Gielata v. Heckmann et al
REPORT AND RECOMMENDATIONS re 184 MOTION to Certify Class [Plaintiffs Motion For Class Certification And Appointment Of Class Representatives And Class Counsel] filed by Ronald Sullivan, Matthew H. Haberkorn, and 217 MOTION to Exclude Declaratio n of Zachary Nye, Ph.D. re 186 Declaration filed by James Danforth Quayle, China Water and Drinks, Inc., Heckmann Corporation, Lou Holtz, Richard J. Heckmann, Donald G. Ezzell, Alfred E. Osborne, Jr. Please note that when filing Objections pursu ant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 6/24/2013. Signed by Judge Mary Pat Thynge on 6/6/13. (cak)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
IN RE HECKMANN CORPORATION
C. A. No. 10-378-LPS-MPT
REPORT AND RECOMMENDATIONS
Lead plaintiff Matthew Haberkorn (“Haberkorn”) and defendants1 dispute over a
shareholder-approved merger between the Heckmann Corporation (“Company”) and
China Water and Drinks, Inc. (“China Water”).2 The amended complaint, filed on
October 8, 2010, asserts claims under §§ 10(b), 14(a), 20(a), and Rule 10b-5 of the
Securities Exchange Act of 1934 (“Securities Exchange Act”) on behalf of all
shareholders who held stock in the Company as of September 15, 2008, and were
entitled to vote on the merger, and on behalf of investors who acquired securities in the
Company during the class period, May 20, 2008 to May 8, 2009.3 The allegations are of
fraud, recklessness, and materially false and misleading statements.4
Prior to the filing of the amended complaint, defendants moved to transfer to the
Central District of California,5 which this court denied.6 On November 12, 2010,
Defendants are Richard J. Heckmann, James Danforth Quayle, Alfred E.
Osborne, Jr., Lou L. Holtz, Donald G. Ezzell, Heckmann Corporation, and China Water
and Drinks, Inc. D.I. 52 ¶¶ 30-37.
Id. ¶ 1.
See generally id. ¶¶ 135-229, 254-328.
D.I. 51 (finding that private and public interest factors of 28 U.S.C. § 1404(a) did
not warrant transfer); see also C.A. No. 10-378 LPS-MPT, 2011 WL 1219230 (D. Del.
Mar. 31, 2011) (affirming D.I. 51).
Haberkorn moved for partial modification of the Private Securities Litigation Reform Act
(“PSLRA”) discovery stay,7 which this court also denied.8 Defendants moved to dismiss
pursuant to the Federal Rules of Civil Procedure 8(a), 9(b), 12(b)(2) and 12(b)(6); this
motion was denied.9
On October 19, 2012, plaintiff filed a motion to certify the class.10 Defendants
filed its answer brief in opposition of the motion on January 1, 2013.11 Further,
defendants filed a motion to exclude the declaration of plaintiff’s expert witness Zachary
Nye, Ph.D.12 Both of these issues are now before the court.
The Merger and Events Leading Thereto
The Company is a publicly traded, “blank check company” that acquires or
obtains control of operating entities through various business combinations, such as
stock acquisitions and mergers.13 It is incorporated under Delaware law with its
principle office in Palm Desert, California.14 In this particular instance, the Company
raised funds from public investors through an initial public offering (“IPO”) promising to
acquire a “qualifying” operating company using the IPO proceeds, which were held in
See C.A. No. 10-378 LPS-MPT, 2010 WL 5887794 (D. Del. Feb. 28, 2010).
(finding Haberkorn did not satisfy PSLRA requirements of necessity or undue prejudice
and particularity to warrant modifying automatic stay).
See 869 F. Supp. 2d 519 (D. Del. 2012).
D.I. 52 ¶¶ 3, 41.
Id. ¶ 31.
escrow.15 The certificate of incorporation required the Company be dissolved and the
IPO proceeds returned to the shareholders if it failed to accomplish a business
combination with an entity whose fair value was equal to at least 80% of the Company’s
net assets (a qualifying business combination) within twenty-four months of the IPO.16
The founders of the Company, i.e., defendants, were not to receive any of the proceeds
upon the Company’s dissolution.17
The IPO was completed on November 16, 2007, raising approximately $432.9
million through the issuance of 54.1 million units at $8.00 per unit.18 Each unit consisted
of one share and one warrant, allowing the holder to purchase one share for $6.00.19
The founders awarded themselves 14,375,000 units, or 20% of the Company, at $0.005
per unit, for a total investment of $71,875.20 The founders also agreed to invest $7
million in exchange for 7,000,000 warrants.21 These funds were placed in escrow to be
paid to shareholders if the Company failed to complete a qualifying business
combination.22 By October 30, 2008, the date of the shareholder vote, defendants
would personally lose more than $287 million if the Company failed to acquire a
Id. ¶ 3.
Id. ¶¶ 3, 45.
Id. ¶ 46.
Id. ¶¶ 5, 44.
Id. ¶ 44.
Id. ¶¶ 4, 46, 213.
Id. ¶¶ 47, 213.
Id. ¶ 47.
Id. ¶¶ 46-47 (basing amount on value of securities, $280 million, and purchase
of warrants, totaling $7 million).
On May 20, 2008, the Company publicized a merger agreement to acquire China
Water and filed the agreement with the Securities and Exchange Commission (“SEC”).24
China Water, now incorporated under Delaware law, manufactures and distributes
bottled water products in China.25 The agreement contained statements,
representations, and warranties regarding China Water’s operations and financial
condition, expressing, inter alia, that its financial statements did not contain any
materially false or misleading statements or omissions.26 It also stated that China Water
possessed no undisclosed liabilities, paid all required taxes, and was in compliance with
all applicable laws.27 The purchase price was $625 million; $455 million in the
Company’s common stock and $170 million in cash.28
The Company praised China Water and the merger, stating that it was a
“compelling” and “special opportunity.”29 Defendant Richard Heckmann, Chairman and
CEO of the Company, projected $220 million in revenues and $70 million in net income
for fiscal year 2008.30 The merger agreement required the Company to hold in escrow
90% of the Company’s shares given to Xu Hong Bin (“Xu”), CEO and president of China
Water and a director of the Company, in exchange for his China Water shares.31 The
Company agreed to release 80% of Xu’s escrowed shares on March 31, 2010,
approximately eighteen months after the merger closing, and the remaining shares two
Id. ¶ 52.
