In re Plug Power, Inc. Securities Litigation
- Edgardo Ramos
- 1:21-cv-02004
- U.S. District Court · Southern District of New York
- 10
In re Plug Power Securities Litigation: Judge Ramos appointed Schumacher lead plaintiff, approved Bernstein Liebhard, and consolidated three securities actions.
The order affected the plaintiffs and proposed class members in the three Plug Power securities actions, the defendants, Manfred Schumacher, and the proposed law firms. It selected Schumacher as lead plaintiff, approved Bernstein Liebhard LLP as lead counsel, combined the three cases, and denied without prejudice the request to renew The Wagner Firm’s appointment as liaison counsel.
What happened
In re Plug Power, Inc. Securities Litigation involved three proposed class actions alleging that Plug Power, Inc. and two officers made false or misleading statements about the company’s financial reporting and internal controls. The cases concerned the same alleged events and defendants, although one proposed class period was longer.
Manfred Schumacher asked the court to combine the cases, appoint him as the lead plaintiff, and approve Bernstein Liebhard LLP as lead counsel. He showed an approximate loss of $1,285,469.09, which the court found was the largest among the remaining applicants. No other applicant opposed his requests.
Judge Edgardo Ramos granted Schumacher’s requests, approved Bernstein Liebhard as lead counsel, and consolidated all three cases under one docket number. The court also denied without prejudice Schumacher’s separate request to renew the appointment of The Wagner Firm as liaison counsel.
The detailed version
- In re Plug Power, Inc. Securities Litigation · No. 1:21-cv-02004
- Edgardo Ramos
- July 22, 2021
Background
Dawn Beverly, Laxman Tank, and Branislav Smolicek each filed a proposed class action against Plug Power, Inc., Andrew Marsh, and Paul B. Middleton. The complaints asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act. They alleged that the defendants failed to disclose issues involving Plug Power’s ability to timely file its 2020 annual report, possible material weaknesses in its internal financial controls, and the effect of those issues on the company’s positive statements about its business.
The complaints alleged that Plug Power’s stock fell $3.68, or 7%, after the company notified the Securities and Exchange Commission on March 2, 2021, that its annual filing would be late. The Beverly and Smolicek complaints proposed the same class period, from November 9, 2020, through March 1, 2021. The Tank complaint proposed a class period ending March 16, 2021, based in part on a later announcement that Plug Power needed to restate financial statements for fiscal years 2018 and 2019 and expected to report an impairment and a material weakness in its internal controls.
Consolidation
The court applied Rule 42(a) of the Federal Rules of Civil Procedure, which allows related cases with common legal or factual questions to be combined to reduce duplication, delay, confusion, and the risk of inconsistent outcomes. The court found that all three cases involved substantially similar allegations, the same defendants, and a common course of conduct. It concluded that the difference in class periods did not outweigh the benefits of handling the cases together.
The court granted consolidation of the Beverly and Tank actions. It also consolidated the Smolicek action into the same case after noting the parties’ consent to its transfer and consolidation. Future filings were to be made under Case No. 21 Civ. 2004 and captioned “In re Plug Power, Inc. Securities Litigation.”
Lead Plaintiff
The Private Securities Litigation Reform Act requires the court to appoint the class member most capable of adequately representing the class as lead plaintiff. The statute generally presumes that the most adequate plaintiff is the person who timely responded to public notice, has the largest financial interest, and preliminarily satisfies the relevant class-representation requirements under Rule 23.
The court found that Schumacher timely filed his motion after public notice. Applying the loss-calculation method preferred in the district, the court found that Schumacher had an approximate loss of $1,285,469.09 and the largest financial loss by a significant margin. The other potential applicants either withdrew, stated that they did not oppose Schumacher’s appointment, or filed no response.
The court also found that Schumacher’s claims were typical because he alleged that he bought Plug Power securities at artificially inflated prices because of the defendants’ allegedly fraudulent statements or omissions and then suffered losses. The court found him adequate to represent the class because he had retained experienced securities counsel, had a substantial financial interest in the case, and had no identified conflict with other class members. The court therefore appointed Schumacher as lead plaintiff.
Lead Counsel
The court approved Schumacher’s selection of Bernstein Liebhard LLP as lead counsel after reviewing the firm’s stated experience in securities class actions. No party or other movant objected to the selection.
The opinion also addressed Schumacher’s request, made in an earlier filing concerning the Smolicek action, to appoint The Wagner Firm as liaison counsel. Because that request was not included in his motion in this court and appeared to be moot after transfer and consolidation, the court denied it without prejudice to renewal within one week of the order.
Disposition
Judge Edgardo Ramos granted Schumacher’s motion for appointment as lead plaintiff, approval of Bernstein Liebhard as lead counsel, and consolidation of the Beverly and Tank actions. The court separately consolidated the Smolicek action. The parties were directed to meet and confer about scheduling and submit a proposed stipulation for the court’s approval.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.