Atkinson v. Forcefield Energy Inc. et al

Filing 37

MEMORANDUM AND ORDER. Beverly Brewer is appointed as lead plaintiff and the Rosen Law Firm, P.A., is appointed as interim counsel in the above-captioned cases, which are consolidated as In re ForceField Energy Inc. Securities Litigation, No. 15 Civ. 3020 (NRB). Brewer shall file a complaint reflecting her appointment within 30 days, and shall promptly inform the Judicial Panel on Multidistrict Litigation of this Memorandum and Order. The service of Brewers complaint and the filing of subsequent pleadings shall then proceed according to the Federal Rules of Civil Procedure, the Local Rules of this Court, and our Individual Practices. The Clerk of Court is directed to close all open motions in the above-captioned cases and to terminate all pl aintiffs and movants other than Beverly Brewer. IT IS SO ORDERED. Terminating (18) Motion to Appoint Counsel; terminating (18) Motion to Consolidate Cases; terminating (3) Motion to Consolidate Cases; terminating (3) Motion to Appoint; terminating (3) Motion to Appoint Counsel; terminating (6) Motion to Appoint Counsel; terminating (6) Motion to Appoint; terminating (6) Motion to Consolidate Cases; terminating (8) Motion to Consolidate Cases; terminating (8) Motion to Appoint; terminating (8) Motion to Approve; terminating (12) Motion to Appoint; terminating (15) Motion to Consolidate Cases; terminating (15) Motion to Appoint; terminating (15) Motion to Appoint Counsel; terminating (18) Motion to Appoint in case 1:15-cv-03020-NRB; terminating (4) Motion to Consolidate Cases; terminating (4) Motion to Appoint; terminating (4) Motion to Appoint Counsel in case 1:15-cv-03141-NRB; terminating (5) Motion to Consolidate Cases; terminating (5) Motion to Appoint; terminating (5) Motion to Appoint Counsel in case 1:15-cv-03279-NRB. (Signed by Judge Naomi Reice Buchwald on 7/22/2015) Filed In Associated Cases: 1:15-cv-03020-NRB, 1:15-cv-03141-NRB, 1:15-cv-03279-NRB (rjm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------X
IN RE:
FORCEFIELD ENERGY INC. SECURITIES
LITIGATION.
-----------------------------------------LORI ATKINSON,

MEMORANDUM AND ORDER

15 Civ. 3020 (NRB)
Plaintiff,
- against FORCEFIELD ENERGY INC., DAVID NATAN, JASON
WILLIAMS, RICHARD ST-JULIEN, THE DREAMTEAM
GROUP, and MISSION INVESTOR RELATIONS d/b/a
MISSIONIR,
Defendants.
-----------------------------------------HANNAH MILLER,
15 Civ. 3141 (NRB)
Plaintiff,
- against FORCEFIELD ENERGY INC., DAVID NATAN, JASON
WILLIAMS, RICHARD ST-JULIEN, THE DREAMTEAM
GROUP, and MISSION INVESTOR RELATIONS d/b/a
MISSIONIR,
Defendants.
-----------------------------------------DEAN ROSALES and NIRAV SHAH,
15 Civ. 3279 (NRB)
Plaintiffs,
- against FORCEFIELD ENERGY INC., DAVID NATAN, JASON
WILLIAMS, RICHARD ST-JULIEN,
Defendants.
--------------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

I. BACKGROUND
Defendant
itself

out

ForceField

as

a

Energy

designer,

Inc.

(“ForceField”)

distributor,

and

holds

licensor

of

alternative energy products, such as LED lights, chemicals used
in the production of photovoltaic cells, and “heat recovery”
devices

that

convert

heat

into

electrical

energy.1

On

the

morning of April 15, 2015, an article on the website Seeking
Alpha

reported

that

ForceField

had

engaged

penny-stock

promoters to inflate its stock price, that ForceField was short
on cash, and that some of ForceField’s managers had previously
engaged in fraud and money laundering.
FBI

arrested

ForceField’s

executive

Soon thereafter, the
chairman,

Richard

St.

