Honorable Consuelo B. Marshall, United States District Judge

James Robert Noblin, Robert S. Green, Green and Noblin PC, Long Beach, CA, Blake M. Harper, Hulett Harper Stewart LLP, San Diego, CA, Amanda B. Murphy, Pro Hac Vice, William B. Federman, Pro Hac Vice, Stuart W. Emmons, Pro Hac Vice, Federman and Sherwood, Oklahoma City, OK, for Plaintiff.

Amanda Kauth, Pro Hac Vice, Damaris Hernandez, Pro Hac Vice, Gary A. Bornstein, Pro Hac Vice, Isaac Chaput, Pro Hac Vice, Cravath Swaine and Moore LLP, New York, NY, David I. Hurwitz, Bird Marella Boxer Wolpert Nessim Drooks Lincenberg & Rhow, Los Angeles, CA, for Defendants.

ORDER RE: PLAINTIFF'S MOTION FOR CLASS CERTIFICATION

Honorable Consuelo B. Marshall, United States District Judge

The matter before the Court is Plaintiff's Motion For Class Certification (the "Motion"). (Dkt. No. 95.) The Motion is fully briefed.

I. BACKGROUND

The operative complaint, filed by Lead Plaintiff Stratesis, LLC, asserts two causes of action: (1) violation of Sections 10(b) of the Securities Exchange Act (the "Act"), 15 U.S.C. § 78j(b) and Rule 10b–5, 17 C.F.R. § 240.10b–5 ; and (2) violation of Section 20(a) of the Act, 15 U.S.C. § 78t(a). (Dkt. No. 94.) This case is based on two alleged theories of securities fraud: (1) "UTi told investors that UTi's 1 View rollout [a new freight forwarding system] was going well, while its invoicing delays were in fact putting the company in mortal danger" (the "slow invoice theory"); and (2) "UTi told investors the company's internal controls over financial reporting [through its Oracle system] were functioning effectively, while they were actually suffering from a material weakness" (the "accounting problems theory"). (Dkt. No. 72.)

II. LEGAL STANDARD

Federal Rule of Civil Procedure 23(a) requires that a proposed class satisfy the following four requirements for class certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. Fed. R. Civ. P. 23(a). In addition, the proposed class must satisfy one of the three options under Rule 23(b)(1), (2) or (3). Here, Plaintiff relies on Rule 23(b)(3), which allows the Court to certify the class if following elements are satisfied: (1) questions of law or fact common to class members predominate over questions affecting only individual class members (i.e., predominance); and (2) the class action is superior to other available methods of adjudicating the controversy (i.e., superiority). Fed. R. Civ. P. 23(b)(3).

III. DISCUSSION

A. Class Definition

Plaintiff's Motion seeks an order certifying a class of "all persons and entities who purchased shares of UTi Worldwide, Inc., ("UTi" or the "Company") common stock during the period from March 28, 2013 through February 25, 2014, inclusive, (the "Class Period") and were damaged thereby." Excluded from the class are Defendants, officers and directors of UTi, members of the immediate families of the Individual Defendants, and affiliates of the corporate Defendant UTi.

At the hearing on the Motion, the parties stated they had no objection to revising the class definition as "all persons and entities who purchased shares of UTi Worldwide, Inc., ("UTi" or the "Company") common stock during the period from March 28, 2013 through February 25, 2014, inclusive, (the "Class Period") and were damaged by the alleged false and misleading statements." Accordingly, the proposed class definition is so modified.

B. Rule 23(a)

Plaintiff submits evidence demonstrating Rule 23(a)'s numerosity, commonality, typicality, and adequacy of representation requirements are satisfied. Defendants do not dispute these requirements are met. Accordingly, the Court finds Rule 23(a)'s numerosity, commonality, typicality, and adequacy of representation requirements are satisfied.

