Case Name: In re FireEye, Inc. Securities Litigation
Case No.: 1-14-CV-266866 (consolidated with 1-14-CV-268110)

This is a consolidated securities class action against defendant FireEye, Inc. (“FireEye”), its top executives and directors, and the underwriters of FireEye’s second public offering of securities on March 6, 2014 (the “Second Offering”), in which FireEye sold 14 million shares. The lead case (1-14-266866) is brought by plaintiffs IBEW Local Union 363 – Money Purchase Pension Plan, IBEW Local Union 363 – Pension, IBEW Local Union 363 – Welfare Plan, IBEW Local Union 363 – Supplemental Unemployment Benefit Fund, and IBEW Local Union 363 – Joint Apprenticeship Training Fund (collectively “IBEW 363”) on behalf of a class of those who purchased FireEye’s common stock pursuant to or traceable to its Offering and Registration Statement in connection with the Secondary Offering. The other consolidated case (1-14-CV-268110) is brought by Steven Platt (“Platt”) on behalf of the same class of purchasers or acquirers of FireEye common stock pursuant/traceable to the Registration Statement and Prospectus in connection with the Second Offering. Both actions allege violations of the Securities Act of 1933, 15 U.S.C., §§ 77k, 77l(a)(2), and 77o (the “Securities Act”) based on materially misleading statements and omissions in the Registration Statement and Prospectus regarding the true state of FireEye’s business, its decelerating revenue growth, and problems FireEye was having with acquisitions and its securities breach detection software.

At this time, institutional investor DeKalb County Employees Retirement Plan (“DeKalb”) moves for leave to file a Complaint in Intervention. DeKalb and IBEW 363 move for their appointment as co-lead plaintiffs and for appointment of Scott + Scott, Attorneys at Law, LLP (“Scott + Scott”), as lead counsel.

Motion to Intervene

“Upon timely application, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding.” (Cal. Code Civ. Proc., § subd. (a).) “Pursuant to section 387 the trial court has discretion to permit a nonparty to intervene where the following factors are met: (1) the proper procedures have been followed; (2) the nonparty has a direct and immediate interest in the action; (3) the intervention will not enlarge the issues in the litigation; and (4) the reasons for the intervention outweigh any opposition by the parties presently in the action. [Citation.]” (Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386.)

DeKalb argues that it has a strong interest in this action due to its significant financial interest in recovering its investment losses (over $744,695 on 12,851 shares of FireEye common stock), that its participation will not enlarge the issues in the case because its claims arise out of the exact same factual predicate as the cases already on file, and there are no countervailing interests that outweigh DeKalb’s interest in intervention.

The motion was filed on October 20, 2014, within four months of the filing of the IBEW 363 Complaint and three months of the filing of the Platt Complaint, and no significant events in the litigation have taken place. Thus, the Court finds the motion was brought within a reasonable time. (See Sanders v. Pacific Gas & Elec. Co. (1975) 53 Cal.App.3d 661, 668-669.) Given DeKalb’s significant stock purchase in the Second Offering, it has a direct and immediate interest in the action, and there is no opposition to the motion. DeKalb’s intervention will not enlarge the issues in this class action, as the proposed Class Action Complaint in Intervention arises out of the same facts and circumstances as the IBEW 363 and Platt Complaints, asserts the same causes of action, and names the same 18 individual and entity defendants. The motion to intervene is GRANTED.

Motion to Appoint Co-Lead Plaintiffs and Lead Counsel

The Court’s authority to appoint lead and/or liaison counsel is found in its inherent supervisory or administrative powers which enables it to adopt any suitable method of practice so that it may “exercise reasonable control over all proceedings … to insure the orderly administration of justice.” (Asbestos Claims Facility v. Berry & Berry (1990) 219 Cal.App.3d 9, 19, disapproved on other grounds, Kowis v. Howard (1992) 3 Cal.4th 888, 896-97.) The benefits achieved by consolidation and appointment of general counsel include: “elimination of duplication and repetition and in effect the creation of a coordinator of diffuse plaintiffs through whom motions and discovery proceedings will be channeled.” (Asbestos Claims Facility, supra, 219 Cal.App.3d at 20.)

DeKalb and IBEW 363 argue they should be appointed co-lead plaintiffs because: (1) they are both sophisticated institutional investors who purchased 14,755 shares of FireEye stock and lost approximately $358,307.61 (versus Platt, who purchased only 60 shares and suffered only a $2,661 loss); (2) IBEW 363’s counsel first identified the securities law violations at issue and was the first to file a complaint, while Platt and his lawyers filed a “copycat” complaint; (3) IBEW 363 and DeKalb have experienced general counsel who is familiar with securities litigation and has successfully handled numerous securities class actions (versus Platt’s counsel, Bottini & Bottini, Inc., which has only four lawyers); and (4) Platt may have standing issues because he did not purchase any of his 60 shares directly in the Second Offering.

DeKalb and IBEW 363 argue the Court should follow the procedures set forth in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) by appointing as lead plaintiffs the party with the largest financial loss. DeKalb and IBEW 363 also cite other factors considered by courts in appointing lead plaintiffs that weigh in their favor, such as the quality of pleadings, the size of financial stake, the preference for institutional plaintiffs, and the vigorousness of prosecution. Regarding the quality of pleadings, DeKalb and IBEW 363 point out that Platt’s Complaint copies (at times verbatim) large portions of IBEW 363’s complaint.

The motion is opposed by Platt, who argues: (1) under California law, the Court has no obligation to appoint a lead plaintiff; (2) his economic stake relative to his status as an individual investor gives him just as much incentive to vigorously litigate the case as DeKalb’s larger stake relative to its large portfolio; (3) there is no basis to accuse Platt and his counsel of filing a “copycat” complaint; (4) Scott + Scott failed to submit evidence of its experience, and it has less experience litigating securities class actions in California state court, while Platt’s counsel, Bottini & Bottini, has successfully litigated multiple complex securities class actions in California superior courts; (5) the lack of standing argument is premature and without merit.

Platt’s points are well-taken that a leadership structure is neither mandated under California law nor necessary given the relatively small size of this consolidated matter. The Court also agrees with Platt that the issues of standing and adequacy of representation are premature. Even if DeKalb and IBEW 363 have a stronger incentive than Platt to vigorously prosecute this case based on their economic stakes, that incentive is not in any way diminished by the lack of the proposed leadership structure. Were this a larger matter with more consolidated actions, the Court would be more concerned about duplication of efforts and the need for channeling diffuse interests in an efficient, centralized manner. However, it does not appear that there are other pending related actions. While the copycat nature of Platt’s Complaint is fairly evident (compare IBEW 363 Compl. ¶¶ 89-97 with Platt Compl. ¶¶ 66-74), this factor alone does not compel the proposed leadership appointments.

If it turns out that the absence of a leadership structure begins to detrimentally affect the interests of the putative class by creating unnecessary inefficiencies, duplication of efforts, or significant conflicts between putative class counsel, the Court will revisit the issue again at that time.

Accordingly, the motion is DENIED WITHOUT PREJUDICE.