Kux-Kardos v. Vimpelcom, Ltd. et al

Filing 170

OPINION AND ORDER re: 161 MOTION to Dismiss . filed by Veon LTD. For the aforementioned reasons, the Court grants VEON's motion to dismiss and dismisses Lead Plaintiff Westway from this action. This resolves ECF No. 161. The Court reopens the Lead Plaintiff selection process consistent with this opinion. Any motions for appointment as Lead Plaintiff shall be filed by April 8, 2021; VEON shall oppose the motions by May 6, 2021; and any replies shall be filed by May 12, 2021. SO ORDERED., Motions due by 4/8/2021., Responses due by 5/6/2021, Replies due by 5/12/2021. (Signed by Judge Andrew L. Carter, Jr on 3/11/2021) (rj)

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 1 of 15

March 11, 2021

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

15-cv-08672 (ALC)
In re Veon Ltd. Securities Litigation

Opinion and Order

ANDREW L. CARTER, JR., United States District Judge:
Lead Plaintiff Westway Alliance Corp (“Westway” or “Plaintiff”) brings this putative class
action on behalf of all those who purchased the securities of Defendant VEON Ltd. (“VEON” or
“the Company”) between December 2, 2010 and November 3, 2015, against VEON. VEON moves
to dismiss the Second Amended Complaint. For the reasons that follow, VEON’s motion to
dismiss is GRANTED.
BACKGROUND
The following facts are taken from the allegations contained in the Second Amended
Complaint, which are presumed to be true for purposes of this motion to dismiss. (ECF No. 156)
(Second Amended Complaint (“Second Am. Compl.”)). The Court also takes judicial notice of
VEON’s public filings, which Plaintiffs quote from at length in the Second Amended Complaint.
ATSI Comm’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007).
Defendant VEON is a “multinational telecommunications company headquartered in the
Netherlands and incorporated in Bermuda.” Second Am. Compl. at ¶ 11. Its securities are publicly
traded in the United States on the NASDAQ. Id. at ¶ 182. Plaintiffs also named as Defendants
certain of VEON’s current and former executives. Id. at ¶¶ 12-16.
On February 10, 2016, VEON entered into a deferred prosecution agreement (“DPA”) with
the United States Department of Justice, pursuant to which VEON pleaded guilty to a two-count
criminal information charging the company with conspiracy to violate the anti-bribery and books

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 2 of 15

and records provisions of the Foreign Corrupt Practices Act of 1977 (“FCPA”) and a violation of
the internal controls provision of the FCPA. Id. at ¶¶ 2-3; see also Second Am. Compl., Ex. A
(DPA). Pursuant to the DPA, VEON also agreed to pay more than $460 million in penalties and
subject itself to outside compliance monitoring. Second Am. Compl. ¶ 5; DPA ¶¶ 7, 13-15.
In the Second Amended Complaint, Plaintiffs describe in detail the facts alleged in the
criminal information against VEON and admitted by VEON in the DPA’s Statement of Facts. See
Second Am. Compl. ¶¶ 31-90. For present purposes, it suffices to say that, beginning in 2005, as
VEON first looked to enter the Uzbek telecommunications market, through 2012, VEON made,
or attempted to make, millions of dollars in improper payments to Gulnara Karimova, the eldest
daughter of Uzbekistan’s President, in an effort to achieve favorable treatment in Uzbekistan.
Executives disguised these payments in VEON’s books and records as legitimate transactions. Id.
at ¶¶ 25, 31, 88-90. One of the ways in which these payments were made was through a partnership
between VEON and Takilant Limited, a company owned by Karimova. Id. at ¶¶ 25, 39-41. This
included a $25 million bribe paid in 2007 to secure certain 3G frequencies for VEON’s whollyowned subsidiary in Uzbekistan. Id. at ¶¶ 45-48. VEON also entered into sham consulting
agreements with Takilant in 2008 and 2011, through which it funneled $32 million to Karimova
in exchange for certain telecommunications assets and continued access to the Uzbek market. Id.
at ¶¶ 49-65. VEON made an additional $10 million in payments to Karimova in 2011 and 2012,
using a variety of sham transactions. Id. at ¶¶ 66-74. Plaintiffs also describe contemplated bribes
in 2012 and 2013 that apparently were not completed. Id. at ¶¶ 75-77.
In addition to admitting much of the underlying conduct just described, in the DPA, VEON
admitted that the company “failed to implement adequate internal accounting controls and failed
to enforce the internal accounting controls it did have in place,” thereby allowing the bribes to

