Wallace v. Intralinks Holdings, Inc. et al
Filing
99
OPINION re: 70 MOTION to Certify Class filed by Plumbers and Pipefitters National Pension Fund. Plaintiff's motion for class certification is granted. The court certifies the following class and subclass as set forth within. The court also appoint Plumbers and Pipefitters National Pension Fund as representative of the class and subclass, and approves Cohen Milstein Sellers & Toll PLLC as class counsel pursuant to Rule 23(g) of the Fed. R. Civ. P. This resolves the motion listed as document number 70 in this case, 11-cv-8861. SO ORDERED. (Signed by Judge Thomas P. Griesa on 9/30/2014) (ajs)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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WILLIAM D. WALLACE ET AL.,
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Plaintiffs,
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- against :
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INTRALINKS ET AL.,
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Defendants.
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11 Civ. 8861 (TPG)
OPINION
This is a motion for class certification pursuant to Rules 23(a) and
23(b)(3) of the Federal Rules of Civil Procedure. Plaintiff Plumbers and
Pipefitters National Pension Fund seeks to certify a class of all who
purchased defendant IntraLinks’ stock between February 17, 2011 and
November 11, 2011. Plaintiff also seeks a subclass of those who
purchased IntraLinks stock in the company’s April 6, 2011 secondary
offering.
For the reasons set out below, the court certifies the class and
subclass.
Procedural History
Plaintiff filed this action on December 5, 2011. On April 3, 2012,
the court consolidated the case with related actions and appointed lead
1
plaintiff, Plumbers and Pipefitters National Pension Fund (hereafter
“plaintiff”). On June 15, 2012, plaintiff filed a consolidated complaint.
On July 31, 2012, defendants moved to dismiss the complaint. On
May 8, 2013, the court denied defendants’ motion as to plaintiff’s claims
concerning misrepresentations or omissions about the strength of
IntraLinks’ business, its customers’ satisfaction, and/or the loss or
potential loss of IntraLinks’ largest customer, the Federal Deposit
Insurance Corporation (“FDIC”). Certain other of plaintiff’s claims,
alleging that IntraLinks made false or misleading statements concerning
its revenue characterization and customer billing methods, were
dismissed.
On February 18, 2014, plaintiff moved to certify a class and
subclass. Defendants oppose.
Consolidated Complaint
The Parties
Lead plaintiff, the Fund, is a multiemployer defined benefit pension
plan. It brings this class action on behalf of itself and all others who
acquired IntraLinks’ common stock from February 17, 2011 through
November 11, 2011. Those who purchased IntraLinks’ common stock
pursuant to the registration statement and prospectus governing the
April 6, 2011 secondary offering form a putative subclass. Defendants
are divided into three groups.
2
The first group, the “Exchange Act Defendants,” is comprised of
IntraLinks, Andrew Damico, and Anthony Plesner. Damico was Chief
Executive Officer, President, and director of IntraLinks throughout the
class period. Plesner was Chief Financial Officer and Chief
Administrative Officer throughout the class period. Both individuals
signed all of IntraLinks’ public filings during the class period. The
complaint alleges these defendants violated Sections 10(b) and 20(a) of
the Exchange Act.
The second group, called the “Securities Act Company
Defendants,” encompasses the Exchange Act Defendants and
additionally includes IntraLinks board members who signed the
registration statement issued for the secondary offering of April 6, 2011.
These additional persons are: Patrick Wack, Jr., Brian Conway, Peter
Gyenes, Thomas Hale, Habib Kairouz, Robert McBride, and Harry Taylor.
The complaint alleges these defendants violated Sections 11 and 12(a)(2)
of the Securities Act of 1933.
The last group, the “Securities Act Underwriter Defendants,”
includes all investment banks that underwrote IntraLinks’ secondary
offering on April 6, 2011. These are: Morgan Stanley & Co. Incorporated,
Jefferies & Company, Inc., Lazard Capital Markets LLC, Credit Suisse
Securities (USA) LLC, Deutsche Bank Securities Inc., and Pacific Crest
Securities LLC. The complaint alleges these defendants violated Sections
11 and 12(a)(2) of the Securities Act of 1933.
3
Background of Claims
IntraLinks is a publicly traded provider of “virtual data rooms”
(“VDRs”), which are software platforms that facilitate the secure
exchange of information between organizations and departments.
