In re The Estee Lauder Co., Inc. Securities Litigation

Background

Bridgett McAlice filed a proposed class action on behalf of people who purchased Estee Lauder common stock during a stated class period. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. A second, substantially identical action was later filed with a different class period. The court had previously granted the parties’ motions to consolidate the cases for purposes of the litigation.

The Private Securities Litigation Reform Act requires the court to appoint as lead plaintiff the class member or group of class members most capable of adequately representing the proposed class. The law creates a presumption in favor of the person or group with the largest financial interest who also satisfies the relevant requirements of Federal Rule of Civil Procedure 23, including typical claims and adequate representation.

Lead-plaintiff motions

After notice of the action was published, three plaintiffs or plaintiff groups timely moved to become lead plaintiff: the Macomb County Employees’ Retirement System, Macomb County Retiree Health Care Fund, and Wayne County Employees’ Retirement System, referred to as the Michigan Funds; individual investor Bennie Bonaminio; and individual investor Theodore Daly.

No movant disputed that the Michigan Funds had the greatest financial interest. Daly filed a notice of non-opposition after learning that he did not have the greatest financial stake. The court also stated that no one contested the other Rule 23 requirements. It found that the Michigan Funds’ claims were typical because they bought Estee Lauder common stock and suffered major losses after the alleged stock-price inflation was revealed. The court further found that the Michigan Funds could fairly and adequately represent the class because they are institutional investors with experienced counsel.

Lead counsel and disposition

The Michigan Funds selected Labaton Keller Sucharow LLP as lead counsel. The court found that the firm had the knowledge, experience, and resources to serve in that role. The Michigan Funds had also agreed to keep Bonaminio as an additional class representative and to keep his selected lawyer as additional class counsel. The court stated that the Michigan Funds could choose to do so, but warned that it would closely review the conduct of the Michigan Funds and their counsel and whether any additional counsel’s work was warranted and necessary. The court also noted that attorney fees and class-representative awards would remain subject to court review.

The court held that the statutory presumption favoring the Michigan Funds had not been rebutted. It denied Daly’s and Bonaminio’s motions to serve as lead plaintiff. It granted the Michigan Funds’ motions to be appointed lead plaintiff and to appoint Labaton Keller Sucharow LLP as lead counsel. The Clerk of Court was directed to close the three motion docket entries. The parties were ordered to meet, confer, and jointly propose a schedule by February 27, 2024, for filing a consolidated amended complaint and for any motions to dismiss, including a briefing schedule.