C. Rule 23(b)(3)

1. Superiority

Plaintiff submits evidence demonstrating Rule 23(b)(3)'s superiority requirement is satisfied. Defendants do not dispute this requirement is met. Accordingly, the Court finds Rule 23(b)(3)'s superiority requirement is satisfied. 2. Predominance

The predominance requirement is meant to "tes[t] whether proposed classes are sufficiently cohesive to warrant adjudication by representation, but it scarcely demands commonality as to all questions." Comcast Corp. v. Behrend , 569 U.S. 27, 41, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013) (internal quotations and citation omitted). For the predominance requirement, "a significant aspect of the case [must be present that] can be resolved for all members of the class in a single adjudication" so as to justify "handling the dispute on a representative rather than an individual basis." Hanlon v. Chrysler Corp. , 150 F.3d 1011, 1022 (9th Cir. 1998).

Defendants argue Rule 23(b)(3)'s predominance requirement is not satisfied because: (1) Plaintiff's evidence is insufficient to support a presumption of reliance; and (2) Plaintiff's "proof of a ‘common damages methodology’ " fails to propose a damages methodology that is consistent with Plaintiff's theory of liability as required under Comcast Corp. v. Behrend , 569 U.S. 27, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013).

a. Reliance

To recover damages for violations of section 10(b) and Rule 10b–5, a plaintiff must prove "(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation." Halliburton Co. v. Erica P. John Fund, Inc. , ––– U.S. ––––, 134 S.Ct. 2398, 2407, 189 L.Ed.2d 339 (2014) (internal quotations and citation omitted). The reliance requirement "ensures that there is a proper connection between a defendant's misrepresentation and a plaintiff's injury." Id. (internal quotations and citation omitted). Under a fraud on the market theory, a plaintiff may demonstrate that a presumption of reliance applies if: (1) the alleged misrepresentations were publicly known; (2) the alleged misrepresentations were material; (3) the stock traded in an efficient market; and (4) the plaintiff traded the stock between the time the misrepresentations were made and when the truth was revealed. Id. at 2408 (citing Basic v. Levinson, 485 U.S. 224, 248, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988) ). The plaintiff has the burden of proving the prerequisites—"namely, publicity, materiality, market efficiency, and market timing"—for invoking the presumption of reliance under the fraud on the market theory have been satisfied, and those prerequisites "(with the exception of materiality) must be satisfied before class certification." Id. at 2412.

Here, Defendants do not dispute the publicity, materiality, or market timing prerequisites have been satisfied. Accordingly, the presumption of reliance applies here if Plaintiff demonstrates the market for UTi common stock was efficient during the Class Period. Id. ; see also In re NetSol Techs., Inc. Sec. Litig. , 2016 WL 7496724, at *5 (C.D. Cal. July 1, 2016) (finding "the only question" as to whether Basic 's presumption of reliance applied was whether the company's stock is traded in an efficient market, where there was no dispute defendants made public statements about the release of a key product and plaintiff traded the company stock during the class period).

Plaintiff relies on an expert report from Cynthia Jones who opines the market for UTi common stock was efficient during the Class Period. Jones applied the five-factor test for evaluating market efficiency set forth in Cammer v. Bloom , 711 F.Supp. 1264 (D.N.J. 1989), and found each of the factors demonstrated market efficiency. (See Jones Report ¶¶ 26–82.) The five Cammer factors include: (1) whether the stock trades at a high weekly volume; (2) whether securities analysts follow and report on the stock; (3) whether the stock has market makers and arbitrageurs; (4) whether the company is eligible to file SEC registration form S–3, as opposed to form S–1 or S–2; and (5) whether there are "empirical facts showing a cause and effect relationship between unexpected corporate events or financial releases and an immediate response in the stock price." Binder v. Gillespie , 184 F.3d 1059, 1065 (9th Cir. 1999) (quoting Cammer , 711 F.Supp. at 1286–87 ). Defendants do not dispute the first four Cammer factors weigh in favor of finding market efficiency, but argue Plaintiff fails to satisfy its burden of showing market efficiency because Plaintiff only offers Jones's event study as to the fifth Cammer factor, which Defendants contend is unreliable, biased, and flawed.

Plaintiff also offers evidence regarding UTi's market capitalization, the relative size of the bid/ask spread for UTi stock, and the degree to which UTi shares were widely held by the public rather than insiders (Jones Report ¶¶ 46–48, 49–59), which it argues also demonstrate market efficiency. Defendants do not dispute these Krogman factors weigh in favor of finding market efficiency.

