Opinion
Civil Action No. H-02-1571.
March 10, 2005
MEMORANDUM AND ORDER
This action is brought against Dynegy, Inc. (DI) and others for violation of federal securities law. In the Memorandum and Order entered on January 3, 2005 (Docket Entry No. 448), the court granted in part and deferred in part Lead Plaintiff's Motion for Class Certification for the 1933 Act and 1934 Act Claims (Docket Entry No. 413), and granted Lead Plaintiff time to submit a supplemental brief and evidence in support of its motion for certification of a class that consists of persons seeking relief for alleged violations of §§ 11 and 15 of the Securities Act of 1933 (1933 Act), 15 U.S.C. §§ 77k and 77o, during a proposed class period beginning on December 20, 2001, and ending on July 22, 2002 (1933 Act Class). Pending before the court are that portion of Lead Plaintiff's Motion for Class Certification for the 1933 Act and 1934 Act Claims (Docket Entry No. 413), on which the court deferred ruling in the Memorandum and Order of January 3, 2005 (Docket Entry No. 448), and Defendants' Motion to Exclude Testimony of Scott Hakala (Docket Entry No. 498).
See In re Dynegy, Inc. Securities Litigation, ___ F.R.D. ___, 2005 WL 388557 (S.D. Tex. January 3, 2005).
I. Lead Plaintiff's Motion to Certify 1933 Act Class
Lead Plaintiff originally sought certification for a class consisting of
all persons who purchased stock issued in Dynegy's 12/20/01 Offering of Class A Common Stock, between 12/20/01 and 7/22/02. On Behalf of this class, Lead Plaintiff alleges violations of §§ 11 and 15 of the Securities Act of 1933 (the "1933 Act Class").
Lead Plaintiff's Motion for Class Certification for the 1933 Act and 1934 Act Claims, Docket Entry No. 413, p. 1.
Defendants opposed certification of the 1933 Act Class, inter alia, on grounds that Lead Plaintiff and all aftermarket purchasers lack standing to assert claims under the 1933 Act. In the Memorandum and Order of January 3, 2005, the court concluded that Lead Plaintiff has satisfied the requirements for class certification with respect to persons who purchased Dynegy Class A common stock on the offering date of December 20, 2001, but deferred ruling on Lead Plaintiff's argument that the 1933 Act Class should include aftermarket purchasers and extend to July 22, 2002. See In re Dynegy, Inc. Securities Litigation, ___ F.R.D. at ___, 2005 WL 388557, at *16, *28.
In its Supplemental Brief and Supporting Evidence Regarding Certification of the 1933 Act Class, Lead Plaintiff conceded that "[d]irect, share-by-share tracing of Offering shares is not possible [in the aftermarket]." Consequently, Lead Plaintiff argued that the 1933 Act Class should include all aftermarket purchasers who can prove they acquired shares in Dynegy, Inc.'s December 20, 2001, offering through the use of statistical evidence as described in the Declaration of Scott D. Hakala (Docket Entry No. 478). Asserting that certain documents produced by Lehman Brothers Inc. and Lehman Brothers Holding, Inc. "indicate the Offering began on December 19, not December 20, 2001 . . . Lead Plaintiff requests that the first day of the 1933 Act class period should be December 19, 2001." Although Lead Plaintiff has not provided any evidentiary support for its request to amend the court's prior ruling to begin the 1933 Act class period on December 19, 2001, instead of December 20, 2001, defendants have argued in response only that the 1933 Act Class should not include aftermarket purchasers.
See Docket Entry No. 476, p. 5.
See id. at pp. 4-6.
Id. at p. 2 n. 1.
See Defendants' Supplemental Opposition to Motion for Certification of 1933 Act Class, Docket Entry No. 501, p. 10.
On March 1, 2005, in the case styled, Krim v. pcOrder.com. Inc., ___ F.3d ___, 2005 WL 469618 (5th Cir. 2005), the Fifth Circuit rejected the same statistical analysis Lead Plaintiff urged the court to approve. Accordingly, in its Reply Regarding Certification of the 1933 Act Class, Lead Plaintiff states that "given the tracing requirement in the Fifth Circuit, Lead Plaintiff believes that the Class for the 1933 Act claims should be comprised of those who purchased in the December 20, 2001 offering and suffered a loss which will be measured in accordance with § 11(e)." Accordingly, the court concludes that the 1933 Act Class should not include aftermarket purchasers.
Docket Entry No. 527, p. 1.
II. Conclusions and Order
For the reasons explained above, the court CERTIFIES a 1933 Act Class that consists of all persons seeking relief for alleged violations of §§ 11 and 15 of the Securities Act of 1933 (1933 Act), 15 U.S.C. §§ 77k and 77o, who purchased, on either December 19, 2001, or December 20, 2001, Class A Common Stock of Dynegy, Inc. in the stock offering of December 2001, and suffered a loss therefrom that can be measured in accordance with § 11 (e) of the 1933 Act, 15 U.S.C. § 77k(e).
Lead Plaintiff's Motion for Class Certification for the 1933 Act Claims (Docket Entry No. 413) is GRANTED in part and DENIED in part. Defendants' Motion to Exclude Testimony of Scott Hakala (Docket Entry No. 498) is MOOT.