Shah v. Fischer et al

Filing 14

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 4/26/12. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
SATISH SHAH
:
v.

:

Civil Action No. DKC 12-0341

:
GENVEC, INC., et al.
:
MEMORANDUM OPINION
Presently

pending

and

ready

for

resolution

in

this

putative, private securities class action is an unopposed motion
filed by shareholders Rob Ferry, Robert T. Schiff, Donald A.
Schumer, Scott Sheckler, and Anne Vandelanotte (collectively,
“the GenVec Investor Group”) for appointment as lead plaintiff
and for approval of Brower Piven, PC, as lead counsel.
9).

(ECF No.

The relevant issues have been briefed and the court now

rules pursuant to Local Rule 105.6, no hearing being deemed
necessary.

For the reasons that follow, this motion will be

granted.
I.

Background
Plaintiff Satish Shah commenced this action on February 3,

2012,

by

filing

a

putative

class

action

complaint

GenVec, Inc., and three of its corporate officers.

against

(ECF No. 1).

The complaint alleges that Defendants committed securities fraud
by intentionally misleading the public regarding the clinical

trial results associated with an experimental cancer treatment
developed

by

GenVec,

company’s stock price.

thereby

artificially

inflating

the

Plaintiff purports to bring this action

“on behalf of all investors who purchased or otherwise acquired
GenVec common stock between March 12, 2009[,] and March 30,
2010,” for violations of § 10(b) of the Securities Exchange Act
of 1934 and SEC Rule 10b-5.
On February 8, the parties filed a stipulation advising
that notice of the suit had been published through a national
wire service, which informed putative class members that they
had sixty days in which to file a motion seeking appointment as
lead plaintiff.

(ECF No. 3).

The parties further advised of

their agreement that, within fifteen days after the appointment
of the lead plaintiff, they would submit a mutually agreeable
schedule for the filing of an amended complaint, if any, and the
filing

of

Defendants’

answer

or

responsive

stipulation was subsequently approved.
On

April

3,

five

shareholders

motion.

That

(ECF No. 8).
calling

themselves

“the

GenVec Investor Group” – namely, Rob Ferry, Robert T. Schiff,
Donald A. Schumer, Scott Sheckler, and Anne Vandelanotte – filed
the pending motion for appointment as lead plaintiff and for
approval of the law firm of Brower Piven, PC, as lead counsel in
this action.

(ECF No. 9).

No opposition has been filed and no

other shareholder has sought to be named lead plaintiff.
2

II.

Analysis
The Private Securities Litigation Reform Act (“PSLRA”), 15

U.S.C. § 78u-4, governs the appointment of a lead plaintiff in
private securities litigation.

Pursuant to § 78u-4(a)(3)(A),

the plaintiff must, within twenty days after the complaint is
filed,
cause
to
be
published,
in
a
widely
circulated
national
business-oriented
publication
or
wire
service,
a
notice
advising members of the purported plaintiff
class . . . of the pendency of the action,
the
claims
asserted
therein,
and
the
purported class period[,] and . . . that,
not later than 60 days after the date on
which the notice is published, any member of
the purported class may move the court to
serve as lead plaintiff of the purported
class.
Within ninety days of the publication of that notice, “the court
shall consider any motion made by a purported class member in
response to the notice . . . and shall appoint as lead plaintiff
the member or members of the purported plaintiff class that the
court determines to be most capable of adequately representing
the interests of class members.”
In

determining

the

most

15 U.S.C. § 78u-4(a)(3)(B)(i).
adequate

plaintiff,

the

instructs:
[T]he court 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
3

PSLRA

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.

rebuttable

§

78u-4(a)(3)(B)(iii)(I).

upon

submission

of

This

proof

that

presumption
the

is

plaintiff

purporting to be most adequate “will not fairly and adequately
protect the interests of the class” or “is subject to unique
defenses

that

render

such

representing the class.”

plaintiff

incapable

of

adequately

15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).

With respect to the approval of lead counsel, the PSLRA
provides only that “[t]he most adequate plaintiff shall, subject
to

the

approval

of

the

represent the class.”

court,

select

and

retain

counsel

15 U.S.C. § 78u-4(a)(3)(B)(v).

Messitte has explained:
In the exercise of its discretion, “[t]he
court has an obligation to assure that Lead
Plaintiff’s choice of representation best
suits the needs of the class.”
Johnson v.
Pozen, Inc., No. 1:07CV599, 2008 WL 474334,
at *3 (M.D.N.C. Feb. 15, 2008) (citation
omitted).
“Approval
of
lead
counsel
necessarily
requires,
inter
alia,
an
independent evaluation of the effectiveness
of proposed class counsel to ensure the
protection of the class.”
Alba Conte &
Herbert Newberg, Newberg on Class Actions §
22:7 (4th ed. 2002).

4

to

As Judge

Klugmann v. American Capital Ltd., Civil No. PJM 09-5, 2009 WL
2499521, at *2 (D.Md. Aug. 13, 2009).
Here, all statutory requirements for the appointment of a
lead plaintiff have been satisfied.
was

filed,

Plaintiff

published

On the same date the suit
the

requisite

notice

Marketwire, a national, business-oriented wire service.
No.

9,

Ex.

D).

