Carpenter v. Oscar Health, Inc.

Background

Lorin Carpenter filed a proposed securities class action against Oscar Health, Inc. and other defendants. The complaint concerns Oscar’s March 2021 initial public offering. Carpenter alleges that Oscar’s registration statement and prospectus materially misrepresented or omitted information about growing COVID-19 testing and treatment costs and the effect of increased membership during a special enrollment period. The opinion states that Oscar’s share price fell from $39.00 at the initial public offering to $12.47 on November 11, 2021, after company disclosures between August and November 2021.

The complaint asserts a claim under Section 11 of the Securities Act against all defendants and a claim under Section 15 against the individual defendants. The order did not decide whether those claims are valid.

Initially, four people sought appointment as lead plaintiff. Two later filed notices stating that they did not oppose the competing motions. The remaining movants, Vicki Riley-Fischer and Robert Scott Heon, jointly requested appointment as co-lead plaintiffs and asked the court to approve their respective law firms as co-lead counsel. No member of the proposed class opposed their request. Oscar took no position on lead-plaintiff or lead-counsel appointment but argued that Heon and Fischer had not provided enough evidence showing that they could manage the litigation effectively.

Legal standard

The Private Securities Litigation Reform Act requires the court to appoint the class member or group of members most capable of adequately representing the class. The court generally presumes that the most adequate plaintiff is the person or group that timely sought appointment, has the largest financial interest in the requested relief, and preliminarily satisfies the adequacy and typicality requirements of Federal Rule of Civil Procedure 23.

At this stage, the court required only a preliminary showing that the proposed lead plaintiffs’ claims were typical of the class and that they and their counsel could adequately represent the class. The court also explained that unrelated investors may serve together as a group of lead plaintiffs when the arrangement would best serve the class under the circumstances.

Analysis

The court found that Heon and Fischer filed their motions on July 11, 2022, within the applicable 60-day period after notice of the action was published.

Heon reported acquiring 6,410 shares for approximately $249,990 and estimated a loss of approximately $213,324.80. Fischer reported acquiring 16,133 shares for approximately $510,359.68 and selling them for $131,492.37, resulting in an approximate loss of $378,867.31. Their combined stated losses were $592,192.11. No other plaintiff came forward claiming a larger financial interest.

The court also found that Heon and Fischer made the required preliminary showings under Rule 23. Their claims appeared typical because, like the other proposed class members, they alleged that the defendants made material misstatements or omissions about Oscar’s business, operations, and financial results in connection with the initial public offering. The court found that their selected firms, Levi & Korsinsky, LLP and Glancy, Prongay & Murray LLP, had extensive experience in complex securities class actions. No plaintiff identified a conflict between Heon or Fischer and the class or argued that either lacked a sufficient financial interest to advocate vigorously.

Although Heon and Fischer had no prior relationship, they submitted a joint declaration stating that they could work together cohesively and understood their responsibilities as co-lead plaintiffs. The court found no basis to doubt those representations.

Ruling

Magistrate Judge Valerie Figueredo GRANTED the motions at ECF Nos. 17 and 25. The court appointed Heon and Fischer as co-lead plaintiffs and appointed their chosen lawyers as co-lead counsel. The court DENIED the motions at ECF Nos. 14 and 21 and directed the Clerk of Court to terminate all four motions. The order appointed class representatives and counsel; it did not resolve the merits of the Securities Act claims.