0 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ANDREW TARICA, ET AL. CIVIL ACTIO N VERSUS NO : 99-383 1 MCDERMOTT INTERNATIONAL, SECTION : "R"(5) INC., ET AL. ORDER AND REASON S Before the Court are plaintiffs' motions for the appointmen t of co-lead plaintiffs, for the appointment of co-lead counsel, and for the appointment of liaison counsel, pursuant to Sectio n 21D of the Securities and Exchange Act of 1934, as amended by th e Private Securities Litigation Reform Act of 1995 ("PSLRA"), 1 5 U.S.C. 78u-4. For the following reasons, plaintiffs' motion s are granted. I. Background Movants purchased the securities of defendant McDermot t during the period May 21, 1999 through November 11, 1999. McDermott is incorporated in Panama with its chief executiv e office and principal place of business in New Orleans, Louisiana. DATE OF ENTRY APR 1 3 2000 C d i9yp
It manufactures steam-generating and environment equipment an d other products for the United States Government, and provide s engineering and construction services to industrial, hydrocarbo n processing facilities and to the offshore oil and natural ga s industry. On December 21, 1999, plaintiff Andrew Tarica, individually and on behalf of all others similarly situated, filed this private securities class action complaint in thi s Court. He alleges that McDermott and certain of its senio r officers and directors made material misrepresentation s regarding, inter alia, McDermott 's liability for asbestos -relate d products liability claims, that these misrepresentation s artificially inflated the price of McDermott' s securities an d allowed defendants to improperly manipulate executive bonuses fo r fiscal years 1999 and 2000, in violation of 10(b), 20(a) an d Rule 10b-5 of the Securities Exchange Act, and that he and al l others similarly situated suffered losses as a result. Subsequently, this Court consolidated this case with two related securities class actions. Movants herein, who claim to have suffered combined losse s of approximately $622,000, now seek to appoint as lead plaintiff s in this matter Great Fish & Co., whose alleged losses approximat e $306,000, Andrew Tarica, whose alleged losses exceed $169,000, SSGA World Funds-US Matrix, whose alleged losses exceed $54,000, 2
and Grady Hobbs, whose alleged losses exceed $59,000. (See Pls. ' Mot. Ex. C.) They also seek to appoint as lead counsel the la w firms Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss" ) and Weiss & Yourman, and to appoint Gauthier, Downing, Labarre, Beiser & Dean, PLC ("Gauthier Downing" ) as liaison counsel. 1 In response, defendants state that they take no position o n plaintiffs' motion for the appointment of lead plaintiffs at this time, but reserve the right to object to any of the proposed lead plaintiffs once they have received plaintiffs' consolidate d complaint and have reviewed plaintiffs' class allegations. Defendants take no position regarding plaintiffs' motion for th e approval of their selection of lead counsel or liaison counsel. II. Discussio n A. PSLRA and Motion to Appoint Lead Plaintiffs Plaintiffs' motions arise under the PSLRA, 15 U.S.C. 78u- 4, which amended the Securities Exchange Act of 1934. Pub. L. No. 104-67, 109 Stat. 743, 748 (1995). The PSLRA applies t o private securities class actions brought pursuant to the Federa l Rules of Civil Procedure, and Congress enacted it "[t] o ameliorate [] perceived abuses [by the plaintiff' s bar] of th e class action device in actions brought under federal securitie s 1Movants initially requested co-liaison counsel, but they withdrew this request. 3
laws[.]" Greebel v. FTP Software, Inc., 939 F.Supp. 57, 58 (D. Mass. 1996 ) ; see Gluck v. Cellstar Corp., 976 F. Supp. 542, 543-4 4 (N.D. Tex. 1997) ; Lax v. First Merchants Acceptance Corp., 199 7 WL 461036 at *2 (N.D. Ill. Aug. 11, 1997). Section 21D, amende d by 78u-4, sets forth disclosure requirements for the plaintif f filing the lawsuit and establishes the procedure for th e appointment of a lead plaintiff. See Greebel, Inc., 939 F.Supp. at 58. Specifically, this section requires certification an d notice, sets forth the timing for applications for appointment a s lead plaintiff, establishes a rebuttable presumption about wh o best represents the class, and provides that the lead plaintiff s shall select and retain lead counsel. See 15 U.S.C. 78u- 4(a)(2), (a) (3) (A), (a) (3) (B). The Court will address each o f these provisions in turn. 1. Certification Under the PSLRA, parties filing complaints (i.e., name d plaintiff(s)) must file a certification that complies wit h subsection 78u-4(a)(2)(A). See Greebel, 939 F.Supp. at 61-6 2 (holding that only named plaintiffs, rather than all partie s moving to be appointed as lead plaintiffs, need comply with th e certification requirement). Subsection (a)(2)(a) provides : Each plaintiff seeking to serve as a representative party on behalf of a class shall provide a sworn certification, which shall be personally signed by suc h 4
