IN RE APPLE INC. STOCKHOLDER DERIVATIVE LITIGATION
4:19-cv-05153
| N.D. Cal. | Jun 29, 2020Background
- Consolidated shareholder derivative actions against Apple Inc.; competing motions to appoint lead counsel were filed by plaintiff Alan Bankhalter (seeking Pritzker Levine LLP and Gainey McKenna & Egleston) and by a group of plaintiffs led by ZFFR (seeking Robbins LLP and WeissLaw LLP).
- Five of six plaintiffs supported ZFFR’s proposed leadership; Bankhalter alone opposed and sought his counsel’s appointment.
- Court considered factors for appointing lead counsel: who best serves plaintiffs, counsel experience in derivative litigation, work performed to date, and the sufficiency of pleadings under Rule 23.1.
- ZFFR’s proposed counsel had more extensive, documented success in litigated derivative actions and had performed more case-related tasks (first-filed complaint, negotiated consolidation/stay, books-and-records demand).
- Bankhalter’s complaint potentially suffered a pleading vulnerability for not specifying stock-purchase dates; the Ninth Circuit requires shareholder status during the wrongful acts and through litigation, but not explicit purchase dates—nonetheless, the complaint’s allegations may be inadequate per some authority.
- Court exercised discretion to appoint Robbins LLP and WeissLaw LLP as Co-Lead Counsel and set responsibilities and scope for co-leads.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who should be appointed lead counsel | Bankhalter: Pritzker/GM&E are suitable and one firm (Pritzker) is local | ZFFR: Robbins/WeissLaw have superior derivative experience and majority support | Court appointed Robbins and WeissLaw as Co-Lead Counsel; majority support weighed heavily |
| Relative experience in derivative litigation | Bankhalter: firms have comparable experience | ZFFR: Robbins/WeissLaw have more successful, litigated derivative recoveries; GM&E/Pritzker have limited lead-derivative wins | Court found ZFFR’s counsel had an edge on experience |
| Work performed in the case to date | Bankhalter: work roughly equal because filings and stays occurred close in time | ZFFR: Robbins filed first complaint, led consolidation/stay negotiations, WeissLaw pursued books-and-records; showed greater initiative | Court credited ZFFR’s greater effort and leadership, which favored appointment |
| Sufficiency of Bankhalter’s pleadings under Rule 23.1 | Bankhalter: no Rule 23.1 requirement to specify stock purchase dates | ZFFR: complaint may fail for not pleading specific purchase dates and shareholder status adequately | Court did not decide the pleading sufficiency but noted the vulnerability weighed against Bankhalter’s counsel |
Key Cases Cited
- Vincent v. Hughes Air West, 557 F.2d 759 (9th Cir. 1979) (district courts regularly appoint lead counsel in complex consolidated suits)
- Lewis v. Chiles, 719 F.2d 1044 (9th Cir. 1983) (Rule 23.1 requires shareholder status at time of wrongful acts and throughout the suit)
- Biondi v. Scrushy, 820 A.2d 1148 (Del. Ch. 2003) (first-to-file may serve as an objective tiebreaker when factors are otherwise even)