Preview
1 Karen P. Kimmey (State Bar No. 173284)
kkimmey@fbm.com
2 Joshua W. Malone (State Bar No. 301836)
jmalone@fbm.com
3 FARELLA BRAUN + MARTEL LLP
235 Montgomery Street, 17th Floor 11/23/2020
4 San Francisco, California 94104
Telephone: (415) 954-4400
5 Facsimile: (415) 954-4480
Richard J. Rosensweig (admitted pro hac vice)
6 rrosensweig@goulstonstorrs.com
Joshua M. Looney (admitted pro hac vice)
7 jlooney@goulstonstorrs.com
GOULSTON & STORRS PC
8 400 Atlantic Avenue
Boston, Massachusetts 02110-3333
9 Telephone: (617) 482-1776
Facsimile: (617) 574-4112
10
Nicholas Cutaia (admitted pro hac vice)
11 ncutaia@goulstonstorrs.com
GOULSTON & STORRS PC
12 885 Third Avenue, 18th Floor
New York, New York 10022
13 Telephone: (212) 878-6900
Facsimile: (212) 878-6911
14 Attorneys for Specially-Appearing Defendants Sogou Inc. and Sohu.com Inc.
15
[Additional counsel appear on the signature page.]
16
17 SUPERIOR COURT OF THE STATE OF CALIFORNIA
18 COUNTY OF SAN MATEO
19 IN RE SOGOU INC. Lead Case No. 18-CIV-06699
SECURITIES LITIGATION
20 CLASS ACTION
____________________________________
21 SPECIALLY-APPEARING DEFENDANTS’
This Document Relates To: MEMORANDUM OF POINTS AND
22 AUTHORITIES IN OPPOSITION TO
ALL ACTIONS.
PLAINTIFFS’ MOTION TO LIFT THE STAY
23
Date: December 8, 2020
24 Time: 9:00 am
Judge: Hon. Marie S. Weiner
25 Assigned for all purposes to Dep’t 2
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-
Farella Braun + Martel LLP
235 Montgomery Street, 17 Floor
San Francisco, California 94104 06699
(415) 954-4400
1 TABLE OF CONTENTS
2 PRELIMINARY STATEMENT ....................................................................................................... 3
3 BACKGROUND ............................................................................................................................... 3
4 I. PLAINTIFFS ARE ATTEMPTING TO PREEMPT THE NEW YORK
COURT’S ROLE IN ASSESSING THE FAIRNESS OF THE PROPOSED
5 SETTLEMENT ..........................................................................................................5
6 II. THE STAY SHOULD CONTINUE IN DEFERENCE TO THE ONGOING
NEW YORK ACTION ..............................................................................................6
7
CONCLUSION ................................................................................................................................. 8
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 Specially-Appearing Defendants Sogou Inc., Sohu.com Inc., J.P. Morgan Securities LLC,
2 Credit Suisse Securities (USA) LLC, Goldman Sachs (Asia) L.L.C., and Yuxin Ren (collectively,
3 “Specially-Appearing Defendants”) respectfully submit this Opposition to Plaintiffs’ Motion to Lift
4 the Stay (“Motion to Lift the Stay” or “Mot.”).
5 PRELIMINARY STATEMENT
6 This Court should deny Plaintiffs’ last-minute request to lift the stay in this action based on
7 their attempt to preempt a decision on the fairness of the class settlement that will be made in the
8 U.S. District Court for the Southern District of New York (the “New York Court”). This Court has
9 already determined that New York is the best forum for resolving the claims asserted in this action,
10 and Plaintiffs fail to provide any reason why San Mateo County is now a more convenient forum.
11 It would contravene the stay’s purpose to restart this litigation on the cusp of a complete resolution
12 of those claims in New York, particularly where the stated reason for doing so is Plaintiffs’
13 subjective belief that the proposed settlement is somehow inadequate, which is irrelevant to
14 whether San Mateo County is a convenient forum. The New York Court will conduct an objective
15 review of the settlement and is capable of addressing any valid objections Plaintiffs may have.
16 Alternatively, Plaintiffs have the right to exclude themselves from the settlement and pursue their
17 individual claims in this Court. The Motion to Lift the Stay should be denied.
18 BACKGROUND
19 On October 7, 2019, the Court stayed this action “in deference to” Jiajia Luo, Individually
20 and on Behalf of All Others Similarly Situated v. Sogou Inc., et al., Case No. 19 Civ. 230 (LJL)
21 (S.D.N.Y.) (“New York Action”), a putative class action asserting the same Securities Act claims
22 against the same defendants. See Case Management Order # 5 (Oct. 7, 2019) (“CMO #5”) at 2
23 (¶ 1). The Court based the stay on non-contractual forum non conveniens and found that (i) New
24 York was a suitable forum, and (ii) the “private and public interests involved weigh[ed] very little
25 in California (or San Mateo County), and overwhelmingly in New York.” CMO #5 at 2, 5–8. The
26 Court also deemed “moot” the Specially-Appearing Defendants Sogou Inc., Sohu.com Inc., J.P.
27 Morgan Securities LLC, Credit Suisse Securities (USA) LLC, and Goldman Sachs (Asia) L.L.C.’s
28 motions to quash service of summons for lack of personal jurisdiction but recognized that those
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 motions would need to be reconsidered if the case were to proceed in California.1 CMO #5 at 3
2 (¶ 3).
