Reply Memorandum of Law of Movant Blue Laine-Beveridge in Further Support of His Lead Plaintiff Motion — In re January 2021 Short Squeeze Trading Litigation (Dkt. 386, S.D. Fla.)

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A Reply Memorandum of Law of Movant Blue Laine-Beveridge in Further Support of His Lead Plaintiff Motion in In re: January 2021 Short Squeeze Trading Litigation, Case 1:21-md-02989-CMA (Case No. 21-2989-MDL-ALTONAGA/Torres, Document 386, 10 pages), in the U.S. District Court for the Southern District of Florida, dated August 17, 2021 and entered that day, filed by The Rosen Law Firm, P.A. over the /s/ signature of Laurence M. Rosen. The reply argues that Laine-Beveridge is the presumptive lead plaintiff under the PSLRA, 15 U.S.C. §78u-4(a)(3)(B)(iii)(I), with the largest financial interest, a loss of $122,383.49 (Dkt. Nos. 366 at 9 and 366-4), and a prima facie showing of adequacy and typicality. The reply asks that the motion be granted in its entirety and the competing motion denied.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO. 21-2989-MDL-ALTONAGA/Torres

This Document Relates to: All Actions Involving the Federal Securities Laws

REPLY MEMORANDUM OF LAW OF MOVANT BLUE LAINE-BEVERIDGE IN
FURTHER SUPPORT OF HIS LEAD PLAINTIFF MOTION

In re: JANUARY 2021 SHORT SQUEEZE
TRADING LITIGATION

Case 1:21-md-02989-CMA   Document 386   Entered on FLSD Docket 08/17/2021   Page 1 of 10

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TABLE OF AUTHORITIES
Cases
Brustein v. Lampert, 2005 WL 8154797 (S.D. Fla. June 16, 2005) ........................................... 1, 6
Cambridge Ret. Sys. v. Mednax, Inc., 2018 WL 8804814 (S.D. Fla. Dec. 6, 2018), report and
recommendation adopted,  2018 WL 6978626 (S.D. Fla. Dec. 21, 2018) .................................. 4
City of Monroe Employees' Ret. Sys. v. Hartford Fin. Servs. Grp., Inc., 269 F.R.D. 291 (S.D.N.Y.
2010)............................................................................................................................................ 4
Constance Sczesny Trust v. KPMG LLP, 223 F.R.D. 319 (S.D.N.Y. 2004) .................................. 1
Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176 (2d
Cir.1990) ..................................................................................................................................... 4
Grand Lodge of Pennsylvania v. Peters, 560 F. Supp. 2d 1270 (M.D. Fla. 2008) ......................... 2
Hevesi v. Citigroup Inc., 366 F.3d 70 (2d Cir. 2004) ................................................................. 2, 5
In re HealthSouth Corp. Sec. Litig., 261 F.R.D. 616 (N.D. Ala. 2009) ...................................... 2, 5
In re Mersho, 6 F.4th 891, 2021 WL 3121385 (9th Cir. 2021) ...................................................... 1
In re Netflix, Inc., Sec. Litig., 2012 WL 1496171 (N.D. Cal. Apr. 27, 2012) ................................. 5
In re Sci.-Atlanta, Inc. Sec. Litig., 571 F. Supp. 2d 1315 (N.D. Ga. 2007) .................................... 4
Jaffe Pension Plan v. Household Intern., Inc., 756 F. Supp. 2d 928 (N.D. Ill. 2010); ................... 4
Loc. 703, I.B. of T. Grocery & Food Emps. Welfare Fund v. Regions Fin. Corp., 762 F.3d 1248
(11th Cir. 2014) ....................................................................................................................... 3, 6
Miller v. Dyadic Int'l, Inc., 2008 WL 2465286 (S.D. Fla. Apr. 18, 2008) ..................................... 3
Pritchard v. Apyx Med. Corp., 2019 WL 9093486 (M.D. Fla. July 16, 2019) ............................... 1
Sofran
v.
LaBranche
&
Co.,
220 F.R.D. 398 (S.D.N.Y.2004) ................................................................................................. 2
Town of Davie Police Pension Plan v. Pier 1 Imports, Inc., 2016 WL 1625774 (N.D. Tex. Apr.
25, 2016)...................................................................................................................................... 1
Tsiredike v. Syntax-Brillian Corp., 2009 WL 2151838 (D. Ariz. July 17, 2009) ........................... 2

