The opinion of the court was delivered by: JOAN H. LEFKOW, District Judge
MEMORANDUM OPINION AND ORDER
This case is a putative class action brought against
defendants, NeoPharm, Inc. ("NeoPharm"), James M. Huffey
("Huffey"), and Inram Ahmad ("Ahmad") (collectively
"defendants"), alleging violations of § 10(b) of the Securities
Exchange Act of 1934 (the "Act"), 15 U.S.C. § 78j(b), Rule 10b-5
promulgated under § 78j(b), and § 20(a) of the Act,
18 U.S.C. § 78t(a). Before the court is the renewed motion for class
certification brought by lead plaintiff Operating Engineers
Construction Industry and Miscellaneous Pension Fund, Local
66-Pittsburgh ("Operating Engineers"). Operating Engineers seeks
an order certifying a class consisting of "all persons who
purchased or otherwise acquired NeoPharm common stock between
October 31, 2001 and April 19, 2002 and appointing Operating
Engineers as class representative."*fn1 For the reasons set
forth below, the motion is granted.
"The Federal Rules of Civil Procedure ("the Rules") provide the
federal district courts with `broad discretion' to determine
whether certification of a class-action lawsuit is appropriate."
Keele v. Wexler, 149 F.3d 589
, 592 (7th Cir. 1998). Under the
Rules, a determination of class certification requires a two-step
analysis. First, the named plaintiff must demonstrate that the
action satisfies the four threshold requirements of Rule 23(a):
(1) numerosity (the class must be so large `that
joinder of all members is impracticable'); (2)
commonality (there must exist `questions of law or
fact common to the class'); (3) typicality (named
parties' claims or defenses `are typical . . . of the
class'); and (4) adequacy of representation (the
representative must be able to `fairly and adequately
protect the interests of the class').
Id. at 594; Fed.R. Civ. P. 23(a). Additionally, the action
must "qualify under one of the three subsections of Rule 23(b)."
Hardin v. Harshbarger, 814 F. Supp. 703, 706 (N.D. Ill. 1993).
In this case, Operating Engineers seeks certification under
subsection 23(b)(3). Rule 23(b)(3) provides that an action may be
maintained as a class action if "the court finds that questions
of law or fact common to the members of the class predominate
over any questions affecting only individual members, and that a
class action is superior to other available methods for the fair
and efficient adjudication of the controversy." When evaluating a
motion for class certification, the court accepts as true the
allegations made in support of certification, and does not
examine the merits of the case. Hardin, 814 F. Supp. at 706
(citing, inter alia, Eisen v. Carlisle & Jacquelin,
417 U.S. 156
, 177-78 (1974)). The party seeking class certification bears
the burden of showing that the requirements for class
certification have been met. Id. (citing, inter alia, Gen.
Tel. Co. of Southwest v. Falcon, 457 U.S. 147
, 161 (1982)).
Failure to establish any one of the requirements precludes class
certification. Retired Chicago Police Ass'n v. City of
Chicago, 7 F.3d 584
, 596 (7th Cir. 1993).
The court previously gave extensive treatment to the factual
allegations of this case in its opinion denying in part
defendants' motion to dismiss. See In re NeoPharm Sec. Litig.,
No. 02 C 2976, 2003 WL 262369 (N.D. Ill. Feb. 7, 2003). The factual
background, therefore, will not be repeated again here.
1. Numerosity-Rule 23(a)(1)
To meet the numerosity requirement, the class must be so large
"that joinder of all members is impracticable." Keele,
149 F.3d at 594; Fed.R. Civ. P. 23(a)(1). In order to establish
numerosity, a plaintiff need not allege the exact number of
members of the proposed class. Johnson v. Rohr-Ville Motors,
Inc., 189 F.R.D. 363, 368 (N.D. Ill. 1999). Generally, where the
membership of the proposed class is at least 40, joinder is
impracticable and the numerosity requirement is met. Id.
(citing Swanson v. American Consumer Indus., Inc.,
415 F.2d 1326, 1333 (7th Cir. 1969)). The court is entitled to make
"common-sense assumptions that support a finding of numerosity."
Gaspar v. Linvatec Corp., 167 F.R.D. 51, 56 (N.D. Ill. 1996).
Defendants do not contest numerosity. Although Operating
Engineers does not specify the exact number of proposed class
members, the court is satisfied that the numerosity requirement
is met. As Operating Engineers points out, NeoPharm stock trades
on NASDAQ and more than 16 million shares are outstanding. It can
be reasonably inferred that hundreds, if not thousands, of
persons would be included in the proposed class. Because of this
number of persons, it would be impracticable to join all
individual class members in one suit. Accordingly, the court
finds that the numerosity requirement has been satisfied. 2. Commonality-Rule 23(a)(2)
To meet the commonality requirement, "there must exist
`questions of law or fact' common to the class.'" Keele,
149 F.3d at 594; Fed.R. Civ. P. 23(a)(2); see also, Tylka v.
Gerber Prods. Co., 178 F.R.D. 493, 496 (N.D. Ill. 1998) (noting
that if at least one question of law or fact is common to the
class, then commonality is satisfied). "A common nucleus of
operative fact is usually enough to satisfy the commonality
requirement of Rule 23(a)(2)." Keele, 149 F.3d at 594
(quotation omitted). A common nucleus of operative fact exists
where "defendants have engaged in standardized conduct toward
members of the proposed class." Id. "[T]he commonality
requirement has been characterized as a `low hurdle' easily
surmounted." Scholes v. Stone, McGuire & Benjamin,
143 F.R.D. 181, 185 (N.D. Ill. 1992).
Defendants do not contest commonality. Operating Engineers
points to several common questions of law and fact that exist as
to all members of the proposed class, including (1) whether the
defendants violated the Act; (2) whether the defendants omitted
and/or misrepresented material facts; (3) whether defendants'
statements omitted material facts necessary to make the
statements made, in light of the circumstances under which they
were made, not misleading; (iv) whether defendants knew or
recklessly disregarded that their statements were false and
misleading; (v) whether the price of NeoPharm's publicly traded
securities were artificially inflated; and (vi) the extent of
damage sustained by members of the putative class and the
appropriate measure of damages. Based on these common questions
of law and fact, the court finds that the commonality factor has
been met. 3. Typicality-Rule 23(a)(3)
To meet the typicality requirement, the named plaintiff's
claims or defenses must be "typical . . . of the class." Keele,
149 F.3d at 594; Fed.R. Civ. P. 23(a)(3). The typicality
requirement, although closely related to the commonality
question, focuses on the class representative. "A plaintiff's
claim is typical if it arises from the same event or practice or
course of conduct that gives rise to the claims of other class
members and his or her claims are based on the same legal
theory." Id. at 595 (citing De La Fuente v. Stoekly-Van Camp,
Inc., 713 ...