IN RE PAYSAFE LIMITED f/k/a FOLEY TRASIMENE ACQUISITION CORP. II SECURITIES…

Background

This putative securities class action concerns purchases or acquisitions of Paysafe or Foley Trasimene Acquisition Corp. II securities between December 7, 2020, and November 10, 2021. The plaintiffs allege that Paysafe, its executives and directors, and former executives and directors of Foley Trasimene made materially false or misleading statements and failed to disclose problems involving European gambling regulations, Paysafe’s digital wallet business, and changes to new customer agreements. The action was consolidated from two related actions.

Seven movants initially sought appointment as lead plaintiff and appointment of their attorneys as lead counsel. After five withdrew or filed notices of non-opposition, the dispute was between the group of Robert J. Viani and Eric C. Price, represented by Kessler Topaz Meltzer & Check, and Campbell Capital Management (CCM), represented by Glancy Prongay & Murray.

Magistrate Judge Katharine H. Parker appointed the Viani/Price Group as lead plaintiff and Kessler Topaz Meltzer & Check as lead counsel. She found that Viani and Price’s combined losses were approximately $3.819 million, compared with CCM’s approximately $2.902 million in losses based on assignments from about 100 clients. She also found that Viani and Price could function as a group and satisfy the applicable requirements for representing the class. By contrast, she determined that CCM could face potential challenges to its standing—the legal requirement that a party have the right to bring the claim—because of questions about the validity or revocability of the assignments.

CCM’s Objections

CCM objected under Federal Rule of Civil Procedure 72(a), which permits a district judge to change a magistrate judge’s ruling on a non-final matter if it is clearly erroneous or contrary to law. CCM argued that Viani and Price lacked a sufficient cooperation plan and that their group may have been formed by counsel for the purpose of aggregating their losses. CCM also argued that the possible defenses concerning its assignments were too speculative.

Court’s Analysis

The court held that CCM did not meet the heavy burden required to overturn the magistrate judge’s ruling. The court agreed that Viani and Price had no relationship before the litigation, but stated that this fact was not disqualifying. It found that the other considerations were either favorable or neutral: both had investment experience, had participated in discussions about the case, had independently approached the law firm for representation according to counsel’s statements, and had described how they planned to communicate and make decisions together.

The court also upheld the finding that CCM could face unique defenses. It explained that, at the lead-plaintiff stage, the opposing party need not prove that such defenses would succeed. A potential or colorable risk that a proposed lead plaintiff will face defenses that could distract from the class’s claims is enough to affect the appointment decision. The court noted that the assignments were silent about whether they could be revoked and that questions about their validity could lead to discovery concerning CCM’s standing.

Disposition

Judge Ramos adopted Magistrate Judge Parker’s order and denied CCM’s objections. The Viani/Price Group remained lead plaintiff, and Kessler Topaz Meltzer & Check remained lead counsel. The court stated that the deadline for an amended complaint was May 16, 2024. It set July 15, 2024, for the opening motion-to-dismiss brief, September 13, 2024, for opposition, and October 28, 2024, for the reply.