, 2022, but plaintiffs’ counsel did not appear, so the court took the motions under submission.

Legal standard and notice

The Private Securities Litigation Reform Act directs the court to select the plaintiff most capable of adequately representing the class. The Ninth Circuit’s process considers whether the required notice was given, which proposed plaintiff has the largest financial interest, and whether that plaintiff satisfies Rule 23’s requirements of typicality and adequacy.

The court found that the required notice was published in Business Wire on the same day the complaint was filed. The notice identified the action, the Securities Exchange Act claims, the proposed class period, and the opportunity for class members to seek lead-plaintiff status. The court held that the notice requirements were satisfied.

Deming Song

Mr. Song claimed a total loss of $105,881.41, but the court found that he did not satisfy Rule 23’s typicality and adequacy requirements. The complaint alleged one corrective disclosure, on January 21, 2022, concerning a cracking issue in certain factory-installed connectors. Mr. Song’s filings showed that he sold all 8,000 of his shares on December 16, 2021, before that disclosure.

The court rejected Mr. Song’s argument that the complaint alleged an earlier partial disclosure. It found that the complaint did not allege a related share-price drop on November 3, 2021, and did not support treating that event as a partial disclosure. Because Mr. Song sold his shares before the alleged corrective disclosure, the court found that he would face unique defenses concerning loss causation and reliance on the alleged misrepresentations. The Pension & Retirement Funds therefore rebutted the presumption that Mr. Song was the most adequate plaintiff.

Pension & Retirement Funds

The Pension & Retirement Funds had the next-largest stated financial interest, $42,016.78. The court found that they satisfied typicality because they purchased SunPower shares during the class period and alleged damages from the defendants’ false or misleading statements. Unlike Mr. Song, they retained shares through the January 21, 2022, corrective disclosure and therefore were not subject to the same unique loss-causation defenses.

The court also found that the Funds satisfied adequacy. It identified no conflict or antagonism between them and other class members. Their substantial financial stake, timely motion, and quality of briefing showed that they were motivated and capable of pursuing the litigation. No other proposed plaintiff rebutted their showing.

Lead counsel and disposition

The court deferred to the Pension & Retirement Funds’ selection of Robbins Geller Rudman & Dowd LLP as lead counsel, finding that the firm had extensive securities-class-action experience and that the selection was not irrational or tainted by self-dealing or a conflict of interest.

The court GRANTED the Pension & Retirement Funds’ motion for appointment as lead plaintiff, Dkt. No. 25, and DENIED the remaining pending motions, Dkt. Nos. 16 and 20. It appointed the Pension & Retirement Funds as lead plaintiff for the putative class and approved Robbins Geller as lead counsel. The court also set an initial case-management conference and directed the parties to meet and confer and submit a joint case-management statement. The order did not decide the merits of the underlying securities-fraud claims.