Id. ¶¶ 32, 48.
Id. ¶¶ 55-59.
Id. ¶¶ 6, 53.
Id. ¶¶ 7, 111, 190.
Id. ¶¶ 7, 12, 50, 136, 186.
Id. ¶¶ 54, 62.
years after the merger closing.32
On June 16, 2008, the Company filed a Form S-4 registration statement for the
proposed merger with the SEC.33 The Form disclosed several risk factors that included
China Water’s failure to: (1) maintain effective internal controls over its internal audit
function because it lacked sufficient qualified personnel; (2) maintain effective internal
controls over the financial closing process to ensure the accurate and timely preparation
of local financial statements and financial data due to an insufficient number of qualified
financial and accounting staff; and (3) adequately design and operate internal controls
to support the requirements of the financial reporting and period-end closing process.34
The Form also described the due diligence conducted by Credit Suisse, one of
the Company’s financial advisors, which involved weeks of meetings in China and
inspections of China Water’s plants.35 The Form acknowledged that even though
extensive due diligence was performed, it could not assure that such diligence identified
all material issues possibly existing in China Water or its business, or that factors
outside of China Water’s control would not later arise.36 If such an issue arose, the
Form noted it may result in losses, and the Company “may be forced to write-down or
write-off assets, restructure operations, or incur impairment or other charges.”37
The Form also stated the acquisition of China Water may negatively effect
Id. ¶ 62.
Id. ¶ 171.
D.I. 71 Ex. A at 20-32.
Id. at 34-36.
Id. at 32.
market perceptions of the Company or its common stock, and potentially cause
violations of net worth requirements or other covenants due to post-combination debt
financing.38 These disclosures were repeated in amendments to the Form filed on July
25, August 22, September 30, and October 1, 2008, and the Form S-1 registration
statement of October 23, 2008, and an amendment filed on November 5, 2008.
The merger was renegotiated allegedly due to market instability, resulting in the
September 29, 2008 purchase price reduction to slightly over $400 million with $120
million less in cash consideration.39 In addition, Xu agreed to reduce the cash proceeds
he was to receive from the merger from $5.00 per share to $2.77 per share for his 5.4
million shares of China Water.40 To induce China Water shareholders to do the same,
Xu agreed to transfer 7.6 million of his China Water shares to its shareholders.41
On October 2, 2008, the Company issued the joint proxy and filed it with the
SEC, recommending its shareholders to approve the merger.42 The joint proxy
included, inter alia, the merger agreement, a registration statement filed with the SEC,
and the financial statements of China Water and the Company.43 The proxy listed risk
factors and deficiencies in China Water’s internal controls, and stated its historical
operating results may not provide a meaningful basis for evaluating its business,
financial performance, and future prospects.44 It also advised it was more than a remote
D.I. 52 ¶¶ 77, 80, 220.
Id. ¶¶ 78, 220.
Id. ¶¶ 79, 220.
Id. ¶¶ 10, 12, 94-95, 171-72.
Id. ¶ 171.
D.I. 71 Ex. B at 33-34.
likelihood that a material misstatement of the financial statement would not be
prevented or detected on a timely basis by employees in their normal course of work.45
The proxy restated the risk factors and the due diligence results described in Form S4.46 The proxy showed China Water had a net loss of $36.55 million in 2007 and a
projected loss of $22.01 million for the first six months ending June 30, 2008.47
The Company nevertheless reassured investors in the proxy that it was
comfortable with the stated deficiencies, that it expected China Water to achieve record
results,48 and that China Water’s operations and value would exceed the qualifying
business combination requirement.49 Based on these and other reasons, the board of
directors encouraged shareholders to vote in favor of the merger, and to amend the
certificate of incorporation to provide for the Company’s perpetual existence.50 The
change in the certificate would absolve the requirement that the Company dissolve and
return the IPO funds if it failed to complete a qualifying business combination within
twenty-four months of the IPO.51 After soliciting votes through a joint Proxy/Prospectus,
the merger was secured on October 30, 2008 at a special stockholder meeting, where
the required majority voted to approve the merger and amend the certificate of
incorporation.52 The merger closed the same day.53
Id. at 28-46.
Id. at 140-41.
D.I. 52 ¶¶ 11-12, 175.
Id. ¶¶ 97, 180.
Id. ¶¶ 12, 97, 180.
Id. ¶ 100.
Approximately five months after the merger, Xu resigned as president and CEO
of China Water and from the Company’s board of directors.54 The agreement between
Xu and the Company provided for the release of Xu’s 3,500,000 shares in the Company
and the Company’s $14 million payment to Xu.55
On May 8, 2009, the Company issued its financial results for the first quarter
following the merger.56 It disclosed financial results inconsistent with China Water’s
historical and projected financial data, and China Water’s value was written down by
$184 million.57 The Company revealed that China Water’s prior management
misrepresented the strength of its business, and may have diverted corporate assets.58
It also advised 15,527,900 common shares and approximately 1.5 million shares
underlying warrants issued to former China Water management and insiders were
The market reacted negatively to these disclosures by decreasing the price of the
Company’s common shares by 13.2%; $4.99 on May 7, 2009, to $4.33 the next day.60
The price of the Company’s warrants fell 25.5%, from $0.90 to $0.7075 during the same
time frame.61 By the third quarter after the merger, China Water’s goodwill had been
Id. ¶ 112.
Id. ¶¶ 112, 224.
Id. ¶¶ 116-17.
Id. ¶¶ 117, 232.
Id. ¶¶ 118, 233.
Id. ¶ 236.
Id. ¶ 237.
written down from $384.72 million, the date of the joint proxy, to $6.3 million.62 On
February 23, 2010, China Water’s total value had been written down to $21 million, a
96% reduction from its $625 million initial price.
