Craig v. CenturyLink Inc et al
ORDER denying #75 Motion to Continue. ADMINISTRATIVE ENTRY to capture court ruling. See document 80 to view PDF image. Signed by Magistrate Judge Joseph H L Perez-Montes on 10/20/2017. (crt,ThomasSld, T) Modified to add document number on 10/20/2017 (ThomasSld, T).
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
BENJAMIN CRAIG (LEAD
CIVIL ACTION 3:17-CV-01005
CENTURYLINK INC., et al.
MAGISTRATE JUDGE PEREZ-MONTES
DON J. SCOTT
CIVIL ACTION 3:17-CV-01033
CENTURYLINK INC., et al.
MAGISTRATE JUDGE PEREZ-MONTES
CIVIL ACTION 3:17-CV-01065
CENTURYLINK INC., et al.
MAGISTRATE JUDGE PEREZ-MONTES
Potential class plaintiffs filed Motions to Appoint Lead Plaintiff and Lead
Counsel (Docs. 25, 26, 28, 29) in three consolidated cases against CenturyLink and
other Defendants for violations of the Securities Exchange Act of 1934. The State of
Oregon’s motion to be appointed Lead Plaintiff (Doc. 28) is GRANTED. The State of
Oregon’s motion to appoint Bernstein, Litowitz, Berger & Grossman, L.L.P. and Stoll
Berne 1 as Co-Lead Counsel (Doc. 28) is also GRANTED. The remaining motions
(Docs. 25, 26, 29) are DENIED.
Before the Court is a complaint filed pursuant to the Securities Exchange Act
of 1934 (15 U.S.C. § 78aa, et seq.) by Plaintiff Benjamin Craig (“Craig”), individually
and on behalf of all others similarly situated.
The named defendants are
CenturyLink Inc. (“CenturyLink”) (its common stock is traded on the New York Stock
Exchange (“NYSE”)), Glen F. Post III (“Post”) (the CEO and President of CenturyLink
Inc. at all relevant times, and R. Stewart Ewing, Jr. (“Ewing”) (CFO, Executive Vice
President, and Assistant Secretary of CenturyLink Inc. at all relevant times).
Craig alleges a federal securities class action pursuant to on behalf of all
investors who purchased or otherwise acquired CenturyLink common stock between
March 1, 2013 and June 16, 2017 (the “Class Period”).
Craig alleges that
CenturyLink publicly issued materially false and misleading statements and omitted
material facts regarding its compliance with applicable laws and regulations, causing
its stock prices to artificially inflate. Craig alleges that he and other investors
suffered significant losses and damages when the truth as to CenturyLink’s unlawful
business practices emerged and its stock prices fell. Craig seeks certification of the
class action, appointment of himself as class representative, appointment of his
Also known as “Stoll Stoll Berne Lokting & Schlachter P.C.”
attorney as lead counsel, a jury trial, compensatory damages, costs (including expert
fees), attorney fees, and injunctive relief. 2
Three related stockholder suits have been filed: Don J. Scott (“Scott”) filed
Scott v. CenturyLink, No. 17-1033 (W.D. La.)3; Amarendra Thummeti filed
Thummeti v. CenturyLink, et al., 3:17-cv-01065 (W.D. La.); and Michael Barbree and
Glen Walker filed Barbree, et al. v. Bejar, et al., No. 3:17-cv-01177 (W.D. La.).
Barbree has since been voluntarily dismissed (Barbree, No. 3:17-cv-01177, Doc. 3).
Thus, to date, there are three stockholder actions against CenturyLink in the
Western District of Louisiana.
The Thummetti case was filed first, on June 21, 2017. Attorney Jeremy Alan
Lieberman of the Pomerantz Law Firm published a notice of the proposed class action
in the Globe Newswire on June 21, 2017 (See Craig, No. 17-1005, Doc. 25-5). 4
Four Motions to Appoint Lead Plaintiff have been filed by potential class
plaintiffs in the Craig case: KBC Asset Management NV (“KBC”) (Doc. 25); the Police
Craig’s case was originally filed in the Southern District of New York (Doc. 1). On stipulation of the
parties and a finding that the case could have originally been brought in the Western District of
Louisiana, Monroe Division, the case was ordered transferred to the Western District of Louisiana
Scott’s related action is also a federal securities class action on behalf of all persons and entities who
purchased or otherwise acquired CenturyLink securities between March 1, 2013 and June 19, 2017.
