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Scuderi v. Mammoth Energy Services Inc.

United States District Court, W.D. Oklahoma

September 13, 2019

THOMAS SCUDERI, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
MAMMOTH ENERGY SERVICES, INC., ARTY STRAEHLA, and MARK LAYTON, Defendants. JUSTIN NORMANTAS, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
MAMMOTH ENERGY SERVICES, INC., ARTY STRAEHLA, and MARK LAYTON, Defendants. THE CITY OF SARASOTA GENERAL EMPLOYEE DEFINED BENEFIT PENSION PLAN, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
MAMMOTH ENERGY SERVICES, INC. ARTY STRAEHLA, and MARK LAYTON, Defendants.

          ORDER CONSOLIDATING ACTIONS AND APPOINTING LEAD PLAINTIFFS AND LEAD COUNSEL

          SCOTT L. PALK UNITED STATES DISTRICT JUDGE.

         These three related matters involve a proposed securities fraud class action on behalf of persons or entities who purchased or otherwise acquired publicly traded Mammoth Energy Services Inc. (Mammoth) securities from October 19, 2017 through June 5, 2019. These matters are before the Court on pending motions to consolidate, appoint lead plaintiff(s) and appoint lead counsel pursuant to the Private Securities Litigation Reform Act (PSLRA), principally codified at 15 U.S.C. § 78u-4, as more fully set forth below.

         I. The Actions

         A. Scuderi - Case No. CIV-19-522

         On June 7, 2019, Plaintiff Thomas Scuderi (Scuderi) filed a proposed class action complaint for violation of the federal securities laws. See Compl. [Doc. No. 1]. On the same day the suit was filed, Scuderi's counsel's law firm published notice of the pendency of the action announcing that lead plaintiff motions were due no later than August 6, 2019. See Notice [Doc. No. 20-1]. Thereafter, on August 6, 2019, Scuderi, together with Stephen Terry, Justas Normantas, Andrew Micklin, and Dion Larot (collectively, the Mammoth Investor Group) filed a motion to consolidate, appoint lead counsel and approve lead plaintiff's selection of counsel. See Motion [Doc. No. 18]. The Mammoth Investor Group subsequently filed a Notice of Withdrawal [Doc. No. 31] acknowledging that “[t]he Mammoth Investor Group does not appear to have the largest financial interest.” Id. at 2. The Mammoth Investor Group continues to move for consolidation of the actions but withdraws its request to be appointed lead plaintiff or to have its counsel be approved to serve as lead counsel.

         B. Normantas - Case No. CIV-19-560

         On June 19, 2019, Plaintiff Justas Normantas (Normantas) filed a lawsuit that arises from substantially the same factual allegations and legal issues as the Scuderi lawsuit. See Compl. [Doc. No. 1].

         C. Sarasota - Case No. CIV-19-720

         On August 6, 2019, Plaintiff City of Sarasota General Employees Defined Benefit Pension Plan (Sarasota) filed a lawsuit. The lawsuit filed by Sarasota is also substantially the same as the Scuderi and Normantas lawsuits. See Compl. [Doc. No. 1].

         I. Consolidation

         The motions before the Court have been filed by the Mammoth Investor Group, the Furia Family[1] and Sarasota.[2] Pursuant to the PSLRA, when, as here, motions to consolidate and motions for appointment of lead plaintiff are pending simultaneously, the Court must first decide the consolidation issue. See 15 U.S.C. § 78u-4(a)(3)(B)(ii). Consolidation of related cases is proper “[i]f actions before the court involve a common question of law or fact . . . .” Fed.R.Civ.P. 42(a).

