Firefighters Pension & Relief Fund of the City of New Orleans v. Bulmahn et al
Filing
129
ORDER & REASONS: ORDERED that the Neiman Group's Motion for Appointment as Lead Plaintiff and Approval of Lead and Liaison Counsel (Rec. Doc. 103 ) and The Moshe Isaac Foundation's Motion for Appointment as Lead Plaintiff and Lead Counse l (Rec. Doc. 95 ) are GRANTED with the following modification: David Callaham, initially included in the Neiman Group, is STRICKEN from the group. As such, Brian Neiman, William Kruse, and The Moshe Isaac Foundation will serve as Co-Lead Plaintif fs for the subclass defined as "all persons who purchased or otherwise acquired the common stock of ATP... between the approximate dates of December 17, 2013, the effective date of ATP's registration statement, and August 17, 2012." FU RTHER ORDERED that Federman & Sherwood and Wolf Popper be appointed Co-Lead Counsel and that Stephan Kupperman of Barrasso Usdin Kupperman Freeman and Sarver be appointed as Liaison Counsel in the foregoing matter. FURTHER ORDERED that (1) Lead Plain tiffs must file an Amended Class Action complaint within 45 days of the entry of this order, and (2) Defendants must file an answer to the Amended Class Action Complaint within 45 days of its filing. FURTHER ORDERED that Mansfield's Motion for Appointment (Rec. Doc. 101 ) is DENIED. Signed by Judge Carl Barbier on 12/6/13. (Reference: 13-3935, 13-6083, 13-6084, 13-6233)(sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
FIREFIGHTERS PENSION AND
RELIEF FUND OF THE CITY OF NEW
ORLEANS
CIVIL ACTION
VERSUS
NO: 13-3935 c/w
13-6083, 13-6084,
13-6233
APPLIES TO 136083, 13-6084
T. PAUL BULMAHN, ET AL.
SECTION: "J" (3)
Order & Reasons
Before the Court are three motions: (a) William Kruse, David
Callaham, and Brian Neiman (collectively, the Neiman Group)'s
Motion for Appointment as Lead Plaintiff and Lead Counsel (Rec.
Doc.
103),
(b)
Thomas
Mansfield
(Mansfield)'s
Motion
for
Appointment as Lead Plaintiff and Lead Counsel (Rec. Doc. 101), and
The Moshe Isaac Foundation ("Moshe")'s Motion for Appointment as
Lead Plaintiff and Lead Counsel (Rec. Doc. 95). Also before the
Court are Movants Neiman, Kruse, and Moshe's Joint Memorandum in
Opposition (Rec. Doc. 111) and Movant Mansfield's opposition (Rec.
Doc. 113). The motions were set for hearing on November 20, 2013,
with oral argument. Having considered the motions and memoranda of
counsel, the record, and the applicable law, the Court finds that
The Moshe Isaac Foundation, William Kruse, and Brian Neiman should
be appointed as co-Lead Plaintiffs; that Federman & Sherwood and
Wolf Popper should be appointed as Lead Counsel; and that Stephan
1
Kupperman of Barrasso Usdin Kupperman Freeman and Sarver should be
appointed as Liaison Counsel.
FACTS AND PROCEDURAL BACKGROUND
This matter arises from four putative securities class actions
brought by various plaintiffs against several executive officers of
ATP Oil & Gas Corporation ("ATP"). All of the moving parties
generally allege that ATP engages in acquiring, developing, and
producing oil and natural gas properties primarily in the Gulf of
Mexico and the North Sea, and that the U.S. Department of the
Interior's drilling moratorium ("Moratorium"), put into effect
following the Deepwater Horizon explosion and resultant oil leak,
had a severe impact on ATP, causing them to file for Chapter 11
bankruptcy. During the bankruptcy proceedings, the parties allege
that it became known that ATP: (1) severely downplayed the extent
to which the Company’s business and revenues would be negatively
impacted by the Moratorium; (2) violated certain provisions of
credit agreements administrated by Credit Suisse AG; (3) issued a
Registration Statement with false and/or misleading facts; and (4)
made other false and misleading statements about its financial
condition. As a result, plaintiffs allege that the price of ATP's
stock fell $15.06 from the beginning of the class period to the
time that ATP filed for bankruptcy.