Julien, for securities fraud while St. Julien was attempting to
board a plane to Costa Rica.2

On May 4, the SEC halted trading

in ForceField’s stock, see Order, ForceField Energy Inc., File
No. 500-1 (S.E.C. May 4, 2015).
Within days of the Seeking Alpha article, plaintiffs filed
the

three

three

above-captioned

ForceField

class

executives,

and

1

actions,
two

suing

stock

ForceField,

promoters

for

Except where noted, the facts in this paragraph are derived from the filed
complaints. We provide these facts for context only, and make no findings
as to whether these allegations are true.
2 St. Julien remains under arrest but has not been indicted.
See Order to
Continue, United States v. St. Julien, 1:15-mj-00356-MDG (E.D.N.Y. July 20,
2015), ECF No. 15.

2

securities fraud pursuant to the Securities Exchange Act.3

In

compliance with procedures set forth in the Private Securities
Litigation Reform Act,4 plaintiff Lori Atkinson published an
“early notice” on April 17 to advise the public of her class
action and to set a deadline for class members to move for
appointment as lead plaintiff.
Six class members or groups of class members filed timely
motions for appointment.5

Three dropped their bids,6 leaving

Beverly Brewer, Bengt Ling, and the self-styled “Lovell Group”
in competition.
plaintiff,
counsel

each

as

Besides appointment of the movant as lead
motion

lead

seeks

counsel

appointment

for

the

of

putative

consolidation of the three pending class actions.
remaining

movants

filed

timely

the

oppositions

to

movant’s

class

and

Each of the
each

other’s

motions, and timely replies in support of their own.7

3

Securities Exchange Act of 1934, §§ 10(b), 20(a), 15 U.S.C. §§ 78j(b),
78t(a) (2012); SEC Rule 10b-5, 17 C.F.R. § 240.10b-5 (2014).
4 Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. § 78u4(3)(A).
5 See Mot. to Consolidate Cases (“Haws Mot.”), ECF No. 3; Mot. to Appoint
Counsel The Rosen Law Firm (“Brewer Mot.”), ECF No. 6; Mot. to Consolidate
Cases (“Sinclair Mot.”), ECF No. 8; Mot. to Appoint Lovell Grp. (“Lovell
Mot.”), ECF No. 12; Mot. to Consolidate Cases (“Ling Mot.”), ECF No. 15;
Mot. to Appoint Renata White & Robert Whiting (“White Mot.”), ECF No. 18
(collectively, the “Lead Plaintiff Motions”); see also Mem. of Law in Supp.
of Beverly Brewer (“Brewer Mem.”), ECF No. 7; Mem. of Law in Supp. of the
Lovell Grp.’s Mot. (“Lovell Mem.”), ECF No. 13; Mem. of Law in Supp. of
Bengt Ling’s Mot. (“Ling Mem.”), ECF No. 16.
6 See Notice of Withdrawal of Mot., June 26, 2015, ECF No. 23 (withdrawing
Sinclair Mot.); Notice of Withdrawal of Mot., ECF No. 25 (withdrawing Haws
Mot.); Notice of Non-Opp., ECF No. 26 (withdrawing White Mot.).
7 See Opp. of Beverly Brewer to Competing Lead Pl. Mots. (“Brewer Opp.”), ECF
No. 24; Mem. of Law in Further Supp. of the Lovell Grp.’s Mot. (“Lovell
Opp.”), ECF No. 27; Mem. of Law in Further Supp. of Bengt Ling’s Mot. (“Ling

3

For the reasons set forth below, we appoint Beverly Brewer
as lead plaintiff, approve her selection of interim counsel
under Rule 23(g)(3),8 and consolidate the three class actions.
II. DISCUSSION
A. Consolidation
As the related securities class actions contain the same
factual and legal issues, we consolidate them under Rule 42(a)
of

the

Federal

Rules

of

Civil

Procedure.

See

Atwood

v.

Intercept Pharm., Inc., 299 F.R.D. 414, 415 (S.D.N.Y. 2014).
All relevant filings and submissions shall be maintained as one
file as case number 15 Civ. 3020 (NRB) with the caption In re
ForceField Energy Inc. Securities Litigation.
B. Appointment of Lead Plaintiff
1. The PSLRA
The PSLRA governs the appointment of a lead plaintiff in
“each

private

action

arising

under

the

[Securities

Exchange

Act] that is brought as a plaintiff class action pursuant to
the

Federal

Rules

of

Civil

Procedure.”

