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Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 8 of 21 PageID #:2775ANALYSISA.THE FOREIGN FUNDS CANNOT MEET THE EXCEEDINGLY HIGHSTANDARD TO ENGAGE IN THE UNNECESSARY AND WASTEFULDISCOVERY THEY SEEK.In the face of multiple briefs, declarations, letters, and meet-and-confers demonstratingtheir speculative concerns to be baseless, the Foreign Funds continue to misconstrue NYC’scertifications and confidential trading data, and now seek unnecessary and wasteful discoverybased on their misapprehensions. Courts consistently reject discovery during the lead plaintiffappointment process under similar facts. See, e.g., Eastwood, 2008 WL 687351, at *3; Khunt v.Alibaba Grp. Holding Ltd., 102 F. Supp. 3d 523, 539 (S.D.N.Y. 2015) (where counsel“submitted sworn statements” attesting to ownership and control of funds, the court held: “I seeno reason to grant [] discovery” into lead plaintiff movant’s “standing as a class member topursue these claims”); In re Tronox, Inc. Sec. Litig., 262 F.R.D. 338, 347-48 (S.D.N.Y. 2009)(rejecting discovery regarding movant’s standing under Huff and into movant’s “trading patternsand corporate structure,” finding any discovery would “only cause unnecessary delay andexpense”); Rieckborn v. Velti PLC, 2013 WL 6354597, at *3, *5 (N.D. Cal. Dec. 3, 2013)(rejecting discovery regarding lead plaintiff movant’s standing); Blaich v. Emp. Sols., Inc., 1997WL 842417, at *3 (D. Ariz. Nov. 21, 1997) (rejecting discovery into whether a lead plaintiffmovant miscalculated its losses).Moreover, the Foreign Funds’ basis for seeking discovery is not even cognizable underthe PSLRA because it does not challenge NYC’s adequacy. See 15 U.S.C. § 78u-4(a)(3)(B)(iv);15 U.S.C. § 78u-4(a)(3)(B)(iii)(II). At most, the Foreign Funds speculate about the size ofNYC’s loss in Kraft Heinz securities – and they are wrong about that – but they do not argue thatNYC’s loss is made up, that NYC lacks any standing to sue at all (as was the case in W.R. HuffAsset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100, 110 (2d Cir. 2008)), or that4

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 9 of 21 PageID #:2776NYC has an insubstantial economic incentive to lead this class action. In fact, the Foreign Funds’own purported expert confirmed the calculation of NYC’s last-in-first-out (“LIFO”) loss at 59.3million. See Dkt. 91-2, at Table 3.Nor do the Foreign Funds argue that NYC is an inadequate fiduciary to the Class or isconflicted from prosecuting this case. Fundamentally, the Foreign Funds do not explain howtheir incorrect quibbling about the size of NYC’s loss renders NYC incapable of zealouslylitigating this case on behalf of the putative Class. Nor can they: NYC’s adequacy has neverbeen challenged in over 20 years of securities litigation. Ex. A, at ¶ 27.2 At least four courtshave appointed NYC to act as a lead plaintiff or class representative in securities fraud litigation.Dkt. 47-5, at ¶¶ 7-10. NYC is the fourth largest public pension fund in the country and isregularly audited by a major public accounting firm. Ex. B, at ¶ 14. And NYC has gone aboveand beyond in this litigation to carefully address the Foreign Funds’ manufactured attempts tosow doubt about NYC’s financial interest. Ex. A, at ¶ 29.The Foreign Funds assert that the details of how NYC conducted certain trades in KraftHeinz securities could become “a focus of discovery” if NYC is appointed lead plaintiff, and thatthe trading data they seek will be “among the core information sought by Defendants whendiscovery begins[.]” Dkt. 108, at 3-4. None of that is true. Because the trades in questionrepresent a relatively tiny percentage of NYC’s purchases and sales in Kraft Heinz securities,they are not relevant to the question of Article III standing, which is established if NYC sufferedany loss due to Defendants’ fraud, regardless of whether that loss is 1 or, as is the case here, 59.3 million.Moreover, the size of the lead plaintiff’s loss is not an element of classcertification under Federal Rule of Civil Procedure 23, and it certainly does not go to the merits2“Ex.” references those exhibits appended to the Declaration of Carol V. Gilden.5

