Faig v. Bioscrip, Inc. et al

Filing 17

MEMORANDUM & ORDER granting (6) Motion to Consolidate Cases 1:13-cv-6922 (as Lead Case) with 1:13-cv-8175; denying (6) Motion to Appoint ; denying (6) Motion to Appoint Counsel ; terminating (8) Motion to Appoint ; terminating (8) Motion to Consolida te Cases 1:13-cv-6922 (as Lead Case) with 1:13-cv-8175; granting (11) Motion to Appoint in case 1:13-cv-06922-AJN; terminating (4) Motion to Appoint ; terminating (4) Motion to Consolidate Cases 1:13-cv-6922 (as Lead Case) with 1:13-cv-8175 in case 1 :13-cv-08175-AJN. For the foregoing reasons, the motions to consolidate and Fresno's motion for appointment as lead plaintiff and approval of its selection of lead counsel are granted, and Faig's motion for appointment as lead plaintiff an d approval of his selection of lead counsel is denied. Pursuant to Federal Rule of Civil Procedure 42(a), any pending, subsequently filed, removed, or transferred actions that are related to the claims asserted in the captioned actions are consolidat ed for all purposes. The consolidated action shall be captioned "In re BioScrip, Inc. Securities Litigation," and the file shall be maintained under Master File No. 13-cv-06922. This resolves Docket Numbers 6, 8, and 11. (Signed by Judge Alison J. Nathan on 12/19/2013) Filed In Associated Cases: 1:13-cv-06922-AJN, 1:13-cv-08175-AJN (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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USDCSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _ _~_ _ __
DATE FILED:

DEC iJ11O.l3

TIMOTHY F AIG, Individually and On Behalf of All
Others Similarly Situated,
No. 13 Civ. 06922 (AJN)
Plaintiff,
MEMORANDUM &
ORDER

-vBIOSCRIP, INC., RICHARD M. SMITH, HAl V.
TRAN, MARY JANE GRAVES, and PATRICIA
BOGUSZ,
Defendants.

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WEST PALM BEACH POLICE PENSION FUND,
Individually and On Behalf of All Others Similarly
Situated,

No. 13 Civ. 08175 (NRB)
MEMORANDUM &
ORDER

Plaintiff,
-v-

BIOSCRIP, INC., RICHARD M. SMITH, HAl V.
TRAN, MARY JANE GRAVES, PATRICIA BOGUSZ,
MYRON Z. HOLBUIAK, CHARLOTTE W. COLLINS,
SAMUEL P. FRIEDER, DAVID R. HUBERS,
RICHARD L. ROBBINS, STUART A. SAMUELS,
GORDON H. WOODWARD, KIMBERLEE SEAH,
JEFFRIES LLC, MORGAN STANLEY & CO. LLC,
SUNTRUST ROBINSON HUMPHREY, INC.,
DOUGHERTY & COMPANY, and NOBLE
INTERNATIONAL I NVESTMENTS, INC.,
Defendants.

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ALISON 1. NATHAN, District Judge:
Before the Court are Faig v. Bioscrip, 13-cv-6992, and West Palm Beach Police Pension

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Fund v. Bioscrip, 13-cv-8175, two related securities class actions brought on behalf of all
persons or entities that purchased BioScrip securities between August 2011, and late September
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2013. Motions to consolidate the cases, appoint lead plaintiff, and approve the selection of class
counsel have been filed by Timothy Faig and the Fresno County Employees' Retirement
Association ("Fresno,,).2 Dkt. Nos. 6, 11. For the reasons that follow, the cases are
consolidated, Fresno is appointed as lead plaintiff, and Fresno's selection of lead counsel is
approved. Mr. Faig's motion for appointment as lead plaintiff and approval of his selection of
class counsel is denied.
I. CONSOLIDATION
The Court must decide whether to consolidate the actions before deciding on the
competing motions for appointment as lead plaintiff. See 15 U.S.C. § 78u-4(a)(3)(B)(ii) ("If
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 patiy has sought to consolidate those actions for
pretrial purposes or for trial, the court shall not make the determination [on the lead plaintiff]
after the decision on the motion to consolidate is rendered."). Consolidation is governed by Rule
42 of the Federal Rules of Civil Procedure, which provides that consolidation is appropriate "[i]f
actions before the court involve a common question oflaw or fact." Fed. R. Civ. P. 42(a); see

also In re CMED Sec. Litig., No. 11. Civ. 9297 (KBF), 2012 WL 1118302, at *1-2 (S.D.N. Y.
Apr. 2, 2012). "The trial court has broad discretion to determine whether consolidation is
appropriate," Johnson v. Celotex Corp. 899 Fold 1281, 1284-85 (2d Cir. 1990) (citing Midwest

Community Council, Inc. v. Chicago Park Dist., 98 F.R.D. 491 (N.D. Ill. 1983); Stemler v.
I The class period proposed by Timothy Faig is August 8, 2011, to September 20,2013, see Faig Br. at 1; and the
class period proposed by the West Palm Beach Police Pension Fund ("WPB) is August 11, 2011, to September 23,
2013, see WPB Br. at 6.
2 The WPB filed and subsequently withdrew its own motion to be appointed as lead plaintiff. See Dkt. Nos. 8, 14.
WPB has stated that it "SUPPOltS the appointment of Fresno as lead plaintiff and its selection of lead counsel." Dkt.
No. 14.

