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Lomingkit v. Apollo Education Group Inc.

United States District Court, D. Arizona

June 16, 2016

Rameses Te Lomingkit, et al., Plaintiffs,
v.
Apollo Education Group Incorporated, et al., Defendants.

          ORDER

          Douglas L. Rayes, United States District Judge.

         Before the Court are four competing motions for appointment as lead plaintiff and approval of lead counsel, (Docs. 30, 31, 33, 34). For the following reasons, the Government of Guam Retirement Fund’s (GGRF) motion, (Doc. 34), is granted and the remaining competing motions, (Docs. 30, 31, 33), are denied.

         BACKGROUND

         This is a securities fraud class action brought under the Securities and Exchange Act of 1934 (Exchange Act) against Apollo Education Group Incorporated (Apollo) and several of its executive officers on behalf of all purchasers of Apollo Class A common stock between June 26, 2013, and October 21, 2015, (Doc. 1, ¶ 1). Apollo owns and operates several for-profit educational institutions around the country, (Id., ¶ 2). Plaintiffs allege that, during the class period, “Apollo reported generating billions of dollars in revenues while concealing that a substantial portion of those revenues were being derived through recruiting tactics being undertaken at U.S. military bases across the country that contradicted an Executive Order signed into law by President [Barack] Obama on April 27, 2012, ” and “concealed that Apollo was using improper recruiting tactics that likely violated the express terms of the contractual agreements the Company had entered into with the [U.S. Department of Defense] in February 2012 and July 2014, ” (Id., ¶ 3). Additionally, Plaintiffs allege that Apollo concealed from its investors that its new online classroom platform contained a technical glitch that prevented online students from accessing their courses, resulting in a dramatic decline in student retention and new enrollment rates, (Id., ¶¶ 4-7). Plaintiffs allege that the price of Apollo Class A common stock plummeted by approximately 80% when these misdeeds came to light, (Id., ¶ 13). This lawsuit followed, and now four Apollo Class A common stock investors separately have moved for appointment as lead plaintiff: Yingbo Li, (Doc. 30); National Shopmen Pension Fund (National Shopmen), (Doc. 31); Iron Workers District Council (Philadelphia & Vicinity) Retirement and Pension Plan (Iron Workers), (Doc. 33); and GGRF, (Doc. 34).[1]

         LEGAL STANDARD

         The Private Securities Litigation Reform Act of 1995 (PSLRA) establishes a procedure for selecting a lead plaintiff in class actions brought under the Exchange Act. See 15 U.S.C. § 78u-4(a)(3). The plaintiff(s) responsible for bringing the action must publish a notice advertising the members of the purported class within 20 days of filing the complaint. § 78u-4(a)(3)(A)(i). Any member of the purported class has 60 days from the date the notice was published to move to serve as lead plaintiff. § 78u-4(a)(3)(A)(i)(II). Within 90 days of publication, the court must “consider any motion made by a purported class member . . . and shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interest of class members . . . .” § 78u-4(a)(3)(B)(i).

         The PSLRA establishes a rebuttable presumption that the most adequate plaintiff is the person or entity that: (1) “has either filed the complaint or made a motion in response to a notice, ” (2) “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.” § 78u-4(a)(3)(B)(iii)(I). This presumption is rebuttable only by proof that the presumptively adequate plaintiff “will not fairly and adequately protect the interests of the class” or “is subject to unique defenses that render such plaintiff incapable of adequately representing the class.” § 78u-4(a)(3)(B)(iii)(II).

         Under Fed.R.Civ.P. 23(a):

One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

         Only factors three and four-typicality and adequacy-are relevant to the selection of lead plaintiff. In re Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002); Tsirekidze v. Syntax-Brillian Corp., No. CV-07-2204-PHX-FJM, 2008 WL 942273, at *2 (D. Ariz. Apr. 7, 2008). “If the plaintiff with the largest financial stake in the controversy provides information that satisfies these ...


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