3 After the stay of this action, the New York Action proceeded. On June 8, 2020, after
4 extensive briefing and a full hearing on Defendants’ motions to dismiss, the New York Court
5 dismissed the New York Action with prejudice, finding that the third amended complaint failed to
6 state claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). The
7 plaintiffs appealed the dismissal to the U.S. Court of Appeals for the Second Circuit on July 9,
8 2020. On September 15, 2020, after a lengthy negotiation, the parties to the New York Action
9 informed the New York Court that they had filed a joint stipulation withdrawing the appeal from
10 the Second Circuit without prejudice to reinstatement because they had reached a settlement in
11 principle, and that they intended to file a motion for preliminary approval. Plaintiffs in this action,
12 who were aware of the New York Action’s dismissal in June, learned of the settlement in principle
13 by September 16, 2020. The parties jointly notified this Court of the dismissal and settlement on
14 October 7, 2020 in a periodic status report this Court ordered to be filed every six months. See
15 CMO #5 at 3 (¶ 2). On November 16, 2020, the plaintiffs in the New York Action filed a motion
16 for preliminary approval of the settlement, a stipulation of settlement executed by all parties, and
17 proposed documents required for approval of a class action settlement under Fed. R. Civ. P. 23.
18 The New York Court has scheduled a hearing on the motion for preliminary approval for
19 November 25, 2020.
20 Plaintiffs in this action argue the stay should be lifted for two reasons. First, they contend
21 that lifting the stay is proper based on their speculation that the proposed settlement provides “no
22 meaningful relief to the putative class.” Mot. at 8. Second, despite waiting nearly five months after
23 the New York Action was dismissed, Plaintiffs now argue that the dismissal of the New York
24 Action requires lifting the stay. See Mot. at 7. Neither is a valid reason for disturbing this Court’s
25 well-reasoned decision to stay this action in favor of “adjudicating this lawsuit in New York, rather
26 than California.” CMO #5 at 7.
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28 Specially-Appearing Defendant Yuxin Ren, who was served before the Court stayed this action,
has no pending deadline to respond to the Consolidated Complaint.
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 I. PLAINTIFFS ARE ATTEMPTING TO PREEMPT THE NEW YORK COURT’S
ROLE IN ASSESSING THE FAIRNESS OF THE PROPOSED SETTLEMENT
2
3 Plaintiffs’ argument for lifting the stay—namely that, in their view, the proposed settlement
4 is “paltry” and “provides no meaningful relief to the putative class”—is irrelevant for purposes of
5 this motion. Mot. at 8 (emphasis in original). The putative class members’ interests in the New
6 York Action are represented by competent counsel who were appointed as lead counsel by the New
7 York Court after a competitive process during which several plaintiff groups and law firms vied for
8 lead plaintiff and lead counsel status. More importantly, it is the New York Court—not Plaintiffs’
9 counsel in this action—that has the authority to determine whether the proposed settlement is fair,
10 reasonable, and in the best interests of the putative class. Unless Plaintiffs decide to opt out of the
11 settlement and pursue their individual claims in this Court, they will have the right to object to the
12 settlement in the New York Action and have other procedural protections the Federal Rules
13 guarantee to putative class members. See Fed. R. Civ. P. 23(e). Until the New York Court
14 considers whether the proposed settlement is fair and reasonable, this Court should disregard the
15 Plaintiffs’ subjective characterization of the proposed settlement, which is irrelevant to whether San
16 Mateo County is a convenient forum. It certainly is not grounds for lifting the stay, and Plaintiffs
17 fail to cite a single decision supporting their argument.
18 Furthermore, the Court should not credit Plaintiffs’ other argument that the putative class
19 “would be prejudiced” if this action is “further delayed for another six months or more.” See Mot.
20 at 8. If that were true, Plaintiffs would not have waited nearly five months after the New York
21 Action was dismissed on June 8, 2020 to file their motion.2 Indeed, Plaintiffs fail to explain how
22 affording the New York Court a few months to determine whether the class’s best interests are
23 served by approving the settlement is somehow prejudicial to the putative California class’s
24 interests. If the passage of time were prejudicial, Plaintiffs would have acted in a timely manner.
25 Instead, they did nothing and, at the eleventh hour, are now seeking to supplant the New York
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Further belying their claim of prejudice, Plaintiffs waited to file their Motion seven weeks after
27 learning of the proposed settlement, and almost a full month after the Court instructed Plaintiffs
28 via email on October 9, 2020 that the proper procedure to request a lift of the stay is to file a
formal motion.
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 Court’s review of the merits of the proposed settlement. Plaintiffs’ inaction shows that there will
2 be no prejudice to continuing the stay another six months to allow the federal settlement process to
3 reach a resolution.
