Reverse Psychology

Here’s a new way to win the coveted Lead Plaintiff position. Just tell the Judge you don’t want it. You laugh? Well, who wouldn't, but it just worked in the In re Pfizer securities class action. So, here’s the actual exchange: Teachers Retirement System of Louisiana counsel: “Your honor, if I may, we represent Public Pension Group, TRSL, and AP4 from Sweden. We are withdrawing our lead plaintiff motion, and we are supporting the Institutional Investor Group (IIG)… at this time. Should your Honor choose not to appoint IIG, we propose that we are the next most qualified movant for lead plaintiff. We are withdrawing in support of them.” There he said it. Twice. He withdrew twice. Or did he? Judge Richard Owen (S.D.N.Y.) certainly didn’t think so, as he said that TRSL counsel “clearly did not intend a complete withdrawal of his motion. He kept his motion pending, in the event that the Court would not choose IIG. That is the choice that the Court has made.”

You see, Judge Owen also decided that he “will consider each potential lead plaintiff individually, and not as artificially grouped by its attorneys.” He noted that IIG’s largest investor, Central States, lost $ 22.4 million and TRSL lost $ 22.8 million. “Given the probable margin of error involved in the damage estimates before the Court, Central States and TRSL have roughly equal damages. However, I conclude TRSL is the more adequate of the two plaintiffs. It has extensive litigation experience, has served as lead plaintiff in multiple securities class actions, and has overseen sizeable recoveries in several of these. It is precisely the type of plaintiff envisioned under the PSLRA.” IIG threw a "professional plaintiff" argument into the mix in a last ditch effort to bounce TRSL, but even that wouldn’t stick, as the Court held that the five-in-three limit “was not intended to target institutional investors.”

Perhaps even more amazing, there was a third group, called “the CI Funds group,” which had bigger losses than both TRSL and IIG. Unfortunately for them, they “first alleged a loss of $75.8 million,” but “under attack, CI Funds reduced this amount by some $ 10.7 million.” Then, “in its reply memorandum, CI Funds re-calculated its losses using methodology similar to that of the other groups and arrived at a loss figure of $ 32,432,617.” Even though, as Judge Owen recognized, the “losses of the other movants are far less,” he decided to "“pass it by for the multiple inaccuracies in its damage calculations, which call into question its reliability.”

You can read In re Pfizer, issued October 21, 2005, at 2005 U.S. Dist. LEXIS 24891.

Nugget: “To allow an aggregation of unrelated plaintiffs to serve as lead plaintiffs defeats the purpose of choosing a lead plaintiff.”