The Reckstin Family Trust v. C3.ai, Inc.

Background

Several plaintiffs filed competing motions under the Private Securities Litigation Reform Act (PSLRA) seeking appointment as lead plaintiff and lead counsel. The motions were filed by Mark Samarghandi, Yining Cai, Leonard Janos, Hossein Afshari, Fadi Karnaby, Dennis Martinez and Christie Sweeney, David Hu and Li Zhong Hu, and Sravan Potu. Cai later withdrew her motion. The other competing movants filed notices acknowledging that they did not have the largest financial interest or otherwise did not oppose Samarghandi’s request, leaving Samarghandi as the sole remaining movant.

The PSLRA requires the court to select the plaintiff most capable of adequately representing the proposed class. The court applies a three-step process: checking whether the required notice was published, identifying the plaintiff with the largest financial interest who satisfies the class-representation requirements, and giving other plaintiffs an opportunity to challenge that plaintiff’s showing.

Lead Plaintiff

The court found that the required notice was published in Globe Newswire on March 4, 2022, the same day the complaint was filed. The notice described the action, the Securities Act claim, the proposed class, and the deadline for seeking appointment as lead plaintiff. The court concluded that the notice satisfied the PSLRA’s requirements.

Samarghandi alleged losses of $1,234,611.90 from purchases of the company’s securities during the class period. Because the other movants acknowledged that they did not have the largest financial interest, the court found that Samarghandi had the largest known financial interest as defined by the PSLRA.

The court also found that Samarghandi satisfied the requirements of typicality and adequacy under Rule 23. His claimed injuries arose from the same type of securities purchases and alleged conduct as the proposed class members’ claims. The court found no apparent unique defenses, conflicts, or antagonism that would prevent him from adequately representing the class.

Lead Counsel

Samarghandi selected Hagens Berman Sobol Shapiro LLP as lead counsel. The court approved that selection, finding that the choice was not irrational and was not tainted by self-dealing or a conflict of interest. The court also noted the firm’s extensive experience in securities class actions.

Disposition

The court GRANTED Samarghandi’s motion to appoint him as lead plaintiff and approve his selection of lead counsel. The court DENIED the remaining unwithdrawn motions for lead plaintiff. Samarghandi was appointed lead plaintiff for the proposed class, and Hagens Berman was approved as lead counsel. The court also set a telephonic case-management conference and directed the parties to meet and confer and submit a joint case-management statement.