PLUMBERS LOCAL #200 PENSION FUND v. WASHINGTON POST COMPANY et al

Filing 10

MEMORANDUM OPINION granting Iron Workers Local No. 25 Pension Fund's motion for appointment as lead counsel and for approval of its selection of counsel. An order consistent with this opinion shall issue this same day. Signed by Judge Paul L. Friedman on April 21, 2011. (MA)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
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PLUMBERS LOCAL #200 PENSION FUND,
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Individually and on Behalf of All Others
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Similarly Situated,
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Plaintiff,
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v.
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THE WASHINGTON POST COMPANY, et al., )
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Defendants.
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__________________________________________)

Civil Action No. 10-1835 (PLF)

MEMORANDUM OPINION
This case is a purported federal securities class action brought on behalf of all
persons who acquired Washington Post common stock between July 31, 2009 and August 13,
2010. This matter is before the Court on Iron Workers Local No. 25 Pension Fund’s
(“Iron Workers”) motion for appointment as lead plaintiff in this purported class action and for
approval of its selection of counsel pursuant to Section 21D(a)(3)(B) of the Securities Exchange
Act of 1934, 15 U.S.C. § 78u-4(a)(3)(B), as amended by Section 101(a) of the Private Securities
Litigation Reform Act of 1995 (“PSLRA”). The counsel it proposes are the counsel who filed
the complaint in this case on behalf of Plumbers Local #200 Pension Fund (“Plumbers Local”),
individually and on behalf of all similarly situated entities. No one has filed an opposition to the
pending motion. Upon consideration of Iron Workers’ papers, the relevant legal authorities, and
the entire record in this case, the Court will grant Iron Workers’ motion.1
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The papers reviewed in connection with the pending motion include: the class
action complaint for violations of securities laws (“Compl.”); Iron Workers Local No. 25 Pension

I. BACKGROUND
On October 28, 2010, plaintiff Plumbers Local filed a complaint in this Court on
behalf of itself and a purported class of all those who purchased Washington Post common stock
between July 31, 2009 and August 31, 2010 (the “Class Period”). See Compl. ¶ 5. In its
complaint, Plumbers Local named three defendants: (1) the Washington Post, a diversified
education and media company; (2) Donald E. Graham, the chairman of the board and the chief
executive officer of the Washington Post since 1993; and (3) Hal S. Jones, the senior vice
president of finance and the chief financial officer of the Washington Post since January 2009.
See id. ¶¶ 6, 13-15.
Plumbers Local alleges that during the Class Period, the defendants issued
materially false and misleading statements about the Washington Post’s business and financial
results. Compl. ¶ 7. As Plumbers Local describes it, “defendants failed to disclose that the
[Washington Post] had been engaging in abusive and fraudulent recruiting and financial aid
lending practices, thereby increasing [the] Washington Post’s student enrollment and revenues.”
Id. As a result, the Washington Post’s common stock allegedly traded at “artificially inflated
prices during the Class Period, reaching a high of $541.38 per share on April 15, 2010.” Id.
Eventually, however, information about the Washington Post’s allegedly abusive and fraudulent
practices “seeped into the market” resulting in “massive sales” of common stock, which
decreased their value “approximately 41.7% from the Class Period high.” Id. ¶ 11. Plumbers
Local seeks damages and injunctive relief. Id. at 16.
Fund’s motion for appointment as lead plaintiff and for approval of lead plaintiff’s selection of
counsel (“Mot.”); the Declaration of Roger M. Adelman in support of Iron Workers Local No. 25
Pension Fund’s motion for appointment as lead plaintiff and for approval of lead plaintiff’s
selection of counsel (“Adelman Decl.”); and Exhibits A through D to the Adelman Declaration.
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Under the procedures established by the PSLRA, on October 28, 2010, the same
day it filed its complaint, Plumbers Local caused notice of the pendency of this case to be
published in Business Wire, a widely-circulated, national, business-oriented wire service. See
Mot., Ex. A to Adelman Decl., Notice of Class Action Suit at 1, Oct. 28, 2010. On December
27, 2010 — 60 days after the notice publication in Business Wire — Iron Workers filed a motion
requesting that it be appointed lead plaintiff and that its selection of counsel, Robbins Geller
Rudman & Dowd LLP (“Robbins Geller”) be approved and appointed as lead counsel. See Mot.
at 1. Iron Workers asserts that it should be appointed lead plaintiff because it (1) timely filed its
motion, (2) has the largest financial interest in this case, and (3) will fairly and adequately
represent the interests of the purported class. Id.