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Statutes
15 U.S.C. §78u-4(a) .................................................................................................................... 1, 2

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Lead Plaintiff Movant Blue Laine-Beveridge (“Mr. Laine-Beveridge” or “Movant”)
respectfully submits this reply memorandum of law in further support of his lead plaintiff
motion. Dkt. No. 366.
Mr. Laine-Beveridge is the presumptive lead plaintiff under the PSLRA.  He has the largest
financial interest as he lost $122,383.49.  Dkt. Nos. 366 at 9 and 366-4.  He also made a prima
facie showing of adequacy and typicality.  Dkt. Nos. 366 at 9-10 and 366-3.  Therefore, he is the
presumptive lead plaintiff.  See 15 U.S.C. §78u-4(a)(3)(B)(iii)(I); Brustein v. Lampert, 2005 WL
8154797, at *7 (S.D. Fla. June 16, 2005); Pritchard v. Apyx Med. Corp., 2019 WL 9093486, at *2
(M.D. Fla. July 16, 2019).
It is at the next step, the presumption rebuttal stage where the Court considers arguments
from competing lead plaintiffs regarding a movant’s Rule 23 compliance.  In re Mersho, 6 F.4th
891, 2021 WL 3121385, at *5 (9th Cir. 2021) (“At step three, the process turns adversarial.”); In
re Cendant Corp. Litig., 264 F.3d 201, 268 (3d Cir. 2001) (same).
Therefore, under the PSLRA, the Group must come forward with proof that Mr. Laine-
Beveridge is inadequate or atypical.  15 U.S.C. §78u-4(a)(3)(B)(iii)(II).  Speculative challenges
do not satisfy the PSLRA’s requirement that the presumptively most adequate plaintiff may only
be rejected if a rival movant presents “proof” that the presumptive lead plaintiff, here Mr. Laine-
Beveridge, will not adequately represent the class.  15 U.S.C. § 78u-4(a)(3)(B)(iii)(II); Town of
Davie Police Pension Plan v. Pier 1 Imports, Inc., 2016 WL 1625774, at *5 (N.D. Tex. Apr. 25,
2016) (“speculative assertions are insufficient to rebut the presumption that [Mr. Laine-Beveridge]
is the most adequate plaintiff.”); Constance Sczesny Trust v. KPMG LLP, 223 F.R.D. 319, 324
(S.D.N.Y. 2004) (“[C]onclusory assertions of inadequacy are, however, insufficient to rebut the
statutory presumption under the PSLRA without specific support in evidence …”); Sofran v.
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LaBranche & Co., 220 F.R.D. 398, 403-04 (S.D.N.Y. 2004) (emphasizing that the PSLRA requires
proof of inadequacy and not mere “speculation”).

In opposition, the Group attempts to rebut the presumption in favor Mr. Laine-Beveridge
by arguing that Mr. Laine-Beveridge is inadequate and/or subject to unique defenses because he
had a relatively modest gain in connection with his purchase and sale of AMC stock on the
Robinhood platform.  Dkt. No. 377, at 5-11.  This argument is without merit on several levels.

First, the Group variously argues that Mr. Laine-Beveridge lacks individual standing to
represent AMC investors because he a made profit on his trades in AMC stock.  Id.  This argument
is without merit.  Mr. Laine-Beveridge need not have standing (or a loss) on every claim to be lead
plaintiff.  See In re HealthSouth Corp. Sec. Litig., 261 F.R.D. 616, 648 (N.D. Ala. 2009)
(“However, the fact that [the Retirement Systems of Alabama] does not have standing to pursue
the Section 11 claims does not render class certification improper. Inevitably, in cases where a
lead plaintiff has been selected under the requirements of the PSLRA, a lead plaintiff may not have
standing to sue on every available claim. [] In such cases, as here, additional named plaintiffs may
be needed to aid the lead plaintiff in representing the class.”) (internal citation omitted); Tsiredike
v. Syntax-Brillian Corp., 2009 WL 2151838, at * 2 (D. Ariz. July 17, 2009) (“Nothing in the
PSLRA indicates that district courts must choose a lead plaintiff with standing to sue on every
available cause of action.”).  Indeed, it is well settled that additional named plaintiffs can be added
to an amended complaint to round out any standing issues.  In re HealthSouth, 261 F.R.D. at 648;
Grand Lodge of Pennsylvania v. Peters, 560 F. Supp. 2d 1270, 1273 (M.D. Fla. 2008); Hevesi v.
Citigroup Inc., 366 F.3d 70, 82 (2d Cir. 2004) (“Nothing in the PSLRA indicates that district courts
must choose a lead plaintiff with standing to sue on every available cause of action. Rather, because
the PSLRA mandates that courts must choose a party who has, among other things, the largest
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financial stake in the outcome of the case, it is inevitable that, in some cases, the lead plaintiff will
not have standing to sue on every claim.”).