STANDARD FOR EXPERT TESTIMONY
The admissibility of expert testimony is governed by Federal Rule of Evidence
(“FED. R. EVID.”) 702, which states in pertinent part:
If scientific, technical or other specialized knowledge will assist the trier of
fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training or
education, may testify thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or data, (2) the testimony is
the product of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the case.63
In Daubert v. Merrell Dow Pharmaceuticals, Inc., the Supreme Court interpreted
FED. R. EVID. 702 “confides to the judges some gatekeeping responsibility in deciding
questions of the admissibility of proffered expert testimony.”64 The Third Circuit has
analyzed Rule 702 as “embodying three distinct substantive restrictions on the
admission of expert testimony: qualifications, reliability, and fit.”65 Important facts to
consider in evaluating the reliability of a particular scientific or technical methodology
(1) whether a method consists of a testable hypothesis; (2) whether the
method has been subject to peer review; (3) known or potential rate of
Id. ¶¶ 126, 128.
FED. R. EVID. 702.
509 U.S. 579, 600 (1993) (Rehnquist, J., concurring in part and dissenting in
Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000) (explaining In re Paoli
R.R. Yard PCB Litig., 35 F.3d 717, 741-43 (3d Cir. 1994)).
error; (4) the existence and maintenance of standards controlling the
technique’s operation; (5) whether the method is generally accepted; (6)
the relationship of the technique to methods which have been established
to be reliable; (7) the qualifications of the expert witness testifying based
on the methodology; and (8) the non-judicial uses to which the method
has been put.66
“In Paoli, [the Third Circuit] explained that even if the judge believes ‘there are
better grounds for some alternative conclusion,’ and that there are some flaws in the
scientist methods, if there are ‘good grounds’ for the expert’s conclusions, it should be
admitted.”67 The question of whether an expert’s testimony is admissible based on his
qualifications, reliability, and fit is committed to the court’s discretion.68
The trial judge has broad latitude in determining whether the Daubert factors are
reasonable measures of reliability.69 In Paoli, the Third Circuit found that proffers of
expert testimony do not have to “demonstrate . . . by a preponderance of evidence that
the assessments of their experts are correct, they [need] only . . . demonstrate by a
preponderance of evidence that their opinions are reliable.”70 Daubert recognized
“vigorous cross examination, presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate means of attacking shaky but
admissible evidence.”71 Daubert emphasized the trial court must “focus” solely on
principles and methodology, and not on the conclusions generated.72 A trial judge,
In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 n.8 (3d Cir. 1996).
Heller v. Shaw Indus., Inc., 167 F.3d 146, 152-53 (3d Cir. 1999) (quoting In re
Paoli, 35 F.3d at 744).
In re Paoli, 35 F.3d at 749.
See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 139 (1999).
In re Paoli, 35 F.3d at 744.
Daubert, 509 U.S. at 596.
Id. at 580.
however, is to scrutinize whether such methods have been properly applied to the facts
of the case.73
As previously stated, the determination of whether to exclude expert evidence is
at the court’s discretion.74 The Third Circuit has noted, however:
While evidentiary rulings are generally subject to a particularly high level of
deference because the trial court has a superior vantage point to assess
the evidence . . . , evaluating the reliability of scientific methodologies and
data does not generally involve assessing the truthfulness of the expert
witness and thus is often not significantly more difficult on a cold record.
Moreover, here there are factors that counsel in favor of a hard look at
(more stringent review of) the district court’s exercise of discretion. For
example, because the reliability standard of 702 and 703 is somewhat
amorphous, there is significant risk that district judges will set the
threshold too high and will in fact force plaintiffs to prove their case twice.
Reducing this risk is particularly important because the Federal Rules of
Evidence display a preference for admissibility.75
The Third Circuit has identified several factors for the court to consider in
determining whether to exclude expert testimony:76
(1) the prejudice or surprise in fact of the party against whom the excluded
witness would have testified, (2) the ability of the party to cure the
prejudice, (3) the extent to which waiver of the rule against calling unlisted
witnesses would disrupt the orderly and efficient trial of the case or of
other cases in the court, and (4) bad faith or willfulness in failing to comply
with the district court’s order.77
Additionally, the “‘importance of the excluded testimony’ should be considered.”78
In re Paoli, 35 F.3d at 749.
Id. at 749-50.
Inline Connection Corp. v. AOL Time Warner Inc., 470 F. Supp. 2d 435, 438
(D. Del. 2007).
In re Paoli, 35 F.3d at 791.
Konstantopoulos v. Westvaco Corp., 112 F.3d 710, 719 (3d Cir. 1997) (quoting
Meyers v. Pennypack Woods Home Ownership Ass’n, 559 F.2d 894, 904 (3d Cir.
DR. NYE’S EXPERT TESTIMONY/REPORT
Under Rule 702, “[t]he focus, of course, must be solely on principles and
methodology, not on the conclusions that they generate.”79 Defendants argue Dr. Nye’s
expert opinion is not reliable, because it is not “based upon generally accepted scientific
methodologies and principles.”80 While defendants concede an event study is a “widely
accepted methodology for determining whether unexpected corporate news has caused
stock price movement,” they claim Dr. Nye’s application of this method is flawed.81
Defendants assert an event study generally includes: “(1) identifying and defining the
event to be studied; (2) defining the length of the event window; (3) controlling for
industry or market effects; and (4) estimating the effects of the event on the company’s
Defendants contend Dr. Nye used a subjective and non-random selection of
dates to test for market efficiency, and such a methodology is not a generally accepted
scientific method.83 Further, defendants assert plaintiff’s expert did not offer a definition
or “objective criteria” for determining what constituted an “earnings-related” event.84 In
addition, Dr. Nye admitted to omitting earnings-related announcements by China Water,
which were relevant to the Company’s earnings.85 Defendants further suggest objective
criteria Dr. Nye could have used instead, such as the Company and China Water’s
Daubert, 509 U.S. at 595.
D.I. 218 at 1.
Id. at 6.
Id. at 7.
Id. at 7-8.
Id. at 8.
announcements or all SEC filings for either company.86 Finally, defendants argue Dr.