In Scott, Plaintiff Don J. Scott named as Defendants CenturyLink, Post, Ewing, and David D. Cole
(“Cole”). Scott also seeks certification of his suit as a class action, appointment of Scott as class
representative, appointment of Scott’s counsel as Class Counsel, damages, costs, attorney fees, and
injunctive relief (Doc. 1).
The PSLRA first requires the person who files the initial action to publish a notice to the class, within
20 days of filing the action, informing class members of their right to file a motion for appointment as
lead plaintiff. See 15 U.S.C. §§ 78u–4(a)(3)(a)(i); In re Universal Access, Inc. Sec. Litig., 209 F.R.D.
379, 383 (E.D. Tex. 2002).
and Fire Retirement System of the City of Detroit and the Laborer’s Pension Trust
Fund–Detroit and Vicinity (Doc. 26) (“Detroit”); the State of Oregon on behalf of the
Oregon Public Employees Retirement Fund (Doc. 28) (“Oregon”); and Amalgamated
Bank, as Trustee for the Long View Collective Investment Fund (Doc. 29)
(“Amalgamated Bank”). 5 Other potential plaintiffs are Sona Andresian (Docs. 21,
35), Mark D. Alger, Allen Feldman, Art Kleppen, Essex Lacy, and Tae Yi (Docs. 22,
The Movants’ motions to appoint Lead Plaintiff are now before the Court for
disposition, and are set for hearing on October 25, 2017. Since filing those motions,
Oregon and KBC filed a Joint Motion to Continue the Motion Hearing (Doc. 75). That
motion is considered first below.
Law and Analysis
The Joint Motion to Continue the Motion Hearing is denied.
Oregon and KBC filed a Joint Motion to Continue the Motion Hearing (Doc.
75) which is opposed by Defendants (Doc. 77).
The Joint Motion to Continue (Doc. 75) is hereby DENIED. The joint movants
seek a continuance principally because, on October 6, 2017, the U.S. Judicial Panel
on Multidistrict Litigation (the "Panel") issued a Conditional Transfer Order ("CTO")
conditionally transferring these securities actions to the United States District Court
The Movants also filed motions to consolidate the Craig and Scott cases (Docs. 25, 26, 28, 29) which
Other motions to consolidate and appoint Lead Plaintiff were filed and withdrawn by potential
plaintiffs Sona Anresian (Docs. 21, 35), and Mark D. Alger, Allen Feldman, Art Kleppen, Essex Lacy,
and Tae Yi (Docs. 22, 41).
for the District of Minnesota. But as correctly noted by Defendant, the CTO is merely
“an administrative act of the Clerk which can be and will be vacated upon the showing
of good cause by any party.”
In re Grain Shipments, 319 F. Supp. 533, 534
(J.P.M.L.1970). Neither the PSLRA nor the balance of jurisprudential authority
indicate that the CTO requires a continuance or stay of this litigation. See Panel
Rule 2.1(d); see also e.g., Khunt v. Alibaba Grp. Holding Ltd., 102 F.Supp.3d 523, 530
(S.D.N.Y.2015); In re Duke Energy Corp. Sec. Litig., 02 CIV.3960 JSR, 2002 WL
1933798, at *1 (S.D.N.Y. Aug. 20, 2002).
However, the Court further finds that a hearing is not affirmatively required,
and would not meaningfully aid in the Court’s decision regarding the competing
motions to approve a lead plaintiff. In the interest of efficiency, therefore, the October
25, 2017 hearing is hereby CANCELED.
Oregon is appointed as Lead Plaintiff.
