Hom et al v. Vale, S.A. et al

Filing 51

MEMORANDUM OPINION AND ORDER re: (21 in 1:15-cv-09539-GHW, 21 in 1:15-cv-09539-GHW, 21 in 1:15-cv-09539-GHW) MOTION to Appoint Counsel Glancy Prongay & Murray LLP, MOTION to Appoint Scott Shen, Vicky Shen, Constantin Tranulis, and Shar on Jamie to serve as lead plaintiff(s), MOTION to Consolidate Cases 15-cv-9539-GHW and 16-cv-658-GHW, (24 in 1:15-cv-09539-GHW, 24 in 1:15-cv-09539-GHW, 24 in 1:15-cv-09539-GHW) MOTION to Consolidate Cases 16-cv-00658, MOTION to Appoint Ro berto Carlen (on behalf of Bulkley Corporation Ltd. (Bulkley Corporation), with authority to enter into litigation on Bulkley Corporations behalf), Cristiano Laux, Ana Piumbini, Anders Evju, and Farhad Babazadeh (collectively, the MOTION to Appoint Counsel, (31 in 1:15-cv-09539-GHW) MOTION to Appoint Alameda County Employees Retirement Association and Orange County Employees Retirement System to serve as lead plaintiff(s), (18 in 1:15-cv-09539-GHW) MOTION to Appoint Cristiano Laux to s erve as lead plaintiff(s), (25 in 1:15-cv-09539-GHW) MOTION to Appoint Counsel Consolidate Related Cases and Appoint TCAP Real Estate Inc as Lead Plaintiff. For the reasons outlined above, the Court GRANTS the motion to consolidate the a ctions Ming Hom v. Vale, S.A., et al., 1:15-cv-9539 and Valli T. Chin v. Vale S.A., et al., 1:16-cv-658. All future filings shall be captioned In re: Vale S.A. Securities Litigation, 1:15-cv-9539-GHW, and filed under that docket number only. The moti on of ACERA/OCERS seeking appointment as lead plaintiffs is GRANTED, and their selection of Bernstein Litowitz as lead counsel is approved. The parties are directed to submit a joint letter no later than March 14, 2016, proposing a schedule for the f iling of an amended complaint, defendants' answer or response to the complaint, and an initial pretrial conference. The Clerk of Court is directed to terminate the motions pending at Dkt. Nos. 18, 21, 24, 25, 31 in No. 1:15-cv-9539. (As further set forth in this Order.) (Signed by Judge Gregory H. Woods on 3/7/2016) Filed In Associated Cases: 1:15-cv-09539-GHW, 1:16-cv-00658-GHW(kko)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------X
MING HOM, individually and on behalf of all others
:
similarly situated,
:
:
Plaintiff, :
:
-against:
:
VALE, S.A., MURILO PINTO DE OLIVEIRA
:
FERREIRA, and LUCIANO SIANI PIRES,
:
:
Defendants. :
------------------------------------------------------------------X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 3/7/2016

1:15-cv-9539-GHW
1:16-cv-658-GHW
MEMORANDUM OPINION
AND ORDER

------------------------------------------------------------------X
VALLI T. CHIN, individually and on behalf of all others :
similarly situated,
:
:
Plaintiff, :
:
-against:
:
VALE S.A., MURILO PINTO DE OLIVEIRA
:
FERREIRA, LUCIANO SIANI PIRES, and
:
PETER POPPINGA
:
:
Defendants. :
------------------------------------------------------------------X
GREGORY H. WOODS, District Judge:
I.

INTRODUCTION
Pending before the Court are two motions to consolidate two putative class actions brought

under the federal securities laws by securityholders of Vale S.A, and to appoint a lead plaintiff under
the procedures set forth in the Private Securities Litigation Reform Act of 1995 (“PSLRA”). For the
reasons outlined below, the Court GRANTS the motion filed by the Alameda County Employees’
Retirement Association (“ACERA”) and the Orange County Employees Retirement System
(“OCERS”) seeking to consolidate the two actions and appointment as lead plaintiff.

II.

