BANES v. MODANY et al

Filing 75

Order on Motions to Appoint Lead Plaintiff and Approve Lead Counsel: For the foregoing reasons, Meitav's Motion (Filing No. 26) to be appointed lead plaintiff is GRANTED. The Court hereby appoints Meitav Dash Mutual Fund Management Ltd. as lead plaintiff and approves Meitav's selection of lead and liaison counsel. All other motions for appointment as lead plaintiff; Filing No. 20 (Cynthia Grebely and Hoai T. Truong), Filing No. 22 (Kumud Jindal), Filing No. 29 (movant Chang Pin Lin), and Filing No. 34 (Helene Hamel), are DENIED. The Court requests the Magistrate Judge to conduct a case management conference with counsel for the lead plaintiff and for defendants ***SEE ORDER FOR ADDITIONAL INFORMATION***. Signed by Judge Tanya Walton Pratt on 3/16/2015. (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
DAVID BANES, on behalf of himself and all
others similarly situated, BABULAL TARAPARA,
individually and on behalf of himself and all
others similarly situated, KUMUD JINDAL,
individually and on behalf of himself and all others
similarly situated, and KRISTOPHER HENNEN,
individually and on behalf of all others similarly
situated,
Plaintiffs,
v.
KEVIN MODANY, DANIEL FITZPATRICK, and
ITT EDUCATIONAL SERVICES, INC.,
Defendants.

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Order on Motions to Appoint Lead Plaintiff
and Approve Lead Counsel
This matter is before the Court on several motions for appointment as lead
plaintiff under the Private Securities Litigation Reform Act of 1995 (the “PSLRA” or
“Act”), 15 U.S.C. § 78u-4(a)(3)(B), and for approval of the lead plaintiff’s selection of
legal counsel. The Court has consolidated four putative class action lawsuits alleging
violation of the Securities and Exchange Act of 1934 by ITT Educational Services,
Inc. and two of its officers. The cases have been recaptioned as provided above.
Plaintiff’s and/or Movants David Barnes (Filing No. 20), Kumud Jindal (Filing No.
22), Meitav Dash Mutual Fund Management Ltd. (“Meitav”) (Filing No. 26), Chang
Pin Lin (“Lin”) (Filing No. 29), and Helene Hamel (Filing No. 34) have each filed a
Motion to Appoint Counsel and for Appointment of Lead Plaintiff. Although several

persons, entities, or groups filed motions seeking appointment as lead plaintiff, some
of them have conceded in subsequent filings that another is the presumptive lead
plaintiff because of its larger financial interest.

As explained below, the Court

appoints Meitav as lead plaintiff because it has the largest financial interest in the
relief sought by the class and has made a sufficient preliminary showing that it
satisfies the requirements of Fed. R. Civ. P. 23. The court also approves Meitav’s
selection of counsel.
I.

The PSLRA sets forth requirements for appointing lead plaintiff.
The PSLRA establishes a procedure to appoint a lead plaintiff in “each private

action arising under [the Exchange Act] that is brought as a plaintiff class action
pursuant to the Federal Rules of Civil Procedure.” 15 U.S.C. § 78u-4(a)(1). The Act
presumes that the most “adequate plaintiff” to serve as lead plaintiff is the “person
or group of persons” that:
(aa) has either filed the complaint or made a motion in response
to a notice [required to be published for class actions covered by the Act];
(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). The presumption may be rebutted if there is proof
that the most adequate plaintiff “will not fairly and adequately protect the interests
of the class” or “is subject to unique defenses that render such plaintiff incapable of
adequately representing the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)(aa), (bb).

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II.

Meitav has the largest financial interest in the relief sought and
satisfies the other requirements for appointment as lead plaintiff.
Among the persons or groups seeking appointment as lead plaintiff, movant

Meitav has, by far, the largest financial interest in the relief sought by the class.
Meitav estimates its losses at approximately $1.4 million. (See Filing No. 28 at p.
10). The other movants, except one, accept that Meitav has shown that it is the
presumptive lead plaintiff and that the presumption has not been rebutted. The
movant who challenges Meitav’s appointment Lin, on behalf of a group. (Filing No.
47).

Lin contends that Meitav lacks standing and that its claims are atypical,

rendering it an inadequate class representative. Lin’s arguments stem mostly from
its assertion that Meitav is only an investment advisor and suffered no losses itself.
(Filing No. 47 at ECF p. 4). However, Meitav has submitted unrebutted proof that
Lin’s assertion is not accurate and that its status as a fund management company
supplies standing. (Filing No. 67 at ECF pp. 9-18).
Lin’s contention that Meitav is an inadequate class representative rests on
assertions that Meitav engaged in options trading in addition to common stock
purchases, is a foreign entity that could be managing the case from overseas and, as
a foreign entity, “is subject to the unique defense of res judicata.” (Filing No. 47 at
ECF p. 9). The Court is not persuaded. Meitav has shown that the res judicata issue
is unfounded and that its options trades and its status as a foreign entity will not
detract from its ability to act in the best interests of the class. (Filing No. 67 at pp.
14-17). The Court is satisfied that Meitav has made a sufficient preliminary showing
that its claims are typical of the class and that it will fairly and adequately protect
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the interests of the class. See Winn v. Symons Int’l Group, Inc., 2001 WL 278113 at
*4-5 (S.D. Ind. March 21, 2001) (addressing Rule 23 factors relevant to lead plaintiff
selection process).
III.

Meitav’s choice of counsel is approved.

The PSLRA vests authority in the lead plaintiff to select and retain lead
counsel, subject to the Court’s approval. 15 U.S.C. § 78u-4(a)(3)(B)(v). Meitav has
selected and retained lawyers with the law firms of Glancy Binkow & Goldberg LLP
and Katz & Korin, PC as proposed lead and liaison counsel for the class. The lawyers
have submitted evidence that they have extensive experience in prosecuting complex
class actions such as this one and the Court has no reason to doubt their qualifications
to represent the class.
Conclusion
For the foregoing reasons, Meitav’s Motion (Filing No. 26) to be appointed lead
plaintiff is GRANTED.

The Court hereby appoints Meitav Dash Mutual Fund

Management Ltd. as lead plaintiff and approves Meitav’s selection of lead and liaison
counsel.
All other motions for appointment as lead plaintiff; Filing No. 20 (Cynthia
Grebely and Hoai T. Truong), Filing No. 22 (Kumud Jindal), Filing No. 29 (movant
Chang Pin Lin), and Filing No. 34 (Helene Hamel), are DENIED.
The Court requests the Magistrate Judge to conduct a case management
conference with counsel for the lead plaintiff and for defendants.
SO ORDERED.

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Dated: 3/16/2015

Distribution:
All ECF-registered counsel of record by email through the court’s ECF system

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