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 3 of 15

Karimova. Second Am. Compl. ¶ 78. VEON also identified problems with its internal audit
function, including a failure to have adequate processes for reviewing contracts and conflicts of
interest. Id. at ¶¶ 79-84. The company did not have a designated full-time compliance function
until 2013, and compliance was treated as a mere formality prior to that time. Id. at ¶ 86.
Accordingly, VEON admitted that it had “little to no anticorruption compliance program.” Id. at ¶
87. Consistent with these admissions, at VEON’s plea proceeding, a Government attorney asserted
that there was “high-level knowledge of the bribery” at VEON. Id. at ¶ 91.
Plaintiffs allege that VEON admits numerous allegations in their answer to the Amended
Complaint, including that VEON knowingly entered into contracts for fake consulting services
with Takilant; executives conspired to take advantage of a resell process to conceal a $10 million
bribe to Foreign Official via Takilant; VEON failed to implement adequate internal accounting
controls and failed to enforce the accounting controls they had in place; VEON failed to implement
a system for conducting, recording, and verifying due diligence on third parties; VEON failed to
require that all consulting agreement be for bona fide services and that the services paid for were
actually performed; VEON had little to no anticorruption compliance program; and that VEON
disguised on its books and records over $114 million in bribe payments made to Foreign Official
in exchange for the ability to do business in the Uzbek telecommunications market. Second Am.
Compl. ¶ 95(a).
Plaintiffs also allege that VEON’s omissions included that it disguised on its books and
records over $114 million in bribe payments made to Karimova in exchange for the ability to do
business in the Uzbek telecommunications market. Plaintiffs state that paragraphs 62-66 of the
deferred prosecution agreement are material omissions that VEON had a duty close. Second Am.
Compl. at ¶¶ 95(d)-95(e). Plaintiffs further assert that these material facts should have been

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 4 of 15

disclosed pursuant to 17 C.F. R. 240.13a-15(f)(1)-3. Id. at ¶ 95(c)-(e). Accordingly, Plaintiffs state
that Westway purchased 30,000 VEON ADRS on December 10, 2010, two days after the start of
the Class Period, and 50,0000 VEON ADRs on January 19, 2011. Id. at ¶ 95(f). Therefore,
Plaintiffs assert that due to VEON’s admission that the Company lacked effective internal
accounting controls and made false entries in its books, VEON had a duty to disclose these material
facts to Westway before the start of the Class Period. Id. at ¶ 95(f).
Additionally, Plaintiffs allege that VEON’s conduct that formed the basis of its FCPA
violations led to material misstatements and omissions in its SEC filings during the relevant time
period. In particular, Plaintiffs allege that when VEON referred to a 17.8 increase in its broadband
subscriptions, including in Uzbekistan, and revenue in general, it “put the topic of the cause of its
financial success at issue,” thereby obligating the company to report that the increase in
subscriptions in Uzbekistan was due, at least in part, to the bribes paid to Karimova. Second Am.
Compl. ¶ 97; accord id. ¶ 98-103, 109-17, 123-33, 139-46, 156-59, 161-62, 167-70. Plaintiffs do
not allege that the actual numbers reported were inaccurate.
Plaintiffs also allege that VEON misrepresented that “[t]he government authorities
responsible for supervising the telecommunications industry in the Republic of Uzbekistan are the
Republic of Uzbekistan Cabinet and a specially authorized telecommunications agency.” Second
Am. Compl. ¶ 104. Plaintiffs contend that this was a misrepresentation because it failed to disclose
the role that Karimova played. Id. at ¶ 105; accord id. ¶¶ 118-19, 134-35.
Finally, Plaintiffs identify a number of VEON’s disclosures in its annual reports regarding
the company’s internal controls. In its annual reports for the calendar years 2010 and 2012, VEON
stated that, “[b]ased on the assessment” of its “internal control over financial reporting,” its
management “believes our company maintained effective internal control over financial reporting”

