Court Opinion

ID: 2664386
Source: CourtListenerOpinion
Date Created: 2014-04-04 03:50:49.780569+00
Date Added: 2024-06-11T09:17:51.265573
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

__________________________________________
                                           )
PLUMBERS LOCAL #200 PENSION FUND,          )
  Individually and on Behalf of All Others )
  Similarly Situated,                      )
                                           )
        Plaintiff,                         )
                                           )
        v.                                 )                  Civil Action No. 10-1835 (PLF)
                                           )
THE WASHINGTON POST COMPANY, et al., )
                                           )
        Defendants.                        )
__________________________________________)

                                   MEMORANDUM OPINION

               This case is a purported federal securities class action brought on behalf of all

persons who acquired Washington Post common stock between July 31, 2009 and August 13,

2010. This matter is before the Court on Iron Workers Local No. 25 Pension Fund’s

(“Iron Workers”) motion for appointment as lead plaintiff in this purported class action and for

approval of its selection of counsel pursuant to Section 21D(a)(3)(B) of the Securities Exchange

Act of 1934, 15 U.S.C. § 78u-4(a)(3)(B), as amended by Section 101(a) of the Private Securities

Litigation Reform Act of 1995 (“PSLRA”). The counsel it proposes are the counsel who filed

the complaint in this case on behalf of Plumbers Local #200 Pension Fund (“Plumbers Local”),

individually and on behalf of all similarly situated entities. No one has filed an opposition to the

pending motion. Upon consideration of Iron Workers’ papers, the relevant legal authorities, and

the entire record in this case, the Court will grant Iron Workers’ motion.1

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              The papers reviewed in connection with the pending motion include: the class
action complaint for violations of securities laws (“Compl.”); Iron Workers Local No. 25 Pension
                                       I. BACKGROUND

               On October 28, 2010, plaintiff Plumbers Local filed a complaint in this Court on

behalf of itself and a purported class of all those who purchased Washington Post common stock

between July 31, 2009 and August 31, 2010 (the “Class Period”). See Compl. ¶ 5. In its

complaint, Plumbers Local named three defendants: (1) the Washington Post, a diversified

education and media company; (2) Donald E. Graham, the chairman of the board and the chief

executive officer of the Washington Post since 1993; and (3) Hal S. Jones, the senior vice

president of finance and the chief financial officer of the Washington Post since January 2009.

See id. ¶¶ 6, 13-15.

               Plumbers Local alleges that during the Class Period, the defendants issued

materially false and misleading statements about the Washington Post’s business and financial

results. Compl. ¶ 7. As Plumbers Local describes it, “defendants failed to disclose that the

[Washington Post] had been engaging in abusive and fraudulent recruiting and financial aid

lending practices, thereby increasing [the] Washington Post’s student enrollment and revenues.”

Id. As a result, the Washington Post’s common stock allegedly traded at “artificially inflated

prices during the Class Period, reaching a high of $541.38 per share on April 15, 2010.” Id.

Eventually, however, information about the Washington Post’s allegedly abusive and fraudulent

practices “seeped into the market” resulting in “massive sales” of common stock, which

decreased their value “approximately 41.7% from the Class Period high.” Id. ¶ 11. Plumbers

Local seeks damages and injunctive relief. Id. at 16.

Fund’s motion for appointment as lead plaintiff and for approval of lead plaintiff’s selection of
counsel (“Mot.”); the Declaration of Roger M. Adelman in support of Iron Workers Local No. 25
Pension Fund’s motion for appointment as lead plaintiff and for approval of lead plaintiff’s
selection of counsel (“Adelman Decl.”); and Exhibits A through D to the Adelman Declaration.

                                                2
                Under the procedures established by the PSLRA, on October 28, 2010, the same

day it filed its complaint, Plumbers Local caused notice of the pendency of this case to be

published in Business Wire, a widely-circulated, national, business-oriented wire service. See

Mot., Ex. A to Adelman Decl., Notice of Class Action Suit at 1, Oct. 28, 2010. On December

27, 2010 — 60 days after the notice publication in Business Wire — Iron Workers filed a motion

requesting that it be appointed lead plaintiff and that its selection of counsel, Robbins Geller

Rudman & Dowd LLP (“Robbins Geller”) be approved and appointed as lead counsel. See Mot.

at 1. Iron Workers asserts that it should be appointed lead plaintiff because it (1) timely filed its

motion, (2) has the largest financial interest in this case, and (3) will fairly and adequately

represent the interests of the purported class. Id.

                                      II. LEGAL STANDARD

                The PSLRA sets forth the procedure governing the appointment of a lead plaintiff

in a private class action brought under the Securities Exchange Act. See 15 U.S.C.

§ 78u-4(a)(3); Reese v. Bahash, 248 F.R.D. 58, 61-62 (D.D.C. 2008); In re XM Satellite Radio

Holdings Sec. Litig., 237 F.R.D. 13, 16-17 (D.D.C. 2006). Under the PSLRA, the Court shall

appoint as lead plaintiff the member or members of the purported class “that the court determines

to be the most capable of adequately representing the interests of class members.” 15 U.S.C.