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Burke, 344 F.2d 393 (6th Cir. 1965», and may be guided in the exercise of that discretion by
consideration of "both equity and judicial economy," Devlin v. Transp. Comm. Int'l Union, 175
F.3d 121, 130 (2d Cir. 1999).
The two cases involve sufficiently overlapping questions of law and fact to justify
consolidation. Both cases allege that BioScrip unlawfully and artificially inflated the price of its
securities between approximately August 2011 and September 2013, and both cases allege
violations of the Exchange Act. See generally Faig Br.; Dkt. No.9 (WPB Br.), at 6. Both cases,
moreover, concern the decline in stock price that occurred following the filing of BioScrip' s
September 23,2013, Form 8-K, which revealed that the company had received a civil
investigative demand from the U.S. Attorney's Office and a subpoena from the New York
Attorney General's Medicaid Fraud Control Unit. See Faig v. BioScrip, et al., Dkt. No. 1 ~~ 3-4;

West Palm Beach Police Pension Fund v. BioScrip, et al., 13-cv-8175, Dkt. No. 1 ~~ 10, 12.
Under these circumstances, neither the fact that the two cases have slightly different proposed
class periods and defendants, nor the fact that West Palm Beach alleges Securities Act violations
in addition to Exchange Act violations, precludes consolidation. See Kaplan v. Gelfond, 240
F.R.D. 88,91 (S.D.N.Y. 2007) ("Differences in causes of action, defendants, or the class period
do not render consolidation inappropriate if the cases present sufficiently common questions of
fact and law, and the differences do not outweigh the interests of judicial economy served by
consolidation.") Accordingly, the motions to consolidate are granted.

II. APPOINTMENT OF LEAD PLAINTIFF AND SELECTION OF LEAD COUNSEL
A. Legal Standard
The PSLRA provides that the Court "shall appoint as lead plaintiff the member or
members of the purported plaintiff class that the court determines to be most capable of

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adequately representing the interests of class members." 15 U.S.C. § 78u-4(a)(3)(B)(i). For
purposes of appointing lead plaintiff, the Court is directed to "adopt a presumption that the most
adequate plaintiff. .. is the person or group of persons that(aa) has either filed the complaint or made a motion in response to a [notice
advertising the filing of the class action, pursuant to 15 U.S.C. § 78u4(a)(3)(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. § 78u-4(a)(3)(B)(iii)(I). This presumption may only be rebutted by proof that the
purportedly most adequate plaintiff "(aa) will not fairly and adequately protected the interests of
the class; or (bb) is subject to unique defenses that render such plaintiff incapable of adequately
representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).
Both movants have satisfied the first prong of the presumption, Faig by filing complaints,
and Fresno by filing a timely motion to serve as lead plaintiff. See 15 U.S.C. § 78u-4(a)(3)(B)(i),
(A)(i). The Court therefore proceeds to consider each prospective lead plaintiffs showings
under the second and third prongs of the test.
S. Largest Financial Interest

Although the PSLRA does not specify how courts are to determine which plaintiff "has
the largest financial interest in the relief sought by the class," courts in this district generally
consider the following factors:
(1) the total number of shares purchased during the class period; (2) the net shares

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purchased during the class period (in other words, the difference between the
number of shares purchased and the number of shares sold during the class
period); (3) the net funds expended during the class period (in other words, the
difference between the amount spent to purchase shares and the amount received
for the sale of shares during the class period); and (4) the approximate losses
suffered.
Peters v. Jinkosolar Holding Co., Ltd., No. 11 Civ. 7133 (JPO), 2012 WL 946875, at *5
(S.D.N.Y. March 19,2012) (quoting Kaplan, 240 F.R.D. at 93). "It is well settled that
'[fJinancialloss, the last factor, is the most important element of the test.'" Id. (quoting
Varghese v. China Shenghuo Pharm. Holdings, Inc., 589 F. Supp. 2d 388,395 (S.D.N.Y. 2008)).
Having considered the above factors, the Court finds that Fresno has the largest financial
interest in the relief sought by the class. During the class period, Faig purchased 443 shares of
BioScrip stock, from which he suffered a loss of $1,706. Faig Br. at 5. Fresno's financial
interest was considerably larger: during the class period, it purchased 58,595 shares of BioScrip
stock, from which it sustained losses of approximately $526,843. Fresno Br. at 5; Silk Decl.,
Exs. C and D. Accordingly, Fresno is presumed to be the most adequate plaintiff, so long as it
"otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure." 15
U.S.C. § 78u-4(a)(3)(B)(iii)(I).
C. Rule 23