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 5 of 15

during the relevant calendar year. Second Am. Compl. ¶¶ 106, 136. Stated somewhat differently
in its 2014 Form 20-F, the company disclosed that, “as a result of management’s assessment of
our internal control over financial reporting as of December 31, 2014, management concluded,
that that our internal control over financial reporting was effective.” Id. at ¶ 164. That year, VEON
also assured the market that its “internal control system was designed to provide reasonable
assurance regarding the reliability of financial reporting.” Id.; accord id. ¶ 120 (2011 Form 20-F).
Plaintiffs also quote from VEON’s website regarding the company's compliance program. Id. at ¶
147.
In a similar vein, between 2010 and 2014, VEON executives signed certifications pursuant
to the Sarbanes Oxley Act of 2002 that the information in the company’s Forms 20-F was accurate.
Id. at ¶¶ 108, 122, 138, 155, 165.
VEON later admitted in connection with its DPA that it:

(a) failed to implement adequate internal accounting controls; (b) failed to enforce
the internal accounting controls it did have in place, which permitted the abovereferenced bribe payments to occur without detection or remediation; (c) failed
to implement a system for conducting, recording, and verifying due diligence
on third parties, including joint venture partners, consultants, reseller
companies, and suppliers to uncover their true nature, beneficial ownership, and
possible corruption risks; and (d) failed to require that all consulting agreements
be for bona fide services, that agreed-upon payments were commensurate with
the services to be performed, and that services paid for were, in fact, performed.

Id. at ¶¶ 107, 121, 137, 148.
Plaintiffs allege that, beginning with a Form 6-K disclosure on March 12, 2014, the truth
began to emerge. Second Am. Compl. ¶ 149. VEON disclosed that it had been informed that the
Securities Exchange Commission (“SEC”) was conducting an investigation into the company and
that its Amsterdam headquarters had been visited by Dutch law enforcement. The company stated
that “[t]he investigation also appears to be concerned with the Company’s operations in

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 6 of 15

Uzbekistan.” That day, the price of VEON’s American Depository Receipts (“ADRs”) dropped
6.3%, from $8.85 the previous day to an intraday low of $8.29. Id. at ¶ 150. The following week,
VEON disclosed that the United States Department of Justice also was investigating the company,
and the ADR price declined 5.6%, from an intraday high of $9.07 to a low of $8.57. Id. at ¶¶ 15152.
In VEON’s 2013 Form 20-F filed on May 15, 2014, the company reiterated the existence
of these investigations and provided more detail on the issues, which the company disclosed
involved money laundering and bribery, and identified Karimova’s company, Takilant. Second
Am. Compl. ¶¶ 153-54. VEON also explained that, in 2013, the company began an internal
investigation into its business in Uzbekistan and its relationship with Takilant, led by outside
counsel with FCPA expertise. VEON made similar disclosures in its Form 20-F filed in 2015. Id. at
¶ 163.
After the close of the market on August 13, 2015, there were reports that United States
authorities had asked their European counterparts “to seize roughly $1 billion in assets related to
a wide-ranging criminal probe of alleged corruption by [VEON], MTS, and TeliaSonera, for
paying hundreds of millions of dollars to businesses controlled by Ms. Karimova to secure wireless
spectrum in Uzbekistan.” Second Am. Compl. ¶ 171. After that report, VEON’s ADR price fell
from $5.56 on August 13 to an intraday low of $5.305 the following day. Id. at ¶ 172. Finally, on
November 3, 2015, when VEON announced that it had reserved $900 million for litigation costs
related to the ongoing investigations, the company’s ADRs declined 5.0%, from the previous day’s
high of $3.665 to an intraday low of $3.48. Id. at ¶¶ 173-74.