plaintiff and filed with the complaint, that-- (i) states that the plaintiff has reviewed the complaint and authorized its filing ; (ii) states that the plaintiff did not purchase the security that is the subject of the complaint at the direction of plaintiff's counsel or in order to participate in any private action arising under this chapter ; (iii) states that the plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at deposition and trial, if necessary ; (iv) sets forth all of the transactions of the plaintiff in the security that is the subject of the complaint during the class period specified in the complaint ; (v) identifies any other action under this chapter, filed during the 3-year period preceding the date on which th e certification is signed by the plaintiff, in which the plaintiff has sought to serve as a representative party on behalf of a class ; an d (vi) states that the plaintiff will not accept any payment for serving as a representative party on behalf of a class beyond the plaintiff's pro rata share of any recovery, except as ordered or approved by the court in accordance with paragraph (4). 15 U.S.C. 78u-4(a)(2)(A). Andrew Tarica filed with hi s complaint a sworn certification that complies with each of thes e six requirements, and the other proposed lead plaintiffs file d 5
certifications with this motion. (See Complaint ; Pls.' Mot. Ex. A.) Therefore, the Court finds that movants have satisfied th e certification provision. 2. Notic e Subsection 78u-4(a)(3)(A) provides that the plaintiffs bringin g the class action must publish early notice of the suit t o purported class members : (i) In general Not later than 20 days after the date on which the complaint is filed, the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business -oriented publication or wire service, a notice advising members of the purported plaintiff class-- (I) of the pendency of the action, the claims asserted therein, and the purported class period ; and (II) that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class. (ii) Multiple action s If more than one action on behalf of a class asserting substantially the same claim or claims arising under this chapter is filed, only the plaintiff or plaintiffs in the first filed action shall be required to cause notice to be published in accordance with clause (i). (iii) Additional notices may be required under Federal rule s Notice required under clause (i) shall be in additio n 6
6 to any notice required pursuant to the Federal Rules of Civil Procedure. 15 U.S.C. 78u-4(a)(3)(A). On December 22, 1999, plaintif f published notice of this suit in compliance with the statute. (See Pls.' Mot. Ex. B.) The December 22 notice, published i n Business wire, named the pending action, enumerated the claim s asserted therein, set forth the purported class period (May 21, 1999 through November 11, 1999), and stated that any member o f the purported class could move to serve as lead plaintiff withi n sixty days after the date of notice. Courts have repeatedly recognized Business Wire as a business-oriented wire servic e within the meaning of the PSLRA, and as an acceptable means o f publishing notice under the statute. See, e.g., Greebel, 93 9 F.Supp. at 62-63 (noting that reliance on Business Wire is no t subject to happenstance of buying a newspaper on the day tha t notice appears, as press release remains accessible fo r substantial period of time) ; accord In re Nice Systems Sec. Lit., 188 F.R.D. 206, 216 (D.N.J. 1999). Moreover, the use of Busines s Wire is particularly appropriate in this case, because McDermot t repeatedly issued press releases on this wire service, increasin g the likelihood that purported class members would see th e December 21, 1999 notice. (See Complaint at IT 29, 38. ) Finally, because this suit involves multiple actions assertin g 7