In response to these allegations, Firefighters Pension and
Relief Fund of the City of New Orleans ("Firefighters") filed the
2
first suit in this Court on May 24, 2013.1 Subsequently, on August
5, 2013, Plaintiff/Movant Neiman filed a similar action in the
Southern District of Texas, and Plaintiff Stackhouse filed another
related case in the Southern District of Texas on August 20, 2013.
The
Texas
court
consolidated
Stackhouse
and
Neiman,
and
the
consolidated matter was transferred to this Court. Later, the
Stackhouse/Neiman suits were consolidated with the Firefighters
action.2
When the Stackhouse/Neiman matter was transferred to this
Court, there were various motions pending. This Court denied all of
the pending motions without prejudice and urged the parties to refile any motion that was still relevant post-transfer. Moshe, the
Neiman Group, and Mansfield all filed the instant motions to
appoint Lead Plaintiff and Lead Counsel.
LEGAL STANDARD & DISCUSSION
A. Is Appointment of a Lead Plaintiff Proper?
The Court previously named Plumbers and Pipefitters National
Pension Fund ("Plumbers") as lead plaintiff in the Firefighters
matter, thus the Court must address whether appointment of another
lead plaintiff(s) is necessary and/or appropriate. (Rec. Doc. 63)
Movants argue that the creation of a subclass is warranted because:
1
Plumbers and Pipefitters National Pension Fund was appointed Lead Plaintiff
in the Firefighters suit on August 15, 2013. (Rec. Doc. 63)
2
An additional suit was also filed by Thomas Mansfield (Case No. 13-6332),
which is also consolidated with 13-3935.
3
(a) some members of the Neiman and Stackhouse actions bring claims
under the Exchange Act, as opposed to the Securities Act, (b)
Exchange Act claims are subject to heightened pleading standards
that Plumbers will not be motivated to satisfy, (c) this action
involves the purchase of common stock and not just ATP notes, and
(d) the class period differs from the Firefighters's class period.
No party opposes the creation of a subclass.
In In re BP, PLC Sec. Litig., 758 F. Supp. 2d 428 (S.D. Tex.
2010), the court held that "[t]he stark difference between the two
groups' class periods and their two distinct theories of the case
create a significant risk of conflict and prejudice to class
members if they are not separated." In re BP, PLC Sec. Litig, 758
F. Supp. 2d at 441; In re Enron Corp. Sec. Litig., 206 F.R.D. 427,
444 (S.D. Tex. Feb. 15, 2002) (“the Court is required to insure
that
independent
classes
with
conflicts
are
protected
by
subdivision and separate representation”); see also In re Peregrine
Systems, Inc., No. 02-870J, 2002 WL 32769239, *12 (S.D. Cal., Oct.
11, 2002) (creating one subclass for Securities Act plaintiffs and
another for Exchange Act plaintiffs). Finding this to be the case
here, the Court finds that it is appropriate to create a subclass
for "all persons who purchased or otherwise acquired the common
stock of ATP ... between the approximate dates of December 17,
2013, the effective date of ATP's registration statement, and
August 17, 2012." Rec. Doc 101-1, pps. 7-8) (internal citation
4
omitted)
Therefore, the Court will determine which movant(s)
should serve as Lead Plaintiff for this subclass.
B. Appointment of Lead Plaintiff
1. Standard for Appointing Lead Plaintiff
Pursuant to 15 U.S.C. § 78u-4, this
[C]ourt 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).
(West). This presumption
may be rebutted only upon proof by a member of the purported
plaintiff class that the presumptively most adequate
plaintiff–
(aa) will not fairly and adequately protect the interests
of the class; or
(bb) 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).3
These
requirements
are
discussed more fully below.
3
Additionally, all movants for must also submit certification swearing
that they: (1) reviewed the complaint and authorized its filing, (2) did not
purchase the securities at issue solely to participate in this action or at
the direction of counsel, (3) are willing to represent the class, and (4) will
refuse any compensation beyond what recovery they are owed as a result of this
suit. 15 U.S.C. § 78u-4(a)(2). The certification must also list: (1) all
relevant transactions during the class period (2) any other action under this
proceeding of which they have been a part of over the last three years. Id.