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 7 of 15

PROCEDURAL HISTORY
After the Court consolidated this action with another related action against VEON and
appointed Westway Alliance Corp. as the Lead Plaintiff in this action, Westway filed its Amended
Complaint on behalf of a putative class of individuals who purchased VEON securities between
December 4, 2010 and November 3, 2015. (See ECF No. 45.) Thereafter, VEON moved to dismiss
the Amended Complaint, arguing that Plaintiffs had failed to state a cause of action under Rule
10b-5 because they did not adequately allege any actionable misstatements, scienter on behalf of
the corporation, or loss causation. (ECF No. 47.) The Court granted the motion in part and denied
the motion in part. (ECF No. 63.) Then on April 30, 2018, the Court granted the individual
Defendants’ motions to dismiss. (ECF No. 123.) VEON then filed a motion for judgment on the
pleadings, which the Court denied without prejudice. (ECF No. 155.) Lead Plaintiff filed the
Second Amended Complaint on April 14, 2020, and Defendant VEON moved to dismiss on May
15, 2020. (ECF No. 161.) Lead Plaintiff opposes the motion. (ECF No. 164) (“Pl’s Memo.”).
VEON has submitted its reply brief, (ECF No. 166) (“Def's Reply”), and the Court considers the
motion fully submitted.
I.

LEGAL STANDARD

To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows
the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. (citing Twombly, 550 U.S. at 556). The plaintiff must allege sufficient facts to show “more
than a sheer possibility that a defendant has acted unlawfully,” and accordingly, where the plaintiff

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 8 of 15

alleges facts that are “‘merely consistent with’ a defendant’s liability, it ‘stops short of the line
between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at
557).
In considering a motion to dismiss, the court accepts as true all factual allegations in the
complaint and draws all reasonable inferences in the plaintiff’s favor. See Goldstein v. Pataki, 516
F.3d 50, 56 (2d Cir. 2008). However, the court need not credit “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678
(citing Twombly, 550 U.S. at 555); see also id. at 681. Instead, the complaint must provide factual
allegations sufficient “to give the defendant fair notice of what the claim is and the grounds upon
which it rests.” Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117, 121 (2d Cir.
2007) (citing Twombly, 550 U.S. at 555). In addition to the factual allegations in the complaint,
the court also may consider “the documents attached to the complaint as exhibits, and any
documents incorporated in the complaint by reference.” Peter F. Gaito Architecture, LLC v.
Simone Dev. Corp., 602 F.3d 57, 64 (2d Cir. 2010) (citation and internal quotation marks omitted).
When plaintiff has alleged fraud claims under § 10(b) of the Exchange Act, the complaint
is subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) and the
Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Rule 9(b) requires that the
complaint “state with particularity the circumstances constituting fraud or mistake.” To satisfy the
particularity requirement, a complaint must “(1) detail the statements (or omissions) that the
plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements
(or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent.”
Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co., 375 F.3d 168, 187 (2d Cir. 2004)
(citation and internal quotation marks omitted).

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 9 of 15

The PSLRA holds private securities plaintiffs to an even more stringent pleading standard.
Under the PSLRA, a plaintiff must “(1) specify each statement alleged to have been misleading
[and] the reason or reasons why the statement is misleading; and (2) state with particularity facts
giving rise to a strong inference that the defendant acted with the required state of mind. Tellabs,
Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 321 (2007) (internal citation and quotation
marks omitted) (quoting 15 U.S.C. § 78u-4(b)). To determine that an inference of scienter is
strong, the court must decide whether “a reasonable person would deem the inference of scienter
cogent and at least as compelling as any opposing inference one could draw from the facts alleged.”
Tellabs, 551 U.S. at 324.
i.