§ 78u-4(a)(3)(B)(i). The Court “shall adopt a [rebuttable] 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] in the determination of the court, has the largest financial

interest in the relief sought by the class; and [3] otherwise satisfies the requirements of Rule 23

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of the Federal Rules of Civil Procedure.” Id. § 78u-4(a)(3)(B)(iii)(I). This presumption “may be

rebutted only upon proof by a member of the purported plaintiff class 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).

                As Judge Huvelle has explained, “[t]he [lead plaintiff] selection process begins

once the first plaintiff files an action and publicizes the pendency of the action, the claims made,

and the purported class period.” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 17

(citing 15 U.S.C. § 78u-4(a)(3)(A)(i)). “The second step is for the court to choose the plaintiff

who has the greatest financial stake in the outcome of the case.” Id. (citing 15 U.S.C.

§ 78u-4(a)(3)(B)(iii)(I)(bb)). “The PSLRA’s presumption that the most adequate plaintiff is the

one with the largest financial interest reflects Congress’ desire to curtail lawyer-driven securities

class actions.” Id. (citing H.R. CONF. REP . NO . 104-369, at *31 (1995), reprinted in

1995 U.S.C.C.A.N. 370). “To achieve this goal, Congress sought to attract lead plaintiffs with a

significant financial stake in the litigation on the assumption that they would be more likely to

play an active role in directing and overseeing the litigation.” Id. (citing Barnet v. Elan,

236 F.R.D. 158, 161 (S.D.N.Y. 2005)).

                After a court determines which plaintiff has the greatest financial stake in the

case, the PSLRA requires that the court evaluate whether that plaintiff satisfies Rule 23(a) of the

Federal Rules of Civil Procedure. See In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D.

at 18. “[A]lthough Rule 23(a) includes four requirements — numerosity, commonality,

typicality, and adequacy — the presumptive lead plaintiff ‘need only make a preliminary showing

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that it satisfies the typicality and adequacy requirements of Rule 23.’” Reese v. Bahash,

248 F.R.D. at 62 (quoting In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18).

               The typicality requirement “‘asses[es] whether the action can be efficiently

maintained as a class and whether the [movant has] incentives that align with those of absent

class members so as to assure that the absentees’ interests will be fairly represented.’” In re XM

Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18 (quoting Baby Neal v. Casey, 43 F.3d 48,

58 (3d Cir. 1994)). Accordingly, “[t]ypicality is generally satisfied when the [movant’s] claims

arise from the same course of conduct, series of events, or legal theories as the claims of other

class members.” Id.; see Reese v. Bahash, 248 F.R.D. at 63 (typicality satisfied “‘if each class

member’s claim arises from the same course of events that led to the claims of the [movant] and

each class member makes similar legal arguments to prove the defendant’s liability’”) (quoting

In re Lorazepam & Clorazepate Antitrust Litig., 202 F.R.D. 12, 27 (D.D.C. 2001)). The

adequacy requirement assesses whether the movant “‘has the ability and incentive to represent

the claims of the class vigorously,’ [and] has retained ‘adequate counsel,’” as well as whether

“there exists any ‘conflict between [the movant’s] claims and those asserted on behalf of the

class.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 18 (quoting Hassine v.

Jeffes, 846 F.2d 169, 179 (3d Cir. 1988)); see also Reese v. Bahash, 248 F.R.D. at 63 (to satisfy

adequacy requirement, movant “‘must not have antagontistic or competing interests with the

unnamed members of the class’” and “‘must appear able to vigorously prosecute the interests of

the class through qualified counsel’”) (quoting Twelve John Does v. District of Columbia,

117 F.3d 571, 575 (D.C. Cir. 1997)).

                                                 5
                The final step in the determination of the lead plaintiff “is to give other plaintiffs

an opportunity to rebut the presumptive lead plaintiff’s showing that it satisfies Rule 23’s

typicality and adequacy requirements.” In re XM Satellite Radio Holdings Sec. Litig.,

237 F.R.D. at 18 (citing 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II)). “If the presumption is overcome,

the court must then turn to the plaintiff with the next highest financial interest in the litigation

and start the process over again until all challenges have been exhausted.” Id.

                With respect to the appointment of lead counsel, the PSLRA provides that “[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). The PSLRA “‘evidences a strong

presumption in favor of approving a properly-appointed lead plaintiff’s decisions as to counsel

selection and counsel retention.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D.

at 21 (quoting In re Cendant Corp. Litig., 264 F.3d 201, 276 (3d Cir. 2001)).