Historically, IntraLinks divided its customers between those who
used VDRs for mergers and acquisitions (“M&A”) and those who used
them for debt capital markets (“DCM”). IntraLinks’ business was based
on selling subscription contracts, usually three to twelve months in
duration, during which time customers—typically financial institutions—
would use IntraLinks’ services to facilitate specific projects or
transactions.
In 2009, IntraLinks sought to diversify its business, creating a new
division called Enterprise, which served customers that used IntraLinks
for longer term storage needs. Enterprise clients treated IntraLinks’
platform as an ongoing repository, rather than a project-specific tool, and
therefore renewed their contracts for longer periods of time. The
Enterprise division thrived almost immediately. Before going public in
August 2010, IntraLinks touted the growth in its Enterprise division, and
investors viewed the Enterprise division as more promising than
IntraLinks’ other lines of business.
By early 2010, FDIC had become IntraLinks largest and most
important customer. FDIC accounted for over 7% of IntraLinks’ total
revenue, while the second-largest customer accounted for less than 2%
4
of total revenue. Furthermore, FDIC’s business was particularly
important to IntraLinks’ market value because it accounted for over 15%
of the revenue in IntraLinks’ Enterprise division.
Yet difficulties arose in IntraLinks’ relationship with FDIC. FDIC,
which was spending $13 million per year on IntraLinks’ services, sought
to renegotiate its contract in early 2010. IntraLinks refused to
renegotiate. In July 2010, FDIC issued a Request for Proposals (“RFP”)
to find different VDR providers. On November 18, 2010, IntraLinks CFO
Anthony Plesner signed a contract with FDIC that indicated FDIC was
“exercising the final 6-month option period” in its task order with
IntraLinks. IntraLinks ultimately managed to maintain some business
with FDIC for longer than that six-month option period. But on
November 7, 2011, FDIC publicly announced that it would finish its
existing projects that relied on IntraLinks’ services, and not use
IntraLinks for any future projects.
Plaintiff alleges that defendants made numerous false and
misleading public statements in light of IntraLinks’ deteriorating
relationship with FDIC. On February 17, 2011, the beginning of the
putative class period, IntraLinks’ Form 8-K and press release touted
growth in its Enterprise business sector and projected a revenue increase
of between 16% and 22% for 2011. In its March 23, 2011 Form 10-K,
IntraLinks again made optimistic statements about the prospects of its
Enterprise business sector, and stated “We believe our customers have a
5
high level of satisfaction, as evidenced by the 104% renewal rate . . . for
our subscription contracts during the year ended December 31, 2010.”
On April 6, 2011, IntraLinks issued new shares of stock in a
secondary offering. Pursuant to this offering, IntraLinks produced a
Form S-1 Registration Statement and a Form 424(b)5 Prospectus.
Alleged misstatements and omissions in these documents are the same
as those in the March 23, 2011 Form 10-K.
IntraLinks made a partial disclosure concerning its troubles with
FDIC in a phone call with investors on May 11, 2011, following its firstquarter earnings announcement. On the call, IntraLinks disclosed
difficulties in the Enterprise business “as a result of a single Enterprise
customer whose IntraLinks usage will significantly decrease over the
remainder of year.” Market analysts inferred that this customer was
FDIC, but they did not know that FDIC was seeking a different vendor or
that it was dissatisfied with IntraLinks.
IntraLinks made additional seemingly optimistic statements in its
first quarter Form 10-Q and second quarter Form 10-Q, as well as its
August 10, 2011 Form 8-K. On November 8, 2011, one day after FDIC
publicly announced that it would not use IntraLinks on future projects,
IntraLinks again filed a Form 8-K, this time attributing disappointing
Enterprise results to deficiencies in its sales force, and declining to
address FDIC’s announcement.
6
Plaintiff alleges that all who purchased or acquired IntraLinks
stock during the class period suffered because the share price during
that time was inflated due to violations by defendants.
Class Certification
Plaintiff seeks certification of a class (the “Exchange Act Class”)
and a subclass (the “Securities Act Subclass”). The Exchange Act Class
would include all persons or entities who acquired IntraLinks common
stock during the class period (February 17, 2011 through November 11,
2011, inclusive). The Securities Act Subclass would include all persons
or entities who purchased IntraLinks common stock “pursuant or
traceable to” the April 6, 2011 secondary offering with its allegedly
misleading prospectus and registration statement.
