Carew v. Lifecore Biomedical, Inc.

Background

David Carew filed a proposed securities class action on behalf of himself and others similarly situated against Lifecore Biomedical, Inc., Albert D. Bolles, James G. Hall, Brian McLaughlin, and John Morberg. Carew and Hugh Robert Holmes separately moved for appointment as lead plaintiff and for approval of their selected counsel. They later filed a joint stipulation asking to serve as co-lead plaintiffs, with Pomerantz LLP and the Rosen Law Firm as co-lead counsel and Lockridge Grindal Nauen PLLP as local liaison counsel.

Legal standard

The Private Securities Litigation Reform Act requires the court to appoint the member or members of the proposed class most capable of adequately representing the class. The statute generally presumes that the most adequate plaintiff is a person who sought appointment, has the largest financial interest in the requested relief, and satisfies the requirements of Federal Rule of Civil Procedure 23. That presumption can be rebutted by proof that the proposed lead plaintiff cannot fairly and adequately protect the class or is subject to unique defenses.

The court explained that whether to appoint co-lead plaintiffs is within the court’s discretion and must be decided case by case. It found co-lead plaintiffs appropriate here because Carew and Holmes were both individual investors with substantial, generally comparable interests. The court also concluded that the co-lead structure could provide stability and adequate resources for the litigation.

Ruling

The court found no objection to either Carew’s or Holmes’s qualifications. Carew reported a claimed loss of $185,349, and Holmes reported a claimed loss of $311,139. Both asserted that Lifecore violated securities laws by making false or misleading statements that inflated its share price, and both stated that they would adequately represent the proposed class. The court also found their selected law firms sufficiently experienced in securities class actions.

The court therefore ordered that:

- Carew’s motion to appoint counsel and appoint him as lead plaintiff was granted in part. - Holmes’s motion to appoint a lead plaintiff and approve his selection of counsel was granted in part. - Carew and Holmes were appointed co-lead plaintiffs. - Pomerantz LLP and the Rosen Law Firm were approved as co-lead counsel, and Lockridge Grindal Nauen PLLP was approved as local liaison counsel. - Counsel must prosecute the case efficiently without overlapping or duplicating work and expenses. - The parties must confer within ten business days about a schedule for filing a consolidated or amended complaint and for defendants to respond, then file that schedule within thirty business days.

The order addressed leadership and case-management issues; it did not decide whether the alleged securities-law violations occurred.