United States District Court, District of Columbia
PATRICIA A. SHENK, et al., Plaintiffs,
MALLINCKRODT PLC, et al., Defendants.
MEMORANDUM OPINION AND ORDER
L. FRIEDRICH United States District Judge.
the Court are the State Teachers Retirement System of
Ohio's (“STRS Ohio's”) Motion for
Consolidation, Appointment as Lead Plaintiff, and Approval of
Its Selection of Counsel, Dkt. 16, and the Motion of
Amalgamated Bank for Consolidation of Related Actions,
Appointment as Lead Plaintiff, and Approval of Its Selection
of Lead Counsel, Dkt. 18. Having considered the parties'
briefs and counsels' arguments during the motions hearing
held on March 1, 2018, the Court will grant STRS Ohio's
motion, appoint STRS Ohio as lead plaintiff, approve Barrack,
Rodos & Bacine as lead counsel, and deny Amalgamated
to the Securities Exchange Act of 1934, as amended by the
Private Securities Litigation Reform Act of 1995
(“PSLRA”), 15 U.S.C. § 78u-4 (2016), a court
must “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)(i). A court's appointment of lead
plaintiff is circumscribed by the PSLRA's mandate that:
[T]he 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 a 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.
15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).
noted, both STRS Ohio and Amalgamated Bank filed motions
under the PSLRA seeking appointment as lead plaintiff.
Accordingly, the process of determining the lead plaintiff
begins by identifying the movant with the largest financial
interest in the relief sought by the class. In re Cendant
Corp. Litig., 264 F.3d 201, 262 (3d Cir. 2001).
case, there is little question that STRS Ohio has the largest
financial interest. Calculated on a first-in-first-out
(“FIFO”) accounting basis, STRS Ohio's
alleged financial loss is $46, 378, 080, and on a
last-in-first-out (“LIFO”) accounting basis, its
alleged financial loss is $45, 659, 928. STRS Ohio's Br.
in Supp. of Mot. 11, Dkt. 16. Not only is STRS Ohio's
financial interest substantial, it exceeds that of
Amalgamated Bank by a multiplier of more than twenty.
satisfy the requirements of Rule 23 of the Federal Rules of
Civil Procedure, a movant seeking to be appointed lead
plaintiff need only make a preliminary showing that it meets
the typicality and adequacy requirements. See In re
Cendant Corp. Litig., 264 F.3d at 263 (stating that
“[t]he initial inquiry (i.e., the determination of
whether the movant with the largest interest in the case
‘otherwise satisfies' Rule 23) should be confined
to determining whether the movant has made a prima
facie showing of typicality and adequacy” (quoting
15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(cc))). STRS Ohio has
met this standard.
STRS Ohio's claims appear to be typical of the putative
class as a whole. To satisfy the typicality requirement, a
movant's claims need not be identical with the absent
class members, but they must be reasonably coextensive with
the class as a whole. See Brown v. Kelly, 609 F.3d
467, 475 (2d Cir. 2010) (noting that the typicality
“requirement is satisfied when 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”); Wagner v. Taylor,
836 F.2d 578, 591 (D.C. Cir. 1987) (“Courts have held
that typicality is not destroyed by factual
variations.”); Dellums v. Powell, 566 F.2d
216, 230 (D.C. Cir. 1977) (stating that the claims of the
class representative must be typical of the class as a
whole). STRS Ohio, like Amalgamated Bank and the other
putative plaintiffs, alleges that it suffered a loss from its
purchase of allegedly artificially-inflated Mallinckrodt
securities that it acquired during the class period.
See STRS Ohio's Br. in Supp. of Mot. 13, Dkt.
16; Class Action Compl. ¶¶ 1-22, 31-54 & 61,
Dkt. 1; Class Action Compl. for Violations of the Fed. Sec.
Laws ¶¶ 1-16, 26-52 & 54, Dkt. 1, Patel v.
Mallinckrodt PLC, No. 17-cv-00171 (D.D.C. Jan. 26,
2017); Compl. for Violations of the Fed. Sec. Laws
¶¶ 1-18, 36-55 & 71-74, Dkt. 1, Fulton
Cnty. Emps.' Ret. Sys. v. Mallinckrodt PLC, No.
17-cv-00534 (D.D.C. Mar. 23, 2017); Class Action Compl. for
Violations of Fed. Sec. Laws ¶¶ 1, 17-53, Dkt. 1,
Schwartz v. Mallinckrodt PLC, No. 17-cv-00447
(D.D.C. Mar. 13, 2017).
STRS Ohio also appears to meet the adequacy requirement of
Rule 23. In assessing this requirement, courts generally
consider whether a movant has the ability and incentive to
represent the claims of the class vigorously, whether the
movant has obtained adequate counsel, and whether there is a
conflict of interest between the movant's claims and
those asserted on behalf of the class. In re Cendant
Corp. Litig., 264 F.3d at 265. Based on its financial
interest in excess of $45 million, STRS Ohio has ample
incentive to represent the putative class vigorously.
Moreover, both STRS Ohio and its proposed lead counsel,
Barrack, Rodos & Bacine, have extensive experience in
securities litigation. STRS Ohio has served as a lead or
co-lead plaintiff in numerous class-action securities
lawsuits, including a prior case litigated in this district,
while Barrack, Rodos & Bacine has served as lead counsel
and has secured multimillion- to billion-dollar recoveries in
numerous such suits. See STRS Ohio's Opp'n.
Br. 1-2, Dkt. 27; STRS Ohio's Reply Br. 10-12, Dkt. 28
(citing lawsuits); STRS Ohio's Br., Rosen Decl. Ex. D at
5-7, Dkt. 16-5. As a preliminary matter, it also appears that
STRS Ohio's interests are aligned with the putative
class, and STRS Ohio can adequately represent the class's
conclusion that STRS Ohio is presumptively the most adequate
plaintiff does not end the inquiry because the presumption
can be rebutted if a putative plaintiff can prove that STRS
Ohio “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). In addition, a putative plaintiff
can obtain discovery to rebut the presumption but “only
if the plaintiff first demonstrates a reasonable basis for a
finding that the presumptively most adequate plaintiff is
incapable of adequately representing the class.” ...