Class Certification Standard and Application
To qualify for class certification, plaintiff must show by a
preponderance of the evidence that the proposed class meets the
requirements of Federal Rule of Civil Procedure 23. Teamsters Local 445
Freight Division Pension Fund v. Bombardier, Inc., 546 F.3d 196, 201-03
(2d Cir. 2008). The proposed class must satisfy all four requirements of
Rule 23(a), and at least one of the three tests in Rule 23(b).
Rule 23(a) requires that: (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 class
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representative are typical of those of the class, and (4) the class
representative will fairly and adequately protect the interests of the class.
Rule 23(b)(3), the provision of Rule 23(b) plaintiff relies on for this
putative class certification, requires that (1) questions of law or fact
common to the class predominate over questions affecting only individual
members, and (2) a class action is superior to other available methods for
adjudicating the controversy.
Defendants offer arguments against class certification under Rule
23(a), focusing on the typicality of the class representative’s claims and
the adequacy of the representative to argue for the class. Defendants’
arguments as to typicality and adequacy concern law and fact that
applies in the same way to the Exchange Act Class and the Securities Act
Subclass.
Defendants also offer arguments against class certification under
Rule 23(b)(3). These arguments contend that common issues do not
predominate for all class members regarding the element of reliance in
the Exchange Act claims. Different standards of reliance, which are not
at issue here, attach to the Securities Act claims, so the Rule 23(b)(3)
discussion does not apply to the Securities Act Subclass.
Rule 23(a)
(1) Numerosity
Rule 23(a)(1) requires that the class be numerous. This
requirement is satisfied when the class comprises so many members that
8
joining them all in the litigation would be impracticable. Fed.R.Civ.P.
23(a). In this Circuit, numerosity is presumed at 40 class members.
Consol. Rail Corp. v. Hyde Park, 47 F.3d 473, 483 (2d Cir.1993). In class
actions alleging fraud in widely traded securities, common sense
assumptions based on the number of outstanding shares may suffice to
demonstrate numerosity. In re Alstom SA Sec. Litig., 253 F.R.D. 266, 275
(S.D.N.Y.2008).
Here, where defendant had millions of shares outstanding during
the class period, and defendants make no contrary argument, there is
numerosity for both the class and subclass.
(2) Commonality
Rule 23(a)(2) requires that there be questions of law or fact
common to the class. This requirement is satisfied when an action raises
questions of law or fact common to all members of the class, so that
addressing those common questions will help efficiently resolve the
proceeding. Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011).
Plaintiff satisfies its burden by identifying several questions
common to the class and subclass that could drive the resolution of the
litigation. These include, for example, whether defendants violated
securities laws, whether defendants made misleading statements
concerning IntraLinks’ loss of the FDIC’s business, and to what degree
plaintiffs were harmed by those alleged wrongdoings. Furthermore,
defendant has declined to specifically dispute the commonality prong of
9
the class certification test, choosing to focus instead on the related
typicality inquiry.
(3) Typicality
Rule 23(a)(3) requires that the claims or defenses of the class
representative be typical of those of the class. This requirement closely
resembles the commonality requirement. Both aim at ensuring that
class treatment is a logical, fair, and efficient method of resolving the
claims of all putative class members. Typicality is satisfied 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.” In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291
(2d Cir. 1992). The test is not demanding, and the claims of the class
representative need not be exact duplicates of all class members’ claims.
In re Livent, Inc. Noteholder Sec. Litig., 210 F.R.D. 512, 516 (S.D.N.Y.
2002).
Here, plaintiff argues that the class representative’s claims satisfy
typicality because they concern misleading statements and omissions
that harmed each class member in the same way. Defendants, however,
contend that typicality is not satisfied because the lead plaintiff and class
representative—the Fund—is vulnerable to “unique defenses which
threaten to become the focus of the litigation.” Baffa v. Donaldson,
Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 59-60 (2d Cir. 2000).
Specifically, defendants suggest that IntraLinks shared material
10
nonpublic information with the Fund’s investment managers. If true, the
Fund would not have been harmed in the same way as other class
members because its investment managers had inside information that
superseded the allegedly misleading public information upon which the
rest of the class relied.
Defendants’ argument, however, is too threadbare to defeat
plaintiffs’ showing of typicality. Defendants point to several conferences
between the Fund’s investment managers and IntraLinks management.
