Michael Sanders, individually and on behalf of all others similarly situated v. The Realreal Inc., Julie Wainwright, Matt Gustke, Steve Lo, Chip Baird, Maha Ibrahim, Rob Krolik, Michael Kumin, Stefan Larsson, Niki Leondakis, James Miller, Credit Suisse Securities (USA) LLC, BOFA Securities Inc., UBS Securities LLC, Keybanc Capital Markets Inc., Stifel, Nicolaus & Company, Cowen and Company LLC, Raymond James & Associates Inc.
Published: Dec. 23, 2022 | Result Date: Jul. 28, 2022 | Filing Date: Nov. 25, 2019 |Case number: 5:19-cv-07737-EJD Settlement – $11,000,000
Judge
Court
USDC Northern District of California
Attorneys
Plaintiff
Laurence M. Rosen
(The Rosen Law Firm PA)
Joshua Baker
(The Rosen Law Firm PA)
Phillip Kim
(The Rosen Law Firm PA)
Defendant
Lisa R. Bugni
(King & Spalding LLP)
Peter M. Stone
(Paul Hastings LLP)
Facts
Michael Sanders, Nubia Lorelle, and Garth Wakeford brought a class action against The RealReal Inc. (TRR), an online marketplace for authenticated, consigned luxury goods; and TRR's directors, executive officers, and major shareholders, including Julie Wainwright; Matt Gutske; Steve Lo; Chip Baird; Maha Ibrahim; Rob Krolik; Michael Kumin; Stefan Larsson; Niki Leondakis; and James Miller. Also named as defendants were Credit Suisse Securities LLC; BofA Securities Inc.; UBS Securities LLC.; KeyBanc Capital Markets Inc.; Stifel, Nicolaus & Company, Cowen and Company LLC; and Raymond James & Associates, Inc.
The class included all persons and entities who purchased TRR common stock during the relevant period and were damaged thereby.
Contentions
PLAINTIFFS' CONTENTIONS: Plaintiffs asserted claims under the Securities Act and the Exchange Act. Plaintiffs contended that TRR's authentication process fell far short of its description. Only a small proportion of the thousands of items processed by the company each day actually went to its small group of expert authenticators--specifically only certain brands and items deemed to face a particularly high risk of counterfeiting. Plaintiffs asserted that the vast majority of items supposedly authenticated by the company were actually reviewed only by the company's copywriters, who often had little or no experience in fashion or luxury products and were given approximately 2-4 minutes authenticating any given item to meet quotas that were strictly enforced. Plaintiffs argued that as the inevitable result of this highly-pressurized authentication process, hundreds of counterfeit items were processed and sold to TRR customers. The truth about TRR's authentication process began to leak out. As a result, TRR's stock price declined significantly, damaging investors.
DEFENDANTS' CONTENTIONS: Defendants denied all contentions.
Settlement Discussions
The parties participated in mediation before the Honorable Layn R. Phillips (Ret.) and ultimately accepted a mediator's proposal to resolve the action.
Result
The parties reached a settlement agreement wherein the defendants admitted no wrongdoing but agreed to pay $11 million to settle class members' claims.
For reprint rights or to order a copy of your photo:
Email
jeremy@reprintpros.com
for prices.
Direct dial: 949-702-5390