UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

THOMAS LAURIA, Individually, and on Behalf 

of Himself and All Others Similarly Situated,

Plaintiff,

v.

BIOSANTE PHARMACEUTICALS, INC., and 

STEPHEN M. SIMES,

Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

)

)

 Civil Action No. 1:12-cv-00772

 Honorable Joan B. Gottschall

REPLY OF THE BIOSANTE INVESTOR GROUP TO CONSOLIDATE RELATED 

ACTIONS; TO BE APPOINTED LEAD PLAINTIFF; AND APPROVE PROPOSED

LEAD PLAINTIFF’S CHOICE OF LEAD COUNSEL

Lead Plaintiff movant, the BioSante Investor Group (“BIG” or “Movant”), consisting of 

Michael O. Bopst, Guy L. Jacks, II, Patrick Lavoie, Quynh-Ly Pham, and George Pappaylion, 

respectfully submits this memorandum in further support of BIG’s motion, pursuant to the 

Private Securities Litigation Reform Act of 1995 (“PSLRA”), for appointment of BIG as lead 

plaintiff, and for approval of its selection of Kahn Swick & Foti, LLC (“KSF”) and Brower 

Piven, A Professional Corporation (“Brower Piven”), as co-Lead Counsel, and Susman Heffner 

& Hurst LLP (“SHH”) as Liaison Counsel for the Class.

I. ARGUMENT

A. The BioSante Investor Group II (“BIG II”) Does Not Trigger Presumptive 

Lead Plaintiff Status Because of Group Cohesion Problems and Improper 

Certifications

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 1 of 8 PageID #:496
2

BIG II, consisting of Avraham Shaked, Sue Benson, and Raymond Skubel, is not entitled 

to presumptive lead plaintiff status because BIG II is not a cohesive group.1 While BIG II meets 

the first statutory requirement to trigger presumptive status (largest claimed loss), BIG II’s group 

cohesion problems preclude it from meeting the second requirement to trigger the presumption, 

“to otherwise satisf[y] the requirements of Rule 23 of the Federal Rules of Civil Procedure.” 15 

U.S.C. § 78u-4(a)(3)(B)(iii)(I)(cc). Courts have consistently required evidence of cohesiveness

among members, especially when they have no pre-existing relationship. Bang v. Acura Pharms, 

Inc., No. C 5757, 2011 WL 91099, at *3 (N.D. Ill. Jan. 11, 2011) (citing cases acknowledging 

that “a group of investors should be ‘small and cohesive enough such that it can adequately 

control and oversee the litigation’”) (citations omitted); Eichenholtz v. Verifone Holdings, Inc., 

No. C 07-06140 MHP, 2008 WL 3925289 at *8 (N.D. Cal. Aug. 22, 2008); see also Schriver v. 

IMPAC Mortg. Holdings, Inc., No. SACV 06-31 CJC, 2006 WL 6886020 at *8 (C.D. Cal. May 

2, 2006) (“The Court agrees with Gemstar and other cases holding that groups of unrelated 

investors, while not per se impermissible lead plaintiffs under the PSLRA, are not adequate class 

representatives absent a showing that they are able to coordinate their efforts in the litigation.”); 

In re Enron Corp. Sec. Litig., 206 F.R.D. 427, 455-57 (S.D. Tex. 2002) (reviewing lead plaintiff 

group applications for those groups which affirmatively decided to work together and had agreed 

upon a decision-making structure).

Here, BIG II’s joint declaration—the only evidence BIG puts forth to demonstrate any 

sort of group cooperation or understanding of litigation responsibilities for a lead plaintiff—

excludes the member of the group with the largest losses. See Porritt Decl. at 5. Indeed, the 

declaration even concedes that Avraham Shaked, the missing third member of the group, did not 

 

1 Notably, BIG II appears to have overlooked BIG’s filing entirely, entitling their responsive brief 

“BioSante Investor Group’s Memorandum In Opposition to Mark Dale, Thomas Norgiel and Jeffrey 

Rennell’s Motions for Lead Counsel.” Indeed, BIG’s filing is not mentioned once throughout the brief.

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 2 of 8 PageID #:497
3

attend the conference call with counsel where the respective responsibilities of counsel and lead 

plaintiffs were discussed. Shaked’s absence from the conference call not only renders everything 

said and agreed-to during the conference meaningless, but also suggests that Shaked does not

agree to zealously represent the class in this litigation and calls into question whether a group 

was even formed to pursue this action in the first place. Another possible scenario is that Shaked 

did not want to sign the declaration because he wanted to litigate independently of the group, 

given that his losses overshadow those of the other two BIG II members. Either way, Shaked’s 

lack of participation sets the stage for problems in group decision-making and ultimate guidance 

of the litigation, which is the whole purpose of having a lead plaintiff represent the class. Unlike 

BIG, which has demonstrated 100% participation in its conference call with proposed lead 

counsel and timely signed individual declarations outlining how the group would manage and 

control the litigation, BIG II has utterly failed to demonstrate even a modicum of group 

cohesion.