4(a)(1).

In

a

class

action

Exchange

Act,

a

court

must

arising

“appoint

15

under
as

lead

U.S.C.
the

§ 78u-

Securities

plaintiff

the

Opp.”), ECF No. 28; Reply Mem. of Law in Further Supp. of Bengt Ling’s Mot.
(“Ling Reply”), ECF No. 32; Reply Mem. of Law in Further Supp. of the Lovell
Grp.’s Mot. (“Lovell Reply”), ECF No. 33; Reply of Beverly Brewer in Further
Supp. of Lead Pl. Mot. (“Brewer Reply”), ECF No. 35.
8 To the extent that Brewer requests final appointment of class counsel, her
motion is denied without prejudice.
We will appoint class counsel at the
certification stage.

4

member . . . of the purported plaintiff class that the court
determines to be the most capable of adequately representing
the interests of class members,” known as the “most adequate
plaintiff.”
lead

15 U.S.C. § 78u-4(a)(3)(B)(i).

plaintiff,

we

are

to

presume

that

In selecting a

the

“most

adequate

plaintiff” is the person or group of persons who:
(aa) has either filed the complaint or made
motion in response to a notice . . .;

a

(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.
§ 78u-4(a)(3)(B)(iii)(I).
The

PSLRA

is

not

explicit

as

to

how

a

court

should

determine which plaintiff has the “largest financial interest”
in the relief sought by the class.

Courts in this Circuit have

considered (1) the total or gross number of shares purchased
during the class period; (2) the number of shares purchased
during the class period, net of sales during the class period;
(3) the net funds expended during the class period; and (4) the
approximate losses suffered.
Corp.

Retiree

F.R.D.

395,

Med.

404

Benefits

(S.D.N.Y.

See, e.g., Pirelli Armstrong Tire
Trust
2004)

v.

LaBranche

(relying

on

&

Lax

Co.,
v.

229

First

Merchants Acceptance Corp., No. 97 C 2715, 1997 WL 461036, at
*5, 1997 U.S. Dist. LEXIS 11866, at *17 (Aug. 11, 1997)).

5

We,

as other courts, shall place the greatest emphasis on the last
of

the

four

factors——the

approximate

loss

suffered

by

the

movant——which corresponds most directly to the “relief sought
by the class.”

See Teran v. Subaye, Inc., Nos. 11-cv-2614

(NRB), -3886, 2011 WL 4357362, at *2, 2011 U.S. Dist. LEXIS
105774, at *6 (S.D.N.Y. Sept. 16, 2011) (citing cases).

In

assessing the potential lead plaintiffs’ financial interests,
we may consider the financial interest of a group of plaintiffs
in

the

aggregate

if

the

group

“will

be

able

to

function

cohesively and to effectively manage the litigation apart from
their lawyers.”

Varghese v. China Shenghuo Pharm. Holdings,

Inc., 589 F. Supp. 2d 388, 392 (S.D.N.Y. 2008).
The

presumption

that

the

plaintiff

with

the

largest

financial interest is the “most adequate” may be rebutted only
upon

“proof

plaintiff——

. . .

that

(aa) will

not

the
fairly

presumptively
and

most

adequately

adequate

protect

the

interests of the class; or (bb) is subject to unique defenses
that

render

class.”

[him]

incapable

of

adequately

§ 78u-4(a)(3)(B)(iii)(II).

representing

the

Rule 23 requires that a

lead plaintiff “fairly and adequately protect the interests of
the class” and that the lead plaintiff’s claims be “typical” of
class members’ claims.

Fed. R. Civ. P. 23(a)(3)–(4).

At this

stage, only a “preliminary showing” of typicality and adequacy

6

is required, In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95, 102
(S.D.N.Y. 2005).
2. The Proposed Lead Plaintiffs
a. Brewer
Beverly Brewer retains 639,062.50 valueless9 shares, which
she purchased at a cost of $4 per share between December 15,
2013, and December 24, 2014.