According to 15 U.S.C. § 78u4(a)(3)(B)(ii), “[i]f more than one action on behalf
of a class asserting substantially the same claim or claims arising under this chapter
has been filed, and any party has sought to consolidate those actions for pretrial
purposes or for trial, the court shall not make the determination required by clause
(i) until after the decision on the motion to consolidate is rendered. As soon as
practicable after such decision is rendered, the court shall appoint the most adequate
plaintiff as lead plaintiff for the consolidated actions in accordance with this
Under 15 U.S.C. § 78u–4(a)(3)(B)(i) of the Private Securities Litigation Reform
Act of 1995 (“PSLRA”), which amended the Securities Exchange Act of 1934 by adding
Section 21D, 15 U.S.C. § 78u–4, in class actions brought under federal securities laws,
“the court shall consider any motion made by a purported class member” in
determining the adequacy of a proposed lead plaintiff to oversee the class action.
Furthermore, “the presumption [of the adequacy of the plaintiff with the largest
financial interest in the outcome of the litigation] described in [15 U.S.C. § 78u–
4(a)(3)(B)(iii)(I)] may be rebutted only upon proof by a member of the purported
plaintiff class that the proposed individual or entity will not fairly and adequately
protect the interests of the class or that he/she/or it is subject to unique defenses that
render [him/her/or it] incapable of adequately representing the class.” 15 U.S.C. §
78u–4(a)(3)(B)(iii)(II). See In re Enron Corp. Sec. Litigation, 206 F.R.D. 427, 439
(S.D. Tex. 2002).
Congress directed the Court to “consider any motion made by a purported class
member” to determine the most adequate plaintiff. 15 U.S.C. § 78u–4(a)(3)(B)(i).
Rebuttal of the presumption of the most adequate plaintiff is limited to “proof by a
member of the purported plaintiff class.” 15 U.S.C. § 78u–4(a)(3)(B)(iii)(II). Discovery
regarding the issue “may be conducted by a plaintiff” only if “the plaintiff first
demonstrates a reasonable basis” for finding the presumptively most adequate
plaintiff inadequate. See Gluck v. CellStar Corp., 976 F. Supp. 542, 550 (N.D. Tex.
1997) (citing 15 U.S.C. § 78u–4(a)(3)(B)(iv)); see also Greebel v. FTP Software, Inc.,
939 F.Supp. 57, 60 (D. Mass. 1996).
Wresting control of securities class actions from lawyers with nominal
plaintiffs and giving the power to large investors will most benefit all investors if it
is done at the outset of the litigation. Gluck, 976 F. Supp. at 550. Congress intended
that appointment of a Lead Plaintiff occur at an early stage of the litigation, before
consideration of certification issues. See Gluck, 976 F. Supp. at 550.
The PSLRA requires the Court to appoint the “most capable” member or
members of the purported plaintiff class who can adequately represent the class
members' interest. See Buettgen v. Harless, 263 F.R.D. 378, 380 (N.D. Tex. 2009)
(citing 15 U.S.C. § 78u–4(a)(3)(B)(I)). The statute requires a court to presume that
the most adequate plaintiff is the person or group of persons that:
(1) filed the complaint or a motion in response to a notice;
(2) has the largest financial interest in the relief sought by the class; and
(3) otherwise satisfies the requirements of Rule 23 of the Federal Rules
of Civil Procedure.
See Buettgen, 263 F.R.D. at 380-81 (citing 15 U.S.C. § 78u–4(a)(3)(B)(iii)(I)).
presumption can be rebutted only by proof offered by a class member 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.
See Buettgen, 263 F.R.D. at 380-81 (citing 15 U.S.C. § 78u–4(a)(3)(B)(iii)(II)).
In determining the largest financial interest, courts look to: (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 by the plaintiffs. See Buettgen,
263 F.R.D. at 380-81 (citing In re Enron Corp. Sec. Litig., 206 F.R.D. at 440); Gluck,
976 F. Supp. at 546); see also In re Waste Management, Inc. Sec. Litigation, 128 F.
Supp. 2d 401, 411 (S.D. Tex. 2000).
To qualify as presumptive lead plaintiffs, a plaintiff or group of plaintiffs must
also satisfy the requirements of Rule 23—in particular, “the claims or defenses of the
representative parties are typical of the claims or defenses of the class” and “the
representative parties will fairly and adequately protect the interests of the class.”
