Opinion
No. 04 Civ. 7447 (RJH).
March 7, 2005
MEMORANDUM OPINION AND ORDER
The present dispute arises out of several consolidated securities class actions asserted against certain officers and directors of IAC/InterActiveCorp ("IAC") and IAC itself (collectively, "defendants") on behalf of a purported class of investors who claim to have sustained losses arising out of defendants' alleged misrepresentations in press releases circulated from March 19, 2003 until August 4, 2004. Upon the submission of several motions to appoint lead plaintiff and lead counsel following the publication of notice to the putative class, the Court issued an Opinion and Order on December 20, 2004 (the "December 20, 2004 Opinion"), appointing Edward Fein and the Investor Group as co-lead plaintiffs, and designating Schatz Nobel, P.C. and Wolf Haldenstein Adler Freeman Herz LLP as co-lead counsel. The Court will assume familiarity with the facts presented therein for the purposes of this Opinion and Order.
The caption of these consolidated actions shall hereinafter be referred to as "In re IAC/InterActiveCorp Securities Litigation". All relevant documents and submissions shall be maintained as one file under Master File No. 04 Civ. 7447(RJH). All actions now pending or subsequently filed in this district that arise out of or are related to the same facts as alleged in the current actions shall be consolidated for all purposes upon application to the Court.
On January 11, 2005, Fein and the Cement Masons and Plasterer's Retirement Trust (the "Cement Masons Trust") independently filed motions for reconsideration of the December 20, 2004 Opinion. For the reasons stated below, the Court grants the Cement Masons Trust's motion for reconsideration and substitutes the Cement Masons Trust as co-lead plaintiff alongside Fein and designates its counsel, Lerach Coughlin Stoia Geller Rudman Robbins LLP, as co-lead counsel in the stead of the Investor Group and its counsel, Wolf Haldenstein Adler Freeman Herz LLP. The remaining motion by Fein is denied to the extent that it is inconsistent with this Opinion and Order.
DISCUSSION
Fein and the Cement Masons Trust have independently moved for reconsideration of the December 24, 2004 Opinion. Rule 60(b) of the Federal Rules of Civil Procedure provides relief from any judgment or order based on six substantive grounds such as mistake, fraud, misrepresentation or newly discovered evidence. Fed.R.Civ.P. 60(b). Rule 60(b)(6) also includes a catchall provision for "any other reason justifying relief from the operation of the judgment. Id.
The Cement Masons Trust identified Rule 60(b) as the basis for its motion for reconsideration, while Fein neglected to mention the applicable rule in its moving papers. Although Rule 59(e) and Rule 60(b) are closely related, a motion for reconsideration of a nonfinal order is "properly classified as a motion for relief under Rule 60(b), since Rule 60(b) encompasses motions filed in response to nonfinal orders as well as judgments, whereas Rule 59(e) contemplates only motions to alter or amend judgments." 12 James W. Moore et al., Moore's Federal Practice § 59.05[8], at 59-26 (3d ed. 1997).
The decision to grant a motion for reconsideration is within "the sound discretion of the trial court, whose disposition of the motion will not be disturbed on appeal absent an abuse of that discretion." National Petrochemical Co. v. M/T Stolt Sheaf, 930 F.2d 240, 244 (2d Cir, 1991). Nevertheless, reconsideration will generally be denied unless the moving party can identify matters that "might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). Moreover, a motion for reconsideration should "not be granted where the moving party seeks solely to relitigate an issue already decided." Id.
Both Fein and the Cement Masons Trust contend that the December 20, 2004 Opinion rested on the erroneous factual conclusion that New Hayward Holdings, Ltd. ("New Hayward Holdings"), a member of the Investor Group, was an institutional investor. (Fein Memorandum in Supp. of Mot. for Reconsideration ("Fein Mem.") at 4; The Cement Masons Trust Memorandum in Supp. of Mot. for Reconsideration ("The Cement Masons Trust Mem.") at 8.) Rather, they charge, New Hayward Holdings is simply a "personal investment vehicle of Jack Bingleman, the signatory of its certification," and does not act in a fiduciary capacity for anyone. (The Cement Masons Trust Mem. at 2; Fein Mem. at 4.) The December 20, 2004 Opinion designated "Fein and the Investor Group, which includes institutional investor, New Hayward Holdings, Ltd., as co-lead plaintiffs" in order to ensure the adequate representation of the potentially broad panoply of interests within the class. Malasky v. IAC/InterActiveCorp, No. 04 Civ. 7447 (RJH), 2004 WL 2980085, at *4 (S.D.N.Y. Dec. 21, 2004) (emphasis added). The Court shall therefore grant the motions for reconsideration of the December 20, 2004 Opinion to the extent that it reflects a misunderstanding of New Hayward Holding's status as an institutional investor.