See Brewer Mem., Ex. 3.

These

shares were not purchased on the open market, but were obtained
at a fixed price in exchange for bond warrants or in lieu of
interest payments.
references

to

See id. Ex. 2 (listing transactions with

interest

payment

conversions

and

warrants);

Notice, June 23, 2015, ECF No. 21-1 (legible version of the
same).

Accordingly,

Brewer’s

losses

on

her

shares

of

ForceField equity are $2,556,250.
Additionally,

Brewer

value of $1.25 million.
4.

holds

a

ForceField

note

with

face

See Brewer Mem., Ex. 2; Brewer Reply

The note’s current value is unclear, and Brewer’s motion

does not rely on any losses related to this note.

9

We assume for purposes of this decision that any unsold ForceField shares
have zero value.
This is a reasonable assumption at this stage because
ForceField stock is no longer traded on a public exchange, ForceField stock
is quoted (if at all) at a nugatory price, and ForceField has defaulted on
five convertible notes. See Form 10-Q at F-14, F-19, 13, ForceField Energy
Inc., Comm’n File No. 001-36133 (S.E.C. filed June 18, 2015); FNRG Price
Quote, Wall St. J. (online ed.), http://quotes.wsj.com/FNRG (quoting closing
price of $0.02 on July 15, 2015).

7

b. The Lovell Group
The “Lovell Group” consists of Dionisio Flores, Eduardo
David, and the T. Lovell Alpha Limited Partnership (“T. Lovell
Alpha”).

Flores and David are brothers-in-law who have no

connection to T. Lovell Alpha except that they share the same
counsel in this case.10
David bought his 1,500 shares on April 17, 2015, two days
after the critical Seeking Alpha article appeared.

This timing

places David outside the putative class as all three complaints
defined it, and makes David’s claim susceptible to a defense
that

his

reliance

unjustified.

on

defendants’

false

statements

was

Accordingly, David cannot adequately represent

the interests of the class, and we consider only Flores and
T. Lovell Alpha as viable lead plaintiffs.
We need not perform a detailed calculation of T. Lovell
Alpha’s and Flores’s losses.
losses
accurate

are

less

their

than

They concede that their total

Brewer’s,

calculation

that

10

and
they

we

accept

suffered

as

roughly

approximately

Despite the filing of sworn declarations that T. Lovell Alpha and the
brothers-in-law plan to coordinate their oversight of counsel, see ECF Nos.
34, 36, it is doubtful that T. Lovell Alpha’s losses should be aggregated
with those of the brothers-in-law for purposes of deciding these motions.
However, we need not resolve these doubts in light of our determination to
appoint Brewer.

8

$234,000 in losses from the open market transactions.11

See

Lovell Reply 5.
c. Ling
Bengt Ling holds 45,000 valueless shares, which he bought
between September 30, 2013, and September 9, 2014.

The Lovell

Group states, and Ling does not deny, that Ling bought these
shares at a fixed price of $4 per share in connection with an
off-market note exchange, and Ling has not denied this.
Lovell

Opp.

3;

Ling

Reply.

We

calculate

that

Ling

See
lost

$180,000 on his stock purchases.
d. Other Potential Plaintiffs
Movants
oppose

the

Haws,
other

Sinclair,
movants’

and

Lead

White

and

Plaintiff

Whiting

Motions,

do

but

not
each

offer to be appointed as lead plaintiff if the other movants
are inadequate.

In light of our preliminary determination that

Brewer is an adequate lead plaintiff, we do not examine their
motions further except to note that their losses were far less
than Brewer’s.
The named plaintiffs in the three class actions are each
eligible for appointment without filing a motion, see 15 U.S.C.
§ 78u-4(a)(3)(B)(iii)(I)(aa), but may not be considered in this

11

T. Lovell Alpha suffered approximately $1 million in losses resulting from
off-market purchases of ForceField equity. In light of the Lovell Group’s
argument that we should not consider Brewer’s off-market transactions, the
Lovell Group does not ask us to consider T. Lovell Alpha’s off-market
losses.