Nye “cherry picked” a date from his random selection of events, where there was
statistically significant movement in the Company’s stock price in response to news, and
concludes the stock price thus promptly responded to such news.87
While being a generally accepted method is one factor analyzed under Rule 702,
it is not the sole factor applied by the Third Circuit in a Daubert analysis.88 The court in
Pineda noted, “[w]e have interpreted the second requirement to mean that ‘an expert's
testimony is admissible so long as the process or technique the expert used in
formulating the opinion is reliable.’”89 Defendants argue Dr. Nye failed to use “generally
accepted scientific and economic practices in his analysis,” but defendants’ argument
fails to consider any other reliability factors, such as his qualifications or relevance of his
opinion.90 The court in Paoli held, “[t]he grounds for the expert’s opinion merely have to
be good, they do not have to be perfect,” and even if the “scientist’s methodology has
some flaws” or there are “better grounds,” the expert opinion may still be admissible.91
The “ultimate touchstone is helpfulness to the trier of fact, and with regard to reliability,
helpfulness turns on whether the expert's ‘technique or principle [is] sufficiently reliable
so that it will aid the jury in reaching accurate results.’”92
Here, Dr. Nye selected “earnings-related announcements” by the Company,
Pineda v. Ford Motor Co., 520 F.3d 237, 244 (3d Cir. 2008).
Id. (quoting In re Paoli, 35 F.3d at 741-42).
D.I. 218 at 1.
In re Paoli, 35 F.3d at 744.
which included quarterly and year-end financial results.93 Further, he constructed a
regression analysis with a “Control Period” based on dates where the company was
restructured.94 Thus, his event study methodology meets the relatively low standard
established in this circuit.
Although defendants challenge Dr. Nye’s methodology, they do not provide
“generally accepted scientific or economic practices” for determining market efficiency.95
Moreover, defendants and their expert, Dr. Cox, admit Dr. Nye used an “event study” to
show the stock’s reaction to information in the market, which they both concede is
“commonly used in securities class actions.”96 Plaintiff highlights that Dr. Cox adopted
Dr. Nye’s market model as his own, further demonstrating the reliability of Dr. Nye’s
Moreover, Dr. Cox admits the competing analysis he proffered has never been
adopted by a federal court in assessing market efficiency for federal securities litigation,
and thus, according to plaintiff, does not appear to be a generally accepted standard.98
Finally, plaintiff argues that Dr. Cox admitted to not reviewing any of the information he
identified as “news” to determine whether new information was being disseminated to
the market, which is a “fundamental requirement of an econometric analysis of market
D.I. 186 at 22.
Id. at 23-24.
D.I. 218 at 1.
D.I. 223 at 28.
Id. at 29.
Plaintiff points out defendants’ critique of Dr. Nye’s methodology relies heavily on
the First Circuit case In re PolyMedica Corp. Securities Litigation.100 Defendants note
the PolyMedica court excluded the opinion of an expert for determining marketefficiency for establishing the fraud-on-the-market presumption.101 However, in
PolyMedica, the First Circuit established a different standard for defining an efficient
market, stating that: “[f]or application of the fraud-on-the-market theory, we conclude
that an efficient market is one in which the market price of the stock fully reflects all
publicly available information.”102 “By ‘fully reflect,’ [the court] means that market price
responds so quickly to new information that ordinary investors cannot make trading
profits on the basis of such information.”103
The Third Circuit, however, affirmatively declined to define “open and developed
market” in Peil v. Speiser,104 stating “[a]s the case at bar involves a widely traded and
established stock, we need not consider whether we would apply the ‘fraud on the
market’ theory in other instances.”105 In In re DVI, Inc. Securities Litigation,106 the Third
Circuit noted “a perfectly efficient market is not attainable,” and the court does not
require “public information [to] be absorbed ‘instantaneously.’”107 Therefore, referencing
PolyMedica for the determination of an efficient market is not particularly enlightening,
and the court will look to Third Circuit precedent for guidance.
432 F.3d 1 (1st Cir. 2005).
D.I. 218 at 7-8.
PolyMedica, 432 F.3d at 14.
Id. at 19.
806 F.2d 1154 (3d Cir. 1986).
Id. at 1161 n.10.
639 F.3d 623 (2011).
Id. at 635.
Defendants also rely on Cammer v. Bloom108 for establishing the test for market
efficiency, but unlike the instant matter, defendants’ stock in Cammer did not trade on a
national stock exchange.109 The court in Cammer identified five factors for establishing
an efficient market, all of which are addressed in Dr. Nye’s analysis, but defendants
focus solely on the cause-and-effect factor.110 In Cammer, the court recognized “it
would be helpful to a plaintiff seeking to allege an efficient market to allege empirical
facts showing a cause and effect relationship between unexpected corporate events or
financial releases and an immediate response in the stock price,” but stops short of
identifying it as the “most important” factor.111
The Cammer court also distinguished the defendants in Basic Inc. v. Levinson112
and Peil as companies who traded on a national stock exchange, and acknowledged
these decisions “depended entirely upon the empirical market studies.”113 In Basic, the
Supreme Court recognized “[n]early every court that has considered the proposition has
concluded that where materially misleading statements have been disseminated into an
impersonal, well-developed market for securities, the reliance of individual plaintiffs on
the integrity of the market price may be presumed.”114 Furthermore, “[r]ecent empirical
studies have tended to confirm Congress' premise that the market price of shares
traded on well-developed markets reflects all publicly available information, and, hence,
711 F. Supp. 1264 (D.N.J. 1989).
Id. at 1280.
Id. at 1286.
Id. at 1287.
485 U.S. 224 (1988).
Cammer, 711 F. Supp. at 1280.