4
II. THE STAY SHOULD CONTINUE IN DEFERENCE TO THE ONGOING NEW
5 YORK ACTION
6 The Court should continue to maintain the stay in deference to the New York Action
7 because the reasons that led this Court to stay the case remain valid. While Plaintiffs argue that the
8 stay should be lifted because the New York Action was dismissed and the stay is subject to being
9 lifted in the event of a dismissal (Mot. at 7), they fail to address the underlying purpose for staying
10 this action in the first place. As this Court recognized, New York is “overwhelmingly” the proper
11 forum for resolution of the claims asserted by the putative class. CMO #5 at 8. Those claims are
12 close to being resolved on a potential class-wide basis. Should the New York Court deny approval
13 of the settlement, the New York plaintiffs will presumably pursue their appeal in the Second Circuit
14 and argue for reinstatement of their claims in the New York Court.
15 It makes little sense to lift the stay just as the New York Court is about to decide whether to
16 preliminarily approve a settlement that may resolve the putative class’s claims (and therefore the
17 claims asserted here).3 It is also premature to lift the stay before Plaintiffs have indicated whether
18 they will participate in the settlement or opt out and pursue their claims individually. Indeed, if the
19 Court were to lift the stay, the parties and the Court would first have to resolve the complex issues
20 of personal jurisdiction raised in the Specially-Appearing Defendants’ pending motions to quash.
21 See CMO #5 at 3 (¶ 3). The time and expense spent resolving personal jurisdiction would be
22 wasted if Plaintiffs here do not exclude themselves from the settlement and the New York Court
23 approves the settlement. See Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997)
24 (noting that a court should consider “the judicial resources that would be saved” when considering
25 whether to stay a case). Plaintiffs fail to provide any reason why the Court should not consider this
26 potential waste of time, effort, and expenses.
27
3
If the New York Court preliminarily approves the settlement before the December 8th hearing on
28 the Motion to Lift the Stay in this Court, Specially-Appearing Defendants will notify this Court.
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 In addition to the fact that the New York Court may resolve the claims at issue here, there
2 are two other reasons why the stay of this case should continue. First, should the settlement not be
3 approved and plaintiffs’ appeal proceeds in the Second Circuit, with the possibility of reversal and
4 reinstatement at the trial court level, both actions would proceed simultaneously. Defendants
5 would then face the burden of litigating the same case on two fronts since, as Plaintiffs admit, the
6 New York Action is substantially similar to this case. See Mot. at 5 (referring to the New York
7 Action as a “copy-cat lawsuit” of this action); see also Berg v. MTC Elec. Techs., 61 Cal. App. 4th
8 349, 363 (1998) (affirming stay because of “the burdens and inefficiencies that would be imposed
9 by the conduct of parallel litigations in different fora”).
10 Second, such parallel proceedings create the risk of different results on the same claims.
11 This is the type of “unseemly conflict” that this Court has the discretion to continue to prevent by
12 maintaining the stay. See Caiafa Prof. Law Corp. v. State Farm Fire & Cas. Co., 15 Cal. App. 4th
13 800, 804 (1993) (“In exercising its discretion [in determining whether to impose a stay], the court
14 should consider the importance . . . of avoiding unseemly conflicts with the courts of other
15 jurisdictions.”) (quoting Farmland Irr. Co. v. Dopplmaier, 48 Cal. 2d 208, 215 (1957)).
16 Plaintiffs fail to provide any reason why the Court should disregard these continuing risks
17 or why the New York Court should not be allowed to consider preliminary and, ultimately, final
18 approval of the proposed settlement, which would achieve the stay’s purposes—i.e., to allow a
19 resolution of the putative class’s claims.
20 [Conclusion and signatures follow on the next page.]
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 CONCLUSION
2 For these reasons, the Court should deny the Motion to Lift the Stay.
3 DATED: November 23, 2020 FARELLA BRAUN + MARTEL LLP
4
By: /s/ Karen P. Kimmey
5 Karen P. Kimmey (SBN 173284)
kkimmey@fbm.com
6 Joshua W. Malone (SBN 301836)
jmalone@fbm.com
7 235 Montgomery Street, 17th Floor
San Francisco, California 94104
8 Telephone: (415) 954-4400
Facsimile: (415) 954-4480
9
Counsel for Specially-Appearing Defendants Sogou
10
Inc. and Sohu.com Inc.
11
DATED: November 23, 2020 MORGAN, LEWIS & BOCKIUS LLP
12
By: /s/ Charlene S. Shimada
13
Charlene S. Shimada (SBN 91407)
14 charlene.shimada@morganlewis.com
Robert O’Leary (SBN 284879)
15 bob.oleary@morganlewis.com
One Market, Spear Street Tower
16 San Francisco, California 94105
Telephone: (415) 442-1000
17 Facsimile: (415) 442-1001
18 Counsel for Specially-Appearing Defendants J.P.
Morgan Securities LLC, Credit Suisse Securities
19 (USA) LLC, and Goldman Sachs (Asia) L.L.C.
