Opinion ID: 3065217
Heading Depth: 3
Heading Rank: 2

Heading: Appointing Lead Counsel

Text: [7] Cohen requests that we remand to the district court with instructions to appoint KGS as lead counsel. He suggests that because the district court considered his choice of counsel in deciding to select him co-lead plaintiff and found that KGS was free from conflict and would vigorously prosecute the action, this ends the district court’s inquiry into the adequacy of counsel.4 We think that would go too far. The court concluded that Cohen should be lead plaintiff, but acted under the misapprehension that it was the district court’s role and not the lead plaintiff’s role to choose lead counsel. Now that our 4 Although none of the parties raise the issue, the district court may have erred in appointing “co-lead plaintiffs,” a practice occasionally employed by district courts. See, e.g., Yousefi v. Lockheed Martin Corp., 70 F. Supp. 2d 1061, 1070 (C.D. Cal. 1999) (appointing an individual and city as lead plaintiffs); In re Oxford Health Plans, Inc. Sec. Litig., 182 F.R.D. 42, 47 (S.D.N.Y. 1998) (appointing three co-lead plaintiffs). While the PSLRA allows a group to serve as lead plaintiff, it also consistently refers to the lead plaintiff and most adequate plaintiff in the singular, suggesting that the district court should appoint only one lead plaintiff, whether an individual or a group. See 15 U.S.C. § 78u-4(a)(3); see also Cendant, 264 F.3d at 223 n.3. The appointment of multiple lead plaintiffs would also tend to run counter to the sequential inquiry we outlined for selection of lead plaintiff. See Cavanaugh, 306 F.3d at 730-31. 14922 COHEN v. UNITED STATES DISTRICT COURT mandate will assure that Cohen chooses lead counsel, it is for the district court to approve or disapprove Cohen’s choice of lead counsel subject to appropriate criteria. [8] Consistent with congressional intent in enacting the PSLRA to vest authority for selecting class counsel in the lead plaintiff and our reasoning in Cavanaugh, the district court should not reject a lead plaintiff’s proposed counsel merely because it would have chosen differently. See 306 F.3d at 732, 734 & n.14 (explaining that selection of lead counsel “is not a beauty contest,” that selection of counsel is an “important client prerogative,” and that a contrary rule would “eviscerate” the PSLRA’s assumption that the lead plaintiff is as or more capable than the court to select class counsel) (quoting Cendant, 264 F.3d at 276). Rather, like the Third Circuit, we hold that if the lead plaintiff has made a reasonable choice of counsel, the district court should generally defer to that choice. See Cendant, 264 F.3d at 276 (enumerating factors to consider in conducting this inquiry, including the lead plaintiff’s sophistication and experience, the process through which the lead plaintiff selected its candidates for and final choice of lead counsel, the qualifications and experience of selected counsel, and evidence of arms-length negotiations between lead plaintiff and proposed counsel); see also H.R. Conf. Rep. No. 104-369 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 734 (suggesting that the district court’s authority to disapprove lead counsel should be exercised when necessary to protect the interests of the class). In the event that the district court determines the lead plaintiff has not made a reasonable choice of counsel, the court should articulate its reasons for disapproving plaintiff’s choice and provide an opportunity for lead plaintiff to select acceptable counsel. See Cendant, 264 F.3d at 277; cf. Cavanaugh, 306 F.3d at 733 n.12. The district court issued conflicting rationales for its decision to appoint Girard Gibbs co-lead counsel, leaving it unclear whether the court was disapproving Cohen’s choice of COHEN v. UNITED STATES DISTRICT COURT 14923 KGS as inadequate or whether it merely found Girard Gibbs to be a better choice. Compare December Order (explaining that the district court had “review[ed] each firm’s resume” and decided Girard Gibbs was “the most qualified counsel” without any discussion of whether Cohen’s choice was inadequate) with January Order (suggesting the district court disapproved of Cohen’s choice of lead counsel). Regardless, even if the district court rejected KGS, it is not clear why it did so or whether the court applied appropriate deference to Cohen’s choice. Rather than attempting to evaluate Cohen’s choice of KGS on the limited record before us, we remand to the district court to consider, using appropriate deference, whether KGS was an unreasonable choice of lead counsel under the circumstances.