Long v. Stellantis N.V.

Background

Steven Long filed a proposed securities class action on behalf of investors who purchased Stellantis N.V. common stock between February 15, 2024, and July 24, 2024. The complaint alleges that Stellantis, its chief executive officer Carlos Tavares, and its chief financial officer Natalie M. Knight made false or misleading statements about inventory levels, pricing, product offerings, and the company’s 2024 outlook. After Stellantis announced disappointing first-half results on July 25, 2024, its stock price fell approximately 10 percent. The complaint asserts securities-fraud claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5, as well as a control-person-liability claim under Section 20(a) against Tavares and Knight.

Five individuals or entities initially moved for appointment as lead plaintiff under the Private Securities Litigation Reform Act. The City of North Miami Beach retirement plans withdrew their motion, Gregory Rikard filed a statement of non-opposition, and Mark Lim did not oppose the competing motions. The court therefore considered the motions of Thomas Trapp and Boston Retirement System, a public pension fund that provides retirement benefits to employees of the City of Boston and its autonomous agencies.

Legal standard

The Act directs the court to appoint the class member most capable of adequately representing the class. It creates a rebuttable presumption in favor of the applicant who timely moved for appointment or filed the complaint, has the largest financial interest, and makes the required preliminary showing of typicality and adequacy under Federal Rule of Civil Procedure 23. That presumption may be overcome by exacting proof that the presumptive lead plaintiff cannot fairly and adequately protect the class or has unique defenses.

Court’s analysis

The court found that both Trapp and Boston Retirement System timely filed their motions and made the preliminary showing required for typicality and adequacy. Both alleged that they purchased Stellantis stock during the class period at prices allegedly inflated by the defendants’ misstatements and suffered losses as a result.

Boston Retirement System, however, had the largest financial interest by every measure considered by the court. It purchased 171,662 shares for approximately $4,102,088 and suffered an approximate loss of $1,427,495. Trapp purchased 14,401 shares for approximately $364,422 and suffered an approximate loss of $141,995. The court therefore treated Boston Retirement System as the presumptive lead plaintiff.

Trapp argued that Boston Retirement System was barred by the Act’s limit on serving as lead plaintiff in more than five securities class actions during a three-year period. The court rejected that argument, relying on decisions from the Southern District of New York and other courts that have permitted qualified institutional investors to exceed that limit when doing so is consistent with the Act’s purpose of encouraging institutional investors to participate actively in securities litigation.

Trapp also argued that Boston Retirement System had not adequately supervised its other class actions or its lawyers. The court found that publicly available board minutes did not provide the exacting proof needed to overcome the presumption. The court credited the sworn statement of Boston Retirement System’s executive officer that securities cases were discussed in private executive sessions and that board members received updates from staff and outside counsel. The court also concluded that Boston Retirement System’s conduct in an earlier securities case did not justify denying appointment in this case, particularly because Trapp presented no evidence of complaints about Boston Retirement System’s conduct in its other cases.

The court separately reviewed Boston Retirement System’s selection of Bernstein Litowitz Berger & Grossman LLP as lead counsel. Because the firm had extensive securities-class-action experience and had obtained substantial recoveries while working with Boston Retirement System in other cases, the court approved the selection.

Disposition

Boston Retirement System’s motion for appointment as lead plaintiff was GRANTED. Trapp’s motion was DENIED. The lead-plaintiff motions filed by Mark Lim, the City of North Miami Beach retirement plans, and Gregory Rickard were DENIED AS MOOT. Boston Retirement System was appointed lead plaintiff, and Bernstein Litowitz Berger & Grossman LLP was appointed lead counsel. The order concerns leadership of the proposed class action; it does not decide whether the alleged securities violations occurred.