Faris et al v. Longtop Financial Technologies Limited et al

Filing 157

MEMORANDUM OPINION AND ORDER re: 153 MOTION to Certify Class Notice of Motion and Unopposed Motion for Class Certification and Appointment of Class Representatives and Class Counsel filed by Danske Invest Management A/S, Pension Funds of Loc al No. One, I.A.T.S.E. For the foregoing reasons, this action shall proceed as a class action on behalf of a Class consisting of all persons and entities who purchased or otherwise acquired Longtop ADSs during the period from February 21, 2008 throug h May 17, 2011, inclusive, and were damaged thereby. Lead Plaintiffs, Danske and Local One, are appointed as Class representatives. Finally, the law firm of Kessler Topaz is appointed as Class Counsel and the law firm of G&E is appointed as local counsel on behalf of Class Counsel and the Class. The Clerk of the Court is directed to close this Motion (Docket Entry # 153). (Signed by Judge Shira A. Scheindlin on 7/10/2013) (lmb)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE LONGTOP FINANCIAL
TECHNOLOGIES LIMITED SECURITIES
LITIGATION

MEMORANDUM
OPINION AND ORDER
11 Civ. 3658 (SAS)

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SHIRA A. SCHEINDLIN, U.S.D.J.:
I.

INTRODUCTION
This putative securities class action is the result of defendants' alleged

material misrepresentations and omissions made between February 21, 2008 and
May 17,2011 (the "Class Period) concerning the financial well-being of Longtop
Financial Technologies Limited ("Longtop"). Plaintiffs have brought claims under
sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. 1
Lead Plaintiffs Danske Invest Management AlS ("Danske") and
Pension Funds of Local No. One, LA.T.S.E. ("Local One") have filed an
unopposed motion seeking: (1) certification of a class of Longtop investors; (2)
appointment of Lead Plaintiffs as Class Representatives; and (3) appointment of

See 15 U.S.C. §§ 78j(b) and 78t(a); 17 C.F.R. § 240.10b-5.

Lead Counsel2 as Class Counsel. For the reasons that follow, their motion is
granted in its entirety.

II.

PROCEDURAL HISTORY
On November 18, 2011, Lead Plaintiffs filed a Consolidated Class

Action Complaint asserting claims under sections 10(b) and 20(a) of the Securities
Exchange Act of 1934. On April 23, 2012, defendant Derek Palaschuk
("Palaschuk"), the only defendant to have appeared in this action, filed a motion to
dismiss the Consolidated Class Action Complaint which was denied, in large part,
on June 29, 2012.
On December 14,2012, Lead Plaintiffs filed an Amended
Consolidated Class Action Complaint against Longtop, Palaschuk, Lian Weizhou
("Lian") and Deloitte Touche Tohmatsu CPA Limited (DTT"). Palaschuk
answered the Amended Complaint on December 14,2012. On April 8, 2013, DTT
was dismissed from this lawsuit. Defendants Longtop and Lian have failed to
appear.
On June 21, 2013, Lead Plaintiffs filed an Unopposed Motion for
Class Certification and Appointment of Class Representatives and Class Counsel

Lead Counsel consists of the law firm Kessler Topaz Meltzer &
Check, LLP ("Kessler Topaz"), to which the law fiml of Grant & Eisenhofer
("G&E") serves as local counsel.
2

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(the "Motion,,).3 Lead Plaintiffs seek certification of the following class of
Longtop Investors (the "Class") pursuant to Federal Rule of Civil Procedure 23
("Rule 23"):
All persons and entities who purchased or otherwise
acquired Longtop ADSs during the period from February
21, 2008 through May 17, 2011, inclusive, and were
damaged thereby. Excluded from the Class are Defendants,
present or former executive officers of Longtop, present or
former members of Longtop's Board of Directors, and their
immediate family members (as defined in 17 C.F.R. §
229.404, Instructions).
In addition, Lead Plaintiffs seek to be appointed as Class Representatives and seek
the appointment of Kessler Topaz and G&E as Class Counsel.

III.

DISCUSSION
A.

Rule 23(a) Requirements
Before certifying the requested class, this Court must ensure that the

Rule 23(a) requirements are met, i.e., numerosity, commonality, typicality, and
adequacy.

3
Defendant Pa1aschuk agreed not to oppose the Motion without
prejudice to his right to subsequently challenge any assertion of fact or law
contained in the Memorandum of Law in Support of Plaintiffs' Unopposed Motion
for Class Certification and Appointment of Class Representatives and Class
Counsel.

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1.

Numerosity

Within the Second Circuit, numerosity is presumed if there are at least
forty class members. 4 In a federal securities class action, numerosity "may be
satisfied by a showing that a large number of shares were outstanding and traded
during the relevant period."5 Here, Longtop ADSs traded regularly during the
Class Period, with an average daily trading volume of over 500,000 ADSs on the
New York Stock Exchange. Numerosity is therefore satisfied.

2.

Commonality

"The commonality requirement is met if there is a common question
of law or fact shared by the class,,6 "Commonality requires the plaintiff1 s] to
demonstrate that the class members have suffered the same injury."7 Commonality
is typically satisfied "where putative class members have been injured by similar
material misrepresentations and omissions."8 Here, common questions include: (I)
See Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234,252
(2d Cir. 2011).
4

In re Bank ofAm. Corp. Sec., Derivative & ERISA Litig., 281 F.R.D.
134,138 (S.D.N.Y. 2012).
5

6

Brown v. Kelly, 609 F.3d 467,475 (2d Cir. 2010).

