Broker-Dealer Litigation - Greenberg Traurig LLP

heightened pleading standards of the PSLRA. Plaintiffs alleged that defendant’s made
misstatements regarding its commitment to quality. Further, plaintiffs alleged that defendants’
claim that it was in compliance with FDA regulations were false and misleading because the
FDA actually found multiple, continuing violations. The court granted the defendants’ motion to
dismiss and found that the allegations sufficiently alleged misrepresentations or omissions.
Further, the allegations supported a strong inference that defendants were severely reckless when
making the alleged misleading statements. However, plaintiff failed to adequately plead
economic loss causation, especially given that stock prices rebounded several months after the
final disclosures and plaintiffs could have still sold their stock for a profit.
2. Appointment of Lead Plaintiff/Class Counsel
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Plumbers Local No. 200 Pension Fund v. Washington Post Co., 274 F.R.D. 33 (D.D.C 2011).
In a putative securities fraud class action, the district court appointed a pension fund as
lead plaintiff and approved its selection of lead counsel. The court noted that the pension fund’s
claim of having the largest financial interest in the outcome of the case was unchallenged.
Accordingly, after finding that the pension fund met the requirements of Fed. R. Civ. P. 23, the
court appointed it as lead plaintiff and approved its selection of counsel.
Endress v. Gentiva Health Servs., Inc., 276 F.R.D. 62 (E.D.N.Y. 2011).
After consolidating five related securities fraud class actions, the district court considered
the appropriate procedure for appointing a lead plaintiff where the named plaintiff moved to
withdraw and none of the proposed lead plaintiffs were eligible under the Private Securities
Litigation Reform Act of 1995 to be appointed lead plaintiff. Specifically, the PSLRA requires
potential lead plaintiffs to either file the original complaint or move to be appointed lead plaintiff
within 60 days of the PSLRA notice. The court had previously denied the motion of the
Minneapolis Police Relief Association to be appointed lead plaintiff because it did not meet the
PSLRA’s requirements. Thereafter, other class members filed nearly identical complaints on
behalf of the class and filed competing motions for appointment as lead plaintiff after the named
plaintiff moved to withdraw. The court noted that the PSLRA did not provide any specific
guidance for this unique situation and “[d]ue to [an] apparent loophole” the parties were racing
to file complaints in order to qualify to be appointed lead plaintiff. Relying on the intent and
purpose of the PSLRA, the court determined that the most appropriate course was to consider
whether any other class members desired to be appointed as lead plaintiff. The court held that
any class members who filed applications within 60 days of the withdrawal of the named
plaintiff would be considered eligible for appointment. Finally, the court concluded that
publication of an additional PSLRA notice was not necessary because class members had already
been given the opportunity to make an informed decision about whether to apply for the lead
plaintiff position and interested class members would be following the case status and would
know of the new procedure for applying to be named lead plaintiff.
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