                                          III. DISCUSSION

                                          A. Lead Plaintiff

                Under the PSLRA’s framework, the Court concludes that Iron Workers is the

member of the purported plaintiff class that is the “most capable of adequately representing the

interests of class members.” 15 U.S.C. § 78-4(a)(3)(B)(i). As an initial matter, Iron Workers

complied with the PSLRA’s procedural requirements by timely moving to be appointed lead

plaintiff, signing and filing a certification as described in 15 U.S.C. § 78u-4(a)(2), and selecting

and retaining counsel to represent itself and the class. See Reese v. Bahash, 248 F.R.D. at 62

(citing 15 U.S.C. §§ 78u-4(a)(2) & (a)(3)); see also Mot. at 4. Furthermore, Iron Workers has

                                                   6
provided documentation that it purchased 2,060 shares of Washington Post common stock during

the Class Period, see Mot., Ex. C to Adelman Decl., Movant’s Purchases and Losses at 1, and

asserts that it “lost in excess of $245,000 due to [the] defendants’ [alleged] misconduct.” Mot.

at 4; see Mot., Ex. C to Adelman Decl., Movant’s Purchases and Losses at 1. Thus, Iron

Workers concludes that, “[t]o the best of [its] knowledge, there are no other applicants . . . who

have a larger financial interest.” Mot. at 4. The Court agrees. The initial named plaintiff,

Plumbers Local, only purchased 440 shares of Washington Post common stock during the Class

Period. See Compl., Schedule A Securities Transactions at 1. Furthermore, there is no evidence

in the record that anyone else has a larger financial interest than Iron Workers, and no member of

the purported class has challenged Iron Workers’ claim that it has the largest financial interest in

this case.

               Finally, Iron Workers has made the required showing that it satisfies the typicality

and adequacy requirements set forth in Rule 23(a) of the Federal Rules of Civil Procedure. As

discussed, this case is a purported federal securities class action brought on behalf of all persons

who acquired Washington Post common stock between July 31, 2009 and August 13, 2010. See

Compl. ¶ 5. With respect to typicality, Iron Workers alleges that it (1) purchased Washington

Post common stock during the Class Period; (2) was adversely affected by defendants’ false and

misleading statements; and (3) suffered damages as a result. See Mot. at 5. Iron Workers’

“claims are typical because they arose out of the same course of events as the claims of absent

class members.” Reese v. Bahash, 248 F.R.D. at 63. With respect to adequacy, Iron Workers’

interests are aligned with those of the purported class because “it has the largest financial interest

in the relief sought by the class, and there is no evidence of any conflict between its interests and

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those of other class members.” Id. And as discussed below, Iron Workers has selected and

retained experienced counsel, who are competent and qualified to pursue the purported class’

claims. See id.

               Because the PSLRA’s presumption in favor of appointing Iron Workers stands

unrebutted, the Court will appoint Iron Workers as lead plaintiff. See 15 U.S.C. § 78u-

4(a)(3)(B)(iii); see also Reese v. Bahash, 248 F.R.D. at 63.2

                                          B. Lead Counsel

               Iron Workers has selected and retained Robbins Geller to serve as lead counsel.

See Mot. at 1, 6. As discussed, the PSLRA “‘evidences a strong presumption in favor of

approving a properly-appointed lead plaintiff’s decisions as to counsel selection and counsel

retention.’” In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 21 (quoting In re

Cendant Corp. Litig., 264 F.3d at 276). Robbins Geller, a large law firm with offices nationwide,

“is actively engaged in complex litigation, particularly securities litigation.” Mot. at 6. As other

courts have recognized, “[t]he experience, ability, and reputation of the attorneys of [Robbins

Geller] is not disputed; it is one of the most successful law firms in securities class actions, if not

the preeminent one.” In re Enron Corp. Sec., Derivative & “ERISA” Litig., 586 F. Supp. 2d 732,

797 (S.D. Tex. 2008); see Reese v. Bahash, 248 F.R.D. at 63 (stating that Robbins Geller has

“‘extensive experience litigating securities class actions ’” and appointing firm as lead counsel)

(quoting In re XM Satellite Radio Holdings Sec. Litig., 237 F.R.D. at 21); see also In re Cardinal

       2
               The Court notes that Iron Workers “is the type of institutional investor that
Congress envisioned serving as a lead plaintiff when it passed the PSLRA.” Reese v. Bahash,
248 F.R.D. at 62; see also Mot. at 5-6.

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Health Inc. Sec. Litigs., 528 F. Supp. 2d 752, 768 (S.D. Ohio 2007).3 Because there is no dispute

as to this firm’s experience and qualifications, the Court approves of Iron Workers’ selection and

will appoint Robbins Geller as lead counsel.

                                       IV. CONCLUSION

               For the foregoing reasons, Iron Workers Local No. 25 Pension Fund’s motion for

appointment as lead plaintiff and for approval of its selection of counsel [Dkt. No. 6] will be

GRANTED. An Order consistent with this Opinion shall issue this same day.

               SO ORDERED.

                                                       /s/
                                                      PAUL L. FRIEDMAN
DATE: April 21, 2011                                  United States District Judge

       3
           Until March of 2010, Robbins Geller was known as Coughlin Stoia Geller
Rudman & Robbins LLP.

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