Unreported / Non-Citable
Background
On June 10, 2026, Ching Ching Cheng, represented by Block & Leviton LLP, filed a putative securities fraud class action against Erasca, Inc. and others on behalf of purchasers of Erasca common stock from January 14, 2025 through April 26, 2026. Cheng's counsel published notice via Globe Newswire the same day, informing class members of the August 10, 2026 deadline to move for lead plaintiff appointment. On that deadline, William and Maria Thornhill (represented by Block & Leviton) moved for appointment as lead plaintiffs, asserting a financial loss of approximately $309,115.36. David Younglove (represented by Bernstein Liebhard LLP and Bragar Eagel & Squire, P.C.) filed a competing motion based on a $22,848 loss. Younglove subsequently filed a non-opposition to the Thornhills' motion, acknowledging their larger financial interest but stating willingness to serve if the Thornhills could not.
The court applied the three-step PSLRA framework from In re Cavanaugh: (1) verify compliance with notice requirements; (2) identify the presumptive lead plaintiff by comparing financial stakes using the Olsten-Lax factors, with approximate losses being most determinative; and (3) allow other movants to rebut the presumptive lead plaintiff's showing of Rule 23 typicality and adequacy. The court found Cheng satisfied the notice publication requirement, and both the Thornhills and Younglove timely filed their motions. The Thornhills' claimed loss of $309,115.36 was the largest, and Younglove did not oppose their appointment on financial grounds.
The Court’s Holding
The court granted the Thornhills' motion for appointment as lead plaintiffs. It found they had the largest financial interest in the action at approximately $309,115.36, satisfying the PSLRA's financial interest prong. No other party presented a larger loss, and Younglove conceded this point. The court then evaluated Rule 23 typicality and adequacy. For typicality, the Thornhills' claims arose from purchasing Erasca stock during the class period at allegedly inflated prices and suffering damages when the alleged misconduct was revealed, which the court found sufficient under Ninth Circuit precedent. For adequacy, the Thornhills declared no conflicts of interest with class members, confirmed they did not purchase shares at counsel's direction or to participate in litigation, and Younglove's non-opposition further indicated no known conflicts. The court concluded the Thornhills were the presumptively most adequate plaintiffs and no evidence rebutted this presumption.
The court also granted the Thornhills' request to approve Block & Leviton LLP as lead counsel. Applying Ninth Circuit precedent from Cohen v. U.S. Dist. Ct., the court deferred to the lead plaintiffs' reasonable choice of counsel after reviewing the firm's resume and finding the selection appropriate. Younglove's competing motion for appointment as lead plaintiff and approval of Bernstein Liebhard LLP as lead counsel and Bragar Eagel & Squire, P.C. as liaison counsel was denied as moot. The court ordered the case caption changed to "IN RE ERASCA, INC. CLASS ACTION SECURITIES LITIGATION" and directed the Thornhills to file an amended complaint by November 3, 2026.
Key Takeaways
- The Thornhills were appointed lead plaintiffs based on the largest financial loss ($309,115.36) among movants, consistent with the PSLRA's presumption favoring the plaintiff with the greatest financial stake.
- Younglove's competing motion was denied as moot after he filed a non-opposition acknowledging the Thornhills' larger financial interest, though he reserved the right to serve if the Thornhills could not.
- The court found the Thornhills satisfied Rule 23 typicality because their claims arose from the same alleged course of conduct—purchasing Erasca stock at inflated prices during the class period—as other class members.
- Adequacy was established through the Thornhills' declarations of no conflicts of interest, no counsel-directed purchases, and no purchases made to manufacture standing, with no evidence rebutting these representations.
- Block & Leviton LLP was approved as lead counsel under the PSLRA's deferential standard for a lead plaintiff's reasonable choice of counsel.
Why It Matters
This order illustrates the PSLRA's lead plaintiff selection mechanism in practice: the plaintiff with the largest financial loss who satisfies Rule 23 typicality and adequacy becomes the presumptive lead plaintiff, and competing movants bear the burden of rebutting that presumption. Younglove's non-opposition effectively conceded the financial interest comparison, streamlining the court's analysis. The decision also reaffirms the strong deference courts give to a lead plaintiff's choice of counsel absent evidence of unreasonableness. The case caption change to "In re Erasca, Inc. Class Action Securities Litigation" signals the court's recognition of this as the primary proceeding for the putative class, and the November 3, 2026 deadline for an amended complaint sets the next procedural milestone.