Section 10(b) Claim

Plaintiffs assert a securities fraud claim against VEON under § 10(b) of the Exchange Act
and Rule 10b-5 promulgated thereunder. Am. Compl. ¶¶ 184-87. To state a claim under § 10(b)
and Rule 10b-5, a plaintiff must allege that the defendant “(1) made misstatements or omissions
of material fact, (2) with scienter, (3) in connection with the purchase or sale of securities, (4) upon
which the plaintiff relied, and (5) that the plaintiff’s reliance was the proximate cause of its injury.”
ATSI Commc’ns, 493 F.3d at 105. VEON argues that Plaintiff has failed to allege any actionable
omissions.
i.

Duty to Disclose
VEON is under a duty to speak on matters only if “(1) a statute or regulation requires

disclosure or (2) disclosure is necessary to avoid rendering existing statements misleading by
failing to disclose material facts.” Menaldi v. Och-Ziff Capital Management Group LLC, 164 F.
Supp. 3d 568, 579 (S.D.N.Y. 2016) (citing Stratte-McClure v. Morgan Stanley, 776 F.3d 94, 101
(2d Cir. 2015)). Moreover, the securities laws and regulations do not create “a rite of confession”

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 10 of 15

whereby corporations have a duty “to disclose uncharged, unadjudicated wrongdoing.” See Diehl
v. Omega Protein Corp., 339 F. Supp. 3d 153, 164 (S.D.N.Y. 2018) (citing City of Pontiac
Policemen’s & Firemen’s Ret. Sys. v. UBS AG, 752 F.3d 173, 184 (2d Cir. 2014)); see also In re
Citigroup, Inc. Sec. Litig., 330 F. Supp. 2d 367, 377 (S.D.N.Y. 2004) (“[F]ailure to disclose that .
. . revenues were derived from ‘unsustainable and illegitimate sources’ ” did not violate Section
10(b) because “the federal securities laws do not require a company to accuse itself of
wrongdoing.”).
“To base a claim on an omission, a plaintiff must also plead that the defendant had a duty
to disclose the omitted fact.” Constr. Laborers Pension Tr. for S. California v. CBS Corp., 433 F.
Supp. 3d 515, 531 (S.D.N.Y. 2020) (citing Stratte-McClure, 776 F.3d at 101. While Section 10(b)
and Rule 10b-5 “do not create an affirmative duty to disclose any and all material information,”
Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 44 (2011), speakers have a duty to disclose
when a statement would otherwise be “inaccurate, incomplete, or misleading” without the omitted
material, Stratte-McClure, 776 F.3d at 101 (quotation omitted). See also Meyer v. JinkoSolar
Holdings Co., 761 F.3d 245, 250 (2d Cir. 2014) (“Even when there is no existing independent duty
to disclose information, once a company speaks on an issue or topic, there is a duty to tell the
whole truth.”).
Lead Plaintiff posits three main arguments. First, Plaintiff argues that VEON’s admissions
that the Company had “knowingly failed to implement adequate controls governing due diligence,
contract approval, and internal audit, and, at the time, was aware that its internal controls were not
effective” is material information that was omitted and concealed off the market; next, Plaintiff
argues that VEON’s omissions regarding the internal controls, bribe payments disguised on its
books and records, and false recording of a bribe are material omissions, and because Plaintiff