A plaintiff who has satisfied the first two prongs of the test is presumed to be the most
adequate plaintiff if it "otherwise satisfies the requirements of Rule 23 of the Federal Rules of
Civil Procedure." 14 U.S.C. § 78u-5(a)(3)(B)(iii)(I). Under Rule 23, a plaintiff may sue on
behalf of a class if:

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(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
(4) the representative parties will fairly and adequately protect the interests of the
class.
Fed. R. Civ. P. 23(a). When deciding competing motions to be appointed lead plaintiff under the
PSLRA, however, a court need not conduct a full analysis of whether the requirements of Rule
23 have been met. Rather, "[a]t this stage of the litigation, a moving plaintiff must only make a
preliminary showing that the adequacy and typicality requirements have been met." Jambay v.
Canadian Solar, Inc., 272 F.R.D. 112, 120 (S.D.N.Y. 2010); see also In re Cendant Corp. Litig.,

264 F.3d 201,263 (3d Cir. 2001) ("The initial inquiry ... should be confined to determining
whether the movant has made aprimajacie showing of typicality and adequacy.").
"The typicality requirement is satisfied if the movant shows that class members' claims
"arise[] from the same course of events, and each class member makes similar legal arguments to
prove the defendant's liability." Peters, 2012 WL 946875, at *11 (quoting In re Drexel
Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir. 1992)). The lead plaintiffs claims,

however, "'need not be identical' to the claims of the class to satisfy this requirement." Id.
(quoting Skwortz v. Crayfish Co., Ltd., No. 00 Civ. 6766 (DAB), 2001 WL 1160745, at

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(S.D.N.Y. Sept. 28, 2001)). In this case, Fresno alleges that it suffered financial losses due to
material misstatements made by BioScrip during the class period. See Fresno Br. 6. Because
Fresno's claims arise from the same course of events as do the claims of other class members,

i. e. the allegedly material misstatements made by BioScrip during the class period, cf Faig Br. at

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7 (stating that Faig's claims arise out of defendants "false or misleading statements of material
facts" made during the class period), the Court finds that it has made a sufficient showing of
typicality for purposes of deciding on a lead plaintiff under the PSLRA.
The adequacy requirement is satisfied if the movant shows that "(1) class counsel is
qualified, experienced, and general able to conduct the litigation; (2) there is no conflict between
the proposed lead plaintiff and the members of the class; and (3) the proposed lead plaintiff has a
sufficient interest in the outcome of the case to ensure vigorous advocacy." Foley v. Transocean
Ltd., 272 F.R.D. 126, l31 (S.D.N.Y. 2011) (citing In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95,
102 (S.D.N.Y. 2005); Shi v. Sina Corp., No. 05 Civ. 2154 (NRB), 2005 WL 1561438, at *2
(S.D.N.Y. July 1,2005)). Bernstein Litowitz, the firm retained by Fresno, appears competent
and experienced in the realm of securities class action litigation. See Fresno Br. At 8-9. The
Court has been given no reason to believe that there are any conflicts between Fresno and other
class members. Fresno's large financial stake, status as an institutional investor, and past
experience serving as Lead Plaintiff, moreover, all weigh in favor of a finding that it "has a
sufficient interest in the outcome of the case to ensure vigorous advocacy." Foley, 272 F.R.D. at
131. In light of the foregoing, the Court finds that Fresno has made a sufficient preliminary
showing of adequacy and is therefore presumed to be the most adequate plaintiff under the
PSLRA.
D. Rebuttal Evidence
No member of the purported plaintiff class has alleged or proved that Fresno "will not
fairly and adequately protect the interests of the class," or "is subject to unique defenses that
render such plaintiff incapable of representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).
Accordingly, the presumption that Fresno is the most adequate plaintiff is not rebutted.

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E. Selection of Lead Counsel
The PSLRA provides that, subject to the approval of the Court, "[t]he most adequate
plaintiff shall. .. select and retain counsel to represent the class." 15 U.S.C. § 78u-4(a)(3)(B)(v).
In this case, Fresno, the most adequate plaintiff, has selected Bernstein Litowitz as lead counsel.
Fresno B1'. at 8. Fresno has additionally submitted documentation demonstrating that Bernstein
Litowitz is an experienced securities class action law firm, well qualified to act as lead counsel in
this case. See Silk Decl., Ex. G. Accordingly, the Court approves of Fresno's selection of
Bernstein Litowitz as lead counsel.

III. CONCLUSION
For the foregoing reasons, the motions to consolidate and Fresno's motion for
appointment as lead plaintiff and approval of its selection of lead counsel are granted, and Faig's
motion for appointment as lead plaintiff and approval of his selection of lead counsel is denied.
Pursuant to Federal Rule of Civil Procedure 42(a), any pending, subsequently filed,
removed, or transferred actions that are related to the claims asserted in the captioned actions are
consolidated for all purposes. The consolidated action shall be captioned "In re BioScrip, Inc.

Securities Litigation," and the file shall be maintained under Master File No. 13-cv-06922.
This resolves Docket Numbers 6, 8, and 11.
SO ORDERED.

~,2013

Dated: December
New York, New York

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