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 10 of 21 PageID #:2777of whether the Defendants misled Kraft Heinz investors. Therefore, the issue raised by theForeign Funds is irrelevant to the litigation between the Class and Defendants.Much less is it a reason for calling into question NYC’s adequacy, which is the onlyquestion before the Court at this stage. Even if the Foreign Funds’ assertion was correct – itdecidedly is not – the most it would show is that NYC’s financial interestmore than the next largest movant. Under the PSLRA,none of these arguments form a cognizable – much less reasonable – basis for a finding thatNYC is inadequate. The Foreign Funds’ unsupported desire to nitpick NYC’s transactionsaccount-by-account thus cannot be the basis for discovery.If discovery were permitted under such circumstances, certainly the private and unauditedForeign Funds’ trading in Kraft Heinz securities would also be subject to considerable questions,including why AP7 regularly engaged in large, block trades at the closing price of the day, orwhy Union’s 34 different funds appear to have engaged in different trading strategies, withcertain of the funds selling prior to any of the alleged disclosures and others continuing to holdthrough them. See Dkt. 60-1. Indeed, given the structure of both AP7 and Union, it is likely thatone or both of them bought or sold Kraft Heinz shares off-market, in-kind, and/or asconsideration for an interest in a commingled fund.B.THE FOREIGN FUNDS’ CONTENTIONS REGARDING NYC’STRADING IN KRAFT HEINZ SECURITIES ARE WRONG ANDCONTRADICTED BY SWORN DECLARATIONS.The Foreign Funds’ discovery motion is premised solely on baseless speculation, refutedrepeatedly by NYC’s submission of evidence. As detailed in the Declaration of Alan Kleinmansubmitted herewith, Ex. A, and in Mr. Kleinman’s prior declaration, Dkt. 99-2,3 at ¶¶ 14-18 –3Mr. Kleinman’s prior declarations are referenced by docket number.6

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 11 of 21 PageID #:2778both of which Mr. Kleinman signed under penalty of perjury and well-aware of the requirementsunder Rule 11 – NYC’s certifications submitted on April 25, 2019 accurately described theownership interest that each NYC fund has in the underlying securities and identified allpurchases and sales by NYC during the relevant period. Ex. A, at ¶¶ 17-28. NYC alsorepeatedly demonstrated that its overall LIFO loss is 59.3 million, and that each NYC fund hasstanding to pursue the claims set forth in its certifications. Id., at ¶¶ 3, 4; Dkt. 99-2, at ¶¶ 15, 16.In response to the Foreign Funds’ speculation that NYC may trade in commingledaccounts, NYC went well beyond the requirements of the PSLRA by explaining that, while twoof the funds in which Kraft Heinz common stock transactions occurred are commingled accounts,those accounts are held exclusively by the NYC funds themselves, who commingle solely toachieve economies of scale to keep investment costs down. Dkt. 99-1, at ¶¶ 14-17. The sworndeclaration from NYC’s Assistant Comptroller, David Jeter, corroborates Mr. Kleinman’sdeclarations that the losses to each NYC fund are treated identically whether the securities areheld in unique accounts or in the commingled funds; that is the consistent, uniform treatment ofthese funds that has repeatedly been validated by NYC’s outside auditors. See Ex. B, at ¶¶ 11-14;Dkt. 99-2, at ¶¶ 16-17. Moreover, NYC explained and submitted a declaration attesting thateven if it was to improperly exclude transactions from those commingled accounts, the LIFOcalculation results in a difference of only– a difference immaterial to whether NYChas the largest loss amongst the movants. Dkt. 99-2, at ¶¶ 15-17; Ex. B, at ¶¶ 15, 21.The Foreign Funds make a series of unpersuasive arguments in response. First, theyclaim that “[t]he only factual support provided for [NYC]’s Reply Brief is a short declaration byMr. Kleinman.” Dkt. 108, at 5. But nothing more is required. See Khunt, 102 F. Supp. 3d at539 (denying discovery request into standing where counsel “submitted sworn statements”7