This

notice

indicated

that

any

on
(ECF

motion

for

appointment as lead plaintiff was required to be filed within
sixty days – i.e., by no later than April 3, 2012.
date,

the

GenVec

Investment

Group

filed

its

On that

motion

for

appointment as lead plaintiff and approval of lead counsel.
other

shareholder

competing

or

group

motion.

The

of

shareholders

individual

has

members

No

submitted

of

the

a

GenVec

Investment Group have provided certifications demonstrating the
significant
(id.

at

extent
Ex.

of

A),

their
as

respective

well

investments

declarations

in

GenVec

accepting

the

responsibility of “vigorously prosecuting this case on behalf of
the

Class”

(id.

acknowledges

that

at

Ex.

the

C

lead

¶

4).

plaintiff

The

PSLRA

may

be

specifically

comprised

of

a

“group of persons,” see 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I), such
as that presented here, and “courts have routinely approved of
group appointments, especially where the groups are small and
include

individuals

financial

interests

who
in

independently
the

outcome
5

possess
of

the

[the]

largest

litigation.”

Klugmann,
474334,

2009

at

*2;

WL

2499521,

In

re

at

(citing

Corp.

Sunbeam

*4

Sec.

Johnson,
Litig.,

2008

No.

03

WL
CV

1721JM(POR), 2004 WL 5159061, at *5 (S.D.Cal. Jan. 5, 2004);
Weltz v. Lee, 199 F.R.D. 129, 133 (S.D.N.Y. 2001)).

Plaintiff’s

counsel has alleged that the GenVec Investment Group “has the
largest known financial interest in the relief sought by the
Class” (ECF No. 9-1, at 6), and given that no other financial
interests have yet been identified, this is not particularly
difficult to show.

Still, the group’s alleged total loss –

$465,778.73 – is certainly substantial.
3).

While

“solely

for

courts
the

are

purpose

typically
of

(ECF No. 9, Ex. B at

loathe

aggregating

to
the

permit

grouping

largest

losses,”

Klugmann, 2009 WL 2499521, at *4, that risk is not presented
where, as here, no competing motions have been filed.
The GenVec Investment Group also appears to satisfy the
requirements of Fed.R.Civ.P. 23, as required by 15 U.S.C. §78u4(a)(3)(B)(iii).

Rule 23(a) provides that:

One or more members of a class may sue or be
sued as representative parties on behalf of
all members only if:
(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
6

(4) the representative parties will fairly
and adequately protect the interests of
the class.
Courts limit inquiries under the PSLRA to the third and fourth
factors set forth in Rule 23(a), the so-called “typicality” and
“adequacy” requirements.

See Klugmann, 2009 WL 2499521, at *5.

The typicality requirement is satisfied when
the representative plaintiff suffers the
same injuries as the class and when the
claims are based on the same legal theory.
[Johnson, 2008 WL 474334, at *2]; see also
Gunnells v. Healthplan Servs., Inc., 348
F.3d 417, 428–29 (4th Cir. 2003). The
adequacy
requirement
is
met
if
“the
purported
class
representative
and
its
attorney
are
capable
of
pursuing
the
litigation and . . . neither has a conflict
of interest with other class members.”
Johnson, 2008 WL 474334, at *2 (citing Sosna
v. Iowa, 419 U.S. 393, 403, 95 S.Ct. 553, 42
L.Ed.2d 532 (1975)).
Id.
The

GenVec

requirements.
of

other

Investment

Group

satisfies

both

of

these

The claims of its members are identical to those

putative

plaintiffs,

i.e.,

those

who

purchased

or

acquired GenVec common stock during the class period and thereby
suffered

damages

as

a

result

misrepresentations and omissions.
demonstrated
Their

that

declarations

they

will

attest

of

alleged

Moreover, the members have

adequately

that

Defendants’

they

are

represent
a

the

“small,

class.

cohesive,

manageable group that . . . will work together, and direct the
activities of our counsel” (ECF No. 9, Ex. C at 4), and the
7

record does not reflect any potential conflict with other class
members.
Accordingly, the GenVec Investment Group is entitled to a
presumption that it is the most adequate plaintiff, pursuant to
15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).

Because no evidence has

been presented rebutting that presumption, the group will be
appointed as lead plaintiff in this action.
As

the

lead

plaintiff,

Group

may

select lead counsel “subject to the approval of the court.”

15

U.S.C. § 78u-4(a)(3)(B)(v).

the

GenVec

Investment

The group has selected the law firm

Brower Piven, PC, and the exhibits submitted in support of that
selection amply demonstrate the firm’s experience in prosecuting
cases of this nature.

See Klugmann, 2009 WL 2499521, at *6

(approving Brower Piven as lead counsel).

Accordingly, Bower

Piven, PC, will be approved as lead counsel in this case.1

1

The parties have additionally filed a second stipulation
in which they advise of their agreement that: (1) Plaintiff will
file an amended complaint on or before 55 days following entry
of
the
order
accompanying
this
Memorandum
Opinion;
(2)
Defendants will file an answer or responsive motion within sixty
days thereafter; (3) if Defendants file a motion to dismiss,
Plaintiff will be provided sixty days in which to respond; and
(4) Defendants will be provided thirty days thereafter in which
to file a reply.
(ECF No. 13).
This stipulation will be
approved.
8

III. Conclusion
For the foregoing reasons, the motion for appointment as
lead plaintiff and approval as lead counsel will be granted.
separate order will follow.

________/s/_________________
DEBORAH K. CHASANOW
United States District Judge

9

A