Some of these conferences are clearly irrelevant because they occurred
before IntraLinks allegedly had reason to know that it would lose FDIC’s
business. And at other conferences, there is simply no evidence that the
Fund’s investment managers received nonpublic information. Courts
have found that mere communications with insiders do not defeat
typicality in securities class actions. See In re Indep. Energy Holdings
PLC Sec. Litig., 210 F.R.D. 476, 482 (S.D.N.Y. 2002). Furthermore, here,
the evidence suggests the Fund’s investment managers did not receive
non-public information. For example, one of the Fund’s investment
managers wrote an internal email—after defendants suggests he received
inside information—stating that he “[does not] believe management lied
in secondary.” Dulka Decl. Ex. L, p. 2.
Courts have rejected class representatives who are potentially
vulnerable to unique defenses because other class members may be
disserved if those defenses become a focus of the litigation. See, e.g.,
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Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
903 F.2d 176, 180 (2d Cir. 1990). But where, as here, the individualized
defenses against the class representative seem to rest on little more than
speculation, the risk of such disservice is minimal. Plaintiff has proven
typicality by a preponderance of the evidence.
(4) Adequacy
Rule 23(a)(4) requires a showing that the class representative will
fairly and adequately protect the interests of other class members.
Importantly, the class representative’s interests must not be antagonistic
to those of other class members. In re Flag Telecom Holdings, Ltd. Sec.
Litig., 574 F.3d 29, 35 (2d Cir. 2009). The adequacy inquiry overlaps
with the typicality inquiry, so that a finding of typicality usually suggests
that the class representative will also satisfy the adequacy requirement.
Pub. Employees’ Retirement v. Merrill Lynch & Co., 277 F.R.D. 97, 109
(S.D.N.Y. 2011).
The Fund appears to be both motivated and well-positioned to
represent the rights and interests of class members. Defendants do not
dispute that the Fund’s counsel, Cohen Milstein, is highly experienced
and qualified to prosecute the class action. Nor does defendant dispute
that the Fund stands to gain much from prosecuting the action: the
Fund lost more from its investment in IntraLinks ($4,250,862.00) than
any other class member, a fact the court found significant in appointing
it Lead Plaintiff in an order dated April 3, 2012. See ECF at No. 35.
12
However, defendants argue that the Fund makes an inadequate
class representative because it lacks familiarity with the litigation.
Under Rule 30(b)(6) of the Federal Rules of Civil Procedure, defendants
were entitled to depose a representative of the Fund on matters “known
or reasonably available to the organization.” Defendants carried out
such a deposition and discerned that the Fund’s representative lacked a
full understanding of the litigation. Therefore, defendants contend that
the Fund is too detached from the litigation to vigorously represent the
interests of the class.
But the Fund’s witness was not as ignorant as defendants say. He
displayed basic familiarity with the litigation’s subject matter, the
identities of the defendants, and the reasons for the Fund’s involvement.
More importantly, the Fund’s witness made it clear that Fund counsel
O’Donoghue & O’Donoghue have been actively monitoring the litigation
and managing the Fund’s relationship with class counsel Cohen Milstein.
For an entity like the Fund, delegating management of securities
litigation to trusted external counsel is not unreasonable. These facts
make the situation distinguishable from cases where class
representatives do nothing beyond “lending [their] name to the lawsuit”.
In re Monster Worldwide, Inc. Sec. Litig., 251 F.R.D. 132 (S.D.N.Y. 2004).
The adequacy requirement is not demanding. It is satisfied unless
“the class representatives have so little knowledge of and involvement in
the class action that they would be unable or unwilling to protect the
13
interests of the class against the possibly competing interests of the
attorneys.” Baffa, 222 F.3d at 61. In light of the competence of Cohen
Milstein, the involvement of Fund counsel, the basic knowledge of the
Fund’s witness, and the Fund’s strong interest in resolving this litigation
in a manner favorable to the class, the court finds that the modest
hurdle of adequacy is cleared.
Rule 23(b)(3)
Having established that the proposed class meets the requirements
of 23(a), plaintiff must still meet one of the three tests in Rule 23(b).
Here, plaintiff chooses to attempt certification under the test of Rule
23(b)(3). To certify under Rule 23(b)(3), plaintiff must show both that
“questions of law or fact common to Class Members predominate over
any questions affecting only individual members,” and that class
treatment is superior to other available methods of adjudicating the
controversy. Fed.R.Civ.P. 23(b)(3).
Defendants do not contest plaintiff’s arguments as to superiority,
which the court accordingly accepts. But defendants argue strenuously
that the predominance requirement is not met.