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 12 of 21 PageID #:2779attesting to ownership and control of funds). The Foreign Funds next claim that Mr. Kleinman“fails to provide any support for his statement that, even if shares traded in commingled fundswere excluded from its financial interest, [NYC] would still have a larger interest than [theForeign Funds].” Dkt. 108, at 7. They are wrong. First, NYC provides support for his statementby calculating an exact number for the LIFO damages attributable to the commingled accounts ifthey were improperly excluded from NYC’s damage calculation:. Dkt. 99-2, at ¶ 17.Moreover, nothing in the PSLRA or case law requires NYC to provide the account-level detailthe Foreign Funds are insisting upon. See 15 U.S.C. § 78u-4(a)(2)(A)(iv) (requiring only thatmovants “set[] forth all of the transactions of the plaintiff in the security”).Lest there be any doubt, NYC is submitting an additional declaration explaining, in detail,that the amount of the loss attributable to the commingled accounts was independently calculatedinternally by NYC’s Bureau of Asset Management staff and externally by Cohen Milstein. SeeEx. A, at ¶¶ 15-21. Both agreed that if transactions into the commingled funds were improperlyexcluded, the difference would be immaterial for purposes of determining which lead plaintiffmovant had the greatest financial interest in this litigation. Id., at ¶¶ 15-21; Ex. 99-2, at ¶ 17; Ex.B, at ¶¶ 12-15. Calculated properly (by including the transactions in the commingled funds),NYC’s interest exceeds the next largest movant’s by approximately 9 million; calculatedimproperly (by excluding commingled fund transactions, as the Foreign Funds suggest), NYC’sinterest exceeds the next largest movant’s by approximately. Ex. A, at ¶¶ 18-19; Ex.B, at ¶¶ 11, 15, 21. In the absence of any proof to undermine the foregoing, the Foreign Funds’hired gun, Kenneth Kotz, has no need or basis for seeking the underlying data. See Dkt. 109, at 7.Rather, the Foreign Funds hope to obtain the data to dredge up yet another baseless argumentthat would distract the Court and prevent the case from expeditiously moving forward.8

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 13 of 21 PageID #:2780The Foreign Funds next assert that “nothing in the Kleinman Declaration attempts toaddress the requirements outlined in Huff,” an out-of-circuit and inapplicable case. See Dkt. 109,at 6. They are wrong. Indeed, as counsel for the Foreign Funds successfully argued in adifferent case in which they sought to block discovery into the presumptive lead plaintiff by acompeting movant, the Foreign Funds’ Huff argument is a “red herring”:In Huff, the Second Circuit held that an investment advisor ‘lacks constitutionalstanding to bring suit for violations of the federal securities laws in its own namebut on behalf of its clients, the beneficial owners of the relevant securities.’ . . .Here, [NYC]’s motion is not brought in the name of an investment advisor.Rather, as [NYC]’s [c]ertification and other papers make abundantly clear,[NYC]’s motion is brought in the name of the [New York City Funds], whichactually purchased [Kraft Heinz] securities and have a direct financial interest inthis action. [The Foreign Funds’] standing argument is a red herring.Ex. C, at 2 (internal citation omitted).NYC also went beyond the requirements of the PSLRA to confirm that its transactions onJune 24, 2016 and June 23, 2017 were (1) open market transactions properly recorded andaccounted for on NYC’s certifications and in its LIFO loss calculation, (2) executed by thirdparty broker-dealers, including Barclays, (3) paid for via commissions to the broker-dealers, and(4) less than the daily volume on those days. Dkt. 99-2, at ¶ 18. See also Ex. A, at ¶¶ 21-22; Ex.B, at ¶¶ 12-16. No other movant in this litigation – including the Foreign Funds – has providedanything close to this level of detail and transparency concerning their losses. See Ex. A, at ¶ 23.Yet even that did not satisfy the Foreign Funds, who now insist that “a broker can be paida commission for an off-market transaction” and that “there remains no apparent reason for aninvestor to simultaneously buy and sell such large quantities of shares at the exact same price,”Dkt. 109, at 7-8. While it is perfectly proper to include off-market transactions on PSLRAcertifications, NYC nevertheless confirmed that these trades were open market transactionsconducted by NYC’s outside asset manager, BlackRock. See Ex. B, at ¶¶ 16-20; Ex. A, at ¶¶ 21,9

