White Pine Investments v. CVR Refining, LP

Background

This securities class action concerns investors who sold CVR Refining, LP common stock between July 30, 2018, and January 28, 2019. The proposed class alleges that CVR Refining and the other defendants violated federal securities laws by making false or misleading statements. The complaint seeks relief under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5.

Joseph DeGaetano and Joanne Zanetos moved to be appointed jointly as lead plaintiffs under the Private Securities Litigation Reform Act and asked the court to approve Levi & Korsinsky, LLP as lead counsel. Gregory Gersch and White Pine Investments also sought appointment as lead plaintiff, but each later filed a notice stating that it did not oppose appointing DeGaetano and Zanetos.

Lead- Plaintiff Analysis

The court applied the statute’s two-step process for selecting the “most adequate plaintiff.” First, the proposed lead plaintiff must have timely moved, have the largest financial interest, and make the required preliminary showing under Federal Rule of Civil Procedure 23. The resulting presumption can be overcome only with proof that the proposed lead plaintiff cannot fairly and adequately protect the class or faces unique defenses.

The court first considered whether DeGaetano and Zanetos could serve as a group. Although they did not identify a relationship before the lawsuit and learned about the opportunity to join through counsel, the court found those facts were not disqualifying. The two described their participation in the case, plans for cooperation, regular communications, availability for litigation activities, and a process for resolving deadlocks. Each had more than twenty years of experience managing personal investments, and their group consisted of only two members. The court therefore found the group acceptable.

The court found that the motion was timely because it was filed by the June 5, 2020 deadline. DeGaetano sold 37,800 CVR Refining units and Zanetos sold 10,472 units during the relevant period, for a combined total of 48,272 units. That exceeded the amounts sold by Gersch and White Pine Investments. The court noted that Zanetos’s declaration also referred to 4,628 units sold on January 29, 2019, but did not include those units in its calculation because the class period ended January 28, 2019.

For the Rule 23 showing, the court concluded that the proposed plaintiffs’ claims were typical because they arose from the same alleged false or misleading statements and asserted similar legal theories. The court also found that they had no conflict with the class, had selected qualified and experienced counsel, and had a substantial interest in the outcome. They therefore were presumptively the most adequate plaintiffs. No party or class member submitted evidence rebutting that presumption.

Lead Counsel

The Private Securities Litigation Reform Act permits the most adequate plaintiff to select class counsel, subject to court approval. DeGaetano and Zanetos selected Levi & Korsinsky, LLP. The court found that the firm had extensive relevant experience and was qualified to conduct the litigation.

Ruling

Judge Analisa Torres granted the motion. The court appointed Joseph DeGaetano and Joanne Zanetos as lead plaintiffs and Levi & Korsinsky, LLP as lead class counsel. Under the parties’ stipulation, the parties were ordered to submit by January 15, 2021, a proposed schedule for filing an amended complaint and for the defendants’ response. The clerk was directed to terminate the motions at ECF Nos. 19, 23, and 26.