Basic, 485 U.S. at 247.
any material misrepresentations.”115 Here, the stock of the Company trades on the New
York Stock Exchange, and Dr. Nye’s analysis constitutes an empirical study.116
The Third Circuit has noted the FED. R. EVID. “display a preference for
admissibility,” and thus, the threshold applied by district court judges cannot be set “too
high,” causing plaintiffs “to prove their case twice.”117 The significance of the evidence
must be considered when determining admissibility because “[t]he exclusion of critical
evidence is an ‘extreme’ sanction, not normally to be imposed absent a showing of
willful deception or ‘flagrant disregard’ of a court order by the proponent of the
As defendants readily assert, plaintiff must demonstrate a cause-and-effect
relationship between the Company’s stock price and its news, in order to establish an
efficient market for the fraud-on-the-market theory.119 Dr. Nye executed an event study,
which is a generally accepted practice in determining market efficiency in securities
litigation.120 He also constructed a regression analysis, a proper control period, and
selected relevant dates to demonstrate the requisite cause and effect.121 While
defendants suggest other dates to include in his event study, none are necessary for
the study to be admissible. Dr. Nye’s study included earnings-related announcements,
which, in his opinion, would impact the market, and thus demonstrate market efficiency.
Id. at 246.
D.I. 185 at 15.
In re Paoli, 35 F.3d at 750.
Konstantopoulos, 112 F.3d at 719 (quoting Dudley v. South Jersey Metal, Inc.,
555 F.2d 96, 99 (3d Cir. 1977)).
D.I. 218 at 6.
D.I. 186 Ex. 3 at 21-23, 28-29.
Id. at 23-28.
Defendants argument that these dates were not objective go to weight.122 Their critique
attacks Dr. Nye’s conclusions, rather than his application of the accepted methodology.
While Dr. Nye’s study may not be perfect, it is not unreliable. Defendants may
challenge Dr. Nye’s conclusions in the appropriate forum, that is, at trial. Therefore,
defendants’ motion to exclude Dr. Nye’s testimony is denied.
STANDARD FOR CLASS CERTIFICATION
“To obtain certification of a class action for money damages under Rule 23(b)(3),
a plaintiff must satisfy Rule 23(a).”123 The plaintiff bears the burden of proving that the
action should be certified as a class action.124 First, to satisfy Rule 23(a), a plaintiff must
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the
interests of the class.125
These four prerequisites are commonly referred to as (1) numerosity, (2) commonality,
(3) typicality, and (4) adequacy of representation.126
“Second, the proposed class must satisfy at least one of the three requirements
listed in Rule 23(b).”127 In this case, plaintiff relies on Rule 23(b)(3), which requires a
Id. at 28-29.
Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191 (2013).
FED. R. CIV. P. 23(a).
See e.g., Amgen, 133 S. Ct. at 1191.
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2548 (2011).
plaintiff to establish, “the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for fairly and efficiently adjudicating the
This prerequisite is commonly broken into a two-part analysis: (1)
predominance, and (2) superiority.129 To meet the predominance requirement, a plaintiff
must demonstrate: “(1) that the existence of individual injury . . . was ‘capable of proof
at trial through evidence that [was] common to the class rather than individual to its
members;’ and (2) that the damages resulting from that injury were measurable ‘on a
class-wide basis’ through use of a ‘common methodology.’”130 In general, the
superiority requirement is easily satisfied in securities fraud cases where “there are
many individual plaintiffs who suffer damages too small to justify a suit against a large
The United States Supreme Court has cautioned, “a court’s class-certification
analysis must be ‘rigorous’ and may ‘entail some overlap with the merits of the plaintiff’s
underlying claim,’ Rule 23 grants courts no license to engage in free-ranging merits
inquiries at the certification stage.”132 “Merits questions may be considered to the
extent–but only to the extent–that they are relevant to determining whether the Rule 23
FED. R. CIV. P. 23(b)(3).
See e.g., Deutschman v. Beneficial Corp., 132 F.R.D. 359, 374 (D. Del. 1990).
Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1430 (2013) (quoting Comcast
Corp. v. Behrend, 264 F.R.D. 150, 154 (E.D. Pa. 2010)).
See e.g., In re DaimlerChrysler AG Sec. Litig., 216 F.R.D. 291, 300 (D. Del.
Amgen, 133 S. Ct. at 1194-95 (citations omitted).
prerequisites for class certification are satisfied.”133
“To recover damages in a private securities-fraud action under § 10(b) of the
Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5,
a plaintiff must prove: ‘(1) a material misrepresentation or omission by the defendant;
(2) scienter; (3) a connection between the misrepresentation or omission and the
purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5)
economic loss; and (6) loss causation.’”134
To demonstrate reliance in securities actions, a plaintiff may rely on the “fraudon-the-market” theory, which permits “invok[ing] a rebuttable presumption of reliance on
material misrepresentations aired to the general public.”135 This theory requires a
plaintiff to demonstrate that the company’s shares traded on an efficient market during
the period of alleged misrepresentation.136 “[I]f a market is shown to be efficient, courts
may presume that investors who traded securities in that market relied on public,
material misrepresentations regarding those securities.”137 This concept evolves from
the common sense notion that if a market is deemed to be efficient, “it is reasonable to
presume that a particular public, material misrepresentation will be reflected in the
A market will be efficient if “the ‘market price of shares’ will ‘reflec[t] all publicly
Id. at 1195.
Id. at 1191-92 (internal citations omitted) (citing Matrixx Initiatives, Inc. v.
Siracusano, 131 S. Ct. 1309, 1317 (2011)).
Amgen, 133 S. Ct. at 1192.
available information.’”139 To determine whether a market is efficient, courts look at a
number of factors.140 This circuit commonly looks at the Cammer factors.141 The
Cammer factors include: “(1) whether the security trades at a large weekly volume; (2)
whether analysts follow and report on the security; (3) whether the security has market
makers and whether there is a potential for arbitrage activity; (4) whether the company
is eligible to file SEC Form S-3; and (5) whether there are empirical facts showing a
cause-and-effect relationship between unexpected corporate events or financial
information releases, and an immediate response in the security’s price.”142 To
determine market efficiency, the court engages in a “rigorous” analysis.143 This analysis
involves resolving disputes among conflicting expert opinions.144
While the fraud-on-the-market theory can be rebutted by proof that “the news of
the [truth] credibly entered the market and dissipated the effects of [prior]
misstatements,” the rebuttal argument is one reserved for trial or summary judgment.145
Relevant to the court’s analysis is the United States Supreme Court’s recently
decided Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds,146 holding that
while a plaintiff “must prove materiality to prevail on the merits . . . such proof is not a
Amgen, 133 S. Ct. at 1192 (quoting Basic, 485 U.S. at 246).