Alternatively, if the Court is inclined to find that BIG II is the presumptive lead plaintiff, 

Shaked’s absence from the joint declaration and Skubel’s improper certification2 warrant limited 

discovery into the group’s formation, ability and willingness to join together and manage the 

litigation. See In re Cavanaugh, 306 F.3d 726, 730 (9th Cir. 2002) (“In seeking evidence that 

could rebut the presumptive lead plaintiff’s showing on these points, other plaintiffs may be 

allowed to conduct discovery if they ‘demonstrate[ ] a reasonable basis for finding that the 

presumptively most adequate plaintiff is incapable of adequately representing the class.’”) 

 

2

In addition to cohesion problems, BIG II fails as a lead plaintiff candidate because one of its members, 

Raymond Skubel, did not sign his certification. “Each plaintiff seeking to serve as a representative party 

on behalf of a class shall provide a sworn certification, which shall be personally signed by such 

plaintiff and filed with the complaint.” 15 U.S.C. § 78u-4(a)(2)(A)(emphasis added); see also Burke v. 

Ruttenberg, 102 F. Supp. 2d 1280, 1319 (N.D. Ala. 2000) (“Only those plaintiffs who satisfy the 

certification requirement of the [PSLRA] subsection can serve as lead plaintiff.”).

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 3 of 8 PageID #:498
4

(quoting 15 U.S.C. § 78u-4(a)(3)(B)(iv)). BIG respectfully submits that these circumstances raise 

sufficient questions to warrant limited discovery. See 15 U.S.C. § 78-u-4(a)(3)(B)(iv) (permitting 

discovery when movant demonstrates a “reasonable basis” for a finding that plaintiff is incapable 

of adequately representing class); see also Brown v. Biogen, No. 05-10801-RCL, 2005 U.S. Dist. 

LEXIS 19350, at *7-8 (D. Mass. July 26, 2005) (granting discovery of lead plaintiff movant); 

Sakhrani v. Brightpoint, Inc., 78 F. Supp. 2d 845, 847-48 (S.D. Ind. 1999) (granting limited 

discovery).

B. Norgiel and Rennell Do Not Trigger Presumptive Lead Plaintiff Status 

Because Their Loss Calculation Is Erroneous

In accordance with the statutory requirements, because BIG II has not triggered

presumptive lead plaintiff status, the Court should next consider the movant with the purported 

second-largest loss, which is the Norgiel and Rennell group. In re Cavanaugh, 306 F.3d at 730

(“If the plaintiff with the greatest financial stake does not satisfy the Rule 23(a) criteria, the court 

must repeat the inquiry, this time considering the plaintiff with the next-largest financial stake, 

until it finds a plaintiff who is both willing to serve and satisfies the requirements of Rule 23.”).

Norgiel and Rennell similarly fail as the presumptive lead plaintiff, given that they include 

multiple errors in their loss calculations, inflating their losses on BioSante trades above and 

beyond their true recognized losses. As demonstrated in BIG’s opposition memorandum, 

Thomas Norgiel’s trade data claims that he made purchases of 25,000 shares on November 17, 

2011, at prices from $4.51 to $4.73; however, the highest value of BioSante stock on November 

17, 2011, was only $2.55. That error nearly doubles Norgiel’s actual loss on the November 17, 

2011, trades. The huge discrepancy in claimed versus actual losses created by this error alone 

calls into question the accuracy of all the group’s trading data, but at the very least indicates that 

the ultimate loss calculation for the group is plainly wrong. Nager v. Websecure, Inc., No. CIV.A 

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 4 of 8 PageID #:499
5

97-10662, 1997 WL 773717 at *1 at n. 1 (D. Mass. Nov. 26, 1997) (reported trade outside the 

daily range “may be explainable, but it cast sufficient doubt on Mr. Renzer’s adequacy as a class 

representative plaintiff that he should be excluded from the group appointed to serve as lead 

plaintiffs”). Given these clear errors, the presumption is not triggered in Norgiel’s and Rennell’s 

favor.

