When Defendants in the CIGNA Corp. securities class action planned to attack the proposed class representative (SERS) on loss causation grounds, Plaintiffs just didn’t sit idly by. Instead, they sought “to allow two other putative class members -- the Miami General Employees' Sanitation Employees Retirement Trust ("Miami Employees") and the Public Employees' Retirement System in Mississippi ("MPERS") -- to intervene as additional proposed class representatives.”
Defendants balked, but Judge Legrome D. Davis (E.D. Penn.) (writing for Judge Michael M. Baylson -- for reasons unknown) (E.D. Penn.) stymied them, noting that “CIGNA is planning to file a summary judgment motion on these grounds within the next week. Apparently fearful of this motion, SERS has secured the agreement of Miami Employees and MPERS to become additional proposed class representatives. SERS quite properly indicates that its motive in doing this is to protect the interests of the putative class. The Court finds this to be a legitimate substantive reason to allow the intervention. If, due to a failure to prove loss causation and/or economic loss, SERS is dismissed as a party or is deemed to be an unworthy class representative notwithstanding its Lead Plaintiff status, the interests of the putative class will clearly be at risk. Given the significance that the PSLRA has placed on the status and responsibility of the Lead Plaintiff in this type of case, the Court finds that any present or potential doubts about SERS being able to fulfill its role should be alleviated by allowing Miami Employees and MPERS to join SERS as proposed class representatives.”
And to top it all off, Judge Davis easily wiped away Defendants’ supposed reasons for opposing the intervention, noting that “Defendant has not offered any substantive reason, other than the fact that they do not want the burden of dealing with the claims of new parties to delay what they hope will be a successful termination of SERS as Lead Plaintiff. However, Defendant has no right to expect that any ruling against SERS on loss causation and/or economic loss grounds will necessarily terminate Defendant's liability to the other members of the putative class. To do so would eviscerate the whole concept that Congress had in mind in establishing the Lead Plaintiff concept in the PSLRA.”
You can read In re Cigna, issued March 23, 2006, at 2005 U.S. Dist. LEXIS 41293.
Nugget: “If defendants are successful in their summary judgment motion against SERS, such a result should not cause termination of the entire case if other putative class members are willing, able and ready to step forward as class representatives and also as Lead Plaintiffs and can prove loss causation and/or economic loss.”