Cammer, 711 F. Supp. at 1285-87.
D.I. 185 at 14-15 (citing Cammer, 711 F. Supp. at 1285-87).
In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 309 (3d Cir. 2009).
Id. at 323 (“Weighing conflicting expert testimony at the certification stage is
not only permissible; it may be integral to the rigorous analysis Rule 23 demands.”).
Amgen, 133 S. Ct. at 1204 (quoting Basic, 485 U.S. at 248-49) (providing
examples of successful methods to rebut the fraud-on-the-market presumption).
133 S. Ct. 1184 (2013).
prerequisite of class certification.”147 In the instant matter, this case was initially argued
in the party’s briefs; however, in light of Amgen, an analysis of this element is not
necessary at the class certification stage of litigation.148
Unlike a claim for a violation under § 10(b), to recover damages under § 14(a) of
the Securities Exchange Act, plaintiff need not prove reliance because it is not an
element of the claim.149 Instead, “to prevail on a Section 14(a) claim, a plaintiff must
show that (1) a proxy statement contained a material misrepresentation or omission
which (2) caused the plaintiff injury and (3) that the proxy solicitation itself, rather than
the particular defect in the solicitation materials, was an ‘essential link in the
accomplishment of the transaction.’”150 “At the class certification stage, plaintiffs are not
required to prove damages by calculating specific damages figures for each member of
the class. Instead, they need only show that a ‘viable method’ is available to prove
damages on a class-wide basis.”151
Finally, the Third Circuit has observed, “[c]lass actions are a particularly
appropriate and desirable means to resolve claims based on the securities laws, ‘since
the effectiveness of the securities laws may depend in large measure on the application
Id. at 1191. For a scholarly analysis of Amgen, the fraud-on-the-market
theory, and its effect on materiality in securities fraud litigation, see Richard A. Booth,
The Two Faces of Materiality, 39 DEL. J. CORP. L. (forthcoming 2013) (arguing that the
two distinct definitions of a material fact can be reconciled as alternatives to prove
See Amgen, 133 S. Ct. at 1191.
See DaimlerChrysler AG, 216 F.R.D. at 300.
Gen. Elec. Co. v. Cathcart, 980 F.2d 927, 932 (3d Cir. 1992) (quoting Mills v.
Elec. Auto-Lite Co., 396 U.S. 375, 385 (1970)).
In re Neurontin Antitrust Litig., No. 02-1390, 2011 WL 286118, at *9 (D.N.J.
Jan. 25, 2011).
of the class action device.’”152
Rule 23(a) Requirements
Numerosity requires the members of the class to be “so numerous that joinder of
all members is impracticable.”153 In Deutschman, the court held that numerosity was
satisfied where “36,000 shares of Beneficial common stock were purchased by an
estimated 2000 investors during the proposed Class Period.”154
Here, plaintiff has clearly met the numerosity prerequisite. Plaintiff demonstrates
that during the period in question, there were between 69 million and 128 million shares
of Heckmann stock outstanding, with an average of 3.4 million common shares traded
on a weekly basis.155 In addition, roughly 73 to 77 million warrants were outstanding,
with nearly 2.1 million warrants trading weekly.156 Those numbers indicate potentially
substantial class members, absent a precise number, satisfying numerosity.
Defendants do not challenge numerosity in their brief.157
Commonality requires that a plaintiff must establish “there are questions of law or
See e.g., Eisenburg v. Gagnon, 766 F.2d 770, 785 (3d Cir. 1985) (quoting
Kahan v. Rosenstiel, 424 F.2d 161, 169 (3d Cir. 1970)).
FED. R. CIV. P. 23(a)(1).
Deutschman, 132 F.R.D. at 372.
D.I. 185 at 6.
See D.I. 215.
fact common to the class.”158 In security fraud class actions, the commonality
requirement is permissively applied.159 “The requirement is satisfied by a showing that
‘the questions of law or fact linking the class members are substantially related to the
resolution of the litigation, even though the individuals are not identically situated.’”160 In
DaimlerChrysler, the court held that commonality was satisfied where the matter
involved alleged violations of Sections 10(b), 14(a), and 20(a) of the Securities
Here, plaintiff has clearly met the commonality prerequisite. Similar to plaintiff’s
allegations in DaimlerChrysler, the common legal and factual issues in this matter
include: (1) whether defendants violated sections 10(b), 14(a), and 20(a) of the
Securities Exchange Act; (2) whether material facts were misrepresented or omitted in
the proxy, SEC filings, press releases, or other statements to the public; and (3)
whether defendants’ misrepresentations or omissions caused the alleged losses.162
Therefore, the commonality requirement is easily satisfied. Defendants also do not
Typicality requires that a plaintiff must establish that “claims or defenses of the
FED. R. CIV. P. 23(a)(2).
Deutschman, 132 F.R.D. at 372.
Id. (quoting In re Gulf Oil/Cities Servs. Tender Offer Litig., 112 F.R.D. 383, 386
See DaimlerChrysler AG, 216 F.R.D. at 296. See also In re Tyson Foods,
Inc., Civ. A. No. 01-425-SLR, 2003 WL 22316548, at *3 (D. Del. Oct. 6, 2003).
D.I. 185 at 7-8.
See D.I. 215.
representative parties are typical of the claims or defenses of the class.”164 The
typicality requirement “is intended as a safeguard to insure that the named plaintiff’s
interests are substantially coextensive with the interests of the class.”165 The Third
Circuit has identified three factors for determining whether typicality is satisfied:
(1) the claims of the class representative must be generally the same as
those of the class in terms of both (a) the legal theory advanced, and (b)
the factual circumstances underlying the theory; (2) the class
representative must not be subject to a defense that is both inapplicable to
many class members and likely to become a major focus of the litigation;
and (3) the interests and incentives of the class representative must be
sufficiently aligned with those of the class.166
Here, the typicality requirement is satisfied because: (1) the factual
circumstances and legal arguments supporting plaintiff’s claims are equally shared by
the class, since all arose from the Company’s merger with China Water; (2) lead plaintiff
purchased his shares on the open market at artificially inflated prices, and is not subject
to any unique defenses that are likely to become a major focus of litigation.167 Thus,
any asserted defense will equally apply to the claims by all class members; and (3) all
the class members share a common interest in obtaining recovery from defendants for
the harm sustained due to defendants’ misrepresentations.168 The claims of the putative
class representative are generally similar and sufficiently aligned with the potential class
members. To be sure, defendants do not challenge typicality.169
FED. R. CIV. P. 23(a)(3).