In the alternative, in the event the Court is inclined to apply presumptive status to Norgiel 

and Rennell, BIG respectfully requests that competing movants should be allowed limited 

discovery to assess the scope of the inaccuracies in the loss figure and certifications for Norgiel 

and Rennell’s motion. Limited discovery into Norgiel and Rennell’s trading data to confirm trade 

dates, numbers of shares, and purchase/sale values would be quick and easy to accomplish and 

verify, and would illuminate any additional errors in the group’s loss calculation. See In re

Cavanaugh, 306 F.3d at 730; see also Brown, 2005 U.S. Dist. LEXIS 19350, at *7-8 (granting 

discovery of lead plaintiff movant); Sakhrani, 78 F. Supp. 2d at 847-48 (granting limited 

discovery). A request for limited discovery into this issue to clarify and confirm the actual loss 

figure in the face of demonstrated errors would ensure that the mandates and goals of the PSLRA 

lead plaintiff provisions are met in this case.

C. BIG Meets the Requirements To Trigger the Statutory Presumption and 

Should Be Appointed Lead Plaintiff

Under the statutory formula, because the presumption is not triggered by BIG II or 

Norgeil and Rennell, the Court should next consider the lead plaintiff movant with the next 

largest claimed loss: BIG.

3 BIG meets the requirements to trigger the presumption because it has 

 

3 Movant Dale, with losses of merely $73,683.72, is the movant with the smallest losses and cannot 

trigger the rebuttable presumption in his favor, much less meet the statutory requirements to be appointed 

lead plaintiff.

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 5 of 8 PageID #:500
6

the next largest financial interest in the outcome of the litigation and “otherwise satisfies the 

requirements of Rule 23 of the Federal Rules of Civil Procedure. 15 U.S.C. § 78u-4(a)(3)(B). As 

illustrated in the previously-submitted declarations, BIG is a small, cohesive group of 

sophisticated investors who will assertively and collaboratively direct counsel in this litigation.4

For the foregoing reasons, BIG’s motion for appointment as Lead Plaintiff and approval 

of its selection of Lead Counsel KSF and Brower Piven, and Liaison Counsel SHH, should be 

granted and all competing motions should be denied.

DATED: April 27, 2012 Respectfully submitted,

SUSMAN HEFFNER & HURST LLP

s/ Matthew T. Heffner 

Matthew T. Heffner

30 N. LaSalle, Suite 1210

Chicago, Illinois 60602

Telephone: (312) 346-3466

Facsimile: (312) 346-2829

Email: mheffner@shhllp.com

Counsel for BioSante Investor Group and Proposed 

Liaison Counsel for the Class

DAVID A.P. BROWER

BROWER PIVEN

A Professional Corporation

488 Madison Avenue, 8th Floor

New York, NY 10004

Telephone: (212) 501-9000 

 

4

See, e.g., Decl. of Michael O. Bobst at 2 (“On April 5, 2012, in furtherance of the formation of the 

BioSante Investor Group, I communicated with the other members of the group during a conference call 

that lasted approximately 25 minutes during which call I learned about the backgrounds of and the 

opportunity to ask questions of Messrs. Pappaylion, Lavoie, and Jacks, and Ms. Pham. I feel strongly that 

as a small, cohesive group, the five of us can effectively and efficiently prosecute these Actions together.

I intend to do so, and the other members of the BioSante Investor Group have also expressed an intention 

to do so by, among other means, communicating with each other and with counsel, to the extent we 

determine necessary to fairly and adequately represent the interests of the Class.”).

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 6 of 8 PageID #:501
7

KIM E. MILLER

KAHN SWICK & FOTI, LLC

500 Fifth Avenue, Ste. 1810

New York, NY 10110

Telephone: (212) 696-3730

Facsimile: (504) 455-1498

Email: kim.miller@ksfcounsel.com

and

LEWIS S. KAHN

KAHN SWICK & FOTI, LLC

206 Covington Street

Madisonville, Louisiana 70447

Telephone: (504) 455-1400 

Facsimile: (504) 455-1498

Email: lewis.kahn@ksfcounsel.com

Counsel for BioSante Investor Group and Proposed CoLead Counsel for the Class

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 7 of 8 PageID #:502
8

CERTIFICATE OF SERVICE

I hereby certify that on April 27, 2011, I electronically filed the foregoing with the Clerk 

of the Court using the CM/ECF system which will send notification of such filing to the e-mail 

addresses registered, as denoted on the attached Electronic Mail Notice List, and I hereby certify 

that I have mailed the foregoing document or paper via the United States Postal Service to the 

non-CM/ECF participants indicated on the Manual Notice List. 

/s/ Matthew T. Heffner

MATTHEW T. HEFFNER

Case: 1:12-cv-00772 Document #: 47 Filed: 04/27/12 Page 8 of 8 PageID #:503