BACKGROUND
On December 7, 2015, a complaint was filed on behalf of a putative class of Vale’s

securityholders, against the company, its Chief Executive Officer, Murilo Pinto de Oliveira Ferreira,
and its Chief Financial Officer, Luciano Siani Pires. Ming Hom v. Vale, S.A., et al., 1:15-cv-9539, Dkt.
No. 1. Vale, a Brazilian corporation that is a large producer of iron ore, is publicly traded on the
New York Stock Exchange. Hom Compl. ¶¶ 7, 20. Vale is also the joint owner of a company that
owns and operates the Fundão Dam in Brazil. Id. ¶ 16. On November 5, 2015, the Fundão Dam
burst, contaminating a major river in the area with toxic waste, killing several people, and displacing
hundreds of others. Id. ¶¶ 17–18.
The complaint alleges that defendants made false and misleading statements or omissions in
United States Securities and Exchange Commission (“SEC”) filings and in public statements,
regarding Vale’s use of the dam for disposing mining waste, safety measures at the dam, and the
extent of damage caused by the accident. Id. ¶ 23. The complaint brings claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a); and SEC Rule
10b-5, 17 C.F.R. § 240.10b-5; on behalf of a putative class of “all persons . . . who purchased Vale
securities between March 21, 2015 and November 30, 2015.” Id. ¶ 1; see id. ¶ 35. Pursuant to the
requirements set forth in the PSLRA, notice of the Hom action was published on the same day that
the complaint was filed. See 15 U.S.C. § 78u–4(a)(3)(A)(i); 1 Hom Dkt. No. 33-4. The notice,
published in Business Wire, alerted members of the putative class that the deadline to seek
appointment as lead plaintiff was February 5, 2016, pursuant to the relevant provisions of the
PSLRA. See 15 U.S.C. § 78u–4(a)(3)(A)(i)(II); Hom Dkt. No. 33-4.

The PSLRA requires that a plaintiff provide notice “in a widely circulated national business-oriented
publication or wire service” no later than twenty days after the complaint is filed. 15 U.S.C. § 78u–
4(a)(3)(A)(i).
1

2

On January 28, 2016, a complaint raising similar allegations was filed on behalf of a putative
class of Vale’s securityholders. Valli T. Chin v. Vale S.A., et al., 1:16-cv-658, Dkt. No. 1. The Chin
complaint includes a more expansive class period—November 7, 2013 through November 30,
2015—and also names as a defendant Peter Poppinga, an Executive Director at Vale. Although the
PSLRA requires that notice be published in only the first filed action where more than one action is
filed “on behalf of a class asserting substantially the same claim or claims,” see 15 U.S.C. § 78u–
4(a)(3)(A)(ii), notice of the Chin action was nevertheless published in PRNewswire on February 1,
2016. See Hom Dkt. No. 33-5.
On February 5, 2016, five sets of putative class members filed motions seeking to
consolidate the two actions and appointment as lead counsel. See Hom Dkt. Nos. 15, 18, 21, 24, 25.
Three of the moving parties have since withdrawn their motions or indicated that they do not
oppose motions filed by other parties with larger financial interests at stake in the litigation. See Dkt.
Nos. 36, 42, 43, 46, 50. Thus, only ACERA/OCERS and TCAP Real Estate Inc. (“TCAP”) remain
in the running for appointment as lead plaintiff. ACERA/OCERS estimate that they incurred over
$15 million in losses from Vale securities purchased during the longer class period alleged in Chin,
whereas TCAP estimates that it incurred $682,050 losses for that same class period. The motions
were fully briefed as of February 22, 2016.
III.