substantially similar claims, only Tarica, the plaintiff in th e first-filed action, was required to publish notice under th e PSLRA. See 78u-4 (a) (3) (A) (ii). This Court thus finds the notice requirement of the statute satisfied. 3. Timelines s First, plaintiffs seeking to be appointed as lea d plaintiffs timely filed their motion on February 22, 2000, th e day on which the sixty-day period expired. Second, because thi s case involves multiple actions which the parties moved t o consolidate, consideration of plaintiffs' motion and th e appointment of lead plaintiffs was delayed until after the Cour t ordered the cases consolidated on January 28, 2000, and Februar y 3, 2000, respectively. Subsection 78u-4(a)(3)(B)(ii) provide s that in such a case, the Court should appoint lead plaintiffs a s soon as practicable after rendering a decision on whether t o consolidate the cases : (ii) Consolidated action s If more than one action on behalf of a class asserting substantially the same claim or claims arising under this chapter has been filed, and any party has sought to consolidate those actions for pretrial purposes or for trial, the court shall not make the determination required by clause (i) [regarding the appointment of lead plaintiff] until after the decision on the motion to consolidate is rendered. As soon as practicable after such decision is rendered, the court shall appoint the most adequate plaintiff as lead plaintiff for the consolidated actions in accordance with thi s 8
paragraph. The motion is therefore timely. 4. Rebuttable Presumptio n Subsection 78u-4(a)(3)(B)(iii) establishes a rebuttabl e presumption, subject to objection by purported class members, regarding who will serve as the most adequate lead plaintiffs. It provides : (iii) Rebuttable presumptio n (I) In genera l Subject to subclause (II), for purposes of clause (i), the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that- (aa) has either filed the complaint or made a motion in response to notice under subparagraph (A)(i) ; (bb) in the determination of the court, has the largest financial interest in the relief sought by the class ; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure. Tarica filed the complaint in the earliest lawsuit, and he an d the other proposed lead plaintiffs filed motions in response t o notice pursuant to subparagraph (A)(i), above. Although th e PSLRA does not define "largest financial interest," one cour t 9
found four factors relevant to this inquiry ; they are the (1 ) number of shares purchased ; (2) number of net shares purchased ; (3) total net funds expended by plaintiffs during class period ; and (4) approximate losses plaintiffs suffered. See Lax, 1997 WL 461036 at *5. The proposed lead plaintiffs purchased a total o f 56,300 shares during the class period, and expende d $1,078,958.42. As stated above, the alleged losses of Great Fis h & Co. approximate $306,000, those of Andrew Tarica excee d $169,000, those of SSGA World Funds-US Matrix exceed $54,000, an d those of Grady Hobbs exceed $59,000, totaling a collective los s of approximately $588,000. (See Pls.' Mot. Ex. C.) In addition, movants assert that they have not received notice of any othe r applicant or applicant group that has suffered greater financia l loss or that has applied to serve as lead plaintiff in thi s matter. (See id. at 8-9.) On the record before the Court, i t appears that these four plaintiffs have the greatest collectiv e financial stake in the relief sought by the class. See In r e Nice, 188 F.R.D. at 216-17 (finding that group of proposed lea d plaintiffs appeared to represent largest financial interest o f class members). 5. Rule 23 Requirement s Courts have consistently held that in a motion fo r appointment of lead plaintiffs, plaintiffs need only make a 10
preliminary showing of typicality and adequacy under Rule 23(a). See In re Oxford Health Plans, Inc., Sec. Lit., 182 F.R.D. 42, 4 9 (S.D.N.Y. 1998) ; Greebel, 939 F.Supp. at 64. Under Rule 23(a), typicality is satisfied when "the claims or defenses of th e representative parties are typical of the claims or defenses o f the class," and adequacy is met when "the representative partie s will fairly and adequately protect the interests of the class. " See FED. R. Civ. P. 23 (a) (3), (4). The Fifth Circuit has held that "the test for typicality is not demanding. It focuses on the similarity between the named plaintiffs' legal and remedia l theories and the theories of those whom they purport t o represent." Mullen v. Treasure Chest Casino, LLC, 186 F.3d 620, 625 (5th Cir. 1999), internal quotation marks and citatio n omitted. Here, plaintiffs all purchased McDermott securitie s during the class period at allegedly inflated prices ; thei r claims arise out of the same alleged material misrepresentation s by defendants, and they all claim damages as a result. Th e plaintiffs have made a sufficient preliminary showing o f typicality. In order to satisfy adequacy of representation, counsel mus t be qualified, experienced, and able to prosecute the actio n vigorously, and the class representatives must not have interest s antagonistic to the class members. See, e.g., In re Lease Oi l 11
