Batter v. Hecla Mining Company

Background

The opinion concerns two securities class actions against Hecla Mining Company and several of its officers and directors. The court had previously consolidated the actions, appointed the Gluck Family as lead plaintiff, and approved Kaplan Fox & Kilsheimer as lead counsel. Ahmed Hussein, who had previously been the presumptive lead plaintiff, moved for reconsideration of that decision.

Hussein’s arguments

Hussein argued that the court had incorrectly decided that the Gluck Family rebutted the presumption favoring him as lead plaintiff. He also argued that the Gluck Family’s certifications were deficient and therefore made the family inadequate to serve as lead plaintiff.

Legal standard

The court explained that reconsideration is an extraordinary remedy. It generally requires the moving party to identify controlling law or factual matters that the court overlooked. The court also described three recognized grounds for reconsideration: an intervening change in controlling law, newly available evidence, or the need to correct a clear error or prevent manifest injustice. Reconsideration is not a way to relitigate issues already decided or present previously rejected arguments under a new theory.

Reasoning

Under the Private Securities Litigation Reform Act, the court generally presumes that the applicant with the largest financial interest who satisfies the applicable requirements is the most adequate lead plaintiff. That presumption can be rebutted by proof that the person will not fairly and adequately protect the class or is subject to unique defenses that make adequate representation unlikely.

The court stated that its earlier decision had considered six events raised by the Gluck Family concerning Hussein: the Frotas matter involving his control of an account while he was a stockbroker; a tax dispute with the Internal Revenue Service; allegations concerning his role as chairman of the Middle East Paper Company; proxy fights and alleged violations of Quality Systems Inc.’s insider-trading policy; allegations concerning business through a defunct New York corporation; and a New Jersey state-court lawsuit concerning a gambling debt in Atlantic City.

Although the court identified the Frotas matter as involving the most troubling conduct, it also stated that all six events raised concerns about Hussein’s ability to act as a fiduciary for the class. The court rejected Hussein’s argument that settlements, unproven allegations, and the absence of criminal wrongdoing prevented the Gluck Family from rebutting the presumption. It explained that potential risks and credibility issues can be sufficient; the court did not need to determine that any possible defense would ultimately succeed.

The court also rejected Hussein’s arguments about the Gluck Family’s certifications because it had already considered and rejected substantially the same arguments in its earlier order. Hussein did not present facts or controlling authority reasonably expected to change the court’s prior conclusion.

Disposition

The court denied Ahmed Hussein’s motion for reconsideration. The opinion therefore left in place the earlier appointment of the Gluck Family as lead plaintiff, the approval of Kaplan Fox & Kilsheimer as lead counsel, and the consolidation of the two actions.