Because there is no evidence disputing the first four Cammer factors and the Krogman factors weigh in favor of market efficiency, the Court finds Plaintiff has met its burden of showing market efficiency. See Vinh Nguyen v. Radient Pharm. Corp. , 287 F.R.D. 563, 574 (C.D. Cal. 2012) ("This Court recognizes that Cammer factors are ‘an analytical tool, not a checklist’ of requirements."); Waggoner v. Barclays PLC , 875 F.3d 79, 99 (2d Cir. 2017) (holding the district court acted within its discretion in finding an efficient market based on the first four Cammer factors and the three Krogman factors where those seven factors were not challenged by defendants, and finding the district court was not required to reach a conclusion concerning the fifth Cammer factor); Local 703, I.B. of T. Grocery & Food Employees Welfare Fund v. Regions Fin. Corp. , 762 F.3d 1248, 1256 (11th Cir. 2014) (rejecting argument that "a finding of market efficiency always requires proof that the alleged misrepresentations had an immediate effect on the stock price," reasoning although some courts have described the fifth Cammer factor as the most important factor, Regions failed to identify any authority that it is required). Even assuming the fifth Cammer factor is required to demonstrate market efficiency, the Court finds Plaintiff demonstrates that factor also weighs in favor of finding market efficiency. To satisfy the fifth Cammer factor, Plaintiff must demonstrate "empirical facts showing a cause and effect relationship between unexpected corporate events or financial releases and an immediate response in the stock price." Cammer , 711 F.Supp. at 1287. Plaintiff's expert Jones conducted an event study to test whether the price of UTI common stock responded rapidly to new information. (Jones Report ¶ 61.) Jones tested the difference between the number of significant abnormal returns on "news days" (4/36 = 11.1%) versus those on "no-news days" (5/194 = 2.6%) (id. ¶¶ 74–76), and determined at the 5% level that four of the 36 news days observed (i.e., 11.1%) had statistically significant abnormal returns, and these four returns on "news days" are much higher than the two statistically significant abnormal returns (.05 x 36 = 1.8) that would be expected in a random sampling without any news days (id. ¶ 76). Jones opined it was four times more likely that a statistically significant abnormal return was observed on days when information about UTi entered the market (i.e., on a "news day") than on "no-news days." (Id. ¶ 75, Ex. 13.) Jones also found the difference between the percentage of statistically significant abnormal returns on "news days" as compared to "no-news days" was 8.5%, and concluded the daily price returns demonstrated a significant difference in the occurrence of abnormal returns on "new days" as compared to "no-news days" "at greater than 99 percent confidence." (Id. ¶ 78, Ex. 14.) Jones therefore opined new information concerning UTi was associated with significant changes in UTi's common stock prices and indicates the market for UTi stock was efficient during the Class Period because there is solid statistical evidence that UTi's stock price responded rapidly to new information and did not display significant price changes, overall, in the absence of news. (Id. ¶ 87.) Defendants contend the event study performed by Jones is unreliable, biased, and flawed for four reasons discussed below. Defendants argue without Jones's event study, Plaintiff lacks adequate evidence that UTi's stock traded on an efficient market during the Class Period, and therefore individual questions of reliance will predominate which precludes class certification because Plaintiff cannot invoke the presumption of reliance.

First, Defendants argue Jones's event study is unreliable because Jones limited her news search to the Bloomberg archive. Defendants rely on the fact Jones has used other news sources for other cases, and Jones's deposition testimony that she chose Bloomberg because she had access to it on her computer, and does not have access to other news sources without paying a fee (Jones Depo. 58:24–59:5). Defendants cite to no relevant authority which supports their contention the use of one news search archive such as Bloomberg renders an event study unreliable. Moreover, Jones states in her rebuttal report that Bloomberg is a "respected source relied upon in the industry," which "provided a robust sample of news articles" in this case so that Jones did not need to supplement her Bloomberg search with articles from other archives she has used in the past. (Jones Rebuttal Report ¶ 32.) Accordingly, Jones's event study is not unreliable based on her use of Bloomberg.