The Group implicitly acknowledges this reality, since its members do not have standing to
represent all the Affected Securities.  Indeed, Group members themselves lack standing and did
not transact in American Airlines Group Inc. (NASDAQ: AAL), BlackBerry Limited (NYSE: BB),
Bed Bath & Beyond Inc. (NASDAQ: BBBY), Express (NYSE: EXPR), Naked Brand Group
(NASDAQ: NAKD), Sundial Growers, Inc. (NASDAQ: SNDL), Tootsie Roll Industries (NYSE:
TR), nor Trivago NV (NASDAQ: TRVG).  Compare Dkt. Nos. 365 at 6, 366 at 5, with 365-2.

Second, the Group speculates that “Mr. Laine-Beveridge is … less likely to vigorously
pursue claims related to AMC losses” because he had a gain and lacks standing.  This speculation
is without merit.  As noted in Mr. Laine-Beveridge’s opening brief, he “intends to add additional
named plaintiffs to represent securities Movant did not purchase to ensure all the Affected
Securities are covered.”  Dkt. No. 366 at 11 n.2.  Additionally, Mr. Laine-Beveridge has the same
incentive to prove the alleged manipulative conduct.  The alleged trading restrictions and the
reasons behind them were applied across the Affected Securities.  Dkt. No. 366 at 6 -7.  Therefore,
any investor of the Affected Securities must prove the same underlying conduct to support their
claims—irrespective of the stock.  Miller v. Dyadic Int'l, Inc., 2008 WL 2465286, at *6 (S.D. Fla.
Apr. 18, 2008) (“As stated in [his] brief, [Mr. Laine-Beveridge] satisfies the typicality requirement
because [his] claims share the same ‘essential characteristics as the class at large.’”) (citing Prado-
Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1278–79 n. 14 (11th Cir. 2000)).

Third, there is no dispute that Mr. Laine-Beveridge has a net loss—over $122,383. Courts
routinely appoint lead plaintiff movants that have net losses.  Loc. 703, I.B. of T. Grocery & Food
Emps. Welfare Fund v. Regions Fin. Corp., 762 F.3d 1248, 1260 (11th Cir. 2014) (affirming
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finding of typicality of a lead plaintiff at class certification who suffered a net loss of approximately
$677,000, even though it sold over $250,000 worth of shares during the class period); Cambridge
Ret. Sys. v. Mednax, Inc., 2018 WL 8804814, at *6 (S.D. Fla. Dec. 6, 2018), report and
recommendation adopted,  2018 WL 6978626 (S.D. Fla. Dec. 21, 2018) (analyzing and adopting
Jaffe Pension Plan’s reasoning that “Finding that several circuit courts of appeal already had
adopted a damages model that required plaintiffs’ losses to be netted against profits attributable to
the same fraud [which Mr. Laine-Beveridge provided], the court held that ‘out-of-pocket damages
should be limited to actual damages because it is a better measurement of the true economic loss
sustained by plaintiffs due to defendants’ fraud.’”  (quoting Jaffe Pension Plan v. Household
Intern., Inc., 756 F. Supp. 2d 928, 935 (N.D. Ill. 2010); see, also City of Monroe Employees' Ret.
Sys. v. Hartford Fin. Servs. Grp., Inc., 269 F.R.D. 291, 295-96 (S.D.N.Y. 2010) (“consistent with
the majority of courts in this district, we find that LIFO [which Mr. Laine-Beveridge utilized] is
the most accurate measure of actual losses suffered by stockholders in that it takes into account
any gains accrued from sales”).  It undisputed that Mr. Laine-Beveridge has a net loss of
$122,383.49 after deducting any profits he made.  Dkt. No. 366-4.