Deutschman, 132 F.R.D. at 373.
Yarger v. ING Bank, FSB, 285 F.R.D. 308, 318 (D. Del. 2012).
D.I. 185 at 9-10.
See D.I. 215.
Adequate and Fair Representation
Lastly, a plaintiff must establish that “the representative parties will fairly and
adequately protect the interests of the class.”170 “The courts in this circuit have applied
a two-prong test to determine whether the named plaintiff has satisfied Rule 23(a)(4).”171
“A named plaintiff is an adequate representative if (1) he has no interest antagonistic to
the interests of the members of the class; and (2) his attorney is capable of prosecuting
the claim with some degree of expertise.”172
Here, plaintiff argues that the class representative will “fairly and adequately
represent the interests of the class,” because there are no conflicts of interest between
plaintiff and the class, and lead counsel is qualified and capable, and has a wealth of
experience prosecuting federal securities law claims.173 The court agrees with plaintiff
that all class members were injured by the same alleged misrepresentation on behalf of
Heckmann and China Water, and thus lead plaintiff will fairly and adequately represent
the interests of the entire class. Again, defendants do not challenge adequate and fair
representation in their brief.174
Rule 23(b)(3) Requirements
Since plaintiff has satisfied the requirements under Rule 23(a), plaintiff must now
satisfy both requirements under Rule 23(b)(3): “(1) the questions of law or fact common
FED. R. CIV. P. 23(a)(4).
Deutschman, 132 F.R.D. at 374.
D.I. 185 at 10-11.
See D.I. 215.
to class members predominate over any questions affecting only individual members,
and (2) that a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.”175 Pertinent to the court’s analysis is:
(A) the class members' interests in individually controlling the prosecution
or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy
already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and
(D) the likely difficulties in managing a class action.176
Here, defendants contend plaintiff fails to meet the predominance standard of
Rule 23(b)(3).177 While defendants concede the Supreme Court has recognized
“[p]redominance is a test readily met in certain cases alleging consumer or securities
fraud or violations of the antitrust laws,” the Third Circuit in Hydrogen notes the more
liberal application of predominance does not permit a court to “relax its certification
analysis, or presume a requirement for certification is met, merely because a plaintiff's
claims fall within one of those substantive categories.”178 Defendants make two
separate arguments against class certification of plaintiff’s Section 10(b) and Section
14(a) claims, discussed below.
Section 10(b) Claim
Amgen, 133 S. Ct. at 1191.
FED. R. CIV. P. 23(b)(3).
D.I. 215 at 3.
Id. at 5.
Plaintiff invokes the rebuttable presumption of reliance on material
misrepresentation aired to the general public under the fraud-on-the-market theory.179
Plaintiff’s argument is twofold. First, plaintiff argues the market is efficient because
Heckmann’s stock trades on the New York Stock Exchange (NYSE).180 Second, plaintiff
relies upon Dr. Nye’s expert report to further demonstrate market efficiency.181 Dr.
Nye’s expert report examines the efficiency of the Heckmann stock based on the
Cammer factors plus three additional factors.182
It is undisputed that Heckman’s securities traded on the NYSE during the class
period.183 The Third Circuit has described the NYSE as “one of the most efficient capital
markets in the world.”184 Further, the Third Circuit has stated that “[s]ecurities markets
like the NYSE . . . are open and developed, and are therefore well suited for application
of the fraud on the market theory.”185 In In re Merck & Co., the court held the mere fact
that the stock traded on the NYSE was enough to determine efficiency.186 The Merck
court felt it unnecessary to continue the analysis by discussing the Cammer factors.187
Both party’s experts in this case base their efficiency study on the Cammer factors;
Id. at 13.
D.I. 223 at 11-13.
Id. at 13-26.
D.I. 149 at 130 ¶ 242(a).
In re PHP Healthcare Corp., 128 F. App’x 839, 848 (3d Cir. 2005).
In re DVI, Inc. Sec. Litig., 639 F.3d 623, 634 (3d Cir. 2011) abrogated by
Amgen, 133 S. Ct. at 1184 (abrogating DVI’s holding that proof of materiality is a
prerequisite for class certification). See Oran v. Stafford, 226 F.3d 275, 282 (3d Cir.
2000) (describing the New York Stock Exchange as open, developed, and efficient).
No. 1658 (SRC), 2013 WL 396117, at *11 (D.N.J. Jan. 30, 2013).
however, an analysis of the Cammer factors is more stringent where the market is less
open and developed than the NYSE, such as the over-the-counter market.188
However, this fact does not deter defendants from challenging efficiency.
Defendants urge plaintiff’s individual issues concerning reliance dominate the common
issues for a Section 10(b) Class.189 Defendants contend plaintiff does not qualify for the
fraud-on-the-market theory, and thus the presumption of reliance does not apply.190
First, defendants attempt to prove inefficiency by their motion to exclude plaintiff’s
expert who determined the market to be efficient.191 However, as this court held,
plaintiff’s expert report is not excluded, and defendants can challenge the credibility of
the expert’s findings at trial.192
Second, defendants argue that although the Company’s stock trades on the
NYSE, they maintain the market for its stock is not efficient through the use of their
expert.193 However, defendants do not cite to any case where a court has held that
stock traded on the NYSE is not efficient.194
Specifically at dispute between the parties is the cause-and-effect relationship
between defendants’ misrepresentations and the price of the securities.195 Plaintiff’s
D.I. 215 at 16.
Id. at 17.
See supra Part II & III.
D.I. 215 at 19-24.
See D.I. 215.
