Feierstein v. Correvio Pharma Corp.

Background

The plaintiff, Josh Feierstein, brought the action individually and on behalf of all others similarly situated against Correvio Pharma Corp., Mark H.N. Corrigan, William Hunter, and Justin A. Renz. Three groups sought appointment as lead plaintiffs under the federal securities laws: the Atkinson Group, consisting of Clinton Atkinson, Nabil Saad, and Iuliia Mironova; the Edge Group, consisting of Nathaniel Edge, Luis Lopez Iglesias, and Win Tang; and Larry Dorman. The Edge Group later withdrew its motion, and Dorman filed a notice stating that he did not oppose the other movants’ motions.

Lead-plaintiff standard

The Private Securities Litigation Reform Act requires the court to identify the “most adequate plaintiff.” The court must consider which applicant has the largest financial interest in the relief sought by the class and otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure. Rule 23 requires, among other things, that the proposed representative’s claims be typical of the class and that the representative adequately protect the class’s interests. The presumption favoring the applicant with the largest financial interest can be rebutted by evidence that the applicant cannot fairly and adequately protect the class or faces unique defenses.

Why the Atkinson Group was appointed

Clinton Atkinson had the largest individual loss, $211,430. Nabil Saad and Iuliia Mironova had combined losses of $218,138.03, giving the group the highest combined loss among the movants. Atkinson resides in North Carolina, while Saad and Mironova reside in Canada.

The court stated that unrelated investors ordinarily should not join together unless the grouping best serves the class. It nevertheless approved this group because Correvio is a Canadian entity whose shares trade on a U.S. exchange. The court found that including investors based in the United States and Canada was more representative of the potential class and could protect against defenses based on geography or nationality.

The court found that the three investors had made an initial showing that they were typical of the proposed class because they purchased Correvio shares during the class period and were harmed by the alleged fraud. The court also found that, with competent counsel, they could adequately represent the proposed class. The opinion noted that the group was at the lower end of what would qualify as an adequate representative: Atkinson had seven years of investing experience and was still in school, Mironova had no disclosed investing experience, and Saad had managed his own portfolio for 12 years. The record contained no proof that the group would fail to protect the class or face unique defenses.

Lead counsel

The Atkinson Group proposed Rosen Law Firm, P.A., and Glancy Prongay & Murray LLP as co-lead counsel. The court approved Rosen as lead counsel but did not approve the proposed two-firm arrangement. The group had not explained why two firms were necessary or in the class’s best interests, how the firms had been selected, or how they would share responsibilities, reduce inefficiencies, and minimize unnecessary costs, including travel. The court also noted that no Glancy attorney had filed a notice of appearance. The court considered Rosen’s New York location better suited than Glancy’s Los Angeles location for litigating the action without unnecessary costs.

Order and effect

Judge Valerie Caproni granted the Atkinson Group’s motion to be appointed lead plaintiff and appointed Clinton Atkinson, Nabil Saad, and Iuliia Mironova as co-lead plaintiffs. She approved Rosen Law Firm, P.A., as lead counsel. The parties were ordered to jointly propose a schedule for next steps, including filing an amended complaint and briefing any anticipated motion to dismiss, by submitting a joint letter no later than March 13, 2020. The Clerk was directed to terminate docket entries 12, 16, and 20 and update the docket to reflect the appointments.