Shnayder v. Allbirds, Inc.

Background

Four putative class members—people seeking to represent a proposed class that had not yet been certified—filed motions under the Private Securities Litigation Reform Act of 1995. They asked the court to consolidate this case with Delgado Jr. v. Allbirds, Inc., appoint lead plaintiffs, and approve lead counsel.

Both cases were putative class actions concerning purchases of Allbirds Class A common stock in connection with its initial public offering and purchases of Allbirds securities between November 4, 2021, and March 9, 2023. Both alleged violations of Sections 11 and 15 of the Securities Act and Sections 20(a), 10(b), and Rule 10b-5 of the Exchange Act.

Consolidation

The court explained that the securities-law statute requires it to consider consolidation before appointing a lead plaintiff. Under Federal Rule of Civil Procedure 42(a), cases may be consolidated when they involve a common question of law or fact.

The court found that the two cases asserted substantially the same claims and involved similar legal and factual questions. It therefore granted the motions to consolidate the related cases.

Lead Plaintiffs

The court applied the statutory process for choosing a lead plaintiff. It found that the required notice had been published on Business Wire on the same day the complaint was filed and that the Noi-Jinghua Family filed its motion within the required sixty-day period.

The court found that the Noi-Jinghua Family had the largest financial interest among the movants. The family had purchased 137,605 shares, retained 64,048 shares, spent $1,252,666 on the purchases, and reported a total loss of $440,105. No movant contested that the family had the largest financial interest.

At this preliminary stage, the court also found that the family met the requirements of typicality and adequacy under Rule 23. The family asserted that its alleged injury arose from purchasing Allbirds securities at prices inflated by alleged misrepresentations or omissions, and that it was damaged when those alleged problems were disclosed. No other present class member argued that the family could not adequately represent the class.

The court granted the Noi-Jinghua Family’s uncontested motion to appoint it as lead plaintiffs.

Interim Class Counsel

The court considered whether Pomerantz LLP satisfied the factors for interim class counsel, including its work investigating the claims, experience with class and complex litigation, knowledge of the applicable law, and ability to commit resources.

The court found that Pomerantz had extensive experience litigating securities class actions, had served as lead counsel in such cases, had obtained recoveries and settlements for investors, and could commit the resources needed for this litigation. The court therefore appointed Pomerantz LLP as interim class counsel.

Disposition

The court granted the motions to consolidate the related cases, granted the Noi-Jinghua Family’s uncontested motion for appointment as lead plaintiffs, and appointed Pomerantz LLP to serve as interim class counsel. The order did not resolve the underlying securities claims or determine whether a class should ultimately be certified.