Compare D.I. 185 at 15-16, with D.I. 215 at 19-21.
expert, Dr. Nye, opines that based on his event study, the Heckmann common shares
“responded to new, material, company-specific news.”196 In contrast, defendants’
expert, Dr. Cox, concludes that based on his event study, the Heckmann common
shares “did not respond differently on news days versus no-news days and thus did not
trade in an efficient market.”197
However, the court does not need to conduct an analysis of which expert is more
credible at the class certification stage; instead, this argument may be proper at trial or
on a motion for summary judgment.198 Further, if the court were to determine which
expert was more credible, it would engage in an analysis of the merits of plaintiff’s
claim. Even though a merits analysis often overlaps with a class certification motion, a
court only needs to conduct an analysis of the merits when necessary.199
Even if the NYSE was not presumed to be efficient, plaintiff meets his burden
that the market for the Company’s stock was efficient during the class period. As
discussed supra, Dr. Cox admits to using a methodology not adopted by a federal court
in assessing market efficiency,200 while plaintiff’s expert, Dr. Nye, uses a methodology
established in this circuit.201 Since the stock undisputably traded on the NYSE during
the class period, and plaintiff’s expert uses methodology consistent with Third Circuit
precedent, the market is efficient. Therefore, the common issues predominate over the
D.I. 185 at 15-16.
D.I. 215 at 20.
See Merck, 2013 WL 396117, at *11.
See Amgen, 133 S. Ct. at 1195.
D.I. 223 at 28.
See supra Part IV.
individual issues as to plaintiff’s Section 10(b) claim.
Section 14(a) Claim
“At the class certification stage, plaintiffs are not required to prove damages by
calculating specific damages figures for each member of the class. Instead, they need
only show that a ‘viable method’ is available to prove damages on a class-wide
Plaintiff argues the common issues predominate as to the Section 14(a) claim
because reliance is not an element, and the claim is solely based on “falsity, materiality
and loss causation,” which arises out of the same misstatements and omissions in the
proxy and the proxy materials, and can be resolved on a class-wide basis.203
Defendants argue plaintiff lacks a viable damage theory, which prohibits recovery
under Section 14(a).204 Noting that proof of damages is an essential element to a
Section 14(a) claim, defendants maintain plaintiff fails to show what the damages to the
class are, or how they may be established through a judicially recognized and
commonly accepted method.205 In support, defendants cite Comcast Corp. v.
Behrend,206 where the Supreme Court denied class certification to over 2 million
Comcast customers in an antitrust action, because the Court only accepted one of
plaintiff’s expert’s four theories regarding damages on the antitrust impact.207 However,
Neurontin, 2011 WL 286118, at *9.
Id. at *12.
Id. at *6.
133 S. Ct. 1426 (2013).
Id. at 1430-31.
plaintiff correctly points out that while Comcast addresses class action certification, it
was not in regard to a securities fraud litigation, which have generally been certified for
class status.208 Instead, Comcast addresses antitrust litigation.209
Here, plaintiff’s damage theory is consistent with Section 14(a) precedent
because it is “based on the diminution in the value of their shares caused by the false
and misleading statements in the Proxy.”210 This theory is consistent with Mills and
Gould where the courts recognized that a plaintiff may state a claim for a diminution in
the value of stock; the claim is not limited to out-of-pocket loss.211 Defendants concede
that a plaintiff may seek recovery of damages for more than out-of-pocket damages.212
Therefore, the common issues predominate over the individual issues as to plaintiff’s
Section 14(a) claim.
“In addition to common questions of law and fact, Rule 23(b)(3) requires the
class action to be superior to other available methods for litigating the claims.”213 This
inquiry requires analysis of subsections (A) through (D) of the rule.214
See e.g., Eisenburg, 766 F.2d at 785.
Comcast, 133 S. Ct. at 1430-31.
D.I. 223 at 10.
See Mills, 396 U.S. at 389. See also Gould v. American-Hawaiian S.S. Co.,
535 F.2d 761, 781 (3d Cir. 1976).
D.I. 215 at 14 (“Courts have recognized that in some cases, a Section 14(a)
claim can allow a plaintiff to recover damages other than out of pocket damages
measured by the difference between the promised value and the actual value of a
DaimlerChrysler AG, 216 F.R.D. at 300.
See FED. R. CIV. P. 23(b)(3).
This circuit favors allowing class certification in securities fraud cases,215
recognizing, “the interests of justice require that in a doubtful case . . . any error, if there
is to be one, should be committed in favor of allowing a class action.”216 In particular,
class actions are “especially appropriate in securities fraud cases wherein there are
many individual plaintiffs who suffer damages too small to justify a suit against a large
Here, “the Class consists of a large number of geographically dispersed investors
in Heckmann common stock and warrants, along with all holders of Heckmann common
stock as of September 15, 2008.”218 The class action method is superior to alternative
methods of litigating the case. Therefore, plaintiff’s motion for class certification is
VII. ORDER AND RECOMMENDED DISPOSITION
Consistent with the findings contained in the Report and Recommendation,
IT IS RECOMMENDED that:
(1) Defendants’ Motion to Exclude Declaration of Zachary Nye, Ph.D. (D.I. 217) is
(2) Plaintiff’s Motion for Class Certification and Appointment of Class
Representatives and Class Counsel (D.I. 184) is GRANTED.
Pursuant to 28 U.S.C. § 636(b)(1)(B), FED. R. CIV. P. 72(a) and D. DEL. LR 72.1,
any objections to the Report and Recommendation shall be filed within fourteen (14)
See e.g., DaimlerChrysler AG, 216 F.R.D. at 300.
Deutschman, 132 F.R.D. at 374 (quoting Kahan, 424 F.2d at 169).
DaimlerChrysler AG, 216 F.R.D. at 300.
D.I. 185 at 19.
days limited to ten (10) pages after being served with the same. Any response is limited
to ten (10) pages.
The parties are directed to the Court’s Standing Order in Non-Pro Se matters for
Objections Filed under FED. R. CIV. P. 72 dated November 16, 2009, a copy of which is
available on the court’s website, www.ded.uscourts.gov.
Date: June 6, 2013
/s/ Mary Pat Thynge
UNITED STATES MAGISTRATE JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets were retrieved from PACER, and should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.