UPDATE: Court in LendingClub Class Action Appoints Lead Plaintiff’s Counsel as Class Counsel
We posted earlier about the surprising decision of Judge William Alsup of the Northern District of California not to appoint lead counsel in the LendingClub class action cases at the same time he appointed a lead plaintiff. Instead, the judge ordered that candidates for lead counsel must submit applications to the newly appointed lead plaintiff, who would then move the court—via their current counsel, who was allowed to apply but not to receive special treatment—to approve the lead plaintiff’s choice.
That process has now concluded, and in a short order dated October 28, 2016 ("Op."), Judge Alsup held that lead plaintiff’s current counsel, Robbins Geller, was an appropriate selection as class counsel. Specifically, “the Court [was] persuaded that the selection of Robbins Geller was within the scope of several reasonable choices and was not influenced by any pay-to-play considerations.” (Op. at 1.)
Although it may not have been a surprise that the lead plaintiff would select its current counsel to be class counsel, “nine other firms … applied to serve as counsel for lead plaintiff.” (Op. at 2.) The court has taken each applicant seriously, as well. “In the course of preparing for the hearing, the Court reviewed some of the submissions made by candidates for selection as counsel for lead plaintiff and read with particularity the fee proposals, staffing proposals, and counsel’s track records.” (Op. at 2.) However, the court stated that it “did not read passages dealing with plans for prosecuting the case.” (Op. at 2.)
As we noted in the prior post, the decision to separate the appointments of lead plaintiff and lead counsel into separate processes is rare. Nonetheless, the LendingClub case is a good reminder that parties and their counsel should not take it as a given that lead plaintiff and lead counsel will be appointed at the same time, and lead counsel (or potential lead counsel) should take care to make sure that they can justify their lead role if the judge so requests.
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