ANALYSIS
A. Consolidation
All moving parties seek consolidation of the two actions, and the Court has received no

objection to the requests for consolidation.
A district court may consolidate two or more actions under Federal Rule of Civil Procedure
42(a) when the actions involve “a common question of law or fact.” Devlin v. Transp. Commc’ns Int’l
Union, 175 F.3d 121, 130 (2d Cir. 1999) (quoting Fed. R. Civ. P. 42(a)). Consolidation is “a valuable
3

and important tool of judicial administration,” that should be “invoked to expedite trial and
eliminate unnecessary repetition and confusion[.]” Id. (internal quotation marks and citations
omitted). The Court “has broad discretion to determine whether consolidation is appropriate.”
Johnson v. Celotex Corp., 899 F.2d 1281, 1284 (2d Cir. 1990).
“Under Rule 42 and the [PSLRA], actions need not be ‘identical’ to allow for consolidation.”
Woburn Ret. Sys. v. Salix Pharm., Ltd., No. 14-cv-8925 (KMW), 2015 WL 1311073, at *2 (S.D.N.Y.
Mar. 23, 2015) (citing Pinkowitz v. Elan Corp., PLC, No. 02-cv-4948 (WK), 2002 WL 1822118, at *3
(S.D.N.Y. July 29, 2002). Indeed, “consolidation is not barred simply because the actions to be
consolidated allege claims against different parties,” nor does a disagreement “on the precise
confines of the relevant class period” preclude consolidation. Pinkowitz, 2002 WL 1822118, at *3
(internal quotation marks and citations omitted). Rather, “[c]ourts have looked to the particular
facts of cases to determine if the anticipated benefits of consolidated actions, such as considerations
of judicial economy and unnecessary costs to the parties, ‘outweigh potential prejudice to the
parties.’” Woburn, 2015 WL 1311073, at *2 (quoting Kaplan v. Gelfond, 240 F.R.D. 88, 91 (S.D.N.Y.
2007)).
The Court finds that consolidation is appropriate. The Hom and Chin complaints raise
similar allegations regarding misrepresentations or omissions in statements concerning the Fundão
Dam, and bring the same causes of action against nearly the same defendants. Although there are
minor differences in the allegations and the putative class periods, the cases nevertheless present
common questions of law and fact. Because considerations of judicial economy and convenience
weigh in favor of consolidation, and there is little risk of potential prejudice, the motion to
consolidate is GRANTED.

4

The actions are consolidated under the caption In re: Vale S.A. Securities Litigation, 1:15-cv9539-GHW. All filings and submissions shall be made under the docket number 1:15-cv-9539GHW only.
B. Appointment as Lead Plaintiff

1. Legal Standard
The PSLRA directs the Court to “appoint as lead plaintiff the member or members of the
purported plaintiff class that the court determines to be most capable of adequately representing the
interests of class members.” 15 U.S.C. § 78u–4(a)(3)(B)(i). The PSLRA creates a “[r]ebuttable
presumption” that “the most adequate plaintiff . . . is the person or group of persons” that: (1) “has
either filed the complaint or made a motion in response to a notice;” (2) “has the largest financial
interest in the relief sought by the class;” and (3) “otherwise satisfies the requirements of Rule 23 of
the Federal Rules of Civil Procedure.” Id. § 78u–4(a)(3)(B)(iii)(I)(aa)–(cc). The presumption “may
be rebutted only upon proof” that “the presumptively most adequate plaintiff: [1] will not fairly and
adequately protect the interests of the class; or [2] is subject to unique defenses that render such
plaintiff incapable of adequately representing the class.” Id. § 78u–4(a)(3)(B)(iii)(II).

2. Timeliness
The PSLRA provides that “not later than 60 days after the date on which the notice is
published, any member of the purported class may move the court to serve as lead plaintiff of the
purported class.” Id. § 78u–4(a)(3)(A)(i)(II). Here, notice of the Hom action was published on
December 7, 2015. Hom Dkt. No. 33-4. All class members seeking appointment as lead plaintiff

5

filed timely motions on February 5, 2016, and thus both ACERA/OCERS and TCAP satisfy the
first requirement set forth in the PSLRA.