20
DATED: November 23, 2020 SIDLEY AUSTIN LLP
21
By: /s/ Jaime A. Bartlett
22 Sara B. Brody (SBN 130222)
sbrody@sidley.com
23
Jaime A. Bartlett (SBN 251825)
24 jbartlett@sidley.com
555 California Street, Suite 2000
25 San Francisco, California 94104
Telephone: (415) 772-1200
26 Facsimile: (415) 772-7400
27 Counsel for Specially-Appearing Defendant
Yuxin Ren
28
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SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY
Lead Case No. 18-CIV-06699
1 PROOF OF SERVICE
2 IN RE SOGOU INC. SECURITIES LITIGATION
Lead Case No. 18CIV06699
3
4 STATE OF CALIFORNIA, COUNTY OF SAN MATEO
5 I, the undersigned, declare:
6 I am a resident of the United States and employed in San Francisco County, California. I
am over the age of eighteen years and not a party to the within-entitled action. My business
7
address is 235 Montgomery Street, 17th Floor, San Francisco, California 94104. My e-mail
8 address is svillalobos@fbm.com. On November 23, 2020, Iserved true copies of the following
document(s) described as:
9
SPECIALLY-APPEARING DEFENDANTS’ MEMORANDUM OF POINTS AND
10 AUTHORITIES IN OPPOSITION TO PLAINTIFFS’ MOTION TO LIFT THE
STAY
11
on the interested parties in this action as follows:
12
13 E-MAIL TRANSMISSION: by transmitting via email PDF the document(s)
listed above to the e-mail addresses set forth below on this date.
14
15 Francis A. Bottini, Jr. James Jaconette
Yury A. Kolesnikov Brian E. Cochran
16 BOTTINI & BOTTINI, INC. ROBBINS GELLER RUDMAN & DOWD LLP
7817 Ivanhoe Avenue, Suite 102 655 West Broadway, Suite 1900
17 La Jolla, California 92037
Tel.: (858) 914-2001 San Diego, CA 92101-8498
18 Fax: (858) 914-2002 Tel.: (619) 231-1058
fbottini@bottinilaw.com Fax: (619) 231-7423
19 ykolesnikov@bottinilaw.com JamesJ@rgrdlaw.com
bcochran@rgrdlaw.com
20 Attorneys for Plaintiff Artak Khayan
Attorneys for Plaintiff Skyler Bishop
21
Patrice Bishop Brian J. Robbins
22 STULL STULL & BRODY Stephen J. Oddo
9430 West Olympic Boulevard , Suite 400 ROBBINS ARROYO LLP
23 Beverly Hills, CA 90212 5040 Shoreham Place
San Diego, CA 92122
Tel.: (310) 209-2468 Tel.: (619) 525-3990
24 Fax: (310) 209-2087 Fax: (619) 525-3991
25 service@ssbla.com brobbins@robbinsarroyo.com
Attorney for Plaintiff Asha Lickley Dore soddo@robbinsarroyo.com
26 Attorneys for Plaintiff Skyler Bishop
27
28
Farella Braun + Martel LLP
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235 Montgomery Street, 17 Floor
San Francisco, California 94104 Proof of Service
(415) 954-4400
IN RE SOGOU INC. SECURITIES LITIGATION; Lead Case No. 18CIV06699
36971\13796133.1
1
2 Attorneys for Specially Appearing Defendants:
3
Charlene S. Shimada J.P. Morgan Securities LLC, Credit Suisse
4 Lucy Wang Securities (USA) LLC and Goldman Sachs
MORGAN, LEWIS & BOCKIUS LLP (Asia) L.L.C.
5 One Market, Spear Street Tower
San Francisco, CA 94105-1596
6 Tel: (415) 442-1475
Fax: (415) 442-1001
7 charlene.shimada@morganlewis.com
lucy.wang@morganlewis.com
8
Sara B Brody Attorneys for Specially Appearing Defendant
9 Jaime A. Bartlett Yuxin Ren
SIDLEY AUSTIN LLP
10 555 California Street, Suite2000
San Francisco, CA 94104
11 Tel: (415) 772-1200
Fax: (415) 772-7400
12 sbrody@sidley.com
jbartlett@sidley.com
13
14
Courtesy Copy Emailed to:
15
16 Honorable Marie S. Weiner
San Mateo Superior Court
17 Department 2, Courtroom 2E
400 County Center
18 Redwood City, CA 94063
Email: complexcivil@sanmateocourt.org
19
I declare under penalty of perjury under the laws of the State of California that the
20 foregoing is true and correct. Executed on November 23, 2020, at Hayward, California.
