LOVALLO v. PACIRA PHARMACEUTICALS, INC. et al

Filing 17

OPINION. Signed by Judge William H. Walls on 4/1/2015. (anr)

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NICHOLAS R. LOVALLO,
Individually and on Behalf of Al! Others
Similarly Situated,
Plaintiff(s),

OPINION

V.

Civ. No. 14-cv-61 72 (WJiW)(CLW)

PACIRA PHARMACEUTICALS, INC.,
DAVID STACK, JAMES SCIBETTA, and
LAUREN RIKER,
Defendants.

Walls. Senior District Judgç
Plaintiff Nicholas R. Lovallo brings a federal securities class action
on behalf of those
who purchased shares of Defendant Pacira Pharmaceuticals, Inc.
(“Pacira”) between April 9,
2012 and September 24, 2014. Lovallo alleges that Pacira and
certain officers and directors
violated the Securities Exchange Act of 1934 by making false or
misleading statements,

or

failing to disclose information, about its drug Exparel.
Lovallo now moves to be appointed lead plaintiff in the action.
Because no class member
opposes the motion, and Lovallo meets all relevant criteria, the
Court appoints him lead plaintiff.
Lovallo also asks that his counsel be appointed lead counsel in the
action. This motion is also
unopposed, and the firms meet the relevant criteria. The Court will
appoint Pornerantz LLP as
lead counsel and Lite DePalma Greenberg, LLC as liaison counsel
for the class.
FACTUAL AND PROCEDURAL BACKGROUND
Lovallo brought this action against Pacira and its officers David
Stack, James Scibetta
and Lauren Riker (collectively, “Defendants”) on October 3,
2014. Compl., ECF No. I. The
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complaint alleges that from April 9, 2012 to September 24, 2014 (the “Class Period”),
Defendants made false and/or misleading statements and failed to disclose material adverse facts
about Pacira’s business, operations, prospects and performance. Id, ¶4. In particular. Lovallo
claims that Defendants overstated the efficacy and safety of its Exparel drug. Id. Such mislea
ding
statements included (1) asserting that the Exparel was effective for up to 72 hours, when it
is
approved only for 24 hours of pain relief; (2) claiming that Exparel is safe for use in
cholecystectomy and colectomy procedures, when approved labeling does not indicate use in
surgical procedures other than hemorrhoidectomy or bunionectomy; and (3) issuing financial
statements that incorporated revenues derived from off-label marketing. Id.
Lovallo alleges that Pacira’s material omissions and misrepresentations were exposed
by
a letter from the FDA, warning that Pacira had promoted Exparel for unapproved uses. Id. ¶5.
Plaintiff claims that Pacira stock fell precipitously when Pacira revealed the letter to the public
on September 25, 2014, causing him and other members of the class financial damage. Id.
Based
on these factual allegations, the complaint asserts that Defendants violated
the Exchange Act (15 U.S.C.

§ § 10(b) and 2 0(a) of

§ 78j(b) and 78t(a)), along with Rule lOb-5 (17 C.F.R. § 240.lOb-

5).Id. ¶8.
The day the complaint was filed, Globe Newswire published a press release summarizing
the complaint’s allegations and providing a link to an online copy of the complaint. Ex. A
to
Deci. of Bruce D. Greenberg, ECF No. 10. Globe Newswire is a widely circulated national
business-oriented wire service. See Sapir V. Averback, No. 14CV-0733l, 2015 WL 858283,
at
*1 n.l (D.N.J. Feb. 26, 2015). The release announced that, “[i]f you
are a shareholder who
purchased Pacira securities during the Class Period, you have until December 2, 2014 to ask
the
Court to appoint you as Lead Plaintiff for the class.” Id. The release listed the name of the

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Pomerantz Law Firm and provided a phone number and email address of a contac
t person at the
firm. Id.
Lovallo moves under 15 U.S.C.

§ 78m4(a)(3)(B) for an order (1) appointing Lovallo as

lead plaintiff on behalf of all persons who purchased or otherwise acquired securit
ies of Pacira
during the time period in question; and (2) approving Lovallo’s selection of Pomer
antz LLP as
lead counsel and Lite DePalma Greenberg, LLC as liaison counsel for the class. ECF
No. 10.
Lovallo alleges that he purchased 250 shares of Pacira, at $107.53 per share, on Augus
t 28, 2014.
Ex, C to Greenberg Decl. During the 68 days following the Class Period, the mean price
of
Pacira shares was calculated at roughly $95.57 per share, Id. Comparing the value of
his shares
at the time of purchase with the average value during the 68 days following the Class
Period,
Lovallo estimates a loss of $2,989. Id. Alleged class member Jay Mesplay moved
to be
appointed lead plaintiff, ECF No. 9, but withdrew the motion on discovering that Lovall
o had the
larger financial interest. ECF No. 13.
STANDARD FOR APPOINTING LEAD PLAINTIFF AND LEAD COUN
SEL
The Private Securities Litigation Reform Act (“PSLRA”) sets forth procedures for
the
selection of Lead Plaintiff in class actions brought under the Exchange Act. See 15 U.S.C.

§

78u—4. The PSLRA instructs a court to appoint “the most adequate plaintiff’ as
the lead plaintiff,
and to “adopt a presumption” that the most adequate plaintiff is the movant that “has
the largest
financial interest in the relief sought by the class” and “otherwise satisfies the require
ments of
Rule 23 of the Federal Rules of Civil Procedure.” Id.