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 11 of 15

purchased ADRs after the material omissions, Plaintiff has standing; and lastly, Plaintiff argues
that since the information is material, VEON’s argument that Plaintiff has failed to identify a
statute or regulation that requires disclosure is unavailing. Moreover, Plaintiff posits that VEON
has violated, 17 C.F. R. § 240.13a-15(a), and that VEON’s admission that it “knowingly failed to
implement adequate controls governing due diligence, contract approval, and internal audit, and,
at the time, was aware that its internal controls were not effective” is material information that a
reasonable investor is entitled to know.
Here, however, Lead Plaintiff has failed to establish that VEON had a duty to disclose the
omissions prior to the first time VEON spoke on the internal issues in its June 2011 Form 20-F.
Lead Plaintiff conflates the purported materiality of the omissions with disclosure. The Court notes
that these are two separate inquiries. Even assuming arguendo that the omissions are material as
Lead Plaintiff posits, “[a] corporation does not have a duty to disclose information simply because
it is material.” DoubleLine Capital LP v. Odebrecht Fin., Ltd., 323 F. Supp. 3d 393, 434 (S.D.N.Y.
2018) (quoting Matrixx Initiatives, 563 U.S. at 44)). “[I]t bears emphasis that § 10(b) and Rule
10b-5(b) do not create an affirmative duty to disclose any and all material information. Disclosure
is required under these provisions only when necessary ‘to make . . . statements made, in the light
of the circumstances under which they were made, not misleading.’” Matrixx Initiatives, Inc., 563
U.S. at 44 (quoting 17 C.F.R. § 240.10b–5(b)). See also Kleinman v. Elan Corp., plc, 706 F.3d
145, 152–53 (2d Cir. 2013). Thus, “[d]isclosure of an item of information is not required . . . simply
because it may be relevant or of interest to a reasonable investor.” Resnik v. Swartz, 303 F.3d 147,
154 (2d Cir. 2002). Because of this, “companies may remain silent even with respect to information
that a reasonable investor might consider material so long as they do not have an underlying duty
to disclose that information.” In re Rockwell Med., Inc. Sec. Litig., No. 16 CV 1691, 2018 WL

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 12 of 15

1725553, at *6 (S.D.N.Y. Mar. 30, 2018) (citation, alterations, and internal quotation marks
omitted).
Accordingly, even if Lead Plaintiff were to establish materiality, Plaintiff must then point
to a statute or regulation that requires disclosure, or alternatively, provide a prior statement made
by VEON that would then render disclosure necessary to prevent that prior statement from being
misleading. Menaldi, 164 F. Supp. 3d at 579. While Plaintiff argues that VEON violated 17 C.F.R.
§ 240.13a-15, that regulation does not create disclosure requirements. Rather, the regulation
expands on controls and procedures for financial reporting and “provide[s] reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes . . . and includes those policies and procedures” relating to maintenance of
accurate records of transactions. 17 C.F.R. § 240.13a-15(f). Moreover, the Court has not found,
and Plaintiff has not posited any case that provides that the aforementioned regulation creates
disclosure requirements. Therefore, Plaintiff has failed to establish that VEON had a duty to
disclose prior to the filing of the June 2011 Form 20-F. VEON’s motion to dismiss must be granted.
ii.

Standing

Lead Plaintiff argues that even if there are no material omissions, Plaintiff still has standing,
and Plaintiff’s claims are not moot until all motions or appeals have been exhausted. The Court
disagrees. As there are no material omissions, there is no longer a live controversy between Lead
Plaintiff and VEON, and Lead Plaintiff must be dismissed from this action.
Where the Court has found that a Lead Plaintiff’s claims have not been mooted has generally
been in class actions already certified under Rule 23, where a claim is deemed moot as to the
named Plaintiff but persists as to the remaining class members. See Robinson v. Sheet Metal
Workers’ Nat. Pension Fund, Plan A, 515 F.3d 93, 97 n. 4 (2d Cir. 2008) (“[T]he mootness of the