21
22
23
24
25 Sharon M. Villalobos
26
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Farella Braun + Martel LLP
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235 Montgomery Street, 17 Floor
San Francisco, California 94104 Proof of Service
(415) 954-4400
IN RE SOGOU INC. SECURITIES LITIGATION; Lead Case No. 18CIV06699
36971\13796133.1
Preview
1 Karen P. Kimmey (State Bar No. 173284) kkimmey@fbm.com 2 Joshua W. Malone (State Bar No. 301836) jmalone@fbm.com 3 FARELLA BRAUN + MARTEL LLP 235 Montgomery Street, 17th Floor 11/23/2020 4 San Francisco, California 94104 Telephone: (415) 954-4400 5 Facsimile: (415) 954-4480 Richard J. Rosensweig (admitted pro hac vice) 6 rrosensweig@goulstonstorrs.com Joshua M. Looney (admitted pro hac vice) 7 jlooney@goulstonstorrs.com GOULSTON & STORRS PC 8 400 Atlantic Avenue Boston, Massachusetts 02110-3333 9 Telephone: (617) 482-1776 Facsimile: (617) 574-4112 10 Nicholas Cutaia (admitted pro hac vice) 11 ncutaia@goulstonstorrs.com GOULSTON & STORRS PC 12 885 Third Avenue, 18th Floor New York, New York 10022 13 Telephone: (212) 878-6900 Facsimile: (212) 878-6911 14 Attorneys for Specially-Appearing Defendants Sogou Inc. and Sohu.com Inc. 15 [Additional counsel appear on the signature page.] 16 17 SUPERIOR COURT OF THE STATE OF CALIFORNIA 18 COUNTY OF SAN MATEO 19 IN RE SOGOU INC. Lead Case No. 18-CIV-06699 SECURITIES LITIGATION 20 CLASS ACTION ____________________________________ 21 SPECIALLY-APPEARING DEFENDANTS’ This Document Relates To: MEMORANDUM OF POINTS AND 22 AUTHORITIES IN OPPOSITION TO ALL ACTIONS. PLAINTIFFS’ MOTION TO LIFT THE STAY 23 Date: December 8, 2020 24 Time: 9:00 am Judge: Hon. Marie S. Weiner 25 Assigned for all purposes to Dep’t 2 26 27 28 36971\13796085.2 th SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV- Farella Braun + Martel LLP 235 Montgomery Street, 17 Floor San Francisco, California 94104 06699 (415) 954-4400 1 TABLE OF CONTENTS 2 PRELIMINARY STATEMENT ....................................................................................................... 3 3 BACKGROUND ............................................................................................................................... 3 4 I. PLAINTIFFS ARE ATTEMPTING TO PREEMPT THE NEW YORK COURT’S ROLE IN ASSESSING THE FAIRNESS OF THE PROPOSED 5 SETTLEMENT ..........................................................................................................5 6 II. THE STAY SHOULD CONTINUE IN DEFERENCE TO THE ONGOING NEW YORK ACTION ..............................................................................................6 7 CONCLUSION ................................................................................................................................. 8 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Farella Braun + Martel LLP 2 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 Specially-Appearing Defendants Sogou Inc., Sohu.com Inc., J.P. Morgan Securities LLC, 2 Credit Suisse Securities (USA) LLC, Goldman Sachs (Asia) L.L.C., and Yuxin Ren (collectively, 3 “Specially-Appearing Defendants”) respectfully submit this Opposition to Plaintiffs’ Motion to Lift 4 the Stay (“Motion to Lift the Stay” or “Mot.”). 5 PRELIMINARY STATEMENT 6 This Court should deny Plaintiffs’ last-minute request to lift the stay in this action based on 7 their attempt to preempt a decision on the fairness of the class settlement that will be made in the 8 U.S. District Court for the Southern District of New York (the “New York Court”). This Court has 9 already determined that New York is the best forum for resolving the claims asserted in this action, 10 and Plaintiffs fail to provide any reason why San Mateo County is now a more convenient forum. 11 It would contravene the stay’s purpose to restart this litigation on the cusp of a complete resolution 12 of those claims in New York, particularly where the stated reason for doing so is Plaintiffs’ 13 subjective belief that the proposed settlement is somehow inadequate, which is irrelevant to 14 whether San Mateo County is a convenient forum. The New York Court will conduct an objective 15 review of the settlement and is capable of addressing any valid objections Plaintiffs may have. 16 Alternatively, Plaintiffs have the right to exclude themselves from the settlement and pursue their 17 individual claims in this Court. The Motion to Lift the Stay should be denied. 18 BACKGROUND 19 On October 7, 2019, the Court stayed this action “in deference to” Jiajia Luo, Individually 20 and on Behalf of All Others Similarly Situated v. Sogou Inc., et al., Case No. 19 Civ. 230 (LJL) 21 (S.D.N.Y.) (“New York Action”), a putative class action asserting the same Securities Act claims 22 against the same defendants. See Case Management Order # 5 (Oct. 7, 2019) (“CMO #5”) at 2 23 (¶ 1). The Court based the stay on non-contractual forum non conveniens and found that (i) New 24 York was a suitable forum, and (ii) the “private and public interests involved weigh[ed] very little 25 in California (or San Mateo County), and overwhelmingly in New York.” CMO #5 at 2, 5–8. The 26 Court also deemed “moot” the Specially-Appearing Defendants Sogou Inc., Sohu.com Inc., J.P. 27 Morgan Securities LLC, Credit Suisse Securities (USA) LLC, and Goldman Sachs (Asia) L.L.C.’s 28 motions to quash service of summons for lack of personal jurisdiction but recognized that those Farella Braun + Martel LLP 3 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 motions would need to be reconsidered if the case were to proceed in California.1 CMO #5 at 3 2 (¶ 3). 