In Re Allergan PLC Securities Litigation

Background

The court had previously appointed Boston Retirement Services (BRS) as lead plaintiff and the Pomerantz Law Firm as sole lead counsel. BRS had narrowly prevailed over the DeKalb County Pension Fund because BRS claimed slightly larger losses, which the court described as the primary selection criterion and statutory tie-breaker when other qualifications are equal.

The court later declined to certify a class because BRS was not an adequate representative. The court concluded that BRS had acquiesced in a maneuver by its law firm that circumvented the court’s directive that the class have only one lead counsel. The court gave thirty days for another party to seek appointment as lead plaintiff and lead counsel.

DeKalb reapplied with Faruqi and Faruqi. Three other Allergan shareholders also sought to intervene and serve as lead plaintiff and lead counsel: Union Asset Management Holding AG, represented by Bernstein, Litowitz, Berger & Grossman; Macomb County Employees’ Retirement System, represented by Bleichmar Fonti & Auld, LLP; and the General Retirement System of Detroit, represented by Abraham, Fruchter & Twersky, LLP. Those three applicants claimed losses ranging from slightly to significantly greater than DeKalb’s losses.

Legal standard and analysis

The Private Securities Litigation Reform Act requires the court to appoint the class member most capable of adequately representing the class. The statute establishes an initial sixty-day period after publication of notice for potential lead plaintiffs to apply.

The court explained that the statute does not contemplate extended lead-plaintiff proceedings beyond the early stages of a case. The court also relied on decisions favoring consideration of parties that applied during the original sixty-day period before considering later applicants. DeKalb was the only current applicant that had timely sought lead-plaintiff status. The court had previously found that DeKalb satisfied the requirements for appointment and had selected BRS only because BRS claimed a larger loss.

The court found no rare circumstance that would justify considering the three later applicants. It also noted that none had explained why it failed to apply on time. Because DeKalb’s application was granted, the court did not reach DeKalb’s additional arguments that particular late applicants should be disqualified. The court also did not address the General Retirement System of Detroit’s motion to strike statements concerning Detroit’s qualifications, because those statements played no role in the decision; that motion was denied as moot.

Ruling

Judge Colleen McMahon granted DeKalb’s motion to be appointed lead plaintiff. She also granted DeKalb’s motion to appoint Faruqi and Faruqi as lead class counsel, conditioned on that firm being the sole lead counsel and performing all services for which it might later seek compensation. The clerk was directed to close the motions listed at Docket Numbers 154, 157, 159, 165, and 185.