§ 78u—4(a)(3)(B)(i) & (iii)(I); In re

Cendant Corp. Litig., 264 F.3d 201, 222 (3d Cir. 2001).
A court must consider any motion to serve as lead plaintiff filed by class membe
rs in
response to a published notice of class action by the later of (i) 90 days after the
date of

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publication, or (ii) as soon as practicable after the court decides any pendin
g motion to
consolidate. 15 U.S.C.

§ 78u—4(a)(3)(B)(i) and (ii). With regard to the selection of lead counsel,

the statute 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); In re Cendant

Corp. Litig., 264 F.3d at 222-23.
The initial determination of whether the movant with the largest interes
t in the case
“otherwise satisfies” Rule 23 “should be confined to determining whethe
r the movant has made a
primafade showing of typicality and adequacy.” In re Cendant Corp. Litig.,
264 F.3d at 263. To
determine whether the movant has preliminarily satisfied the typicality require
ment,

a court

“should consider whether the circumstances of the movant with the largest
losses are markedly
different or the legal theory upon which the claims of that movant are
based differ from that
upon which the claims of other class members will perforce be based. Id.
”
at 265 (citations
omitted). To evaluate Rule 23’s adequacy requirement, a court should consid
er whether a
movant “has the ability and incentive to represent the claims of the class vigoro
usly, whether it
has obtained adequate counsel, and whether there is a conflict between
the movant’s claims and
those asserted on behalf of the class.” Id. (citations omitted).
The Third Circuit has also instructed courts to examine two additional
factors in making
the threshold adequacy determination. The first is whether the movant “has
demonstrated a
willingness and ability to select competent class counsel and to negotiate
a reasonable retainer
agreement with that counsel.” Id. “[T]he question is whether the choices made
by the movant
with the largest losses are so deficient as to demonstrate that it will not fairly
and adequately
represent the interests of the class, thus disqualifying it from serving as lead
plaintiff at all.” Id.
at 266.

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The second additional factor “will arise only when the movant with the largest interest in
the relief sought by the class is a group rather than an individual person or entity.” Id. A court
must declare a movant inadequate to represent the interests of the class “[iJ f the court determines
that the way in which a group seeking to become lead plaintiff was formed or the manner in
which it is constituted would preclude it from fulfilling the tasks assigned to a lead plaintiff.

.

Id. This may occur if “a movant group is too large to represent the class in an adequate manner.”
Id. at 267.
Once a presumptive lead plaintiff is located, the presumption “may be rebutted only upon
proof by a member of the purported plaintiffclass 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.” Id. at
268 (citing 15 U.S.C.

§ 78u—4(a)(3)(B)(iii)(II)) (emphasis in original). “[OJnly class members

may seek to rebut the presumption.” In re Cendant Corp. Litig., 264 F.3d at 268. They must
“prove that the presumptive lead plaintiff will not do a ‘fair and adequate’ job.” Id.
DISCUSSION
Lovallo Is Appointed Lead Plaintiff

More than 90 days have passed since the complaint was filed and publicized on October
3, 2014. No motion to consolidate is pending. It is proper to appoint a lead plaintiff and lead
counsel now.
Lovallo has shown that he has the largest financial interest in the relief sought by the
class: he alleges to have sustained losses of $2,989 from Defendants’ conduct, after purchasing
250 shares. Ex. C to Greenberg Dccl. No other class member has submitted proof of having
sustained losses so large, or possessing so many shares. See Mot. to Appoint Lead Plaintiff by

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Jay Mesplay, Ex. 2 to Dccl. of Laurence M. Rosen, ECF No. 9 (showing the purchase of 99
shares at $95.93 per share). Lovallo alleges to be a shareholder like any other whose holdin
gs
lost value because of Defendants’ conduct. There is no indication that his circumstances
are
markedly different, or that the legal theory upon which his claims are based differs, from
that
upon which the claims of other class members will be based. No conflict between his interes
t and
the interests of the other class members is apparent.
Lovallo’s counsel attached a list of similar matters the firms have handled. Exs. D-E to
Greenberg Dccl. The cases appear to be of a similar nature to this one, With the long track record
of both firms in class action securities litigation, the Court deems them adequate counse
l.
In no sense are Lovallo’s choices “so deficient as to demonstrate that [he] will not fairly and
adequately represent the interests of the class.” In re Cendant Corp. Litig., 264 F.3d at 266.
Lovallo is an individual, not a group, so the second adequacy factor identified by the Third
Circuit is not applicable.
Lovallo has made aprimafacie showing of typicality and adequacy, and has offered
unrebutted evidence that he has the largest interest in the recovery sought by the class. No
member of the class has introduced evidence to rebut the presumption of adequacy or typical
ity.
In light of the facts presented, and the lack of objection, the Court sees no reason to doubt
Lovallo’s adequacy or typicality, and appoints him lead plaintiff in this latter.
Pomerantz LLP Is Appointed Lead Counsel and Lite DePalma Greenberg, LLC
Is
Appointed as Liaison Counsel

Pomerantz LLP and Lite DePalma Greenberg, LLC are acting as counsel for Lovallo. See
Compi. at 36; Mot. on Behalf of Jeremy A. Lieberman and Francis P. McConville for Leave
to
Appear Pro Hac Vice, ECF No. 3. The PSLRA allows a court to approve the choice of counse
l

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made by the most adequate plaintiff IS U.SC

§

)
Su4(a)(3)(B)(V
7 Faced with no objectj

and in light of the qualificj of the finns, the Court sees no reason not to approve Lovajjo’
05
5
choice of cose1

CONCLUSION
Lovaflo ‘s motion

DATE:

//

4t

is

granted

2) C
District Court Judge

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