7
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)
(quotation marks and citation omitted).
8

In re Bank ofAm., 281 F.R.D. at 139 (quotation marks and citation

omitted).
4

whether defendants violated federal securities laws; (2) whether defendants' SEC
filings, press releases, and other public statements contained material
misstatements and omissions; (3) whether defendants otherwise made false and
misleading statements during the Class Period; (4) the materiality of such
misstatements and omissions; and (5) whether Class members sustained damages
and, if so, the proper measure of such damages. The commonality requirement has
clearly been met here.

3.

Typicality

"Typicality is established where each class member's claim 'arises
from the same course of events, and each class member makes similar legal
arguments to prove the defendant's liability. ",9
Here, Lead Plaintiffs' claims are typical of the Class. Lead Plaintiffs
purchased Longtop ADSs during the Class Period at prices allegedly inflated by
defendants' misrepresentations and omissions concerning Longtop' s financial
condition. The arguments advanced by Lead Plaintiffs with respect to defendants'
liability are the same arguments that other Class members would bring in support
of their claims. Thus, typicality is satisfied.

Janbay v. Canadian Solar, Inc., 272 F.R.D. 112, 120 (S.D.N.Y. 2010)
(quoting In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285,291 (2d Cir.
1992)).
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4.

Adequacy

Pursuant to Rule 23(a)(4), Lead Plaintiffs must establish that "the
representative parties will fairly and adequately protect the interests of the class."
"Generally, adequacy of representation entails inquiry as to whether a plaintiffs:
(1) interests are antagonistic to the interest[ s] of other members of the class; and
(2) attorneys are qualified, experienced and able to conduct the litigation."iO
Because Lead Plaintiffs purchased Longtop ADSs during the Class Period, their
interests are directly aligned with the interests of the other putative Class members.
Moreover, the claims of both Lead Plaintiffs and the putative Class members are
based on identical legal and remedial theories. Lastly, proposed Class Counsel are
highly qualified and capable of prosecuting this action. Adequacy has thus been
satisfied here.

B.

Rule 23(b) Requirements
1.

Predominance

Lead Plaintiffs seek class certification under Rule 23(b)(3) given that
"questions of law or fact cornmon to the class members predominate over any
questions affecting only individual members" and "a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy."

10

In re Sadia, S.A. Sec. Litig., 269 F.R.D. 298, 305 (S.D.N.Y. 2010).
6

"[T]he [predominance] requirement is satisfied 'if resolution of some of the legal
and factual questions that qualify each class member's case as a genuine
controversy can be achieved through generalized proof, and if these particular
issues are more substantial that the issues subject only to individualized proof. ",11
Courts routinely find the elements of scienter, materiality and causation to be
common issues in federal securities cases. Moreover, here reliance can be
presumed under the "fraud-on-the-market" doctrine set forth in Basic Inc. v.
Levinson 12 as the parties stipulated that Longtop ADSs traded in an efficient market

during the Class Period. Accordingly, the predominance requirement has been
satisfied.

2.

Superiority

Rule 23(b)(3) also requires that the class action is superior to other
available methods for litigating the case. Here, the putative Class consists of a
large number of investors in Longtop ADSs, many of whose individual damages
are small enough to render litigation on an individual basis prohibitively
expensive. Concentrating the claims of the Class members in a single action and
forum is the most efficient use ofjudicial resources. Superiority has also been

Myers v. Hertz Corp., 624 F.3d 537,547 (2d Cir. 2010) (quoting
Moore v. Paine Webber, Inc., 306 F.3d 1247, 1252 (2d Cir. 2002)).
11

12

485 U.S. 224, 246 (1988).
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satisfied. Given that predominance and superiority have been met, the putative
Class can be certified under Rule 23(b)(3).

IV.

CONCLUSION
For the foregoing reasons, this action shall proceed as a class action

on behalf of a Class consisting of all persons and entities who purchased or
otherwise acquired Longtop ADSs during the period from February 21, 2008
through May 17,2011, inclusive, and were damaged thereby. Lead Plaintiffs,
Danske and Local One, are appointed as Class representatives. Finally, the law
firm of Kessler Topaz is appointed as Class Counsel and the law firm of G&E is
appointed as local counsel on behalf of Class Counsel and the Class. The Clerk of
the Court is directed to close this Motion (Docket Entry # 153).

SO ORDERED:

Dated:

New York, New York
July 10, 2013

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- Appearances ­
For Plaintiffs:
Gregory M. Castaldo, Esq.

Kimberly A. Justice, Esq.

Richard A. Russo, Esq.

Margaret E. Onasch, Esq.

Kessler Topaz Meltzer & Check, LLP

280 King of Prussia Road

Radnor, P A 19087

[phone]

Daniel L. Berger, Esq.

Deborah A. Elman, Esq.

Grant & Eisenhoffer, P.A.

485 Lexington Avenue, 29th Floor

New York, NY 10017

[phone]

For Defendant Palascbuk (Pro Se):
Derek Palaschuk
4326 Dunbar Street
P.O. Box 45117
Vancouver BC, Canada
V6S 2M8

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