Antitrust Lit. (No. II), 186 F.R.D. 403, 421 (S.D. Tex. 1999). In this case, the proposed lead plaintiffs make a sufficien t preliminary showing of adequacy of representation. Because thei r injuries arise out of the same conduct as those of the clas s members, their interests appear to be aligned with those members. In addition, the proposed lead plaintiffs have obtained competen t and experienced counsel to represent them in this action. Thi s Court has reviewed the firm resumes of Milberg Weiss and Weiss & Yourman, which have successfully prosecuted shareholder an d securities class actions, and have frequently served as counse l in major actions in this and other courts. (See Pls.' Mot. Exs. D, E, firm resumes.) See In re Oxford, 182 F.R.D. at 50. The Court therefore finds that Great Fish & Co., Andre w Tarica, SSGA World Funds-US Matrix and Grady Hobbs satisfy th e legal requirements to be appointed co-lead plaintiffs in thi s matter. The Court's determination is without prejudice t o revisit this issue in considering a motion for clas s certification. See Greebel, 939 F.Supp. at 60-61 ; Gluck, 97 6 F.Supp. at 547. In appointing these four plaintiffs as lead plaintiffs, the Court observes that several courts have approved the appointment of more than one lead plaintiff in large securities class actions. See, e.g., Greebel, 939 F.Supp. at 64 ; In re Oxford, 182 F.R.D. at 46, 49 (noting that appointment o f 12
multiple lead plaintiffs provides the proposed class wit h benefits of joint decision-making and funding, is consistent wit h the language and purpose of the PSLRA, and allows plaintiffs as a group to wield more control over counsel). Courts have als o recognized that the PSLRA specifically encourages the appointmen t of institutional investors, such as SSGA, as lead plaintiffs. See In re Oxford, 182 F.R.D. at 46 ; Gluck, 976 F.Supp. at 548. B. Appointment of Co-Lead Counsel and Liaison Counse l Subsection 78u-4(a) (3) (B) (v) provides that 11[t]he most adequate plaintiff[s] shall, subject to the approval of th e court, select and retain counsel to represent the class." A s discussed above, this Court finds that lead plaintiffs hav e retained competent, experienced counsel and therefore grant s plaintiffs' motion to appoint Milberg Weiss and Weiss & Yourman as co-lead counsel in this action, provided that (1) there shal l be no duplication of attorneys' services ; (2) the use of co-lea d counsel will not in any way increase attorneys' fees an d expenses. See Lax, 1997 WL 461036 at *7 (granting motion t o appoint co-lead counsel subject to these provisions), citing In re Donnkenny, Inc. Sec. Lit., 171 F.R.D. 156, 158 (S.D.N.Y. 1997). Co-lead counsel shall have the authority to speak fo r lead plaintiffs in all matters regarding pretrial and tria l procedures, and, in making work assignments, shall facilitate th e 13
orderly and efficient prosecution of this case. The Court also grants plaintiffs' motion to appoint Gauthie r Downing as liaison counsel. Gauthier Downing will be responsibl e for advising lead counsel on local procedural matters, for th e creation and maintenance of a master service list of all partie s and their respective counsel, for distributing communication s between the Court and counsel, for apprizing counsel o f developments and scheduling matters in the case, and fo r generally assisting in coordination of the case. See In re Oxford, 182 F.R.D. at 50. III. Conclusio n For the foregoing reasons, this Court grants plaintiffs ' motion for the appointment of co-lead plaintiffs (consisting o f Great Fish & Co., Andrew Tarica, SSGA World Funds-US Matrix an d Grady Hobbs) and it appoints Milberg Weiss and Weiss & Yourman a s co-lead counsel. The firm of Gauthier Downing is appointe d liaison counsel. New Orleans, Louisiana, this 13th day of April, 2000. SARAH S. VANCE UNITED STATES DISTRICT JUDGE 14