Predominance
Plaintiff contends that common questions predominate for all
members of the Exchange Act Class, observing that all members must
establish the same elements of their private cause of action for deception
14
in connection with the sale of a security under Section 10(b) of the
Securities Exchange Act of 1934. These elements are: (1) a material
misrepresentation or omission by the defendant; (2) scienter; (3) a
connection between the misrepresentation or omission and the purchase
or sale of a security; (4) reliance upon the misrepresentation or omission;
(5) economic loss; and (6) loss causation. Amgen Inc. v. Connecticut
Retirement Plans and Trust Funds, 133 S.Ct. 1184, 1192 (2013).
Only the fourth element of the cause of action is in dispute.
Defendants protest that common issues do not predominate concerning
the element of reliance.
Presumption of Reliance
Plaintiff argues that class members are entitled to a presumption
of reliance on defendants’ alleged misrepresentations and/or omissions
under the “fraud on the market” doctrine. The fraud on the market
doctrine is a judicially crafted presumption of reliance on certain
statements that are likely to mislead an entire market in an efficientlytraded stock. The doctrine applies if the requirements of publicity,
materiality, market efficiency, and market timing are met. See Basic v.
Levinson, 108 S.Ct. 978, 991 (1988). Plaintiff also contends that class
members are entitled to a presumption of reliance because omissions,
rather than affirmative statements, form the core of the alleged fraud.
See Affiliated Ute Citizens of Utah v. United States, 92 S.Ct. 1456, 1472
(1972). Defendants contend that neither presumption applies.
15
Defendants’ first salvo against the application on the fraud on the
market doctrine is that the alleged misrepresentations did not impact
IntraLinks’ price.
If an alleged misrepresentation did not affect the market price of a
stock, the fraud on the market presumption cannot apply. Price impact
is therefore a precondition to a Rule 10b-5 action such as this one.
Halliburton Co. v. Erica P. John Fund, Inc., 134 S.Ct. 2398, 2415 (2014).
Defendants bear the burden to show a lack of price impact. McIntire v.
China MediaExpress Holdings, Inc., No. 11 CIV 804, 2014 WL 4049896,
at *13 (S.D.N.Y. Aug. 15, 2014).
Here, defendants do not carry that burden. It is difficult to see
why the alleged misstatement and omissions would not have impacted
the share price. Ample evidence in the record suggests that analysts and
market participants, including the Fund’s agents, found it significant
when they learned that FDIC was reducing its usage of IntraLinks. This
undermines defendants’ speculation that factors unrelated to the FDIC
customer relationship exclusively caused the drop in IntraLinks’ share
price around May 11, 2011. Defendants also highlight uncertainty about
whether the decline in IntraLinks’ share price on August 10, 2011 and
November 9, 2011 were caused by corrective disclosures concerning the
FDIC’s business with IntraLinks. But the reasons for the declines on
those dates are likewise intertwined with IntraLinks’ alleged
misrepresentations concerning the FDIC. On August 10, the market
16
likely inferred a connection between the loss of FDIC business and
IntraLinks’ disclosure that it received an SEC subpoena. And the decline
on November 9, 2011 may have represented the market’s erasure of
earlier fraud, if market participants were processing both FDIC’s
November 7 announcement that it was seeking a new VDR vendor, and
IntraLinks’ November 8 statement that “since our last earnings call,
[FDIC] has informed us that beginning this month it will be using a
different vendor for its projects.” Defendant has not shown that
unrelated factors account for these price movements.
Defendants do not rebut plaintiff’s specific arguments for the
efficiency of the market in IntraLinks shares. All but conceding market
efficiency, they argue instead that if an efficient market is assumed, the
class period must be drawn more narrowly than plaintiff would like.
The court therefore finds that IntraLinks shares traded in an
efficient market during the proposed class period, and that defendants
have failed to rebut a presumption of class-wide reliance on the integrity
of the market. The application of the Affiliated Ute doctrine need not be
decided here, because plaintiff has shown that the fraud on the market
doctrine applies, and common issues predominate concerning reliance
on defendants’ alleged omissions or misrepresentations.
The Exchange Act Class Period
Defendants argue that the Exchange Act Class period should
exclude those who purchased IntraLinks stock after May 11, 2011
17
because on that date, the market became aware that FDIC was
decreasing its IntraLinks usage. Therefore, the argument goes, any
purchasers after that date did not rely on the alleged misrepresentations,
and common issues do not predominate as to those purchasers. The
argument is misplaced.