9

instance

because

their

complaints

fail

to

indicate

the

magnitude of their losses.
3. Arguments in Opposition to Brewer
There is no dispute that Brewer lost the greatest amount
of any movant and is therefore the presumptively most adequate
plaintiff.

The Lovell Group and Ling argue that Brewer is

inadequate for two reasons.
Brewer,

unlike

statements

by

most

class

ForceField

The Lovell Group asserts that
members,

management,

relied
and

is

on

non-public

therefore

ill-

suited to litigate a fraud-on-the-market theory of reliance.
Ling asks us to recognize distinct equity and debt subclasses,
and argues that Brewer, who holds both equity and debt, would
be unable to fairly lead the equity subclass.
a. Reliance
In order to prove a claim of securities fraud, a plaintiff
must

prove

that

he

relied

on

the

defendant’s

fraudulent

misrepresentation, and may do so in at least two ways.

Either

the plaintiff may prove reliance directly, by proving that he
heard and acted upon defendant’s false statement, or he may
prove

a

fraud-on-the-market

theory

that

he

relied

on

the

integrity of a price that, through efficient market forces,
incorporated defendant’s false statement.

See Basic Inc. v.

Levinson, 485 U.S. 224, 246–47 (1988); Salvani v. ADVFN PLC, 50
F. Supp. 3d 459, 471–72 (S.D.N.Y. 2014).

10

Plaintiffs in class

actions typically must plead and prove the fraud-on-the-market
theory

because

inquiry

into

proof

each

of

class

direct

reliance

member’s

would

investment

require

analysis.

an
See

Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. ___,
___,

133

S. Ct.

inappropriate

to

1184,

1193

appoint

a

(2013).

lead

Therefore,

plaintiff

whose

it

is

investment

choices resulted from substantially different information than
was available to the general public.
Energy

Holdings

(S.D.N.Y.

PLC

2002)

Sec.

Litig.,

(rejecting

as

See, e.g., In re Indep.
210

F.R.D.

atypical

a

476,

482–83

proposed

lead

plaintiff who had bought shares in reliance on his personal
relationship with a defendant).
The Lovell Group contends that Brewer purchased her “note
and

warrants”

in

reliance

on

“confidential

and/or

selected

information provided to movant Brewer by Defendants,” Lovell
Opp. 2–3, so that Brewer will be subject to an argument that
her claims are atypical.

This argument fails for two reasons.

First, the Lovell Group’s statement that Brewer received
private

information

is

speculative.

Brewer’s

reply

brief

flatly denies that she received any non-public information, see
Brewer Reply 2, and the Lovell Group presents no evidence to
the contrary.

The PSLRA requires the Lovell Group to offer

“proof,” not speculation, that Brewer is atypical of the class.
See Foley v. Transocean Ltd., 272 F.R.D. 126, 133 (S.D.N.Y.

11

2011); Armour v. Network Assocs., Inc., 171 F. Supp. 2d 1044,
1054 (N.D. Cal. 2001).

The lack of evidence is especially

telling given that T. Lovell Alpha also held ForceField notes
at one time, and therefore would be in a position to know the
kind

of

information

that

ForceField

provided

to

note

purchasers.
Second,

the

fact

that

Brewer

bought

her

equity

shares

through off-market transactions is irrelevant to her fraud-onthe-market theory of reliance.

The fraud-on-the-market theory

depends on the existence of an efficient market whose price
signals may be relied upon to inform an investor’s choices.
Even though Brewer bought equity shares outside the open market
through a note exchange program, she plausibly relied on the
market’s efficient valuation of ForceField equity to determine
whether to participate in the note exchange.
Third, the Lovell Group specifically argues that private
information contributed to Brewer’s “acquisition of the note
and

warrants,”

Lovell

Opp.

2

(emphasis

added),

which

is

distinct from Brewer’s subsequent conversion of those notes and
warrants
solely

into

upon

equity.

losses

ForceField equity.
unique

reliance

purchase

of

But

that

seeks

sustained

by

appointment
virtue

of

based
buying

Thus, even if defendants could raise a

defense

notes

she

Brewer

and

against

Brewer

warrants,

12

with

respect

defendants

to

could

her
not

necessarily raise such a defense with respect to her later
accessions to equity.
We

overrule

the

Lovell

Group’s

opposition

to

Brewer’s

motion because we have no basis at this time to find that
Brewer

will

be

subject

to

a

unique

reliance

defense.

