On Tuesday, Judge Richarg Seeborg of the Northern District of California sided with the plaintiffs, Boston Retirement System (BRS) and four individuals, by both granting their motion for class certification and appointing them as class representatives. The opinion said that certification was appropriate, despite Uber Technologies Inc. and its board members’ assertion that the proposed plaintiffs did not satisfy Federal Rules of Civil Procedure requirements.
The securities class action concerns alleged omissions Uber made at the time of its initial public offering (IPO) about the legality of its business model, its passenger safety record, and its financial condition. BRS purchased shares for $45 per share as part of the IPO that generated nearly $8 billion in proceeds for Uber, but when the news came to light, the share price slid to an all-time low of $25.99 on Nov. 14, 2019.
In this week’s opinion, Judge Seeborg considered the propriety of class treatment. First, he overrode Uber’s predominance concerns. Specifically, the company argued that lead plaintiff BRS’s actual knowledge of the omissions defeated class certification via “evidence in the form of deposition testimony from various employees of BRS’s investment manager, ZCI, showing that some employees had knowledge of pieces of information related to the alleged omissions.”
The court opined that apart from issues of whether knowledge of individual ZCI employees may be imputed to BRS, the awareness of “snippets of information” does not defeat predominance.
In addition, Uber argued that actual knowledge gave rise to individualized issues of causation which would predominate over common issues and create conflicts within the class. Judge Seeborg declined the argument in view of Uber’s failure to establish that actual knowledge, concluding that the company failed to carry its burden of proving the affirmative defense.
As to adequacy, Uber fingered lead plaintiff BRS for not controlling the litigation and abdicating responsibility for running the case to counsel. The court found the arguments overdramatic, with Uber “assert[ing] a higher bar to establishing adequacy than is required in this circuit.”Lead counsel for the plaintiffs and putative class is Labaton Sucharow LLP. Uber is represented by Shearman & Sterling LL and Willkie Farr & Gallagher LLP.