Second, Defendants argue Jones's event study is unreliable and flawed because it showed UTi stock had a statistically significant excess return on only 11.1% of news days, which Defendants contend is insufficient to support a finding of market efficiency. This fact alone does not render Jones's event study unreliable and flawed. As the Supreme Court has recognized, "[d]ebates about the precise degree to which stock prices accurately reflect public information are ... largely beside the point." Halliburton Co. , 134 S.Ct. at 2410 (noting the presumption of reliance is based "on the fairly modest premise that market professionals generally consider most publicly announced material statements about companies, thereby affecting stock market prices," and "public information generally affects stock prices"); see also Första AP–Fonden, 312 F.R.D. at 522 ("[R]equiring Lead Plaintiff to offer an event study, before certification, showing that a stock's price responded to news at some specific rate would ignore the Supreme Court's recognition that "[d]ebates about the precise degree to which stock prices accurately reflect public information" are "largely beside the point.") (quoting Halliburton Co. , 134 S.Ct. at 2410 ). Third, Defendants argue Jones's event study is unreliable because it does not test the market's response to "new, relevant" information. Defendants' argument goes to the weight, and not the admissibility, of Jones's report. See McIntire , 38 F.Supp.3d at 428. Moreover, Jones opines, and courts have found, engaging in such ex ante determinations as proposed by Defendants would be subjective. See Brown , 2014 WL 12576643, at *7 (finding expert's event study was unreliable where the expert made a subjective determination of which events to examine in his event study by including information he determined was "of the import necessary to change the price of"); In re NII Holdings, Inc. Sec. Litig. , 311 F.R.D. 401, 412 (E.D. Va. 2015) (rejecting defendants' attempt to rebut plaintiff's expert's event study based on defense expert's opinion that plaintiff's expert's conclusions were unfounded because he failed to analyze whether the news released on event days was new or unexpected, reasoning plaintiff's expert's event study avoided bias by using objective measures of event days, and emphasizing "an expert report relying on a study containing cherry-picked event dates is far less persuasive than one in which objective criteria were used"). Accordingly, Defendants fail to demonstrate Jones's study should be entirely disregarded based on Jones's failure to engage in a determination of "new" and "relevant" news ex ante. See, e.g., Loritz v. Exide Techs. , 2015 WL 6790247, at *13 (C.D. Cal. July 21, 2015) (finding plaintiff's expert selected events to be included in his event study using objective criteria for what would qualify as "news" where the expert defined news as Exide-issued press releases and Exide disclosures of financial results before looking at the results, and noting "[i]t was also proper for [plaintiff's expert] to avoid engaging in subjective ex ante evaluations of the studied events"); Vinh Nguyen, 287 F.R.D. at 574 (granting class certification in securities fraud action, and finding although defendants argued plaintiff's expert report should be excluded for using unreliable methods, there was nothing highly misleading in the report and although defendants "may disagree with this analysis, ... that disagreement does not entitle them to the windfall of excluding the entire report").

Finally, Defendants argue Jones's conclusions are unreliable and should be disregarded because Jones did not apply her own methodology consistently. Specifically, Defendants contend although Jones states she included "all analyst reports as archived by Thomas [sic] Reuters" (Jones Report ¶ 69), Jones did not actually do so. Jones states that "[i]n assembling the analyst reports for inclusion in the News Days, [she] rel[ied] on the analyst research reports archived by Thomson Reuters," but that "not every item on the list [included in her original report] qualifies as an analyst research report." (Jones Rebuttal Report ¶ 33.) Jones explains, "[f]or example, UTi's earnings teleconference transcripts are included on the list, and clearly do not qualify as an analyst research report." (Id. ¶ 33.) Jones further explains, "[t]here are also reports by subscription-only market research firms that [she] did not include in [her] analysis" because: "a. The reports are not prepared by analysts that comprised the ‘consensus’ earnings estimates and price targets for UTi; b. The reports are not prepared by analysts that participated in the Q & A during UTi's teleconferences with the investment community; and c. The reports contained generalized information about UTi but were not newsworthy ." (Id. ¶ 33 (emphasis added).)