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 13 of 15

claims of one of two lead plaintiffs does not moot the class action so long as ‘there are questions
of law or fact common to the class’ and ‘the representative parties will fairly and adequately protect
the interest of the class.” (citing Fed .R. Civ. P. 23(a)(2), (4))). This action; however, is not yet a
class action.
It is well established that, in the class action context, a named Plaintiff must have standing to
assert both its own individual claims and the class claims brought on behalf of the putative class.
See McCall v. Chesapeake Energy Corp., 509 F. App’x 62, 64 (2d Cir. 2013); Amador v. Andrews,
655 F.3d 89, 99 (2d Cir. 2011) (“Of course, a class action cannot be sustained without a named
plaintiff who has standing.”). Accordingly, “[f]or each claim asserted in a class action, there must
be at least one class representative (a named plaintiff or a lead plaintiff) with standing to assert
that claim.” Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 862 F. Supp. 2d 322, 331
(S.D.N.Y. 2012); see also Jobie O. v. Spitzer, No. 03 Civ. 8331, 2007 WL 4302921, at *3
(S.D.N.Y. Dec. 5, 2007) (“[I]n order to represent a class, the named plaintiff must personally have
standing to litigate his own claim.”). If Plaintiffs lack standing to assert a particular claim, the
Court “lacks subject matter jurisdiction to entertain the class relief requested” as to that claim. See
Jobie O., 2007 WL 4302921, at *3. And claims “for which the class representatives do not have
standing[ ] must be dismissed.” Fort Worth Emps.’ Ret. Fund, 862 F. Supp. 2d at 332.
Moreover, even if a case has several named Plaintiffs, where the claims of a particular named
Plaintiff have become moot, and the other named Plaintiffs lack standing to assert them, those
claims are typically dismissed. See, e.g., Leonard v. Abbott Labs., Inc., No. 10 CV 4676, 2012 WL
764199, at *7 (E.D.N.Y. Mar. 5, 2012) (“Generally, the dismissal of the named plaintiffs claims
before a motion for class certification has been filed would result in the dismissal of the complaint,
or, in this case, the putative New York class’ NYCPA cause of action.”); Bowens v. Atl. Maint.

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 14 of 15

Corp., 546 F. Supp. 2d 55, 76 (E.D.N.Y. 2008) (“The unnamed class members are not technically
part of the action until the court has certified the class; therefore, once the named plaintiffs’ claims
are dismissed, there is no one who has a justiciable claim that may be asserted.”). Accordingly,
Lead Plaintiff no longer has a personal stake in the outcome of this lawsuit and must be dismissed
from this action.
However, the Second Amended Complaint puts forth Plaintiffs Sherman Steele, Leonard
Karpwich, and Stan Sinitsa as additional Plaintiffs in this action. Thus, in the interest of judicial
efficiency, the Court shall reopen the Lead Plaintiff appointment process. “In the absence of any
guidance in the PSLRA, the Court shall deem any movant timely who either (a) filed a complaint
in these consolidated actions, as explicitly contemplated by the PSLRA, 15 U.S.C. § 78u–
4(a)(3)(B)(iii)(I)(aa) or (b) moved to be appointed Lead Plaintiff in response to the initial notice
of pendency.” See In re Initial Pub. Offering Sec. Litig., 214 F.R.D. 117, 120 (S.D.N.Y. 2002).
Additionally, the Court shall allow the three Plaintiffs named in the Second Amended complaint
to move for appointment as Lead Plaintiff.
CONCLUSION
For the aforementioned reasons, the Court grants VEON’s motion to dismiss and dismisses
Lead Plaintiff Westway from this action. This resolves ECF No. 161. The Court reopens the Lead
Plaintiff selection process consistent with this opinion. Any motions for appointment as Lead
Plaintiff shall be filed by April 8, 2021; VEON shall oppose the motions by May 6, 2021; and any
replies shall be filed by May 12, 2021.
SO ORDERED.

Case 1:15-cv-08672-ALC-OTW Document 170 Filed 03/11/21 Page 15 of 15

Dated:

March 11, 2021
New York, New York
ANDREW L. CARTER, JR.
United States District Judge