Of

course, it is possible that we will be required to repeat the
present exercise if Brewer is ultimately subject to a colorable
defense that renders certification inappropriate.

Congress,

however, accepted this risk.

By directing district courts to

choose

the

lead

plaintiffs

at

earliest

stage

of

class

litigation, Congress expressed a judgment that the benefits of
appointing

a

high-loss

plaintiff

early

in

litigation

would

outweigh the costs of occasionally having to replace the lead
plaintiff later on.
selecting

a

We will not subvert Congress’ policy by

different

plaintiff

than

the

presumptively

most

adequate one on the basis of speculation.
b. Subclassing
Ling’s argument proceeds in two steps.

First, Ling argues

that the interests of equity-holders and note-holders are so
divided

that

it

will

be

necessary

investors into separate subclasses.

13

to

divide

ForceField

Second, Ling argues that

Brewer,

who

holds

both

equity

and

notes,

cannot

fairly

represent the equity subclass, which Ling wishes to represent.12
Ling relies heavily on In re Literary Works in Electronic
Databases Copyright Litigation, 654 F.3d 242 (2d Cir. 2011), in
which

the

Circuit

vacated

the

district

certification and remanded for subclassing.
case

comprised

authors

whose

class

The class in that

copyrighted

published in electronic databases.

court’s

works

had

been

Some authors (“Category A”)

had particularly valuable claims because they had registered
their

works

in

time

to

qualify

for

statutory

attorney’s fees under the Copyright Act.

damages

and

Others (“Category B”)

had somewhat less valuable claims because they had registered
their

works

disgorgement,
fees.

in

time

but

not

to

qualify

for

for

statutory

actual

damages

damages

and

and

attorney’s

The vast majority of the class members (“Category C”)

held claims for infringement of unregistered works, and thus
were not entitled to any sort of damages.
declined

to

subclass

the

authors

involving all three categories.

and

The district court

approved

a

settlement

The Circuit held that the

three categories were “fundamentally” in conflict as to the
distribution

of

a

settlement

because

12

their

claims

commanded

Ling presents the same argument in opposition to the appointment of T.
Lovell Alpha. T. Lovell Alpha denies that it currently holds any ForceField
debt and denies that it suffered any compensable losses from holding such
debt. In light of our decision to appoint Brewer, we need not resolve this
factual dispute or any other dispute regarding the adequacy of the Lovell
Group.

14

different

settlement

values.

As

the

court

pointed

out,

“[n]amed plaintiffs who hold [claims outside Category C] had no
incentive

to

plaintiffs.”

maximize

the

recovery

for

Category

C-only

654 F.3d at 254.

Here, Ling argues that the equity and bond claims differ
because

stock

market news.

and

bond

prices

are

affected

differently

by

Furthermore, according to Ling, the equity claims

are far more valuable that the bond claims because only equityholders, whose securities were publicly traded, may rely on the
fraud-on-the-market theory of reliance.
It is true in the abstract that stock and bond prices can
be affected in different ways by market news.

For example,

sudden news of increased economic growth will tend to raise
stock prices due to the expectation of greater profits, but
will

tend

to

cut

bond

prices

due

to

the

expectation

that

households and businesses will be more willing to take loans at
higher yields.

Cf. In re Countrywide Fin. Corp. Sec. Litig.,

273 F.R.D. 586, 615 (C.D. Cal. 2009) (“[G]enerally increasing
interest rates will increase bond yields.”).

Bad news about a

specific business may affect equity prices drastically and bond
prices minimally if, even after accounting for the bad news,
the company remains far from insolvency.
the concept of an “‘cushion’ for bad news”).

15

See id. (discussing

However, a single company’s stock price and bond price are
not completely independent.

