Plymouth County Retirement Association v. Array Technologies, Inc.

Background

The court previously appointed Plymouth County Retirement Association and the Carpenters Pension Trust Fund for Northern California as co-lead plaintiffs in this securities class action under the Private Securities Litigation Reform Act. It denied Erste Asset Management’s application to become lead plaintiff and lead counsel because the court found that Erste AM faced unique standing defenses—standing issues particular to that proposed lead plaintiff.

Erste AM moved for reconsideration of that decision. The Institutional Investor Group opposed the motion, arguing that Erste AM remained subject to unique defenses. The dispute included whether Erste AM had received a valid assignment of claims from Erste Fonds Nr. 566, the entity that bought and sold the Array securities at issue.

Court’s Analysis

The court granted reconsideration and revised one part of its earlier ruling. After reviewing cases cited by Erste AM, it held that Erste AM would not face standing defenses merely because the alleged assignment occurred after another plaintiff filed the first complaint.

The court nevertheless adhered to its conclusion that Erste AM was not a suitable lead plaintiff. Erste AM had stated that it suffered losses from its purchases of Array common shares, but the accompanying damages chart showed that Erste 566—not Erste AM—bought and sold the shares. Erste AM later said it was Erste 566’s Austrian management company and was authorized to sue for the fund. It also submitted an Assignment Declaration stating that Erste AM had authority to pursue the case and that the fund would be bound by the lawsuit’s result.

The court found a serious, non-speculative risk that the Assignment Declaration did not transfer the required property interest in the claims under Austrian law. The court explained that a non-beneficial owner of securities may have standing if assigned a property interest in the claims, but foreign law may be relevant to proving that the property interest exists. Erste AM had not established that the Assignment Declaration was sufficient under Austrian law. The court also noted that resolving the issue could require complex foreign-law litigation that supported choosing another lead plaintiff.

The court did not consider an Austrian-law expert declaration that Erste AM submitted for the first time with its reconsideration reply. The declaration addressed whether Erste 566 had legal personality and existed, rather than whether the Assignment Declaration transferred the required property interest. In addition, the court found the submission untimely because Erste AM should have submitted it with its original motion. The court also stated that its decision did not rest on whether Erste 566 lacked legal personality or existence.

Order

The court ordered that Erste AM’s motion for reconsideration was GRANTED. It DENIED Erste AM’s application to submit materials supplementing its reply brief. It DENIED Erste AM’s motion for appointment as lead plaintiff and lead counsel. It GRANTED the motion of Plymouth County Retirement Association and the Carpenters Pension Trust Fund for Northern California to be appointed lead plaintiffs and GRANTED the appointment of Labaton Sucharow LLP as lead counsel.