In the last paragraph of a 46-page decision dismissing many—but not all—claims against Apple Inc. in a huge securities fraud class action, U.S. District Judge Yvonne Gonzalez Rogers of the Northern District of California had some additional bad news for plaintiffs lawyers from Labaton Sucharow.

"The court intends to reconsider the motion for lead counsel," she wrote on Tuesday. "Plaintiff's counsel shall meet and confer … for the orderly transition of leadership."

That sounds a lot like vindication for Robbins Geller Rudman & Dowd, which argued all along that it deserved the lead role, only to lose out to Labaton last year.

What's so unusual is how Gonzalez Rogers has handled their competing claims to lead the nearly $4 billion case, taking an approach that's almost without precedent.

When consolidating class action complaints, judges typically appoint lead plaintiffs counsel based on whose client has the largest financial interest in the case—provided of course that the firm can show it's capable of handling the work.

That's not really an issue in evaluating Labaton versus Robbins Geller—both are among the most formidable securities law firms in the country.

But how to get the edge in presenting your client as the biggest stakeholder? One way is to expand the proposed class period. 

At the start of a case, judges aren't really equipped—or inclined—to determine where to set those markers. The obvious answer for a busy jurist is to go with whomever claims to have the biggest financial interest, even if it means accepting their stretched-out time frame without many questions.  

In the Apple case, team Labaton said the class should cover everyone who bought Apple securities from August 1, 2017 through January 2, 2019.

Based on that timeframe, their client, the Employees' Retirement System of the State of Rhode Island, lost about $4 million.

But Robbins Geller's Mark Solomon, Shawn Williams, Danielle Myers and Dan Pfefferbaum argued the real class should cover a much shorter period—from November 2, 2018 to January 2, 2019.

By that measure, Robbins Geller's client, the Norfolk Pension Fund, lost $1.1 million, but Labaton's client only lost $32,000.

At a hearing in Oakland, California on August 13, 2019, Gonzalez Rogers said she was "not very impressed" by the claims covering the longer class period. "So it puts me in a predicament," she said, according to a transcript of the proceedings. 

Her answer? To appoint Labaton lead counsel, let them go through one round of motions to dismiss, "and if all that is left is the more narrow action, re-evaluate the appropriateness of who is leading the class and most likely appoint [Robbins Geller client] Norfolk."

She also allowed Robbins Geller to submit its own five-page brief opposing the motion to dismiss based on its narrower theory of the case.

The judge cautioned Labaton partner Carol Villegas, who did not respond to a request for comment, about the perils of "padding the claim to take first position … It's going to be a loss to you if you are booted out of first position which I will have no hesitation doing. Understood?" 

Sure enough, when Gonzalez Rogers dug into the merits on the motions to dismiss, she rejected Labaton's more expansive claims.

The plaintiffs sued Apple, its CEO Tim Cook and CFO Luca Maestri for making allegedly false and misleading statements and omissions. They argued that the company, which is represented by Orrick, Herrington & Sutcliffe, should have admitted that the "intentional slowdown of certain model iPhones unsustainably boosted iPhone sales during 2017 and cannibalized future sales."

They also alleged Apple misled investors about how its replacement battery program in 2018 hurt iPhone sales, and that "the U.S.-China trade war, declining Chinese economy, and strength of the U.S. dollar had negatively impacted demand for iPhones in Greater China."

The judge rejected the allegations about throttling and replacement batteries as "plainly insufficient to establish scienter…. there is simply no evidence that either Cook or Maestri received information about Apple's throttling of old iPhones, the battery replacement program, or the program's effect on demand."

But she found the allegations related to declining demand in China passed muster. Sure enough, that's what Robbins Geller stressed in pushing for the shorter, two-month class period. 

Which puts Robbins Geller on top—and pushes Labaton to the back seat.

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