3. Largest Financial Interest
a. Legal Standard
“The PSLRA does not specify a method for calculating which plaintiff has the ‘largest
financial interest,’ and neither the Supreme Court nor the Second Circuit has provided instruction
on the appropriate method.” Elstein v. Net1 UEPS Techs., Inc., No. 13-cv-9100 (ER), 2014 WL
3687277, at *6 (S.D.N.Y. July 23, 2014). That said, courts in this circuit analyze four factors—the
“Lax factors”—to make this determination: “(1) the number of shares purchased; (2) the number
of net shares purchased; (3) total net funds expended by the plaintiffs during the class period; and
(4) the approximate losses suffered by the plaintiffs.” In re CMED Sec. Litig., No. 11-cv-9297 (KBF),
2012 WL 1118302, at *3 (S.D.N.Y. Apr. 2, 2012) (citing Lax v. First Merchants Acceptance Corp., No.
97-cv-2715, 1997 WL 461036 (N.D. Ill. Aug. 11, 1997). Courts considering these factors generally
“place the most emphasis on the last of the four factors: the approximate losses suffered by the
movant above any weight accorded to net shares purchased and net expenditures.” Id. (internal
quotation marks and citation omitted).
To calculate approximate losses, courts “typically employ one of two methodologies: First–
In–First–Out (‘FIFO’) or Last–In–First–Out (‘LIFO’).” Bo Young Cha v. Kinross Gold Corp., No. 12cv-1203 PAE, 2012 WL 2025850, at *3 (S.D.N.Y. May 31, 2012). “Under FIFO, stocks acquired
first are assumed to have been sold first in the calculation of losses; under LIFO, stocks acquired
most recently are assumed to have been the first sold.” Id. Courts in this district have stated “a very
strong preference for the LIFO method in calculating loss.” Richman v. Goldman Sachs Grp., Inc., 274
F.R.D. 473, 476 (S.D.N.Y. 2011). “The main advantage of LIFO is that, unlike FIFO, it takes into
account gains that might have accrued to plaintiffs during the class period due the inflation of the
6

stock price. FIFO may exaggerate losses.” City of Monroe Employees’ Ret. Sys. v. Hartford Fin. Servs.
Grp., Inc., 269 F.R.D. 291, 295 (S.D.N.Y. 2010) (ellipses omitted) (quoting In re eSpeed, Inc. Sec. Litig.,
232 F.R.D. 95, 101 (S.D.N.Y. 2005)). Thus, the Court will utilize the LIFO method for calculating
loss.

b. Relevant Class Period
As an initial matter, ACERA/OCERS and TCAP disagree as to which class period the Court
should utilize in determining the party with the largest financial interest. ACERA/OCERS assert
that the longer class period alleged in Chin—November 7, 2013 through November 30, 2015—
should be considered because that time period is more inclusive and, therefore, encompasses greater
potential damages to potential class members. TCAP, on the other hand, maintains that the shorter
class period alleged in Hom—March 21, 2015 through November 30, 2015—should be considered
because that is the class period for which early notice was provided through publication. Although
TCAP contends that the two actions rely upon “the same or substantially similar facts that occurred
during similar time periods” in asserting that consolidation of the actions is appropriate, see TCAP
Mem. of Law at 4, Dkt. No. 27, it nevertheless argues that the longer class period asserted in Chin
“dramatically expand[s] the class period,” see TCAP Mem. of Law in Further Supp. at 7, Dkt. No.
37—such that the published notice did not provide class members with adequate information in
considering appointment as lead counsel. Alternatively, TCAP argues that the Court should require
republication of notice with the longer class period so that all class members have an additional sixty
days to seek appointment as lead plaintiff.
First, the Court finds that republication of notice is not required under the PSLRA. The
plain text of the statute provides that, where a subsequent action asserts “substantially the same
claim or claims . . . only the plaintiff or plaintiffs in the first filed action shall be required to cause
notice to be published.” 15 U.S.C. § 78u–4(a)(3)(A)(ii). Based on this statutory text, courts typically
7

