Bailey v. Zendesk, Inc.

Background

Brian Bailey and Scott Franklin moved under the Private Securities Litigation Reform Act of 1995 (PSLRA) to be appointed co-lead plaintiffs in this securities action. They referred to themselves in the motion as the “B&F Group.” No competing motion for lead-plaintiff appointment was filed.

Lead-plaintiff analysis

The court described the PSLRA’s three-step process: the first plaintiff must give notice of the action; the court identifies the presumptive lead plaintiff; and other candidates may challenge that selection. Because no other candidates came forward, the court addressed only the first two steps.

The court found that Bailey and Franklin submitted a notice meeting the PSLRA’s requirements. The notice informed potential class members about the lawsuit, the claims, the proposed class period, and the deadline for seeking appointment as lead plaintiff.

The PSLRA presumes that the “most adequate plaintiff” is the applicant who filed the complaint or responded to the notice, has the largest financial interest in the relief sought by the class, and satisfies the requirements of Federal Rule of Civil Procedure 23. The statute allows a group of people to serve collectively as lead plaintiff, but courts generally require evidence that the group can work together for the class.

Bailey had a larger individual financial interest than Franklin. The court nevertheless found that Bailey and Franklin could serve jointly because they described their investment experience, cooperation, and shared desire to work for the class. The court particularly relied on their prior work together in related litigation in Delaware. It concluded that they satisfied the PSLRA’s requirements and could serve as co-lead plaintiffs.

Co-lead counsel

Bailey selected and retained Monteverde & Associates PC, and Franklin selected and retained Kahn Swick & Foti, LLC, to serve as co-lead counsel. The court approved that selection, finding no reason to doubt the firms’ willingness or ability to perform the lead-counsel role. The court also noted the firms’ extensive experience as lead counsel in securities class actions.

Order and responsibilities

The court appointed Bailey and Franklin as co-lead plaintiffs to represent the interests of the proposed class and approved Monteverde & Associates PC and Kahn Swick & Foti, LLC as co-lead counsel. The court vacated the July 13, 2023 hearing and stated that the deadlines listed at Docket Number 16 remained in place.

The order assigned co-lead counsel responsibility for coordinating motions, discovery, depositions, pretrial conferences, settlement negotiations, pleadings, trial preparation, and other matters concerning the lawsuit. Plaintiffs could not initiate motions, discovery requests, other pretrial proceedings, or settlement negotiations without co-lead counsel’s approval. Service of most pleadings on plaintiffs could be completed by serving co-lead counsel, which would also act as the liaison between the court, plaintiffs, and their counsel.

The order disposed of Docket Number 13.