In the United States Court of Appeals for the Seventh Circuit
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Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (1 of 141) No. 20-____ In the United States Court of Appeals for the Seventh Circuit IN RE KENNY K. WANG, KATHLEEN WANG, AND KENNY W. WANG, Petitioners. On Petition for a Writ of Mandamus to the United States District Court for the Northern District of Illinois in No. 19-CV-2394, Hon. John J. Tharp, Jr., District Judge PETITION FOR A WRIT OF MANDAMUS Lewis S. Kahn Daniel L. Geyser KAHN SWICK & FOTI, LLC GEYSER P.C. 1100 Poydras St., Ste. 3200 One Energy Square New Orleans, LA 70163 4925 Greenville Ave., Ste. 200 Tel.: (504) 455-1400 Dallas, TX 75206 [email protected] Tel.: (214) 800-2660 [email protected] Counsel for Petitioners Appellate Counsel for Petitioners Marvin A. Miller Andrew Szot MILLER LAW LLC 115 S. LaSalle St., Ste. 2910 Chicago, IL 60603 Tel.: (312) 332-3400 [email protected] [email protected] Local Counsel for Petitioners [Oral Argument Requested] Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (2 of 141) TABLE OF CONTENTS Page Introduction .............................................................................................................. 1 Relief sought ............................................................................................................. 4 Issue presented ........................................................................................................ 4 Statement .................................................................................................................. 4 Reasons why the writ should issue ........................................................................ 8 I. Mandamus is appropriate to correct the misreading and misapplication of the PSLRA’s scheme for appointing lead plaintiffs ................................................................................................ 8 II. The district court’s lead-plaintiff analysis violated the PSLRA’s statutory scheme .............................................................. 10 A. Per the PSLRA’s plain text and structure, a lead plaintiff cannot be disqualified based on “questions” or “concerns” alone—the PSLRA requires actual “proof” that a party “will not” adequately represent the class .................................................................................... 10 B. The court applied the wrong standard in assessing prima facie “adequacy” under the PSLRA and Rule 23 ...................................................................................... 15 1. The court wrongly required petitioners to “prove” they satisfied Rule 23, whereas stage one requires only a “prima facie” showing .............. 16 2. The court wrongly raised the adequacy threshold above and beyond Rule 23’s traditional requirements ............................................ 19 3. The court erred by refusing to provide any opportunity to satisfy its (improper) heightened standard .................................................... 22 i Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (3 of 141) TABLE OF CONTENTS (continued) Page C. The court’s contrary rationale lacks merit .......................... 25 1. The court failed to identify any relevant authority to support its misreading and misapplication of the PSLRA .................................... 25 2. The court’s factual findings lacked merit—and were premised on baseless suppositions refuted by actual evidence ........................................... 27 Conclusion ............................................................................................................... 37 ii Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (4 of 141) TABLE OF AUTHORITIES Page(s) Cases: Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ...................................... 20 Beaton v. SpeedyPC Software, 907 F.3d 1018 (7th Cir. 2018) .......................... 33 Berger v. Compaq Computer Corp., 257 F.3d 475 (5th Cir. 2001) ................... 22 Berger v. Compaq Computer Corp., 279 F.3d 313 (5th Cir. 2002) ................... 26 Bhojwani v. Pistiolis, No. 06-13761, 2007 WL 9228588 (S.D.N.Y. July 31, 2007) ...................................................................................................... 34 Bieter Co., In re, 16 F.3d 929 (8th Cir. 1994) ........................................................ 9 Brady v. Top Ships Inc., 324 F. Supp. 3d 335 (S.D.N.Y. 2018) ........................ 16 Camp v. Qualcomm Inc., No. 18-1208, 2019 U.S. Dist. LEXIS 130746 (S.D. Cal. Aug. 5, 2019) ......................................................................... 27 Cavanaugh, In re, 306 F.3d 726 (9th Cir. 2002) ........................................ passim Cendant Corp. Litig., In re, 264 F.3d 201 (3d Cir. 2001) ......................... passim Cheney v. U.S. Dist. Ct. for D.C., 542 U.S. 367 (2004) ................................... 8, 10 City of Sterling Heights Gen. Emps.’ Retirement Sys. v. Hospira, Inc., No. 11-8332, 2012 WL 1339678 (N.D. Ill. 2012) ..................................... 20 Cohen, In re, 586 F.3d 703 (9th Cir. 2009) ............................................................ 9 Conseco, Inc. Sec. Litig., In re, 120 F. Supp. 2d 729 (S.D. Ind. 2000) ............. 26 Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170 (3d Cir. 2012) ........... 20 DVI Inc. Sec. Litig., In re, 249 F.R.D. 196 (E.D. Pa. 2008) .............................. 33 eSpeed, Inc. Sec. Litig., In re, 232 F.R.D. 95 (S.D.N.Y. 2005) ......................... 18 Ferrari v. Gisch, 225 F.R.D. 599 (C.D. Cal. 2004) ................................. 18, 26, 33 Fuwei Films Sec. Litig., In re, 247 F.R.D. 432 (S.D.N.Y. 2008) ...................... 20 iii Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (5 of 141) TABLE OF AUTHORITIES (continued) Page(s) Garbowski v. Tokai Pharm., Inc., 302 F. Supp. 3d 441 (D. Mass. 2018) ................................................................................................... 34 Gemstar-TV Guide Int’l, Inc. Sec. Litig., In re, 209 F.R.D. 447 (C.D. Cal. 2002) ............................................................................................................. 26 Hedick v. Kraft Heinz Co., No. 19-1339, 2019 WL 4958238 (N.D. Ill. Oct. 8, 2019) ......................................................................................................... 20 Hudson, In re, 710 F.3d 716 (7th Cir. 2013) ....................................................... 10 Johnson v. Tellabs, 214 F.R.D. 225 (N.D. Ill. 2002) .......................................... 19 Karkus, In re, No. 09-1500, 2010 WL 358974 (10th Cir. Jan. 27, 2010) ....................................................................................................................... 8 Karp v. Diebold Nixdorf, Inc., No. 19-6180, 2019 WL 5587148 (S.D.N.Y. Oct. 30, 2019) ............................................................................... 26, 27 Karp v. Diebold Nixdorf, Inc., No. 19-6180, 2019 WL 6619351 (S.D.N.Y. Dec. 5, 2019) ...................................................................................... 15 Kellogg Brown & Root, Inc., In re, 756 F.3d 754 (D.C. Cir. 2014) ..................... 9 Koon v. United States, 518 U.S. 81 (1996) ............................................................ 9 Lacy v. Cook County, 897 F.3d 847 (7th Cir. 2018) ............................................ 20 Li Hong Cheng v. Canada Goose Holdings Inc., No. 19-8204, 2019 U.S. Dist. LEXIS 209946 (S.D.N.Y. Dec. 5, 2019) ......................................... 34 Lifson v. Assisted Living Concepts, Inc., No. 12-884, 2012 WL 12929878 (E.D. Wis. Nov. 14, 2012) ................................................................. 20 Micholle v. Ophthotech Corp., No. 17-0210, 2018 U.S. Dist. LEXIS 41120 (S.D.N.Y. Mar. 13, 2018) ........................................................................ 34 Morris v. Wachovia Sec., Inc., 223 F.R.D. 284 (E.D. Va. 2004) ....................... 22 Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Labranche & Co., 229 F.R.D. 395 (S.D.N.Y. 2004) ........................................ 22 iv Case: 20-1402 Document: 1-1 Filed: 03/10/2020 Pages: 137 (6 of 141) TABLE OF AUTHORITIES (continued) Page(s) Piven v. Sykes Enters., Inc., 137 F. Supp. 2d 1295 (M.D. Fla. 2000) ........ 22, 27 Plaut v. Goldman Sachs Grp., Inc., No. 18-12084, 2019 U.S. Dist. LEXIS 160255 (S.D.N.Y. Sep. 19, 2019) ......................................................... 34 Reitan v. China Mobile Games & Entm’t Group, Ltd., 68 F. Supp. 3d 390 (S.D.N.Y. 2014) ................................................................................. 20, 34 Rolls Royce Corp., In re, 775 F.3d 671 (5th Cir. 2014) ........................................ 9 Shah v. Zimer Biomet Holdings, Inc., No. 16-815, 2017 WL 1207158 (N.D. Ind. Apr. 3, 2017) ..................................................................................... 20 Star Gas Sec. Litig., In re, No. 04-1766 , 2005 U.S. Dist. LEXIS 5827 (D. Conn. Apr. 8, 2005) ............................................................................. 34 Stein v. KPMG, LLP, 486 F.3d 753 (2d Cir. 2007) .............................................. 9 Varghese v. China Shenghuo Pharm. Holdings, Inc., 589 F. Supp. 2d 388 (S.D.N.Y. 2008) ....................................................................................... 17 Wagner v. Spectrum Brands Legacy, Inc., No. 19-0178, 2019 U.S. Dist. LEXIS 98251 (W.D. Wis. June 12, 2019) ............................................... 17 Wolfe v. AspenBio Pharma, Inc.,