Defendants point to a swift decline in IntraLinks’s share price
following the earnings call and lowered market guidance on May 11,
2011. On that earnings call, IntraLinks disclosed that a large Enterprise
customer was significantly decreasing its usage of IntraLinks. The
following day, undisputedly, market analysts inferred that FDIC was
reducing its usage of IntraLinks. But defendants do not show that the
alleged misleading statements or omissions were then fully cured: the
decline in Intralinks’ share price might have been larger if the market
had known the full extent of IntraLinks’ difficulties with FDIC.
Defendants’ declaration from Mary Dulka contains communications
showing that Fund’s investment managers believed, following the
earnings call, that FDIC was decreasing IntraLinks usage due to a
shrinking distressed bank portfolio and a correspondingly smaller need
for VDRs. See Dulka Decl., Ex. L. But that was not the full truth, if
FDIC was also dissatisfied with IntraLinks’ pricing and seeking
replacement vendors. If, as plaintiff alleges, defendants misled the
market to believe that FDIC was not seeking a replacement for IntraLinks
18
and was not dissatisfied, then a disclosure of FDIC’s decrease in usage
did not fully eliminate that deception.
Defendants’ arguments concerning the proper class period belong
more properly to the discussion of damages, not class certification.
Individualized calculations of damages do not generally defeat the
predominance requirement. See Enea v. Bloomberg, L.P., No. 12 CIV
4656 (GBD)(FM), 2014 WL 1044027, at *21 (S.D.N.Y. Mar. 17, 2014).
Presumably, if plaintiff prevails, class members who purchased or sold at
different times during the class period will be entitled to significantly
different recoveries. While calculating the proper damages based on the
date of purchase and sale may be complicated, it does not demand
excessive individual inquiry. Plaintiff’s proposed determination of
damages by event study appears to be a workable methodology of
determining damages on a class-wide basis that conforms to its theory of
liability, thus meeting the requirements of Comcast Corp. v. Behrand, 133
S.Ct. 1426 (2013).
The Securities Act Subclass Limitation
Defendants contend that the Securities Act Subclass must exclude
aftermarket purchasers of securities from the April 6, 2011 secondary
offering. The Securities Act Subclass members will make claims under
Sections 11 and 12(a)(2) of the Securities Act of 1933. Aftermarket
purchasers are those who bought the securities in the open market,
rather than directly from IntraLinks.
19
The Section 11 claims provide no reason to exclude aftermarket
purchasers. To be sure, only those who “can trace their shares to the
allegedly misleading registration statement” have standing in a Section
11 claim. In re Global Crossing, Ltd. Sec. Litig., 313 F. Supp. 2d. 189,
207 (S.D.N.Y. 2003). But tracing is a merits issue that the court need
not consider at the class certification stage. See In re Smart
Technologies, Inc. Shareholder Litig., 295 F.R.D. 50, 61-62 (S.D.N.Y.
2013).
However, aftermarket purchasers lack standing to maintain a
Section 12(a)(2) claim, because the securities sale was not made to them
by means of oral communication or prospectus. See, e.g., In re Smart
Technologies, 295 F.R.D. at 56-57. Without standing, their claims under
Section 12(a)(2) cannot succeed, and should not be certified as part of
the class. See In re Flag Telecom Holdings, 574 F.3d at 39.
Aftermarket purchasers are therefore excluded from the subclass
with respect to claims brought under Section 12(a)(2). They retain the
possibility of obtaining relief through the Section 11 claims, and as
members of the Exchange Act Class.
Conclusion
Plaintiff’s motion for class certification is granted. The court
certifies the following class and subclass:
“All persons and entities who purchased or acquired IntraLinks
common stock during the period February 17, 2011 and November 11,
20
2011, inclusive, including a subclass of those persons or entities who
purchased IntraLinks common stock pursuant or traceable to the
company's registration statement and prospectus issued in connection
with the Apri16, 2011 offering and who were damaged thereby.
Aftermarket purchasers are excluded from the subclass with respect to
claims brought under Section 12(a)(2)."
The court also appoints Plumbers and Pipefitters National Pension
Fund as representative of the class and subclass, and approves Cohen
Milstein Sellers & Toll PLLC as class counsel pursuant to Rule 23(g) of
the Federal Rules of Civil Procedure.
This resolves the motion listed as document number 70 in this
case, 11-cv-8861.
Dated: New York, New York
September 30, 2014
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