4 Firms Vie For Lead Counsel In Zoom Shareholder Litigation
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Law360 (June 10, 2020, 7:12 PM EDT) — Pomerantz LLP, The Rosen Law Firm PA, Robbins Geller Rudman & Dowd LLPand Faruqi & Faruqi LLPare competing to lead consolidated litigation brought by investors alleging video conferencing provider Zoom misled shareholders about the degree of its data privacy and security measures, according to motions filed in California federal court.
The investors initially alleged in two separate suits that they were harmed when the company’s “inadequate data privacy and security measures”came to light and companies started backing off using the service. As a result, the company’s stock price plummeted, they said.
U.S. District Judge James Donato consolidated the cases last month.
Pomerantz and Rosen, which are looking to lead the case together, urged the court to appoint their client Zoom Investor Group as the lead plaintiff, arguing that it has the largest financial interest in the matter. Zoom Investor Group claimed it lost about $708,760 as a result of Zoom’s failures, according to the motion dated Monday.
Pomerantz and Rosen “have the skill, knowledge, expertise, resources and experience that will enable the firms to prosecute the action effectively and expeditiously under the Zoom Investor Group’s direction,” they said.
Meanwhile, Robbins Geller argued that its client, Adam Butt, should take the helm, arguing that Butt has a substantial financial interest in the relief sought and he suffered the same injury as other members of the proposed class. Butt lost about $209,500, according to the motion.
“As to adequacy, Mr. Butt’s substantial stake in the outcome of the case indicates he has the requisite incentive to vigorously represent the class’s claims,” Robbins Geller said. Moreover, Mr. Butt is not aware of any conflicts between his claims and those asserted on behalf of the putative class and is not subject to any unique defenses.”
Robbins Geller added that it has obtained the largest securities fraud class action recovery in six of the circuit courts.
“Thus, the court can be assured that by approving Mr. Butt’s choice of Robbins Geller as lead counsel the putative class will receive the highest caliber of representation,” the firm said.
Finally, Faruqi & Faruqi argued in favor of its client, Lawrence Jarnes, who alleges he lost about $135,452 as a result of Zoom’s actions. Jarnes’ claims are typical of the class, and he will adequately protect the class’ interests given his “significant financial stake” in the litigation, the firm said.
And Faruqi & Faruqi should serve as lead counsel because it is a “highly experienced plaintiffs’ firm with substantial securities class action experience,” the firm said.
Investor Michael Drieu initially sued Zoom in April, alleging that Zoom had “significantly overstated the degree to which its video communication software was encrypted.” As the news spread during the pandemic, organizations began prohibiting their employees from using Zoom for work activities, and the company’s stock price dropped, Drieu said.
Zoom allegedly included false or misleading statements and omissions in its initial public offering documents, saying it offered “robust security capabilities, including end-to-end encryption,” according to the complaint.
End-to-end encryption prevents third parties from accessing communications.
The proposed class said the company’s offering documents contained “boilerplate” warnings related to cybersecurity, data privacy and hacking and “generic ‘catchall’ provisions that were not tailored to Zoom’s actual known risks concerning weaknesses in its cybersecurity and data protection systems.”
He was looking to represent a class of people who purchased or acquired Zoom shares between April 18, 2019 –– the day the company began publicly trading on the Nasdaq ––and April 6, 2020.
Drieu’s suit was consolidated with Brams v. Zoom Video Communications Inc. on May 18. He didn’t put his hat in the ring for lead plaintiff.
Counsel for the investors didn’t immediately return requests for comment Wednesday.
Zoom Investor Group is represented by Jennifer Pafiti, Jeremy A. Lieberman, J. Alexander Hood II and Patrick V. Dahlstrom of Pomerantz LLP and Laurence M. Rosen of the Rosen Law Firm PA.
Butt is represented by Shawn A. Williams, Danielle S. Myers and Juan Carlos Sanchez of Robbins Geller Rudman & Dowd LLP.
Jarnes is represented by Benjamin Heikali and Richard W. Gonnello of Faruqi & Faruqi LLP.
Zoom is represented by Patrick E. Gibbs, Jessica Valenzuela, Jenna C. Bailey, Reza Harris and Craig E. TenBroeck of Cooley LLP.
The case is In re: Zoom Securities Litigation, case number 5:20-cv-02353, in the U.S. District Court for the Northern District of California.
–Additional reporting by Kelly Zegers, Allison Grande and Emma Whitford. Editing by Haylee Pearl.
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