3 After the stay of this action, the New York Action proceeded. On June 8, 2020, after 4 extensive briefing and a full hearing on Defendants’ motions to dismiss, the New York Court 5 dismissed the New York Action with prejudice, finding that the third amended complaint failed to 6 state claims under Sections 11 and 15 of the Securities Act of 1933 (the “Securities Act”). The 7 plaintiffs appealed the dismissal to the U.S. Court of Appeals for the Second Circuit on July 9, 8 2020. On September 15, 2020, after a lengthy negotiation, the parties to the New York Action 9 informed the New York Court that they had filed a joint stipulation withdrawing the appeal from 10 the Second Circuit without prejudice to reinstatement because they had reached a settlement in 11 principle, and that they intended to file a motion for preliminary approval. Plaintiffs in this action, 12 who were aware of the New York Action’s dismissal in June, learned of the settlement in principle 13 by September 16, 2020. The parties jointly notified this Court of the dismissal and settlement on 14 October 7, 2020 in a periodic status report this Court ordered to be filed every six months. See 15 CMO #5 at 3 (¶ 2). On November 16, 2020, the plaintiffs in the New York Action filed a motion 16 for preliminary approval of the settlement, a stipulation of settlement executed by all parties, and 17 proposed documents required for approval of a class action settlement under Fed. R. Civ. P. 23. 18 The New York Court has scheduled a hearing on the motion for preliminary approval for 19 November 25, 2020. 20 Plaintiffs in this action argue the stay should be lifted for two reasons. First, they contend 21 that lifting the stay is proper based on their speculation that the proposed settlement provides “no 22 meaningful relief to the putative class.” Mot. at 8. Second, despite waiting nearly five months after 23 the New York Action was dismissed, Plaintiffs now argue that the dismissal of the New York 24 Action requires lifting the stay. See Mot. at 7. Neither is a valid reason for disturbing this Court’s 25 well-reasoned decision to stay this action in favor of “adjudicating this lawsuit in New York, rather 26 than California.” CMO #5 at 7. 27 1 28 Specially-Appearing Defendant Yuxin Ren, who was served before the Court stayed this action, has no pending deadline to respond to the Consolidated Complaint. Farella Braun + Martel LLP 4 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 I. PLAINTIFFS ARE ATTEMPTING TO PREEMPT THE NEW YORK COURT’S ROLE IN ASSESSING THE FAIRNESS OF THE PROPOSED SETTLEMENT 2 3 Plaintiffs’ argument for lifting the stay—namely that, in their view, the proposed settlement 4 is “paltry” and “provides no meaningful relief to the putative class”—is irrelevant for purposes of 5 this motion. Mot. at 8 (emphasis in original). The putative class members’ interests in the New 6 York Action are represented by competent counsel who were appointed as lead counsel by the New 7 York Court after a competitive process during which several plaintiff groups and law firms vied for 8 lead plaintiff and lead counsel status. More importantly, it is the New York Court—not Plaintiffs’ 9 counsel in this action—that has the authority to determine whether the proposed settlement is fair, 10 reasonable, and in the best interests of the putative class. Unless Plaintiffs decide to opt out of the 11 settlement and pursue their individual claims in this Court, they will have the right to object to the 12 settlement in the New York Action and have other procedural protections the Federal Rules 13 guarantee to putative class members. See Fed. R. Civ. P. 23(e). Until the New York Court 14 considers whether the proposed settlement is fair and reasonable, this Court should disregard the 15 Plaintiffs’ subjective characterization of the proposed settlement, which is irrelevant to whether San 16 Mateo County is a convenient forum. It certainly is not grounds for lifting the stay, and Plaintiffs 17 fail to cite a single decision supporting their argument. 18 Furthermore, the Court should not credit Plaintiffs’ other argument that the putative class 19 “would be prejudiced” if this action is “further delayed for another six months or more.” See Mot. 20 at 8. If that were true, Plaintiffs would not have waited nearly five months after the New York 21 Action was dismissed on June 8, 2020 to file their motion.2 Indeed, Plaintiffs fail to explain how 22 affording the New York Court a few months to determine whether the class’s best interests are 23 served by approving the settlement is somehow prejudicial to the putative California class’s 24 interests. If the passage of time were prejudicial, Plaintiffs would have acted in a timely manner. 