“disfavor republication of notice under PSLRA when a class period is extended beyond the period
contained in the first-filed securities class action.” Turner v. ShengdaTech, Inc., No. 11-cv-1918 (TPG),
2011 WL 6110438, at *3 (S.D.N.Y. Dec. 6, 2011). Instead, courts generally require republication of
notice only “where the amended complaint substantially alters the claims or class members.” Kaplan
v. S.A.C. Capital Advisors, L.P., 947 F. Supp. 2d 366, 367 (S.D.N.Y. 2013) (quoting Waldman v.
Wachovia Corp., No. 08-cv-2913(SAS), 2009 WL 2950362, at *1 (S.D.N.Y. Sept. 14, 2009)).
Although TCAP cites Kaplan for support, the differences between that case and the present
case are noteworthy. There, the court found that republication was required because the first-filed
complaint included an original class period of only nine days, which was expanded by more than two
years in an amended complaint. Id. at 367. “[M]ore significantly” than the larger class period,
moreover, was the fact that the subsequent complain “assert[ed] new claims.” Id. In contrast, the
expanded class period alleged in Chin is significantly more modest, and more importantly, the two
actions bring the same legal causes of action, against nearly identical defendants, and allege
substantially similar allegations. The Hom and Chin actions are substantially similar, such that the
December 7, 2015 notice satisfied the requirements of the PSLRA and adequately notified potential
lead plaintiffs of the nature of the claims against Vale.
Moreover, the Court finds that the use of the longer, more inclusive class period is proper
for purposes of the present motion because the longer class period encompasses more potential
class members and damages. A number of courts in this district have found it appropriate to rely on
the more inclusive class for determining lead plaintiff because “it encompasses more potential class
members.” See, e.g., In re Doral Fin. Corp. Sec. Litig., 414 F. Supp. 2d 398, 402–03 (S.D.N.Y. 2006);
Villella v. Chem. & Mining Co. of Chile Inc., No. 15-cv-2106 (ER), 2015 WL 6029950, at *5 n.5
(S.D.N.Y. Oct. 14, 2015) (utilizing more expansive class period of June 30, 2010 through March 17,
2015, rather than class period of March 4, 2014 through March 17, 2015 alleged in first-filed
8

complaint); In re Elan Corp. Sec. Litig., No. 08-cv-08761 (AKH), 2009 WL 1321167, at *1 (S.D.N.Y.
May 11, 2009) (because claims asserted in longer class period were not implausible, “it is appropriate
to use that more inclusive period” for determining lead plaintiff); see also In re Gentiva Sec. Litig., 281
F.R.D. 108, 113–14 (E.D.N.Y. 2012) (utilizing longer class period of July 31, 2008 through October
4, 2011, rather than class period of July 31, 2008 through July 20, 2010 alleged in first-filed
complaint); Plumbers & Pipefitters Local 562 Pension Fund v. MGIC Inv. Corp., 256 F.R.D. 620, 625
(E.D. Wis. 2009) (“[Nothing in the PSLRA limits the class period to the period identified in the first
notice.”). Thus, the Court will utilize the more inclusive class period for purposes of appointing a
lead plaintiff.

c. Common Stock and Preferred Stock
As another preliminary matter, the parties disagree as to whether the Court should consider
losses in Vale preferred stock American Depository Receipts (“ADRs”), or limit its consideration to
losses in Vale common stock ADRs. TCAP purchased only common stock ADRs during the class
period, whereas ACERA/OCERS purchased both common stock and preferred stock ADRs.
TCAP argues that because the Hom complaint was brought on behalf of a putative class of
purchasers of Vale common stock ADRs only, the Court’s analysis should necessarily be limited to
losses in common stock ADRs.
TCAP’s argument fails for several reasons. First, it is not at all clear that the scope of the
putative class alleged in Hom was limited to common stock ADRs. Rather, the complaint purported
to bring claims on behalf of a class of “all persons . . . who purchased Vale securities between March
21, 2015 and November 30, 2015.” Hom Compl. ¶ 1 (emphasis added); see also id. ¶ 35. The term
“security,” as defined in federal securities laws, is “sufficient ‘to encompass virtually any instrument
that might be sold as an investment.’” S.E.C. v. Edwards, 540 U.S. 389, 393 (2004) (quoting Reves v.
Ernst & Young, 494 U.S. 56, 61 (1990)).
9