Fed. R. Civ. P. 23(a)(3) and (4); see In re BP, PLC Sec. Litig., 758 F.Supp.2d 428, 435
(S.D. Tex.2010) (citing Enron, 206 F.R.D. at 441 (“Typicality and adequacy are
directly relevant to the choice of the Lead Plaintiff as well as of the class
representative in securities fraud class actions.”)); see also In re Oxford Health Plans,
Inc. Sec. Litig., 182 F.R.D. 42, 49 (S.D.N.Y.1998) (“Typicality and adequacy of
representation are the only provisions [of Rule 23(a)] relevant to a determination of
lead plaintiff under the PSLRA.”).
Plaintiff Craig asks, in his complaint, to be made Lead Plaintiff. Craig filed a
complaint in which he appears to show he is an individual investor who purchased
$441.18 of CenturyLink common stock from March 1, 2013 through June 16, 20177
It appears that Craig spent a total of $24.51 each time he purchased CenturyLink stock.
(Craig case, Doc. 1). Craig clearly has a relatively small financial interest in this
Plaintiff Scott asks, in his complaint (the first-filed) to be made Lead Plaintiff
in his complaint, shows he published appropriate notice of the proposed class action,
and shows he is an individual investor who spent $16,963.05 purchasing CenturyLink
common stock between March 1, 2013 and June 16, 2017 (Scott case, Doc. 1-1). Scott
also has a relatively small financial interest in this case.
Within the Craig case, KBC filed a motion be appointed Lead Plaintiff (Doc.
25). KBC shows it is an institutional investor that has one of the largest financial
stakes in the litigation. 8 However, the PSLRA imposes restrictions on “professional
plaintiffs.” “Except as the court may otherwise permit, consistent with the purposes
of this section, a person may be a lead plaintiff, or an officer, director, or fiduciary of
a lead plaintiff, in no more than 5 securities class actions brought as plaintiff class
actions pursuant to the Federal Rules of Civil Procedure during any 3-year period.”
See 15 U.S.C.A. § 78u-4(a)(3)(B)(vi). KBC shows in its Certification (Doc. 245-3) that
it has sought to serve as lead counsel in 13 SEC class actions within the last 3 years,
and a cursory review of those cases shows KBC was appointed Lead Plaintiff in 8 of
those cases. Therefore, KBC should be disqualified from being appointed lead counsel
in this case pursuant to 15 U.S.C.A. § 78u-4(a)(3)(B)(vi).
The “Detroit Institutional Investor Group” (“Detroit”), comprised of the Police
and Fire Retirement System of the City of Detroit (“PFRS-D”), and the Laborers’
KBC claims a loss of $13,166,113 under a LIFO accounting basis.
Pension Trust Fund-Detroit and Vicinity (“LPTF-D”), also moved to be appointed
Lead Plaintiff (Doc. 26). Detroit claims to have incurred a total loss of $1,047,041.88
(as calculated on a LIFO basis) during the class transaction period. The PFRS-D and
the LPTF-D state they are both currently serving as lead plaintiff in two cases, and
that the PFRS-D has served as lead counsel in one other case within the past three
years (Doc. 26-1). Detroit concedes it does not have the largest financial interest in
this case (Doc. 45).
The State of Oregon moved to be appointed Lead Plaintiff (Doc. 28), and shows
the Oregon Public Employees Retirement Fund (“Oregon”) is an institutional investor
that has sustained a loss of about $6.9 million on a FIFO basis, or $6.3 million on a
LIFO basis, over the Class Period, and purchased 1,160,139 shares, or 560,340 net
shares (Doc. 44). It does not appear that Oregon has served as Lead Plaintiff in any
class action in the last three years.
Although Oregon is the second-largest
institutional investor in this case, with the second-largest losses, KBC contends
Oregon has a conflict of interest because it purchased CenturyLink bonds during the
Oregon sold some of its bonds (1,615,000) for a small gain of
$121,362.50, and still holds 2,420,000 CenturyLink bonds (Doc. 28-4). KBC contends
Oregon should not be appointed Lead Plaintiff because it did not sustain a loss on its
bonds, so it does not have standing to represent the bond-holders.
