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Bristol County Retirement System v. Allscripts Healthcare Solutions

November 9, 2012

BRISTOL COUNTY RETIREMENT SYSTEM, PLAINTIFF,
v.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC., GLEN E. TULLMAN, AND WILLIAM J. DAVIS, DEFENDANTS.



The opinion of the court was delivered by: James F. Holderman, Chief Judge:

MEMORANDUM OPINION AND ORDER

On May 2, 2012, plaintiff Bristol County Retirement System ("Bristol County") filed a two-count Complaint seeking class action relief against defendants Allscripts Healthcare Solutions, Inc. ("Allscripts), Glen E. Tullman ("Tullman"), and William J. Davis ("Davis") for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §§ 78j(b) and 78t(a), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. (Dkt. No. 1 ("Compl.") ¶ 1.) The purported class consists of "all persons who purchased or otherwise acquired the publicly-traded common stock of Allscripts (the "Class") between November 9, 2010 and April 26, 2012, inclusive (the "Class Period")." (Id.)

Pending before the court are two competing motions for appointment as lead plaintiff in this lawsuit - the "Motion of the Ironworkers Group for Appointment as Lead Plaintiff and Lead Counsel" (Dkt. No. 8) and "The Government of Bermuda Contributory and Public Service Superannuation Pension Plans' and the International Brotherhood of Electrical Workers Local Union 38 Pension Fund's Motion for Appointment as Lead Plaintiff and Approval of Lead Plaintiff's Selection of Lead Counsel" (Dkt. No. 16). For the reasons set forth below, the "Motion of the Ironworkers Group for Appointment as Lead Plaintiff and Lead Counsel" (Dkt. No. 8) is denied and "The Government of Bermuda Contributory and Public Service Superannuation Pension Plans' and the International Brotherhood of Electrical Workers Local Union 38 Pension Fund's Motion for Appointment as Lead Plaintiff and Approval of Lead Plaintiff's Selection of Lead Counsel" (Dkt. No. 16) is granted.

LEGAL STANDARD

Pursuant to Section 21D(a)(3)(B) of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995 ("PSLRA"), the court must "appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members." 15 U.S.C. § 78u-4(a)(3)(B)(i). The court applies a presumption that the "most adequate plaintiff" is "the person or group of persons" that (aa) "has either filed the complaint or made a motion in response to a notice [advising members of the purported plaintiff class]"; (bb) "has the largest financial interest in the relief sought by the class;" and (cc) "otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). The purpose of the presumption's "largest financial interest" provision is "to increase the likelihood that institutional investors will serve as lead plaintiffs." City of Sterling Heights Gen. Employees' Retirement Sys. v. Hospira, Inc., No. 11 C 8332, 2012 WL 1339678, at *3 (N.D. Ill. Apr. 18, 2012) (St. Eve, J.) (quoting H.R. Conf. Rep. 104-369). The presumption of adequacy may be overcome by proof that the presumptively most adequate plaintiff "will not fairly and adequately protect the interests of the class" or "is subject to unique defenses." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).

ANALYSIS

A. Presumptive Lead Plaintiff

The plain language of § 78u-4(a)(3)(B) makes clear that "the most adequate plaintiff" does not have to be only one individual or entity. For example, the PSLRA instructs the court to appoint as lead plaintiff "the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members." 15 U.S.C. § 78u-4(a)(3)(B)(i) (emphasis added). The statute further notes that the presumption of most adequate plaintiff applies to "the person or group of persons" satisfying the enumerated requirements. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I) (emphasis added).

Two groups of movants are competing for the position of lead plaintiff in this case: the "Ironworkers Group" and the "Pension Plans Group." The Ironworkers Group consists of Ironworkers Locals 40, 361 & 417 -- Union Security Funds ("IW 40"); Iron Workers Local 580 -- Joint Funds ("IW 580"); and Iron Workers District Council of Western New York and Vicinity Welfare, Pension and Annuity Funds ("IWDC"). Together, IW 40, IW 580, and IWDC hold "three dozen accounts," and the Ironworkers Group's spreadsheet includes transactions for ten different member plans or funds. (Dkt. No. 34 at 5; Dkt. No. 9-4.) The Pension Plans Group consists of the Government of Bermuda Contributory and Public Service Superannuation Pension Plans ("Bermuda Pension Plans") and the International Brotherhood of Electrical Workers Local Union 38 Pension Fund ("Local 38 Pension Fund"). The Bermuda Pension Plans are separately referred to as the "Bermuda Contributory Pension Plan" and "the Bermuda Superannuation Pension Plan." It is undisputed that both the Ironworkers Group and the Pension Plans Group are "institutional investors," and that both groups have filed timely motions for appointment as lead plaintiff.

1. Largest Financial Interest

The main dispute between the parties is over which of the two plaintiffs' groups has the "largest financial interest" in this case. The PSLRA "does not specify how courts should measure the 'largest financial interest in the relief sought by the class.'" Hospira, 2012 WL 1339678, at *3 (quoting 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb)). In the absence of statutory guidance, courts have considered four primary factors:

(1) the total number of shares purchased during the class period; (2) the net shares purchased during the class period (in other words, the difference between the number of shares purchased and the number of shares sold during the class period); (3) the net funds expended during the class period (in other words, the difference between the amount spent to purchase shares and the amount received for the sale of shares during the class period); and (4) the approximate losses suffered.

Id. at *4 (quoting Lax v. First Merch. Acceptance Corp., No. 97 C 2715, 1997 WL 461036, at *5 (N.D. Ill. Aug. 11, 1997) (Coar, J.)). "While courts differ on the precise weight to apply to each factor, most courts agree that [the] fourth factor-the approximate losses suffered-is the most salient factor in assessing the lead plaintiff." Id.

It is undisputed that the Pension Plans Group purchased more shares during the class period (234,860) than the Ironworkers Group (225,380). It is also undisputed, however, that the Pension Plans Group sold more shares during the class period (53,200) than the Ironworkers Group (1,700). As a result, the Ironworkers Group held more net shares during the class period (223,680) than the Pension Plans Group (181,660). The Ironworkers Group also had a ...


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