Lamontagne v. Tesla, Inc.

Background

Thomas Lamontagne filed a proposed securities class action against Tesla, Inc., and other defendants. Oakland County Voluntary Employees’ Beneficiary Association and Oakland County Employees’ Retirement System, together called Oakland County, moved under the Private Securities Litigation Reform Act (PSLRA) to be appointed lead plaintiff. Oakland County also asked the court to appoint Labaton Sucharow LLP as lead counsel and Hagens Berman Sobol Shapiro LLP as liaison counsel. The motion was unopposed, and the court decided it based on the written submissions.

Lead Plaintiff

The PSLRA establishes a process for selecting the plaintiff most capable of adequately representing the proposed class. The court considered whether Oakland County timely responded to the required public notice, had the largest financial interest, and met the typicality and adequacy requirements of Federal Rule of Civil Procedure 23.

The court found that notice was published after Lamontagne filed the complaint and that Oakland County timely moved for appointment. Oakland County alleged, without opposition, that it had the largest financial interest in the case. It claimed approximately $2,020,887 in “last-in-first-out” losses from relevant Tesla securities transactions during the class period. Other proposed plaintiffs, Michael Reece and Robert Kent, filed a competing motion but later stated that they did not oppose Oakland County’s motion and acknowledged that they did not have the largest financial interest.

Oakland County alleged that, like other proposed class members, it acquired Tesla stock at prices allegedly inflated by materially false or misleading statements or omissions and suffered losses. The court found that Oakland County established the statutory presumption that it was the most adequate plaintiff. No class member rebutted that presumption.

Counsel

The PSLRA gives the lead plaintiff authority to select lead counsel, and courts generally defer to a reasonable selection. The court found that Labaton Sucharow satisfied the relevant Rule 23(g) factors, including experience with securities class actions, knowledge of the applicable law, and demonstrated recoveries for investors. The court also considered Hagens Berman’s experience representing investors in class actions and approved its appointment as liaison counsel.

Because class certification had not yet been decided, the court appointed Labaton Sucharow as interim class counsel rather than making a final class-certification determination.

Disposition

The court GRANTED Oakland County’s motion to be appointed lead plaintiff. It also GRANTED Oakland County’s motion for Labaton Sucharow LLP to serve as interim class counsel and Hagens Berman Sobol Shapiro LLP to serve as liaison counsel. The order did not decide the underlying securities claims or whether the proposed class would ultimately be certified.