Zoom Video Communications Inc. investors who failed to secure a role as lead plaintiff for the would-be class lost their bid to get a federal judge in California to reconsider appointing them.
The Zoom Investor Group didn’t identify any new law or material facts supporting its reconsideration bid, and failed to show a “manifest failure” in the original proceedings to pick a lead plaintiff for the securities suit against the online communications platform, the U.S. District Court for the Northern District of California said.
Investors accused Zoom of hiding software encryption flaws ahead of a drastic increase in usage due to the coronavirus pandemic. Judge James Donato appointed individual investor Adam Butt as lead plaintiff in November, based in part on his alleged losses of more than $209,000.
The Group didn’t “offer a good reason” for revisiting the appointment or replacing Butt as lead plaintiff, Donato’s Monday order said. It didn’t contest that Butt has the largest financial interest in the case under the court’s multiple disclosure dates approach or give a persuasive reason why that methodology isn’t appropriate.
The Group “more than once” argued that the damages cap should be calculated based on the final corrective disclosure alone, but the Private Securities Litigation Reform Act “makes no such demand,” Donato said.
“Contrary to the Group’s suggestion,” the court’s methodology wasn’t “judicial off-roading into the wilderness,” the order said, noting that other district courts have followed a similar approach.
The group urged the court to use a single-disclosure approach instead, but that’s “neither rational nor consistent under the circumstances,” Donato said.
Rosen Law Firm PA and Pomerantz LLP represented the Group. Robbins Geller Rudman & Dowd LLP represents the investors as lead counsel. Cooley LLP represents Zoom.
The case is In re Zoom Sec. Litig., N.D. Cal., No. 3:20-cv-02353, reconsideration request denied 4/12/21.