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Maz Partners LP v. First Choice Healthcare Solutions, Inc.

United States District Court, M.D. Florida, Orlando Division

July 4, 2019

MAZ PARTNERS LP, Plaintiff,
v.
FIRST CHOICE HEALTHCARE SOLUTIONS, INC. and CHRISTIAN ROMANDETTI, SR., Defendants.

          REPORT AND RECOMMENDATION

          LESLIE R. HOFFMAN UNITED STATES MAGISTRATE JUDGE.

         TO THE UNITED STATES DISTRICT COURT:

         This cause came on for consideration without oral argument on the following motion file d herein:

MOTION:PLAINTIFF MAZ PARTNERS LP'S MOTION FOR APPOINTMENT AS LEAD PLAINTIFF AND APPROVAL OF SELECTION OF COUNSEL, AND ACCOMPANYING MEMORANDUM OF LAW (Doc. No. 29)
FILED: May 28, 2019
THEREON it is RECOMMENDED that the motion be GRANTED in part and DENIED in part.

         I. BACKGROUND.

         On March 29, 2019, Plaintiff MAZ Partners LP filed a purported class action complaint against Defendants First Choice Healthcare Solutions, Inc. and Christian Romandetti, Sr., alleging violations of the federal securities laws. Doc. No. 1. The proposed “class” consists of:

all persons other than Defendants who purchased or otherwise acquired First Choice common stock from April 1, 2014 through November 14, 2018, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder, against Defendants.

Id. ¶ 1. Plaintiff alleges that Defendant Romandetti, the former CEO and Chairman of the Board of Trustees of First Choice Healthcare, engaged in a “classic pump and dump scheme” that artificially inflated the price of First Choice's stock. Id. ¶¶ 3, 19, 78, 94. Plaintiff also alleges that Defendants issued misleading statements due to material omissions regarding the trading of First Choice's stock. Id. ¶ 94. In November 2018, the Department of Justice filed a criminal indictment against Romandetti and co-conspirators based on the stock manipulation scheme. Id. ¶ 56. The Securities and Exchange Commission also filed an SEC complaint against Romandetti and his co-conspirators. Id. ¶ 61. Thereafter, First Choice Healthcare common stock declined dramatically. Id. ¶ 68.

         Both Defendants have moved to dismiss the complaint. Doc. Nos. 13, 28. The motions will not become ripe until June 28, 2019. Doc. No. 33. Accordingly, discovery in this matter is stayed pending the Court's ruling on the motions to dismiss. See 15 U.S.C. § 78u-4(b)(3)(B).

         In the instant motion, Plaintiff seeks to be appointed the lead plaintiff in this case pursuant to the Private Securities Litigation Reform Act (“PSLRA”). Doc. No. 29. Plaintiff also asks that the Court approve the law firm of Wolf Popper, LLP, as lead counsel and the law firm of Rice Pugatch Robinson Storfer & Cohen PLLC as liaison counsel on behalf of the class. Id. at 3. Defendants have not filed responses to the motion, and the time for doing so has passed. The matter was referred to the undersigned, and it is ripe for review.

         II. APPLICABLE LAW.

         The PSLRA sets forth the procedures required in class actions alleging violations of the federal securities laws. See 15 U.S.C. § 78u-4. As relevant here, no later than twenty days after the complaint is filed, the plaintiff must publish notice of the pendency of the action to the purported plaintiff class. Id. § 78u-4(a)(3)(A). No. later than sixty days after publication, any member of the purported class may move to serve as lead plaintiff of the purported class. Id. § 78u- 4(a)(3)(A)(i)(II). No. later than ninety days after the published notice of the action, “the court shall consider any motion made by a purported class member in response to the notice . . . and shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members [i.e., the ‘most adequate plaintiff'] . . . .” Id. ยง 78u-4(a)(3)(B)(i). The Court must presume that the most adequate plaintiff is a person that: (1) either filed the complaint or filed a motion in response to the notice; (2) has the largest financial interest in the relief sought by the class; and (3) otherwise satisfies the requirements of Federal Rule of Civil ...


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