BIAO WANG v. ZYMERGEN INC (2024)

ORDER GRANTING IN PART MOTIONS TO INTERVENE

Re: Dkt. Nos. 248, 250, 255

Plaintiffs in this securities case filed an amended class action complaint on February 24, 2022. The complaint included two causes of action: First, a claim under Section 11 of the Securities Act against Zymergen, a group of individual defendants, and a group of underwriter defendants; and second, a claim under Section 15 of the Securities Act against the individual defendants and a third set of defendants, the controlling stockholders, which included a group of SoftBank parties,¹ a group of DCVC parties,² and a group of True Ventures parties.³

On November 29, 2022 the Court dismissed the Section 15 claim (the only claim against the SoftBank, DCVC, and True Ventures parties) on the basis that there were not “sufficient allegations to suggest that the ‘Controlling Stockholders’ acted in concert.” Dkt. No. 162, at 4. That dismissal was with leave to amend: The Court ordered that “[a]ny amended complaint is due within 28 days,” but also directed that “if the plaintiffs wish to proceed on this complaint, they can always seek leave to amend at a later stage if discovery reveals additional information relevant to the dismissed claims.” Id. Plaintiffs did not file an amended complaint within 28 days of the order dismissing the Section 15 claim. Shortly thereafter, the Court entered a scheduling order setting a deadline of December 21, 2023 to amend pleadings. Dkt. No. 167.

On December 21, 2023, in accordance with the Court's order dismissing the Section 15 claim and its scheduling order, plaintiff filed a motion for leave to file a second amended complaint. Dkt. No. 234. The proposed complaint would replead the previously dismissed Section 15 claims against the three sets of controlling stockholders. Plaintiff says the proposed additions are based on discovery obtained to date. Id. at 6. The proposed complaint would also add claims against the investment management companies for the three sets of funds: SB Investment Advisers (US) Inc.; DCVC Management Co., LLC; and True Venture Management, L.L.C.

The SoftBank, DCVC, and True Venture parties oppose plaintiff's motion for leave to amend. They say that they tried to obtain a stipulation to intervene for the limited purpose of opposing that motion but were not able to reach agreement. The three sets of parties have therefore filed separate motions to intervene under Rule 24, to which they have attached proposed oppositions to the motion for leave to amend. In these proposed oppositions, the moving parties generally argue that plaintiff's proposed amendments to the complaint would be futile, that they would be prejudiced if plaintiff amends the complaint, and that the amendment should be denied on the basis of undue delay.

Rule 24 authorizes two types of intervention: intervention as a matter of right and intervention with permission of the Court. Because the moving parties do not seek to become full parties (indeed, they are actively seeking not to become parties) but instead seek to intervene for the limited purpose of opposing the motion for leave to amend, permissive intervention under Rule 24(b) is warranted, and the Court will not address intervention by right under Rule 24(a).

Rule 24(b) provides: “On timely motion, the court may permit anyone to intervene who ․ has a claim or defense that shares with the main action a common question of law or fact.” Permissive intervention requires: “(1) an independent ground for jurisdiction; (2) a timely motion; and (3) a common question of law and fact between the movant's claim or defense and the main action.” Freedom from Religion Found., Inc. v. Geithner, 644 F.3d 836, 843 (9th Cir. 2011).

Here, the Court would have federal question jurisdiction over the potential Section 15 claim against the moving parties, as well as the related questions of leave to amend under Rule 15. The three motions are timely; although the parties disagreed about whether the moving parties should be allowed to intervene, they nevertheless agreed that the moving parties would be allowed to file the present motions to intervene by January 18, 2024, the deadline for defendants’ opposition to plaintiff's motion. Finally, because the moving parties seek to intervene for the limited purpose of opposing plaintiff's motion for leave to amend, there are clearly common questions of law or fact between the moving parties’ request to file an opposition and the underlying motion for leave to amend which they seek to oppose.

Rule 24(b) also directs that, “[i]n exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties’ rights.” Here, there would be no undue delay or prejudice by allowing the moving parties to intervene to oppose plaintiff's motion for leave to amend. There is no undue delay because deeming the moving parties’ oppositions filed as of the date of this order will leave plaintiff time to file a reply addressing the intervenors’ arguments ahead of the hearing on the motion for leave to amend. Although there might be undue prejudice to plaintiff if the Court heard the moving parties’ futility arguments at this stage because doing so could preclude arguing the issues more thoroughly at the motion to dismiss stage, there would not be any undue prejudice from hearing the moving parties’ other arguments related to prejudice and undue delay—arguments the moving parties would not be able to re-raise at the motion to dismiss stage.

The three motions to intervene are therefore granted in part. The Court will consider the moving parties’ arguments that are specific to the motion for leave to amend and which could not be raised in a subsequent motion to dismiss—i.e., the delay and prejudice arguments—but will not consider the moving parties’ futility arguments and will instead consider those arguments in connection with any motion to dismiss the amended complaint (should leave to amend be granted). The proposed oppositions attached to the motions are deemed filed as of the date of this order. The SoftBank, DCVC, and True Venture parties are ordered to re-file the oppositions on the public docket by February 16, 2024. Plaintiff may file a single reply of up to 15 pages addressing the three oppositions (excluding their futility arguments) by February 22, 2024.

IT IS SO ORDERED.

FOOTNOTES

1.   SVF Excalibur (Cayman) Limited; SVF Endurance (Cayman) Limited; and SoftBank Vision Fund (AIV M1) L.P.

2.   Data Collective II, L.P. and DCVC Opportunity Fund, L.P.

3.   True Ventures IV, L.P.; True Ventures Select I, L.P.; True Ventures Select II, L.P.; True Ventures Select III, L.P.; and True Ventures Select IV, L.P.

P. Casey Pitts, United States District Judge