USDSSDNY - DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED:

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1 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 1 of 6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK JOHN ORTUZAR, individually and on behalf of all others similarly situated, Plaintiff, USDSSDNY - DOCUMENT ELECTRONICALLY FILED DOC #: DATE FILED: No. 13 Civ (RJS) ORDER FRANCESCA'S HOLDINGS CORP., et al., Defendants. WEST PALM BEACH POLICE PENSION FUND, individually and on behalf of all others similarly situated, WIC Plaintiff, ORDER FRANCESCA'S HOLDINGS CORP., et al., Defendants. RICHARD J. SULLIVAN, District Judge: Before the Court are two putative class action suits brought on behalf of investors who claim to have suffered damages as a result of Defendants' alleged misconduct in violation of the Securities Act of 1933, the Exchange Act of 1934, and the Exchange Act Rules and Regulations. On November 26, 2013, the West Palm Beach Police Pension Fund and the Taunton Contributory Retirement System (the "WPB Movants"), the Arkansas Teacher Retirement System (the "Arkansas Movant"), and the Alaska Electrical Fund and the Beaver County Employees Retirement Fund (the "Beaver Country Movants") moved for the consolidation of the two cases and for the appointment of lead plaintiff and lead counsel in the consolidated action, pursuant to the Private Securities Litigation Reform Act of 1995 ("PSLRA").

2 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 2 of 6 (Doe. Nos. 6, 9, 11)'; see 15 U.S.C. 77z-l(a)(3)(B), 78u4(a)(3)(B). 2 For the reasons set forth below, the Court consolidates the cases, appoints the Arkansas Movant as lead counsel, and approves the Arkansas Movant's choice of counsel. A. Consolidation A court may consolidate two or more actions pursuant to Rule 42(a) of the Federal Rules of Civil Procedure where the actions involve "a common question of law or fact." Fed. R. Civ. P. 42(a); see also Devlin v, Transp. Cornmc'ns Int'l Union, 175 F,3d 121, 130 (2d Cir. 1999); Johnson v. Celotex Corp., 899 F.2d 1281, 1284 (2d Cir. 1990). The trial court has broad discretion to consolidate actions under Rule 42(a). See Johnson, 899 F,2d at However, while a court may enter orders of consolidation "to avoid unnecessary costs or delay,... [e]onsiderations of convenience and economy must yield to a paramount concern for a fair and impartial trial." Johnson, 899 F.2d at (citations omitted). B. Appointment of Lead Plaintiff Under the procedures established by the PSLRA, a district court "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." 15 U.S.C. 78u-4(a)(3)(B). The PSLRA creates a rebuttable presumption that the most adequate plaintiff is the "person or group of persons" who is a named plaintiff or timely movant and otherwise satisfies the requirements of Federal Rule of Civil Procedure 23, provided that person or group of persons "has the largest financial interest in the relief sought by the class." Id; see also In Re Fuwei Films Sec. Litig., 247 F.R.D. at (S.D.NY. 2008). All citations are to the docket in No. 13 Civ (RJS). 2 The relevant portions of Section 77z-1 and Section 78u-4 are identical. As a result, going forward, the Court will cite to Section 78u-4 only.

3 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 3 of 6 1. Rule 23 Requirements Of the four criteria of Rule 23(a) - numerosity, commonality, typicality, and adequacy - "only two - typicality and adequacy - directly address the personal characteristics of the class representative." Pirelli Armstrong Tire Corp. Retiree Med Benefits Trust v. LaBranche & Co., Inc., 229 F, RD. 395, 412 (S.D.N.Y. 2004). Thus, "in deciding a motion to serve as lead plaintiff, the moving plaintiff must make only a preliminary showing that the adequacy and typicality requirements under Rule 23 have been met." Id. (internal quotation marks and citations omitted); see also In re OSI Pharmaceuticals, Inc. Sec. Litig., No. 04 Civ (JS) (ETB), 2005 WL , at *4 (E.D.N.Y. Sept. 21, 2005). The adequacy requirement is satisfied where the lead plaintiff can "fairly and adequately protect the interests of the class." Fed. R. Civ, P. 23(a). Thus, "(1) there should be no conflict between the interests of the class and the named plaintiff nor should there be collusion among the litigants; and (2) the parties' attorney must be qualified, experienced, and generally able to conduct the proposed litigation." Pirelli, 229 F.R.D. at (citations omitted). Additionally, "the lead plaintiff should have a sufficient interest in the outcome to ensure vigorous advocacy." Id. at 413 (citations and internal quotations omitted). The requirement of typicality is met if "each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285, 291 (2d Cir.1992) (citations omitted). Nonetheless, a lead plaintiff's claims "need not be identical to the claims of the class to satisfy the typicality requirement." Pirelli, 229 F.R.D. at 412. Once established, the presumption of most adequate plaintiff may be rebutted "only upon proof by a member of the purported plaintiff class" that the presumptive lead plaintiff "will not fairly and adequately protect the interests of the class" or "is subject to unique defenses that render such plaintiff incapable of adequately representing the class." 15 U.S.C. 78u-4(a)(3)(B)(iii)(II).