5
a. Timely Motion
Within twenty days of filing suit, the filing party must
publish notice of the pending action. Within sixty days of that
notice, all parties interested in serving as lead plaintiff must
file a motion for appointment with the Court. The Neiman Group,
Mansfield, and Moshe had previously filed timely motions in the
Southern District of Texas, but this Court dismissed the motions
and instructed the parties to re-file their motions; therefore,
though the 60-day window had elapsed when the motions were filed in
this Court, the Court will consider their motions to be timely.
One of the proposed groupings, which consists of Moshe, Kruse,
and Neiman, was not proposed as Lead Plaintiff until after all
Movants had filed their motions and the window for such motions had
passed.4 Moshe, Kruse, and Neiman assert that, because the Neiman
Group
and
Moshe
filed
timely
motions
individually,
this
new
grouping's request for appointment should be considered timely;
however, Mansfield contends that such a grouping should not be
allowed as it is evidence of lawyer-driven manipulation of Lead
Plaintiffs.
(Rec. Doc. 11, p. 6) The Court need not determine if
this proposal was timely, because, even if it was untimely, the
"Court is empowered to consider the [untimely] proposal [...]
4
Instead of filing a standard opposition to the motions to appoint lead
plaintiff and counsel, Neiman, Kruse, and Moshe filed a "Joint Memorandum of
Law" that purports to oppose Mansfield's motion, but actually proposes this
new grouping.
6
through a sua sponte modification." Weltz v. Lee, 199 F.R.D. 129,
133 (S.D.N.Y. 2001). Therefore, the Court will consider this
grouping without respect to its timeliness.
b. Largest Financial Interest & FRCP 23 Requirements
The
party
with
the
largest
financial
interest
is
the
presumptive lead plaintiff. In determining who has the largest
financial interest, some courts have found the following factors to
be relevant: (1) the number of shares purchased during the class
period; (2) the number of net shares purchased during the class
period; (3) the total net funds expended by the plaintiffs during
the class period; and, (4) the approximate losses suffered during
the class period. In re Orthodontic Centers of Am., Inc. Sec.
Litig., No. 01-949, 2001 WL 1636846 (E.D. La. Dec. 18, 2001).
In addition to showing the largest financial interest, a lead
plaintiff must also satisfy the requirements of Federal Rule of
Civil Procedure 23. Although this rule lists four requirements,
courts have held that those seeking to be appointed as lead
plaintiff need only make a preliminary showing of typicality and
adequacy. Tarica v. McDermott Int'l, Inc., No. 99-3831, 2000 WL
377817 (E.D. La. Apr. 13, 2000). Adequacy requires that “the
representative parties will fairly and adequately protect the
interests of the class.” FED. R. CIV. PRO. 23(a). Adequacy is
generally divided into two inquires that consider the adequacy of
both
the
proposed
lead
plaintiff
7
and
the
proposed
counsel.
"[C]ounsel must be qualified, experienced, and able to prosecute
the action vigorously, and the class representatives must not have
interests antagonistic to the class member." Tarica, 2000 WL 377817
at * 4. Typicality requires that “the claims or defenses of the
representative parties are typical of the claims or defenses of the
class. FED. R. CIV. PRO. 23(a). "The Fifth Circuit has held that 'the
test for typicality is not demanding. It focuses on the similarity
between the named plaintiffs' legal and remedial theories and the
theories of those whom they purport to represent.'" Tarica, 2000 WL
377817 at * 4 (citing Mullen v. Treasure Chest Casino, LLC, 186
F.3d 620, 625 (5th Cir. 1999).
2. Application of Standard to the Movants
The Movants' losses are detailed in the chart below. The Court
will analyze each Movant, beginning with the Movant with the
largest losses, until a proper Lead Plaintiff is found.
Kruse, Neiman,
Moshe
Approximate Losses
First in First Out
Last in Last Out
Calculation
Calculation
$4,830,862.00
$6,149,341.00
Neiman Group
$4,236,776.27
$2,918,297.86
Moshe only
$2,297,661.00
$2,297,661.00
Kruse Only5
$3,098,048.98
$1,779,570.57
$774,042.00
$774,042.00
Mansfield
5
These figures represent the financial losses of both William and
Deborah Kruse. Deborah Kruse assigned her claims to William.
8
a. Neiman/Kruse/Moshe Group
This grouping consists of three plaintiffs: Moshe, Kruse, and
Neiman. They propose the law firms of Wolf Popper and Federman &
Sherwood as Co-Lead Counsel and Barrasso Usdin as Liaison Counsel.