In its initial moving papers to be appointed as lead plaintiff, the Investor Group represented that New Hayward Holdings:
is a corporation engaged in financial money management, including the investment of assets in a broad range of investment vehicles. New Hayward Holdings Ltd. actively selects and executes its investment choices, reflecting the type of sophisticated investor that Congress envisioned when it passed the PSLRA.
(The Investor Group Memorandum in Further Support of Motion to be Appointed as Lead Plaintiff at 3-4.) The Investor Group then stated that "[t]he goal of the PSLRA's lead plaintiff provision is to locate a person or entity whose sophistication and interest in the litigation are sufficient to permit that person or entity to function as an active agent for the class. See, e.g., H.R. Conf. Rep. No. 104-369, at 32 (1995)." ( Id. at 4.) In support of its view that it was an appropriate lead plaintiff despite having sustained fewer estimated losses than did Fein, the Investor Group subsequently cited three cases where courts appointed an individual investor and an institutional investor as co-lead plaintiffs even though the individual investor had sustained the largest financial loss. See In re Party City Litigation, 189 F.R.D. 91, 114 (D.N.J. 1999) (appointing individual investor and institutional investor as co-lead plaintiffs and remarking that the individual investor "will be able to benefit from the investment experience of Slater Asset, as an institutional investor."); In re Cable Wireless, PLC, Securities Litigation, 217 F.R.D. 372, 376 (E.D.Va. 2003) (appointing individual investor and teachers' pension plan as co-lead plaintiffs and reasoning that the "purpose of the PSLRA's selection-of-lead-plaintiff provision was to get institutional investors involved in the prosecution of securities class action suits."); In re Microstrategy, Inc. Securities Litigation, 110 F. Supp. 2d 427, 439 (E.D. Va. 2003) (appointing two-person family and union pension fund as co-lead plaintiffs).
To be sure, the Investor Group never explicitly stated that it was an institutional investor, although at the very least, its precise status was unclear at the time the December 20, 2004 Opinion was rendered. In any event, the Investor Group has now effectively conceded that it is not an institutional investor. (The Investor Group Memorandum in Opposition to Mot. for Reconsideration at 6-8 (stating that "New Hayward is at least a `sophisticated' investor.").) The broad range of interests that the Court sought to protect in appointing Fein and the Investor Group will therefore be left unserved if the Investor Group remains co-lead plaintiff alongside Fein.
By contrast, the Cement Masons Trust, which originally sought to be appointed as lead plaintiff but later withdrew its motion, is a "multiemployer pension plan that provides pension benefits to retired cement masons and plasterers in Washington state." (The Cement Masons Trust Memorandum in Further Support of Motion for Reconsideration at 4 n. 5.) In claiming $99,925.50 as total losses in its original moving papers (Declaration of Mario Alba Jr., Ex. B), the Cement Masons Trust has alleged, as do the other class members, that its losses stemmed from defendants' alleged misrepresentations in violation of federal securities law. In addition, counsel for the Cement Masons Trust, Lerach Coughlin Stoia Geller Rudman Robbins LLP, filed the first action captioned Malasky v. IAC/InterActiveCorp (04 Civ. 7447) and is a reputable law firm with substantial expertise in securities class actions. (The Cement Masons Trust Mem. at 4, 9.) Based on these considerations, the Court finds that the Cement Masons Trust has satisfied the typicality and adequacy requirements of Rule 23 and can provide a unique perspective, depth of experience and added stability to the representation of the class.
As Fein points out, Black's Law Dictionary defines the term "institutional investors" to mean "[l]arge investors, such as mutual funds, pension funds, insurance companies, and others who largely invest other people's money." Black's Law Dictionary at 801 (6th ed. 1990).
Accordingly, the Court exercises its discretion in substituting the Cement Masons Trust in the place of the Investor Group as co-lead plaintiff alongside Fein. In light of the preference that the PSLRA expresses in favor of allowing lead plaintiffs to select their own counsel, 15 U.S.C. § 78u-4(a)(3)(B)(v), the Court similarly substitutes Lerach Coughlin Stoia Geller Rudman Robbins LLP as co-lead counsel in the stead of Wolf Haldenstein Adler Freeman Herz LLP.
To the extent that Fein argues that he alone should be appointed lead plaintiff based on his estimated financial loss, the Court rejects this contention as an effort to relitigate matters already evaluated and resolved in the December 20, 2004 Opinion. Shrader, 70 F.3d at 257.
Mindful that disagreements may arise — and in fact, have already arisen — throughout this action, the Court reserves the right to modify this co-lead plaintiff structure in the event that litigation is stalled, expenses become unnecessarily duplicative or wasteful, or the structure becomes otherwise unmanageable. In the meantime, the action shall proceed as "In re IAC/InteractiveCorp Securities Litigation" under the Master File No. 04 Civ. 7447, with Fein and the Cement Masons Trust as co-lead plaintiffs and Schatz Nobel, P.C. and Lerach Coughlin Stoia Geller Rudman Robbins LLP as co-lead counsel.
SO ORDERED.