Fourth, that Mr. Laine-Beveridge had a gain in AMC stock but an overall net loss is not a
“unique defense.”  For a defense to be a disabling “unique defense,” it has to be unique to a lead
plaintiff movant and not something other class members are subject to.   In re Sci.-Atlanta, Inc.
Sec. Litig., 571 F. Supp. 2d 1315, 1327 (N.D. Ga. 2007) (“a defense which is unique to the class
representative and which has the potential to become ‘the focus of the litigation’ may suffice to
destroy typicality.”) (quoting Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 903 F.2d 176, 180 (2d Cir.1990)).  Here, there is nothing unique about an investor with
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gains and losses in the Affected Securities.  Many investors traded these same “meme” stocks1 and
other members of the class had losses in some of the Affected Securities and gains in others.2

Fifth, the Group’s cases are off the mark.  The Group cites In re HealthSouth, yet that court
certified a class of bondholders noting “the fact that [the Retirement Systems of Alabama] does
not have standing to pursue the Section 11 claims does not render class certification improper.
Inevitably, in cases where a lead plaintiff has been selected under the requirements of the PSLRA,
a lead plaintiff may not have standing to sue on every available claim.” 261 F.R.D. at 648 (citing
Hevesi, 366 F.3d at 82).  Mr. Laine-Beveridge has stated he will add additional named plaintiffs
to cover the Affected Securities (as the Group would have to do).  Dkt. No. 366 at 8 n.2.

In re Netflix, Inc., Sec. Litig., actually undermines the Group itself. The Netflix court
“determine[d] that the Fish Group is an unrelated group of individuals and accordingly declines to
aggregate their individual losses. The Fish Group has made no showing of former ties or current
cohesion. … and finds it to be a sufficient reason to decline to aggregate the individual claims of
the Fish Group’s members.” 2012 WL 1496171, at *4 (N.D. Cal. Apr. 27, 2012).  Then, due to
one group member not controlling the relevant securities and therefore having no standing (the
securities were instead controlled by a related trust which would have standing), the group was
found inadequate and the Netflix court also found that the potential issue “could subject the class
to the burden of litigation focused on her standing.” Id. at 5.

1 Indeed, the Group members themselves traded in at least a few of the Affected Securities.  Dkt.
No. 365-2.
2 Ponczek, Sarah, Katharine Gemmell, and Charlie Wells, “Meme Stocks Lose $167 Billion as
Reddit
Crowd
Preaches
Defiance”,
Bloomberg,
February
2,
2021,
https://web.archive.org/web/20210209130419/https://www.bloomberg.com/news/articles/2021-
02-02/moonshot-stocks-lose-167-billion-as-crowd-preaches-defiance (noting that individual
investors invested in more than one security and that some realized some gains).
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In Regions the court observed that some courts find that “an investor who suffers no net
losses thanks to sales during the class period is subject to an atypical standing defense,” however
the Court explained that when investor makes gains but suffers a net loss the investor is adequate
and typical.  762 F.3d 1248, 1259 (11th Cir. 2014).

In short, the Group has failed to rebut the presumption in favor of Mr. Laine-Beveridge
with proof that he is inadequate or atypical.  Brustein, 2005 WL 8154797, at *7 (“Because the
Court finds no proof in the record that challenges Mr. [Laine-Beveridge’s] satisfaction of the
typicality and adequacy requirements, it finds that Mr. [Laine-Beveridge] has satisfied this third
requirement.”).  As such, the Court should grant Mr. Laine-Beveridge’s motion in its entirety and
deny the Group’s motion.
CONCLUSION

For the foregoing reasons, Mr. Laine-Beveridge’s motion should be granted in its entirety
and the competing motion should be denied.
Dated: August 17, 2021

Respectfully submitted,

THE ROSEN LAW FIRM, P.A.

/s/Laurence M. Rosen

 Laurence M. Rosen, Esq., Fla. Bar No. 0182877

 Phillip Kim, Esq.

 Michael Cohen, Esq.

 Erica Stone, Esq.
275 Madison Avenue, 40th Floor
New York, New York 10016
Telephone: (212) 686-1060
Fax: (212) 202-3827
Email: lrosen@rosenlegal.com
Email: pkim@rosenlegal.com
Email: mcohen@rosenlegal.com
Email: estone@rosenlegal.com

[Proposed] Lead Counsel for Lead Plaintiff
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CERTIFICATE OF SERVICE

I hereby certify that on August 17, 2021, a true and correct copy of the foregoing document
was served by CM/ECF to the parties registered to the Court’s CM/ECF system.

/s/Laurence M. Rosen

Case 1:21-md-02989-CMA   Document 386   Entered on FLSD Docket 08/17/2021   Page 10 of 10

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