25 Instead, they did nothing and, at the eleventh hour, are now seeking to supplant the New York 26 2 Further belying their claim of prejudice, Plaintiffs waited to file their Motion seven weeks after 27 learning of the proposed settlement, and almost a full month after the Court instructed Plaintiffs 28 via email on October 9, 2020 that the proper procedure to request a lift of the stay is to file a formal motion. Farella Braun + Martel LLP 5 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 Court’s review of the merits of the proposed settlement. Plaintiffs’ inaction shows that there will 2 be no prejudice to continuing the stay another six months to allow the federal settlement process to 3 reach a resolution. 4 II. THE STAY SHOULD CONTINUE IN DEFERENCE TO THE ONGOING NEW 5 YORK ACTION 6 The Court should continue to maintain the stay in deference to the New York Action 7 because the reasons that led this Court to stay the case remain valid. While Plaintiffs argue that the 8 stay should be lifted because the New York Action was dismissed and the stay is subject to being 9 lifted in the event of a dismissal (Mot. at 7), they fail to address the underlying purpose for staying 10 this action in the first place. As this Court recognized, New York is “overwhelmingly” the proper 11 forum for resolution of the claims asserted by the putative class. CMO #5 at 8. Those claims are 12 close to being resolved on a potential class-wide basis. Should the New York Court deny approval 13 of the settlement, the New York plaintiffs will presumably pursue their appeal in the Second Circuit 14 and argue for reinstatement of their claims in the New York Court. 15 It makes little sense to lift the stay just as the New York Court is about to decide whether to 16 preliminarily approve a settlement that may resolve the putative class’s claims (and therefore the 17 claims asserted here).3 It is also premature to lift the stay before Plaintiffs have indicated whether 18 they will participate in the settlement or opt out and pursue their claims individually. Indeed, if the 19 Court were to lift the stay, the parties and the Court would first have to resolve the complex issues 20 of personal jurisdiction raised in the Specially-Appearing Defendants’ pending motions to quash. 21 See CMO #5 at 3 (¶ 3). The time and expense spent resolving personal jurisdiction would be 22 wasted if Plaintiffs here do not exclude themselves from the settlement and the New York Court 23 approves the settlement. See Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997) 24 (noting that a court should consider “the judicial resources that would be saved” when considering 25 whether to stay a case). Plaintiffs fail to provide any reason why the Court should not consider this 26 potential waste of time, effort, and expenses. 27 3 If the New York Court preliminarily approves the settlement before the December 8th hearing on 28 the Motion to Lift the Stay in this Court, Specially-Appearing Defendants will notify this Court. Farella Braun + Martel LLP 6 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 In addition to the fact that the New York Court may resolve the claims at issue here, there 2 are two other reasons why the stay of this case should continue. First, should the settlement not be 3 approved and plaintiffs’ appeal proceeds in the Second Circuit, with the possibility of reversal and 4 reinstatement at the trial court level, both actions would proceed simultaneously. Defendants 5 would then face the burden of litigating the same case on two fronts since, as Plaintiffs admit, the 6 New York Action is substantially similar to this case. See Mot. at 5 (referring to the New York 7 Action as a “copy-cat lawsuit” of this action); see also Berg v. MTC Elec. Techs., 61 Cal. App. 4th 8 349, 363 (1998) (affirming stay because of “the burdens and inefficiencies that would be imposed 9 by the conduct of parallel litigations in different fora”). 10 Second, such parallel proceedings create the risk of different results on the same claims. 11 This is the type of “unseemly conflict” that this Court has the discretion to continue to prevent by 12 maintaining the stay. See Caiafa Prof. Law Corp. v. State Farm Fire & Cas. Co., 15 Cal. App. 4th 13 800, 804 (1993) (“In exercising its discretion [in determining whether to impose a stay], the court 14 should consider the importance . . . of avoiding unseemly conflicts with the courts of other 15 jurisdictions.”) (quoting Farmland Irr. Co. v. Dopplmaier, 48 Cal. 2d 208, 215 (1957)). 16 Plaintiffs fail to provide any reason why the Court should disregard these continuing risks 17 or why the New York Court should not be allowed to consider preliminary and, ultimately, final 18 approval of the proposed settlement, which would achieve the stay’s purposes—i.e., to allow a 19 resolution of the putative class’s claims. 