Based on its review, the Court finds that the appointment of this
group as Lead Plaintiffs is the best way to represent the class in
this matter. Combined, the parties clearly have the highest losses;
and, even individually, Kruse and Moshe assert the largest losses.
Additionally, at oral argument, counsel for the group informed the
Court that the parties are available for consultation and have
spoken with each other on the phone and via e-mail. Trans.,
November 20, 2013 Hearing, p. 17, lines 4-17. The parties also
appear to be motivated to aggressively pursue litigation. Trans.,
November 20, 2013 Hearing, p. 17, lines 18-25. Neiman is one of the
plaintiffs who contacted counsel to file suit, and though his
financial losses are not the greatest in value, ATP stock made up
the
majority
of
his
investment
portfolio,
causing
him
great
personal loss. Trans., November 20, 2013 Hearing, p. 15, lines 815. As for Kruse, the fact that he suffered large losses alone
weighs in favor of his appointment. Finally, in regards to Moshe,
it is run by Robert Konig, a lawyer in good standing who has an
understanding of the litigation at issue, making it a desirable
9
Lead Plaintiff.6 Trans., November 20, 2013 Hearing, p.16, lines 1025; p. 17, lines 1-3. Therefore, the Court finds that this group
satisfies the requirement concerning the adequacy of the Lead
Plaintiff to represent the class. Adequacy of class counsel and the
typicality requirement were not challenged, and the Court finds
that these requirements are met. As such, Brian Neiman, William
Kruse, and The Moshe Isaac Foundation are appointed as Lead
Plaintiffs.
b. Other Movants
As the Court has determined that Neiman, Kruse, and Moshe
should be appointed as Lead Plaintiffs, the Court need not address
the remaining applications for Lead Plaintiff status.
Accordingly,
IT IS ORDERED that the Neiman Group's Motion for Appointment
as Lead Plaintiff and Approval of Lead and Liaison Counsel (Rec.
Doc. 103) and The Moshe Isaac Foundation's Motion for Appointment
6
Mansfield argues that Moshe is not an adequate representative because
one of its trustees, Michael Konig, has engaged in "repeated fraudulent
activity" and the foundation suffers from "continued legal troubles." (Rec.
Doc. 113, p. 7-8) The Court finds that this is not enough to rebut the
presumption that Moshe is a proper Lead Plaintiff. The wrongdoing that
Mansfield alleges does not involve Robert Konig, who actually runs the day-today operations of Moshe. Further, the litigation in which Moshe was "involved"
was unrelated to the current issues and involved the personal misconduct of
Michael Konig, not Robert Konig. See Attorney General v. M.C.K., Inc., 432
Mass. 546 (Oct. 13, 2000). In fact, Moshe was only named once in the opinion,
in a footnote, and it was only mentioned in connection with Michael Konig's
conduct. Id. at 555, n.20. As such, the Court will allow Moshe to serve as
part of the Lead Plaintiff group. The Court's determination is without
prejudice to revisit this issue in considering a motion for class
certification. Tarica, 2000 WL 377817 at *5.
10
as Lead Plaintiff and Lead Counsel (Rec. Doc. 95) are GRANTED with
the following modification: David Callaham, initially included in
the Neiman Group, is STRICKEN from the group. As such, Brian
Neiman, William Kruse, and The Moshe Isaac Foundation will serve as
Co-Lead Plaintiffs for the subclass defined as "all persons who
purchased or otherwise acquired the common stock of ATP ... between
the approximate dates of December
17, 2013, the effective date of
ATP's registration statement, and August 17, 2012."
IT IS FURTHER ORDERED that Federman & Sherwood and Wolf Popper
be appointed Co-Lead Counsel and that Stephan Kupperman of Barrasso
Usdin Kupperman Freeman and Sarver be appointed as Liaison Counsel
in the foregoing matter.
IT IS FURTHER ORDERED that (1) Lead Plaintiffs must file an
Amended Class Action complaint within 45 (forty-five) days of the
entry of this order, and (2) Defendants must file an answer to the
Amended Class Action Complaint within 45 (forty-five) days of its
filing.
IT IS FURTHER ORDERED that Mansfield's Motion for Appointment
(Rec. Doc. 101) is DENIED.
New Orleans, Louisiana, this 6th day of December, 2013.
_____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
11
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