4 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 4 of 6 2. Financial Interest The PSLRA does not specify a method for calculating which plaintiff has the "largest financial interest," and neither the Supreme Court nor the Second Circuit has articulated such a method. Pirelli, 229 F.R.D. at 404 n.15; see also In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 295 (E.D.N.Y. 1998). In the absence of explicit guidance, many courts, including courts in this District and in the Eastern District of New York, have adopted a four-factor test first promulgated in Lax v. First Merchants Acceptance Corp., No, 97 Civ. 2715, 1997 WL (N.D Aug. 11, 1997), and later in In re Olsten, 3 F. Supp. 2d at 295 (the "Olsten Lax Test"). See Pirelli, 229 F.R.D. at 404 (collecting cases); see also Andrada v. Atherogenics, Inc., No. 05 Civ. 61 (RJH), 2005 WL , at *3 (S.D.N.Y. April 19, 2005); Ferrari v. Irnpath, Inc., No. 03 Civ (DAB), 2004 WL , at *4 (S.D.N.Y. July 20, 2004); In re Comverse Tech., Inc. Sec. Litig., No. 06 Civ, 1825 (NGG) (RER), 2007 WL , at *3 (E.D.N.Y. May 2, 2007). Under the Olsten Lax Test, a prospective lead plaintiffs financial interest may be determined by looking to (1) the number of shares purchased during the class period; (2) the number of net shares purchased during the class period; (3) the total net funds expended during the class period; and (4) the approximate losses suffered. In re Olsten, 3 F. Supp. 2d at 295; Lax, 1997 WL , at *5; see also Pirelli, 229 F.R.D. at 404. This Court, like many others, "shall place the most emphasis on the last of the four factors: the approximate loss suffered by the movant." Kaplan v. Gelfond, 240 F.R.D. 88, 93 (S.D.N.Y. 2007). C. Appointment of Lead Counsel District courts will generally approve the lead counsel selected by the lead plaintiff, except to the extent necessary "to protect the interests of the class." Weltz v. Lee, 199 F.R.D. 129, 134 (S.D.N.Y. 2001). Such protection is required when the proposed counsel is inadequately experienced or where the lead plaintiff's proposal would otherwise lead to inefficiency. Id. 4

5 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 5 of 6 II. DISCUSSION A. Consolidation Consolidation of these two actions pursuant to Rule 42(a) is appropriate because the factual allegations and legal claims advanced in the complaints are overlapping and raise common questions of law and fact. See Devlin, 175 F.3d at Both complaints assert causes of action under the securities laws in connection with the same allegedly false or materially misleading statements by Francesca's in prospectuses and registration statements. Further, all movants seek consolidation, and no one opposes consolidation. Accordingly, the actions are hereby consolidated. B. Appointment of Lead Plaintiff The Arkansas Movant prevails under all four of the Olsten Lax factors. As detailed in their response brief, they purchased the greatest number of shares on both a gross and net basis, had the greatest amount of net expenditures, and suffered by far the greatest loss? (Doc. No. 15 at 1-2 (tables comparing all movants on all of the Olsten Lax factors).) The Court also finds that the Arkansas Movant satisfies adequacy and typicality under Rule 23. Its claims are typical, in that they arise from the same alleged misrepresentations and the same drop in stock price. The Arkansas Movant is adequate because it has no conflicts of interest, it has a large - indeed, the largest - interest in the outcome of the case, and its counsel is well qualified. Moreover, no movant has contested the Arkansas Movant's superior financial interest and Rule 23 adequacy and typicality. Indeed, the WPB Movants have submitted a brief urging the Court the appoint the Arkansas Movant as lead plaintiff. (Doc. No. 16.) Accordingly, the PSLRA presumption is controlling, and the Court appoints the Arkansas Movant as lead plaintiff. The Arkansas Movant's loss is calculated through a Last in First Out (LIFO) method, which is the preferred method in this District. See In re espeed, Inc. Sec. Litig., 232 F.R.D. 95, 101 (S.D.N.Y. 2005). 5

6 Case 1:13-cv RJS Document 9 Filed 12/19/13 Page 6 of 6 C. Appointment of Lead Counsel The Arkansas Movant has selected Bernstein Libowitz Berger and Grossmann LLP and Labaton Sucharow LLP to serve as co-lead counsel. These two firms are both highly experienced and have previously worked as co-lead counsel in class actions, (Doc. No, 10 at 11-13,) The Court sees no risk of inefficiency in this selection. Accordingly, the Court appoints Bernstein Libowitz and Labaton Sucharow as co-lead counsel, III. CONCLUSION For the foregoing reasons, IT IS HEREBY ORDERED THAT these two cases are consolidated. IT IS FURTHER ORDERED THAT the Arkansas Teacher Retirement System shall serve as lead plaintiff and that Bernstein Libowitz Berger and Grossmann LLP and Labaton Sucharow LLP shall serve as co-lead counsel. The clerk of the court is respectfully directed to terminate the motions pending at docket numbers 6, 9, and 11 in No. 13 Civ and the motion pending at docket number 3 in No, 13 Civ Dated: December 17, 2013 New York, New York