In re Luckin Coffee Inc. Securities Litigation

Background

Martin Cohen filed a proposed class action on behalf of people who purchased Luckin securities from November 13, 2019, through January 31, 2020. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The defendants named in the opinion are Luckin Coffee Inc., Jenny Zhiya Qian, and Reinout Hendrik Schakel.

Notice and Lead- Plaintiff Procedure

The Private Securities Litigation Reform Act requires publication of notice to members of the proposed class. The notice must describe the action, the claims, and the proposed class period. The opinion states that plaintiff’s counsel notified the court that the required notice was published on February 13, 2020.

Under the statute, proposed class members had 60 days after publication to move for appointment as lead plaintiff, the person or group the court determines is most capable of adequately representing the class. The court stated that the deadline for those motions was April 13, 2020. Opposition was due May 13, 2020. If substantially similar cases were filed and a party sought to combine them, the court would decide the consolidation request before appointing a lead plaintiff.

Court’s Order

The court ordered a conference on June 2, 2020, at 11:00 a.m. to consider motions for appointment of lead plaintiff and lead counsel and for consolidation of related actions. If an amended complaint or related case was filed before appointment of a lead plaintiff, plaintiff’s counsel had to submit a letter within one week identifying differences from the original complaint and explaining why the court should not require republication of notice and set a new deadline for lead-plaintiff motions. The named plaintiffs were also ordered to promptly serve the order on each defendant. The order did not decide the merits of the securities claims.