It is not a requirement that a lead plaintiff under the PSLRA suffer losses on
each type of security that may be at issue in the class action. The purpose of the lead
plaintiff section of the PSLRA is to ensure that securities litigation is investor-driven,
as opposed to lawyer-driven. In re Nw. Corp. Sec. Litig., 299 F. Supp. 2d 997, 1007
(D.S.D. 2003) (citing In re Initial Public Offering Securities Litigation, 214 F.R.D.
117, 123 (S.D.N.Y. 2002); Aronson v. McKesson HBOC, Inc., 79 F. Supp. 2d 1146,
1150–51 (N.D. Cal. 1999). Therefore, the fact that Oregon did not suffer a loss in
CenturyLink bonds does not preclude it from becoming Lead Plaintiff.
Amalgamated Bank, as Trustee for the LongView Collective Investment Fund
(“Amalgamated Bank/LongView Fund”) also filed a motion to be appointed Lead
Plaintiff (Doc. 29). Amalgamated Bank shows it had a loss of $1,243,105 on a LIFO
basis, and that it purchased 136,685 shares, or (23,773) net shares. Amalgamated
Bank/LongView Fund has recently applied to be Lead Plaintiff (the decision has not
been made) in another SEC case in the Eastern District of Pennsylvania, Waterford
Township Police & Fire Retirement System, 2:17-cv-01476, Doc. 5 (E.D. Pa.).
Amalgamated Bank/LongView Fund was appointed Lead Plaintiff in an SEC case in
the Eastern District of Virginia, Klein v. Brock, 4:15-cv-00016, Doc. 11 (E.D. Va.).
Amalgamated Bank concedes it does not have the largest loss in this case (Doc. 45).
Since Oregon has the largest loss after KBC, it is presumed to be the most
appropriate lead plaintiff. Oregon’s claim for losses on commons stocks, the claims
or defenses of the representative parties are typical of the claims or defenses of the
class” and “the representative parties will fairly and adequately protect the interests
of the class.” The fact that Oregon did not sustain a loss when it sold some of its
CenturyLink bonds does not provide it with a “unique defense.”
There is little
difference between Oregon, who did not sustain a loss on its bonds, and a party who
does not have any CenturyLink bonds at all–neither has sustained a loss on
CenturyLink bonds, while both suffered losses on CenturyLink stock.
Therefore, Oregon’s motion to be appointed Lead Plaintiff (Doc. 28) is
Oregon’s attorneys are appointed Lead Counsel.
The PSLRA provides that the “most adequate plaintiff shall, subject to the
approval of the court, select and retain counsel to represent the class.” 15 U.S.C. §
Oregon seeks to appoint Bernstein, Litowitz, Berger, &
Grossmann, L.L.P. of New York and Stoll Berne of Oregon as Co-Lead Counsel (Doc.
28). The Court has reviewed the resume of each firm and is satisfied that each firm
could adequately represent the plaintiff class in this action. Lead Counsel will be
ordered to enroll in this action immediately. It is noted that Lead Counsel will not
be permitted to conduct all business in this case solely through local counsel or by
phone, and will be expected to prosecute this case in Louisiana.
Based on the foregoing, IT IS ORDERED that the Joint Motion to Continue
(Doc. 75) is DENIED, and the October 25, 2017 hearing is hereby CANCELED.
IT IS FURTHER ORDERED that Oregon’s motions to be appointed Lead
Plaintiff, and to have Bernstein, Litowitz, Berger & Grossman, L.L.P. and Stoll
Berne 9 appointed as Co-Lead Counsel (Doc. 28) ARE GRANTED.
IT IS FURTHER ORDERED that the motions for Lead Plaintiff and Lead
Counsel filed by Craig (Doc. 1), Scott (Case No. 17-1033, Doc. 1), KBC (Doc. 25),
Detroit (Doc. 26), and Amalgamated Bank (Doc. 29) are DENIED.
THUS DONE AND SIGNED in chambers in Alexandria, Louisiana, this _____
day of October, 2017.
Joseph H.L. Perez-Montes
United States Magistrate Judge
Also known as “Stoll Stoll Berne Lokting & Schlachter P.C.”
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