It is unclear what objective criteria Jones used to determine what was "not newsworthy" for purposes of including analyst reports from Thomson Reuters. See, e.g., Brown , 2014 WL 12576643, at *7. While making a determination as to what was "not newsworthy" would appear to include some subjectivity, analyzing what steps Jones's took to minimize the subjectivity of the study in determining what was "not newsworthy" go to weight, not admissibility. See In re Diamond Foods, Inc., Sec. Litig. , 295 F.R.D. at 249 ("Factors to consider in determining the probative value of event studies include whether the study is based on a sufficiently large number of observations and the steps taken to minimize the subjectivity of the study.") (emphasis added). Furthermore, courts have recognized that an expert conducting an event study must use her discretion or independent determination in identifying news. See In re Diamond Foods, Inc., Sec. Litig. , 295 F.R.D. at 249 ("In analyzing event studies at the class certification stage, courts have acknowledged that many decision points in designing an event study require some subjectivity") (citing In re Countrywide Fin. Corp. Sec. Litig., 273 F.R.D. at 618 ). Moreover, Defendants fail to offer an independent study by their expert or other evidence demonstrating that the market for UTi's stock was not efficient during the Class Period.

Therefore, even if the Court were to find Jones's event study is entitled to lesser weight based on her exclusion of certain analyst reports as "not newsworthy," the Court finds Plaintiff still meets its burden of showing the fifth Cammer factor weighs in favor of finding market efficiency. See Loritz , 2015 WL 6790247, at *15 (finding plaintiffs' evidence demonstrated the fifth Cammer factor favored market efficiency where plaintiffs offered multiple studies providing a causal relationship, and defendants' expert did not submit any studies of his own); Buttonwood Tree Value Partners, 2013 WL 12125980, at *11 (finding plaintiff's expert's event study wherein the expert concluded that "identified news events explained a substantial and disproportionate portion of the movement in FRB's share price over time, consistent with an informationally efficient market," was sufficient to establish the basic facts of empirical evidence of a cause-and-effect relationship between material events and stock price changes to satisfy the fifth Cammer factor); In re JPMorgan Chase & Co. Sec. Litig. , 2015 WL 10433433, at *6 (S.D.N.Y. Sept. 29, 2015) ("Plaintiffs' event study need not be flawless in order to support a finding of market efficiency. As Defendants' expert offers no opinion on market efficiency through an event study of his own, the fifth Cammer factor can only weigh against Defendants or be neutral. It weighs in Plaintiffs' favor because Defendants have not demonstrated that the work of Plaintiffs' expert is so flawed as to fail to be probative of market efficiency."); Första AP–Fonden , 312 F.R.D. at 522 (finding the plaintiff presented adequate proof that the fifth Cammer factor was satisfied, and therefore the market for defendant's stock was efficient during the class period, where plaintiff's expert conducted an event study and concluded the company's stock price was reacting to news about the company, and defendants' expert could have submitted rebuttal evidence in the form of an affirmative event study but failed to do so).

Accordingly, Plaintiff satisfies its burden of demonstrating the market for UTi stock was efficient, and the presumption of reliance under the fraud-on-the market theory therefore applies. See, e.g., Huberman v. Tag–It Pac. Inc. , 314 Fed.Appx. 59, 63 (9th Cir. 2009) (holding the fraud-on-the-market presumption applied upon finding an efficient market was present where defendant's stock "was traded on a national exchange and stock prices reflected public information," concluding common questions of fact and law therefore predominated over individual questions pursuant to Rule 23(b)(3), and remanding with instructions to grant class certification since the remaining elements necessary for class certification were undisputedly present); In re Countrywide Fin. Corp. Sec. Litig. , 273 F.R.D. at 619 (finding plaintiffs were entitled to the presumption of reliance where plaintiff's expert performed an event study and applied the Cammer factors in concluding the market was efficient, and no defense expert performed a test that showed evidence of inefficiency). b. Damages

Defendants also argue the predominance requirement is not satisfied because Plaintiff has failed to articulate a class-wide damages methodology that is consistent with its theory of liability as is required under Comcast Corp. v. Behrend , 569 U.S. 27, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013). Defendants rely on their expert Professor Gompers, who opines Jones failed to show she can put forward a class-wide damages methodology that is consistent with Plaintiff's allegations. (Gompers Report ¶¶ 11, 62–86.)