In any event, the Chin complaint expressly included allegations regarding losses in Vale
preferred ADRs, and TCAP offers no compelling basis for excluding losses in those securities.
TCAP does not, for example, argue that the interests of purchasers of Vale preferred stock ADRs
are not aligned with the interests of purchasers of Vale common stock ADRs. See Freudenberg v.
E*Trade Fin. Corp., No. 07-cv-10400, 2008 WL 2876373, at *6 (S.D.N.Y. July 16, 2008) (noting that
courts “often appoint [as lead plaintiff] purchasers of one type of securities to represent purchasers
of other types of securities of the same issuer where the interests of those purchasers are aligned”
and collecting cases). Indeed—other than the fact that considering losses in preferred stock ADRs
diminishes the likelihood of TCAP’s appointment as lead counsel—TCAP has not provided any
persuasive reason for limiting the lead-plaintiff analysis to losses in Vale common stock ADRs.
In enacting the PSLRA, Congress sought to curb abuses such as “the race to the courthouse
to be the first to file the complaint.” S. REP. 104-98, at 10 (1995), as reprinted in 1995 U.S.C.C.A.N.
679, 689. Instead, “Congress intended to ‘increase the likelihood that parties with significant
holdings in issuers, whose interests are more strongly aligned with the class of shareholders, will
participate in the litigation and exercise control over the selection and actions of plaintiff’s counsel.’”
In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 43–44 (S.D.N.Y. 1998) (quoting H.R. CONF.
REP. 104-369, at 32 (1995), as reprinted in 1995 U.S.C.C.A.N. 730, 731). Limiting consideration to
the losses suffered in common stock ADRs would run counter to Congress’s stated goals, in that it
would both: (a) encourage a race to the courthouse to be the first to file a complaint, and thereby
dictate the scope of the losses considered for appointment as lead plaintiff; and (b) exclude from
consideration significant losses from parties whose interests are otherwise strongly aligned with the
putative class of securityholders. Thus, the Court considers the parties’ broader losses alleged with
respect to both common stock and preferred stock ADRs.

10

d. Application
There is no dispute that ACERA/OCERS have a larger financial interest than TCAP, when
considering the longer class period alleged in Chin and the alleged losses in Vale preferred stock
ADRs. See TCAP Reply Mem. of Law at 2, Dkt. No. 47. Indeed, the $15,297,748 in LIFO losses
alleged by ACERA/OCERS dwarfs the $682,050 in LIFO losses alleged by TCAP. 2 Turning to the
remaining factors articulated in Lax, ACERA/OCERS purchased 4,851,100 shares during the class
period, whereas TCAP purchased 200,000 shares. Next, ACERA/OCERS purchased 3,067,600 net
shares during the class period, whereas TCAP purchased 200,000 net shares. Finally,
ACERA/OCERS expended $22,243,849 in net funds during the class period, whereas TCAP
expended $1,220,381 in net funds. Thus, the Lax factors weigh in favor of ACERA/OCERS, and
the Court concludes that they have the greater financial interest in the relief sought by the putative
class.

4. Rule 23 Requirements
“Once the court ‘identifies the plaintiff with the largest stake in the litigation, further inquiry
must focus on that plaintiff alone and be limited to determining whether he satisfies the other
statutory requirements.’” Khunt v. Alibaba Grp. Holding Ltd., 102 F. Supp. 3d 523, 535 (S.D.N.Y.
2015) (quoting Sofran v. LaBranche & Co., 220 F.R.D. 398, 402 (S.D.N.Y. 2004)). Rule 23(a) of the
Federal Rules of Civil Procedure provides that a party may serve as a class representative only if the
following four requirements are satisfied: “(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.
TCAP argues that ACERA/OCERS overstate their losses by virtue of their status as in-and-out traders.
For purposes of the present motion, it is sufficient to find that, under any analysis, the financial interest of
ACERA/OCERS exceeds that of TCAP. TCAP has not suggested otherwise.
2