II. LEGAL STANDARD
The PSLRA sets forth the procedure governing the appointment of a lead plaintiff
in a private class action brought under the Securities Exchange Act. See 15 U.S.C.
§ 78u-4(a)(3); Reese v. Bahash, 248 F.R.D. 58, 61-62 (D.D.C. 2008); In re XM Satellite Radio
Holdings Sec. Litig., 237 F.R.D. 13, 16-17 (D.D.C. 2006). Under the PSLRA, the Court shall
appoint as lead plaintiff the member or members of the purported class “that the court determines
to be the most capable of adequately representing the interests of class members.” 15 U.S.C.
§ 78u-4(a)(3)(B)(i). The Court “shall adopt a [rebuttable] presumption that the most adequate
plaintiff . . . is the person or group of persons that — [1] has either filed the complaint or made a
motion in response to a notice . . . ; [2] in the determination of the court, has the largest financial
interest in the relief sought by the class; and [3] otherwise satisfies the requirements of Rule 23

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of the Federal Rules of Civil Procedure.” Id. § 78u-4(a)(3)(B)(iii)(I). This presumption “may be
rebutted only upon proof by a member of the purported plaintiff class that the presumptively
most adequate plaintiff — [1] will not fairly and adequately protect the interests of the class; or
[2] is subject to unique defenses that render such plaintiff incapable of adequately representing
the class.” Id. § 78u-4(a)(3)(B)(iii)(II).
As Judge Huvelle has explained, “[t]he [lead plaintiff] selection process begins
once the first plaintiff files an action and publicizes the pendency of the action, the claims made,
and the purported class period.” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 17
(citing 15 U.S.C. § 78u-4(a)(3)(A)(i)). “The second step is for the court to choose the plaintiff
who has the greatest financial stake in the outcome of the case.” Id. (citing 15 U.S.C.
§ 78u-4(a)(3)(B)(iii)(I)(bb)). “The PSLRA’s presumption that the most adequate plaintiff is the
one with the largest financial interest reflects Congress’ desire to curtail lawyer-driven securities
class actions.” Id. (citing H.R. CONF. REP . NO . 104-369, at *31 (1995), reprinted in
1995 U.S.C.C.A.N. 370). “To achieve this goal, Congress sought to attract lead plaintiffs with a
significant financial stake in the litigation on the assumption that they would be more likely to
play an active role in directing and overseeing the litigation.” Id. (citing Barnet v. Elan,
236 F.R.D. 158, 161 (S.D.N.Y. 2005)).
After a court determines which plaintiff has the greatest financial stake in the
case, the PSLRA requires that the court evaluate whether that plaintiff satisfies Rule 23(a) of the
Federal Rules of Civil Procedure. See In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D.
at 18. “[A]lthough Rule 23(a) includes four requirements — numerosity, commonality,
typicality, and adequacy — the presumptive lead plaintiff ‘need only make a preliminary showing
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that it satisfies the typicality and adequacy requirements of Rule 23.’” Reese v. Bahash,
248 F.R.D. at 62 (quoting In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18).
The typicality requirement “‘asses[es] whether the action can be efficiently
maintained as a class and whether the [movant has] incentives that align with those of absent
class members so as to assure that the absentees’ interests will be fairly represented.’” In re XM
Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18 (quoting Baby Neal v. Casey, 43 F.3d 48,
58 (3d Cir. 1994)). Accordingly, “[t]ypicality is generally satisfied when the [movant’s] claims
arise from the same course of conduct, series of events, or legal theories as the claims of other
class members.” Id.; see Reese v. Bahash, 248 F.R.D. at 63 (typicality satisfied “‘if each class
member’s claim arises from the same course of events that led to the claims of the [movant] and
each class member makes similar legal arguments to prove the defendant’s liability’”) (quoting
In re Lorazepam & Clorazepate Antitrust Litig., 202 F.R.D. 12, 27 (D.D.C. 2001)). The
adequacy requirement assesses whether the movant “‘has the ability and incentive to represent
the claims of the class vigorously,’ [and] has retained ‘adequate counsel,’” as well as whether
“there exists any ‘conflict between [the movant’s] claims and those asserted on behalf of the
class.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18 (quoting Hassine v.
Jeffes, 846 F.2d 169, 179 (3d Cir. 1988)); see also Reese v. Bahash, 248 F.R.D. at 63 (to satisfy
adequacy requirement, movant “‘must not have antagontistic or competing interests with the
unnamed members of the class’” and “‘must appear able to vigorously prosecute the interests of
the class through qualified counsel’”) (quoting Twelve John Does v. District of Columbia,
117 F.3d 571, 575 (D.C. Cir. 1997)).

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The final step in the determination of the lead plaintiff “is to give other plaintiffs
an opportunity to rebut the presumptive lead plaintiff’s showing that it satisfies Rule 23’s
typicality and adequacy requirements.” In re XM Satellite Radio Holdings Sec. Litig.,
237 F.R.D. at 18 (citing 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)). “If the presumption is overcome,
the court must then turn to the plaintiff with the next highest financial interest in the litigation
and start the process over again until all challenges have been exhausted.” Id.
With respect to the appointment of lead counsel, the PSLRA provides that “[t]he
most adequate plaintiff shall, subject to the approval of the court, select and retain counsel to
represent the class.” 15 U.S.C. § 78u-4(a)(3)(B)(v). The PSLRA “‘evidences a strong
presumption in favor of approving a properly-appointed lead plaintiff’s decisions as to counsel
selection and counsel retention.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D.
at 21 (quoting In re Cendant Corp. Litig., 264 F.3d 201, 276 (3d Cir. 2001)).