In Comcast, the district court accepted one theory of antitrust liability as capable of class-wide proof, rejected the plaintiffs' remaining three theories of liability, found damages resulting from the one remaining theory of liability could be calculated on a class-wide basis, and certified the class. The Court of Appeals affirmed, but the Supreme Court found the plaintiffs' proposed model failed to measure damages resulting from the particular antitrust injury based on the one remaining theory of liability alone. The Supreme Court stated "at the class-certification stage (as at trial), any model supporting a plaintiff's damages case must be consistent with its liability case. 569 U.S. at 35, 133 S.Ct. 1426. The Supreme Court, however, cautioned its decision "should not be read to require, as a prerequisite to certification, that damages attributable to a class-wide injury be measurable on a class-wide basis," and emphasized that "when adjudication of questions of liability common to the class will achieve economies of time and expense, the predominance standard is generally satisfied even if damages are not provable in the aggregate." Id. at 41, 133 S.Ct. 1426 (internal quotations and citations omitted); see also Pulaski & Middleman, LLC v. Google, Inc. , 802 F.3d 979, 988 (9th Cir. 2015) (noting "differences in damage calculations do not defeat class certification after Comcast ," and holding it is an abuse of discretion to deny class certification on the basis of damages calculation alone).

Here, Plaintiff's expert Jones proposes using an event study and out-of-pocket loss calculation to determine damages on a class-wide basis which is tied to Plaintiff's theory of liability (i.e., artificially inflated prices paid by the Class for UTi stock during the Class Period based on Defendants' alleged misrepresentations/omissions regarding 1 View and Oracle). (See Jones Report ¶¶ 83, 87; Jones Rebuttal Report 52.). Unlike in Comcast, Plaintiff's proposed damages model is not tied to multiple theories of liability, some of which are no longer at issue in the case. See Comcast, 569 U.S. at 36, 133 S.Ct. 1426 ; Pulaski, 802 F.3d at 988 ("The putative class's problem in Comcast was that the damages model did not isolate damages resulting from any one theory of antitrust impact."). Moreover, courts have recognized the event study/out of pocket method as proposed by Jones is an accepted method for calculating damages in securities fraud class actions. Therefore, Plaintiff meets its burden of demonstrating damages are calculable on a class-wide basis.

* * *

Accordingly, the Court finds Plaintiff satisfies its burden of demonstrating common issues predominate.

Having found Plaintiff has demonstrated the requirements of Rule 23(a) and Rule 23(b)(3) are satisfied, the Court certifies the class, defined as: "all persons and entities who purchased shares of UTi Worldwide, Inc., ("UTi") common stock during the period from March 28, 2013 through February 25, 2014, inclusive, and were damaged by the alleged false and misleading statements. Excluded from the class are Defendants, officers and directors of UTi, members of the immediate families of the Individual Defendants, and affiliates of the corporate Defendant UTi."

D. Appointment of Plaintiff Stratesis, LLC

Plaintiff's Motion also requests that the Court appoint Stratesis, LLC as the Class Representative. Defendants do not oppose this request. Plaintiff presents evidence it is an adequate representative of the Class. Accordingly, the Court grants the request to appoint Stratesis, LLC as the Class Representative.

E. Appointment of Class Counsel

Plaintiff's Motion also requests that the Court appoint Federman & Sherwood as Counsel for the Class. Defendants do not oppose this request. Plaintiff presents evidence that Federman & Sherwood will adequately represent the Class. Therefore, the Court grants the request to appoint Federman & Sherwood as Class Counsel. IV. CONCLUSION

Accordingly, the Court GRANTS Plaintiff's Motion for Class Certification.

IT IS SO ORDERED.