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23(a). At this stage of the litigation, however, “the moving plaintiff must only make a preliminary
showing that the adequacy and typicality requirements have been met.” Blackmoss Investments, Inc. v.
ACA Capital Holdings, Inc., 252 F.R.D. 188, 191 (S.D.N.Y. 2008). ACERA/OCERS have made the
requisite preliminary showing of adequacy and typicality under Rule 23.
“The typicality threshold is satisfied where the claims arise from the same conduct from
which the other class members’ claims and injuries arise.” Goldstein v. Puda Coal, Inc., 827 F. Supp. 2d
348, 354 (S.D.N.Y. 2011) (quoting Foley v. Transocean Ltd., 272 F.R.D. 126, 131 (S.D.N.Y. 2011)). “A
lead plaintiff’s claims need not be identical to the claims of the class to satisfy the typicality
requirement.” Plumbers, Pipefitters & MES Local Union No. 392 Pension Fund v. Fairfax Fin. Holdings
Ltd., No. 11-cv-5097 (JFK), 2011 WL 4831209, at *2 (S.D.N.Y. Oct. 12, 2011) (internal quotation
marks and citation omitted). ACERA/OCERS and other putative class members allege that they
purchased Vale shares at artificially inflated prices during the class period, and were injured by the
false and misleading statements and omissions made by defendants in violation of federal securities
laws. Thus, the typicality requirement is satisfied.
In order to satisfy the adequacy requirement, a potential lead plaintiff must show that:
“(1) class counsel is qualified, experienced, and generally 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, 272
F.R.D. at 131. ACERA/OCERS have retained Bernstein Litowitz Berger & Grossmann LLP as
lead counsel. As discussed below, Bernstein Litowitz is qualified to serve as lead counsel and
conduct the litigation. Moreover, there has been no evidence presented that ACERA/OCERS have
interests adverse to those of the putative class members or any other conflict. Finally,
ACERA/OCERS have a significant financial interest in the outcome of the case, suggesting that
they will advocate vigorously on behalf of the class. Thus, the adequacy requirement is also satisfied.
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5. Rebuttal Evidence
TCAP has failed to present any proof that ACERA/OCERS either “will not fairly and
adequately protect the interests of the class,” or “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). Because
the Court finds that ACERA/OCERS are the presumptively most adequate plaintiffs, and no
member of the class has presented proof to rebut the presumption, the Court appoints
ACERA/OCERS as lead plaintiffs.

6. Co-Lead Plaintiffs
In a last-ditch effort, TCAP argues in its reply brief that the Court should appoint both
TCAP and ACERA/OCERS as co-lead plaintiffs: TCAP as co-lead plaintiff for a class of investors
who purchased Vale common stock ADRs, and ACERA/OCERS as co-lead plaintiff for a class of
investors who purchased Vale preferred stock ADRs. TCAP asserts that such a lead-plaintiff
structure is warranted because, although it concedes that ACERA/OCERS have significant losses in
preferred stock ADRs, it maintains that ACERA/OCERS cannot prove loss causation with respect
to their alleged losses in common stock ADRs because of their status as in-and-out traders. 3
Even if the Court accepts TCAP’s argument regarding loss causation—an issue on which the
Court expressly takes no position for purposes of the present motion—the Court nevertheless

Under Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), a plaintiff’s trading losses incurred prior to any
corrective disclosure “are not recoverable in a securities fraud action because the losses are not proximately
caused by the defendant’s misstatements.” In re LightInTheBox Holding Co., Ltd. Sec. Litig., No. 13-cv-6016
(PKC), 2013 WL 6145114, at *3 (S.D.N.Y. Nov. 21, 2013) (citing Dura, 544 U.S. at 342–43). Nevertheless,
“[l]oss causation ‘does not require full disclosure and can be established by partial disclosure during the class
period which causes the price of shares to decline.’” In re Gen. Elec. Sec. Litig., No. 09-cv-1951(DC), 2009 WL
2259502, at *4 (S.D.N.Y. July 29, 2009) (quoting Montoya v. Mamma.com Inc., No. 05-cv-2313(HB), 2005 WL
1278097, at *2 (S.D.N.Y. May 31, 2005)). ACERA/OCERS argue that the Chin complaint alleges several
partial disclosures, and on that basis allege a significant amount of losses in both Vale common stock and
preferred stock ADRs prior to the full corrective disclosure alleged in the Chin and Hom complaints. The
Court need not resolve whether the Chin complaint plausibly alleges any partial disclosures for purposes of
the present motion.
3