20 [Conclusion and signatures follow on the next page.] 21 22 23 24 25 26 27 28 Farella Braun + Martel LLP 7 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 CONCLUSION 2 For these reasons, the Court should deny the Motion to Lift the Stay. 3 DATED: November 23, 2020 FARELLA BRAUN + MARTEL LLP 4 By: /s/ Karen P. Kimmey 5 Karen P. Kimmey (SBN 173284) kkimmey@fbm.com 6 Joshua W. Malone (SBN 301836) jmalone@fbm.com 7 235 Montgomery Street, 17th Floor San Francisco, California 94104 8 Telephone: (415) 954-4400 Facsimile: (415) 954-4480 9 Counsel for Specially-Appearing Defendants Sogou 10 Inc. and Sohu.com Inc. 11 DATED: November 23, 2020 MORGAN, LEWIS & BOCKIUS LLP 12 By: /s/ Charlene S. Shimada 13 Charlene S. Shimada (SBN 91407) 14 charlene.shimada@morganlewis.com Robert O’Leary (SBN 284879) 15 bob.oleary@morganlewis.com One Market, Spear Street Tower 16 San Francisco, California 94105 Telephone: (415) 442-1000 17 Facsimile: (415) 442-1001 18 Counsel for Specially-Appearing Defendants J.P. Morgan Securities LLC, Credit Suisse Securities 19 (USA) LLC, and Goldman Sachs (Asia) L.L.C. 20 DATED: November 23, 2020 SIDLEY AUSTIN LLP 21 By: /s/ Jaime A. Bartlett 22 Sara B. Brody (SBN 130222) sbrody@sidley.com 23 Jaime A. Bartlett (SBN 251825) 24 jbartlett@sidley.com 555 California Street, Suite 2000 25 San Francisco, California 94104 Telephone: (415) 772-1200 26 Facsimile: (415) 772-7400 27 Counsel for Specially-Appearing Defendant Yuxin Ren 28 Farella Braun + Martel LLP 8 36971\13796085.2 th 235 Montgomery Street, 17 Floor San Francisco, California 94104 (415) 954-4400 SPECIALLY-APPEARING DEFENDANTS’ OPPOSITION TO MOTION TO LIFT STAY Lead Case No. 18-CIV-06699 1 PROOF OF SERVICE 2 IN RE SOGOU INC. SECURITIES LITIGATION Lead Case No. 18CIV06699 3 4 STATE OF CALIFORNIA, COUNTY OF SAN MATEO 5 I, the undersigned, declare: 6 I am a resident of the United States and employed in San Francisco County, California. I am over the age of eighteen years and not a party to the within-entitled action. My business 7 address is 235 Montgomery Street, 17th Floor, San Francisco, California 94104. My e-mail 8 address is svillalobos@fbm.com. On November 23, 2020, Iserved true copies of the following document(s) described as: 9 SPECIALLY-APPEARING DEFENDANTS’ MEMORANDUM OF POINTS AND 10 AUTHORITIES IN OPPOSITION TO PLAINTIFFS’ MOTION TO LIFT THE STAY 11 on the interested parties in this action as follows: 12 13 E-MAIL TRANSMISSION: by transmitting via email PDF the document(s) listed above to the e-mail addresses set forth below on this date. 14 15 Francis A. Bottini, Jr. James Jaconette Yury A. Kolesnikov Brian E. Cochran 16 BOTTINI & BOTTINI, INC. ROBBINS GELLER RUDMAN & DOWD LLP 7817 Ivanhoe Avenue, Suite 102 655 West Broadway, Suite 1900 17 La Jolla, California 92037 Tel.: (858) 914-2001 San Diego, CA 92101-8498 18 Fax: (858) 914-2002 Tel.: (619) 231-1058 fbottini@bottinilaw.com Fax: (619) 231-7423 19 ykolesnikov@bottinilaw.com JamesJ@rgrdlaw.com bcochran@rgrdlaw.com 20 Attorneys for Plaintiff Artak Khayan Attorneys for Plaintiff Skyler Bishop 21 Patrice Bishop Brian J. Robbins 22 STULL STULL & BRODY Stephen J. Oddo 9430 West Olympic Boulevard , Suite 400 ROBBINS ARROYO LLP 23 Beverly Hills, CA 90212 5040 Shoreham Place San Diego, CA 92122 Tel.: (310) 209-2468 Tel.: (619) 525-3990 24 Fax: (310) 209-2087 Fax: (619) 525-3991 25 service@ssbla.com brobbins@robbinsarroyo.com Attorney for Plaintiff Asha Lickley Dore soddo@robbinsarroyo.com 26 Attorneys for Plaintiff Skyler Bishop 27 28 Farella Braun + Martel LLP th 235 Montgomery Street, 17 Floor San Francisco, California 94104 Proof of Service (415) 954-4400 IN RE SOGOU INC. SECURITIES LITIGATION; Lead Case No. 18CIV06699 36971\13796133.1 1 2 Attorneys for Specially Appearing Defendants: 3 Charlene S. Shimada J.P. Morgan Securities LLC, Credit Suisse 4 Lucy Wang Securities (USA) LLC and Goldman Sachs MORGAN, LEWIS & BOCKIUS LLP (Asia) L.L.C. 5 One Market, Spear Street Tower San Francisco, CA 94105-1596 6 Tel: (415) 442-1475 Fax: (415) 442-1001 7 charlene.shimada@morganlewis.com lucy.wang@morganlewis.com 8 Sara B Brody Attorneys for Specially Appearing Defendant 9 Jaime A. Bartlett Yuxin Ren SIDLEY AUSTIN LLP 10 555 California Street, Suite2000 San Francisco, CA 94104 11 Tel: (415) 772-1200 Fax: (415) 772-7400 12 sbrody@sidley.com jbartlett@sidley.com 13 14 Courtesy Copy Emailed to: 15 16 Honorable Marie S. Weiner San Mateo Superior Court 17 Department 2, Courtroom 2E 400 County Center 18 Redwood City, CA 94063 Email: complexcivil@sanmateocourt.org 19 I declare under penalty of perjury under the laws of the State of California that the 20 foregoing is true and correct. Executed on November 23, 2020, at Hayward, California. 21 22 23 24 25 Sharon M. Villalobos 26 27 28 Farella Braun + Martel LLP th 235 Montgomery Street, 17 Floor San Francisco, California 94104 Proof of Service (415) 954-4400 IN RE SOGOU INC. SECURITIES LITIGATION; Lead Case No. 18CIV06699 36971\13796133.1