         The Scuderi, Normantas and Sarasota actions involve claims on behalf of purchasers of Mammoth securities for alleged violations of securities laws. The actions each name as defendants Mammoth Energy Services, Inc., Arty Straehla and Mark Layton. All three actions arise from the same factual and legal issues: whether the plaintiffs purchased or otherwise acquired Mammoth securities at artificially inflated prices during the relevant time period as a result of Defendants' allegedly false and misleading statements, and whether the Defendants' conduct violated the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and Securities and Exchange Commission (SEC) Rule 10(b)-5. Moreover, no party opposes consolidation of the related actions. Accordingly, the Court finds consolidation is proper and directs that the cases be consolidated for all pretrial proceedings and for trial.

         II. Appointment of Lead Plaintiff

         The PSLRA further governs the procedure for appointment of lead plaintiff. See 15 U.S.C. § 78u-4(a)(3).[3] The PSLRA mandates the Court to “adopt a presumption that the most adequate plaintiff . . . is the person or group of persons that” (1) “has either filed the complaint or made a motion in response to a notice”; (2) “has the largest financial interest in the relief sought by the class” and (3) “otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.” Id., § 78u-4(a)(3)(B)(iii)(I). The presumption is rebuttable but only upon proof that the presumptively most adequate plaintiff “will not fairly and adequately protect the interests of the class” or “is subject to unique defenses that render such plaintiff incapable of adequately representing the class.” Id., § 78u-4(a)(3)(B)(iii)(II). “The court must examine potential lead plaintiffs one at a time, starting with the one who has the greatest financial interest, and continuing in descending order if and only if the presumptive lead plaintiff is found inadequate or atypical.” In re Cavanaugh, 306 F.3d 726, 732 (9th Cir. 2002).

         A. The Furia Family has the Largest Financial Interest in the Relief Sought

         Here, applying the statutory presumption, the Furia Family is the most adequate plaintiff. “[C]ourts routinely look to the movant's financial loss as the most significant factor in assessing his financial interest in the action.” Ellis v. Spectranetics Corp., No. 15-cv-01857-KLM, 2015 WL 9259928 at *2 (D. Colo. Dec. 18, 2015) (unpublished op.). The Furia Family has suffered $989, 215.54 in losses as a result of Defendants' alleged wrongful conduct. See Walker Decl. [Doc. No. 22-1], Exs. B-E; see also Furia Family's Opp. [Doc. No. 32] at 3.[4] In comparison, Sarasota identifies $133, 595.84 as its approximate losses. See Berg Decl. [Doc. No. 35], Ex. 4; see also Sarasota's Mem. of Law in Opp. [Doc. No. 34] at 9, 13.[5]

         B. The Furia Family Satisfies the Requirements of Rule 23

         The Court also finds the Furia Family satisfies the typicality and adequacy requirements of Rule 23.[6]

         1. Typicality

         The Furia Family's claims are typical of those of the class. The typicality requirement is satisfied “so long as the claims of the class representative and class members are based upon the same legal theory or remedial theory.” Wolfe v. AspenBio Pharma, Inc. 275 F.R.D. 625, 628 (D. Colo. 2011) (citation omitted); see also City of Dania Beach Police & Firefighters' Ret. Sys. v. Chipotle Mexican Grill, Inc., No. 12-CV-02164-PAB- KLM, 2013 WL 1677553 at *2 (D. Colo. Apr. 17, 2013) (unpublished op.) (“Typicality exists where the injury and the conduct are sufficiently similar.” (quotations omitted)). As set above in the Court's discussion of whether consolidation of the related actions is proper, like all purported class members, the Furia Family purchased Mammoth securities during the relevant time period and suffered injuries based on the same alleged fraudulent conduct of Defendants. The factual and legal issues governing the claims of the Furia Family are the same as those governing the other purported class members. Cf. Wolfe, 275 F.R.D. at 628 (finding typicality requirement satisfied where “both movant and members of the purported class allege that they purchased shares of AspenBio Pharma, Inc. (“AspenBio”) stock at prices that were artificially inflated by defendants' misrepresentations and omissions regarding the effectiveness of AspenBio's main product, AppyScore”); see also In re Ribozyme, 192 F.R.D. at 658-59 (“Both plaintiff groups satisfy this requirement because, ...


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