When, as plaintiffs allege here,

the truth about a company is so devastating that the company’s
stock price falls close to zero, it is reasonable to expect
that the same information will cause a significant decrease in
the value of the company’s corporate bonds.
then,

that

the

equity-holders

and

It is likely,

note-holders

will

share

exactly the same objectives: proof that defendants lied, proof
that

defendants’

misrepresentations

artificially

propped

up

ForceField’s stock and bond prices, and recovery (with pro rata
distribution) of their investment losses.
Ling also argues that the note-holders have legally weak
claims

because,

in

the

absence

of

a

developed

market

for

ForceField bonds, the note-holders cannot utilize the fraud-onthe-market theory of reliance.
factually

correct

inefficient.

that

the

We do not know whether Ling is

market

for

ForceField

bonds

was

But even if this were so, then the proper remedy

would be to deny the note-holders class certification and allow
the

largest

plaintiff

equity-holder

for

the

(i.e.,

equity-holders.

Brewer)
The

to

act

as

difficulties

lead
of

subclassing come into play only when, as in Literary Works,
both categories of class members remain in the case.
Finally, the present situation is easily distinguishable
from Literary Works.

In Literary Works, the Circuit’s concern

16

was that a lead plaintiff with two types of claim would focus
his energies on maximizing the returns for the more valuable
type of claim, to the detriment of class members who held the
less

valuable

inadequately

type.
advance

Here,
the

Ling

argues

equity

claims.

that

Brewer

This

might

concern

is

misplaced because Brewer’s equity-based claims are monetarily
larger and legally stronger than her debt-based claims.13
4. Conclusion
Movant Brewer suffered the greatest loss of any movant,
and is presumptively the most adequate plaintiff.

Her claims

are typical of the class’s, she appears adequate to represent
the entire class, and there is no evidence at this stage that
she

will

be

subject

to

special

defenses.

Accordingly,

we

appoint Brewer to be lead plaintiff.
C.

Class Counsel
The

PSLRA

“evidences

a

strong

presumption

in

favor

of

approving a properly-selected lead plaintiff’s decisions as to
counsel
Commc’ns

selection
Corp.

and

Sec.

&

counsel
Deriv.

retention.”
Liab.

Litig.,

In re
No.

Adelphia
03-md-1529

(LMM), 2008 WL 4128702, at *2, 2008 U.S. Dist. LEXIS 67220, at
*14

(S.D.N.Y.

Sept.

3,

2008)

(quoting

In re

Cendant

Corp.

Litig., 264 F.3d 201, 276 (3d Cir. 2001)).
13

If anything, Brewer might be expected to advance her equity claims at the
expense of debtholders. It would be premature to address this concern now,
before any debt-only class member has sought subclassing and before final
certification.

17

In this litigation, the Rosen Law Firm, P.A. (“Rosen”),
filed the first class complaint just two days after the Seeking
Alpha article and now represents the lead plaintiff.

Rosen’s

résumé (Brewer Mem., Ex. 4, ECF No. 7) demonstrates that Rosen
has

sufficient

plaintiffs
Rosen

to

shall

experience
represent

therefore

on

the

be

behalf

putative

designated

of

securities

class
as

at

interim

this

fraud
stage.

counsel

for

Brewer’s putative class.
CONCLUSION
Beverly

Brewer

is

appointed

as

lead

plaintiff

and

the

Rosen Law Firm, P.A., is appointed as interim counsel in the
above-captioned

cases,

which

are

consolidated

as

In re

ForceField Energy Inc. Securities Litigation, No. 15 Civ. 3020
(NRB).

Brewer

appointment

within

shall
30

file
days,

a
and

complaint
shall

reflecting

promptly

inform

her
the

Judicial Panel on Multidistrict Litigation of this Memorandum
and Order.

The service of Brewer’s complaint and the filing of

subsequent

pleadings

Federal

Rules

of

shall

Civil

then

Procedure,

proceed
the

according

Local

Rules

to
of

the
this

Court, and our Individual Practices.
The Clerk of Court is directed to close all open motions
in the above-captioned cases and to terminate all plaintiffs
and movants other than Beverly Brewer.
IT IS SO ORDERED.

18

Dated:

New York, New York
July ~,

2015

L(~
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

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