III. DISCUSSION
A. Lead Plaintiff
Under the PSLRA’s framework, the Court concludes that Iron Workers is the
member of the purported plaintiff class that is the “most capable of adequately representing the
interests of class members.” 15 U.S.C. § 78-4(a)(3)(B)(i). As an initial matter, Iron Workers
complied with the PSLRA’s procedural requirements by timely moving to be appointed lead
plaintiff, signing and filing a certification as described in 15 U.S.C. § 78u-4(a)(2), and selecting
and retaining counsel to represent itself and the class. See Reese v. Bahash, 248 F.R.D. at 62
(citing 15 U.S.C. §§ 78u-4(a)(2) & (a)(3)); see also Mot. at 4. Furthermore, Iron Workers has

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provided documentation that it purchased 2,060 shares of Washington Post common stock during
the Class Period, see Mot., Ex. C to Adelman Decl., Movant’s Purchases and Losses at 1, and
asserts that it “lost in excess of $245,000 due to [the] defendants’ [alleged] misconduct.” Mot.
at 4; see Mot., Ex. C to Adelman Decl., Movant’s Purchases and Losses at 1. Thus, Iron
Workers concludes that, “[t]o the best of [its] knowledge, there are no other applicants . . . who
have a larger financial interest.” Mot. at 4. The Court agrees. The initial named plaintiff,
Plumbers Local, only purchased 440 shares of Washington Post common stock during the Class
Period. See Compl., Schedule A Securities Transactions at 1. Furthermore, there is no evidence
in the record that anyone else has a larger financial interest than Iron Workers, and no member of
the purported class has challenged Iron Workers’ claim that it has the largest financial interest in
this case.
Finally, Iron Workers has made the required showing that it satisfies the typicality
and adequacy requirements set forth in Rule 23(a) of the Federal Rules of Civil Procedure. As
discussed, this case is a purported federal securities class action brought on behalf of all persons
who acquired Washington Post common stock between July 31, 2009 and August 13, 2010. See
Compl. ¶ 5. With respect to typicality, Iron Workers alleges that it (1) purchased Washington
Post common stock during the Class Period; (2) was adversely affected by defendants’ false and
misleading statements; and (3) suffered damages as a result. See Mot. at 5. Iron Workers’
“claims are typical because they arose out of the same course of events as the claims of absent
class members.” Reese v. Bahash, 248 F.R.D. at 63. With respect to adequacy, Iron Workers’
interests are aligned with those of the purported class because “it has the largest financial interest
in the relief sought by the class, and there is no evidence of any conflict between its interests and
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those of other class members.” Id. And as discussed below, Iron Workers has selected and
retained experienced counsel, who are competent and qualified to pursue the purported class’
claims. See id.
Because the PSLRA’s presumption in favor of appointing Iron Workers stands
unrebutted, the Court will appoint Iron Workers as lead plaintiff. See 15 U.S.C. § 78u4(a)(3)(B)(iii); see also Reese v. Bahash, 248 F.R.D. at 63.2

B. Lead Counsel
Iron Workers has selected and retained Robbins Geller to serve as lead counsel.
See Mot. at 1, 6. As discussed, the PSLRA “‘evidences a strong presumption in favor of
approving a properly-appointed lead plaintiff’s decisions as to counsel selection and counsel
retention.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 21 (quoting In re
Cendant Corp. Litig., 264 F.3d at 276). Robbins Geller, a large law firm with offices nationwide,
“is actively engaged in complex litigation, particularly securities litigation.” Mot. at 6. As other
courts have recognized, “[t]he experience, ability, and reputation of the attorneys of [Robbins
Geller] is not disputed; it is one of the most successful law firms in securities class actions, if not
the preeminent one.” In re Enron Corp. Sec., Derivative & “ERISA” Litig., 586 F. Supp. 2d 732,
797 (S.D. Tex. 2008); see Reese v. Bahash, 248 F.R.D. at 63 (stating that Robbins Geller has
“‘extensive experience litigating securities class actions ’” and appointing firm as lead counsel)
(quoting In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 21); see also In re Cardinal

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The Court notes that Iron Workers “is the type of institutional investor that
Congress envisioned serving as a lead plaintiff when it passed the PSLRA.” Reese v. Bahash,
248 F.R.D. at 62; see also Mot. at 5-6.
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Health Inc. Sec. Litigs., 528 F. Supp. 2d 752, 768 (S.D. Ohio 2007).3 Because there is no dispute
as to this firm’s experience and qualifications, the Court approves of Iron Workers’ selection and
will appoint Robbins Geller as lead counsel.

IV. CONCLUSION
For the foregoing reasons, Iron Workers Local No. 25 Pension Fund’s motion for
appointment as lead plaintiff and for approval of its selection of counsel [Dkt. No. 6] will be
GRANTED. An Order consistent with this Opinion shall issue this same day.
SO ORDERED.

/s/
PAUL L. FRIEDMAN
United States District Judge

DATE: April 21, 2011

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Until March of 2010, Robbins Geller was known as Coughlin Stoia Geller
Rudman & Robbins LLP.
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