13

declines to appoint TCAP as co-lead plaintiff. Importantly, “nothing in the PSLRA requires that the
lead plaintiffs have standing to assert all of the claims that may be made on behalf of all of the
potential classes and subclasses of holders of different categories of security at issue in the case.” In
re Glob. Crossing, Ltd. Sec. Litig., 313 F. Supp. 2d 189, 204 (S.D.N.Y. 2003). As the court in In re
Global Crossing further explained:
[T]he imposition of any such requirement would be at odds with the purposes of the
statute, since in the case of large alleged frauds involving issuers of many classes of
securities, the consequence would be either the appointment of a large number of lead
plaintiffs (undermining the goal of a cohesive leadership and management group) or
the premature breakdown of the action into an unmanageable number of separate
cases brought by different lead plaintiffs on behalf of each potential subclass of
securities holders.
Id. at 204–05; see also Glauser v. EVCI Ctr. Colleges Holding Corp., 236 F.R.D. 184, 189–90 (S.D.N.Y.
2006) (“[R]ather than better serving the interests of individual class members, the appointment of a
co-Lead Plaintiff would only serve to fracture the leadership and drive up attorney[’]s fees.”).
TCAP fails to articulate any benefit to the putative class members in having it serve as colead plaintiff. Accordingly, the Court finds that the risk of fractured leadership and likely additional
attorney’s fees that would result from appointing a co-lead plaintiff outweigh any hypothetical
advantage to the class members that would result from such an appointment, at least at this stage of
the litigation.

B. Appointment of Lead Counsel
Under the PSLRA, “[t]he most adequate plaintiff shall, subject to the approval of the court,
select and retain counsel to represent the class.” 15 U.S.C. § 78u–4(a)(3)(B)(v). “Although the
Court maintains discretion in appointing lead counsel to protect the interests of the class, the statute
evidences a strong presumption in favor of approving a properly-selected lead plaintiff’s decisions as
to counsel selection and counsel retention.” Atwood v. Intercept Pharm., Inc., 299 F.R.D. 414, 417

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(S.D.N.Y. 2014) (quoting Casper v. Song Jinan, No. 12-cv-4202 (NRB), 2012 WL 3865267, at *3
(S.D.N.Y. Sept. 6, 2012)).
ACERA/OCERS have selected Bernstein Litowitz Berger & Grossmann LLP to serve as
lead counsel. In support of the request, Blair A. Nicholas, a partner at Bernstein Litowitz, submitted
a detailed firm resume and biography. Dkt. No. 33-6. Having reviewed the firm resume, the Court
finds that Bernstein Litowitz is qualified to serve as lead counsel. Accordingly, the motion seeking
approval of Bernstein Litowitz as lead counsel is GRANTED.
II.

CONCLUSION
For the reasons outlined above, the Court GRANTS the motion to consolidate the actions

Ming Hom v. Vale, S.A., et al., 1:15-cv-9539 and Valli T. Chin v. Vale S.A., et al., 1:16-cv-658. All
future filings shall be captioned In re: Vale S.A. Securities Litigation, 1:15-cv-9539-GHW, and filed
under that docket number only. The motion of ACERA/OCERS seeking appointment as lead
plaintiffs is GRANTED, and their selection of Bernstein Litowitz as lead counsel is approved.
The parties are directed to submit a joint letter no later than March 14, 2016, proposing a
schedule for the filing of an amended complaint, defendants’ answer or response to the complaint,
and an initial pretrial conference.
The Clerk of Court is directed to terminate the motions pending at Dkt. Nos. 18, 21, 24, 25,
31 in No. 1:15-cv-9539.
SO ORDERED.
Dated: March 7, 2016
New York, New York

_____________________________________
_____________________
__
__________________
___
GREGORY H
GORY
R
GREGORY H. WOODS
United States District Judge
nited

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