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 14 of 21 PageID #:278122. NYC also confirmed that, contrary to the Foreign Funds’ unsupported conjecture, there wasan appropriate reason for the transactions:. SeeEx. B, at ¶¶ 16-20; Ex. A, at ¶¶ 21, 22.In support of their motion, the Foreign Funds cite a slew of inapplicable cases involvingthe formation of an unrelated group of movants, which is not at issue here.4 The only case thateven remotely approaches the facts of this one is Tronox, a case familiar to counsel for theForeign Funds, since there – with the shoe on the other foot – they argued strenuously (andsuccessfully) against allowing “a discovery fishing expedition” on the basis of a competingmovant’s “baseless and speculative arguments.” Ex. C, at 3 (brief of Gerald Silk of BLBG).There, the court held that the concerns raised regarding a movant’s “trading patterns andcorporate structure” and standing were insufficient “to give rise to a reasonable basis on which toauthorize discovery” and would rather “only cause unnecessary delay and expense[.]” Tronox,262 F.R.D. at 347–48.The Tronox decision also explains how each case cited by the Foreign Funds is inapt. InSakhrani v. Brightpoint, Inc., 78 F. Supp. 2d 845, 847-48, 854 (S.D. Ind. 1999), for instance, thecourt directed groups of lead plaintiffs to provide information regarding “their sophistication,”“experience overseeing or working with counsel,” and the group members’ pre-existing4Not at issue for NYC, that is. But there are serious questions regarding (1) the failed formalcombination of the Foreign Funds and the Arca Krupa Group after they represented to the Courtthat they were pairing up, (2) the Arca Krupa Group’s history of serious misconduct, and (3)whether there is an informal arrangement between the Foreign Funds and the Arca Krupa Groupgiven the Arca Krupa Group’s consistent statements seeking to be appointed with, andsupporting the motion of, the Foreign Funds. See, e.g., Dkt. 95, at 2 (“Arca Krupa proposes thatit be appointed a co-lead plaintiff alongside UAM/AP7.”); Dkt. 119 (supporting the ForeignFunds’ discovery motion). Those are the types of questions that raise far stronger issues fordiscovery than the inconsequential and incorrect accounting claims pressed here.10

Case: 1:19-cv-01339 Document #: 124 Filed: 06/07/19 Page 15 of 21 PageID #:2782“relationships,” and ultimately concluded that disaggregation of the proposed groups wasappropriate. As the Tronox court noted, the court in Sakhrani concluded that “the result hasbeen a debacle.” Tronox, 262 F.R.D. at 348 n.70 (emphasis added) (quoting Sakhrani, 78 F.Supp. 2d at 854). Likewise, in In re Network Assocs., Inc., Sec. Litig., 76 F. Supp. 2d 1017 (N.D.Cal. 1999), the court allowed limited discovery only after several movants unsuccessfullyattempted to aggregate their losses and it became necessary to determine which individualmovant had the largest financial loss. See also Tronox, 262 F.R.D. at 348, n.70 (distinguishingNetwork Associates). In re The Reserve Fund Sec. & Derivative Litig., Case No. 09-2011, Dkt.73 (S.D.N.Y. Aug. 5, 2009), involved discovery into whether a lead plaintiff group was formed“in bad faith, was lawyer-instigated, or is likely to be lawyer-dominated.” See also Tronox, 262F.R.D. at 348 n.70 (distinguishing The Reserve Fund). Of course, unlike the Foreign Funds,NYC is not a contrived group. These cases are thus irrelevant. The remainder of the cases theForeign Funds cite concern alleged con

RETIREMENT AND PENSION PLAN, individually and on behalf of all others similarly situated, Plaintiff, v. THE KRAFT HEINZ COMPANY, et al., Defendants. Case No. 19-1845 (RMD) CLASS ACTION TIMBER HILL LLC, individually and on behalf of all others similarly situated, Plaintiff, v. THE KRAFT