The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge
ORDER GRANTING MOTIONS TO CONSOLIDATE, APPOINTING NEW JERSEY CARPENTERS PENSION AND BENEFIT FUND AS LEAD PLAINTIFF, AND APPROVING LEAD COUNSEL SELECTION
Westchester Capital Management, Inc. ("Westchester") and Green & Smith Investment Management LLC ("G&S") have filed a motion to consolidate the above-captioned actions, to be appointed as lead plaintiff, and to approve their selected counsel as lead counsel. The New Jersey Carpenters Pension and Benefit Funds ("Carpenter Funds") have also filed a motion to consolidate the actions, to be appointed as lead plaintiff, and to approve their selected counsel as lead counsel.*fn1 For the reasons discussed below, the motions to consolidate are GRANTED. Westchester and G&S's motion for appointment as lead plaintiff and for approval of their attorneys as lead counsel is DENIED. The Carpenter Funds' motion for appointment as lead plaintiff and for approval of their attorneys as lead counsel is GRANTED.
These class actions are brought on behalf of persons who purchased or otherwise acquired securities of Leap Wireless International, Inc. ("Leap" or "Company"), during the time period between May 16, 2004 and November 9, 2007.*fn2 All of the actions allege that Leap and individual officers of the Company made material misrepresentations and omissions of fact regarding the Company's revenues beginning in fiscal year 2004 and continuing through the second quarter of fiscal year 2007. (The HCL Partners case also names as a defendant PricewaterhouseCoopers, LLP, which allegedly represented that Leap's financial statements were in conformity with accounting principles generally accepted in the United States of America.)
On November 9, 2007, Leap announced that it was restating its financial results going back to fiscal year 2004 to correct for errors in previously reported service revenues, equipment revenues, and operating expenses. According to Leap's press release, the most significant adjustment related to the Company's prior accounting for a group of customers who voluntarily disconnected service. After the November 9, 2007 announcement, the price of the Company's publicly traded stock plummeted to close at $36.72 per share, declining 37% from the previous trading day's close of $58.10.
The actions allege that Defendants' material misrepresentations and omissions caused the Company's securities to be overvalued and artificially inflated, causing damages to Plaintiffs and other members of the class. The actions assert claims for violation of section 10(b) of the Exchange Act and Rule 10b-5 and violation of section 20(a) of the Exchange Act.
Consolidation may be appropriate when actions before the court involve a "common question of law or fact ." Fed. R. Civ. P. 42(a). All of these actions cover approximately the same time period, arise out of the same facts, and allege violations of the securities laws. Defendants agree that the cases should be consolidated. Therefore, the Court grants the motions for consolidation.
B. Lead Plaintiff & Lead Counsel
Competing motions to be appointed lead plaintiff and to approve selected counsel as lead counsel have been filed by (1) Westchester and G&S, and (2) Carpenter Funds. As discussed below, the Court finds that Carpenter Funds is most capable of adequately representing the interests of class members.
Under the Private Securities Litigation Reform Act ("PSLRA"), no later than 20 days after filing a class action securities complaint, a private plaintiff or plaintiffs must publish a notice advising members of the purported plaintiff class of the pendency of the action, the claims asserted, and that any member of the purported class may move the court to serve as lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(A)(i). Not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class. Id.
Within 90 days after publication of the notice, the Court shall consider any motion made by a class member to serve as lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(B)(i). The Court shall appoint as lead plaintiff "the member or members of the purported plaintiff class that the court determines to be ...