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ANDRADA v. ATHEROGENICS

April 18, 2005.

PURISMA ANDRADA, individually and on behalf of others similarly situated, Plaintiffs,
v.
ATHEROGENICS, INC., MICHAEL HENOS, RUSSELL MEDFORD, MARK COLONNESE, and ROBERT SCOTT, Defendants. VALERIE FAULKNER, individually and on behalf of others similarly situated, Plaintiffs, v. ATHEROGENICS, INC., MICHAEL HENOS, RUSSELL MEDFORD, MARK COLONNESE, and ROBERT SCOTT, Defendants.



The opinion of the court was delivered by: RICHARD HOLWELL, District Judge

MEMORANDUM OPINION AND ORDER

Presently before the Court are two securities fraud actions brought against certain officers and directors of Atherogenics, Inc. ("Atherogenics") and Atherogenics itself (collectively, "defendants") on behalf of a purported class of investors who claim to have sustained losses arising out of defendants' alleged materially false statements issued between September 28, 2004 and December 31, 2004. Three parties have independently moved to consolidate the actions, be appointed as lead plaintiff and designate their respective counsel as lead counsel pursuant to the procedures set forth by the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4(a)(3)(B) ("PSLRA").

For the reasons set forth below, the Court consolidates the actions, appoints the Billings Group as lead plaintiff and designates Milberg Weiss Bershad & Schulman LLP ("Milberg Weiss"), Chitwood & Harley and Dyer & Shuman LLP ("Dyer & Shuman") as co-lead counsel. The remaining motions are denied to the extent that they are inconsistent with this Opinion and Order.

  BACKGROUND

  The complaint in the first, above-captioned actions was filed by Purisma Andrada on January 5, 2005. On that same day, Purisma's counsel, Schiffrin & Barroway, LLP, caused a notice to be published on the web site, Yahoo! Finance, advising purchasers of Atherogenics stock that (1) a class action against defendants had commenced in the Southern District of New York; (2) the class included all plaintiffs who had purchased Atherogenics stock between September 28, 2004 and December 31, 2004; (3) the complaint asserted claims charging defendants with, inter alia, artificially inflating its stock price through alleged misrepresentations and failing to disclose material information regarding the results of certain clinical trials performed on its anti-inflammatory agent, AGI-1067, targeting atherosclerosis; and (4) any class member wishing to serve as lead plaintiff or choose lead counsel was required to move the court within sixty days.

  On March 7, 2005, the Billings Group, South Ferry, L.P. II ("South Ferry") and Russell Jeffords separately filed motions to consolidate these actions, appoint lead plaintiff and designate lead counsel. Defendants have joined the requests to consolidate the actions and have not otherwise moved to oppose the remaining motions.

  DISCUSSION

  I. Consolidation of the Actions

  The Billings Group, South Ferry and Jeffords have moved to consolidate both actions pursuant to Rule 42(a) of the Federal Rules of Civil Procedure. Defendants have joined these motions to consolidate the actions. Rule 42(a) provides that a court may order all actions consolidated if they involve "common issues of law or fact." Fed.R.Civ.P. 42(a). In determining the propriety of consolidation, district courts have "broad discretion" although they generally espouse the view that "considerations of judicial economy favor consolidation." Ferrari v. Impath, Inc., No. 03 Civ. 5667 (DAB), 2004 WL 1637053, at *2 (S.D.N.Y. July 20, 2004) (citations and quotations omitted). Moreover, consolidation is particularly appropriate in the context of securities class actions if the complaints are "based on the same `public statements and reports'" and defendants will not be prejudiced. Id., 2004 WL 1637053, at *2 (internal quotations omitted).

  Both actions implicate similar or overlapping claims under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder, that defendants issued several misleading press releases regarding the clinical trials of AGI-1067 between September 28, 2004 and December 31, 2004. Accordingly, both actions involve "common issues of law and fact" and are hereby consolidated under the caption of "In re Atherogenics Securities Litigation". All relevant documents and submissions shall be maintained as one file under Master File No. 05 Civ. 0061 (RJH). All actions now pending or subsequently filed in this district that arise out of or are related to the same facts as alleged in the current actions shall be consolidated for all purposes upon application to the Court.

  II. Appointment of Lead Plaintiff

  A. The Notice and Filing Requirements Under the PSLRA

  The Billings Group, South Ferry and Jefford have independently moved to be appointed as lead plaintiff. The PSLRA sets forth the procedures governing the appointment of lead plaintiff in "each action arising under the [Securities and Exchange Act of 1934] that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure." 15 U.S.C. § 78u-4(a)(1). As an initial matter, the PSLRA requires the plaintiff in the initial action to cause notice to be published in a national, business-oriented publication within 20 days of filing the complaint. 15 U.S.C. § 78u-4(a)(3)(A)(i). The notice must inform members of the purported class of (1) the details and pendency of the action; and (2) their right to seek appointment as lead plaintiff within 60 days after the date on which notice is published. Id. Within 90 days after the publication of such notice, a court shall consider any motion made by any class member, regardless of whether they are individually named as plaintiffs in any of the actions, and shall appoint the "most adequate plaintiff" as lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(B)(i). Moreover, the PSLRA instructs courts to appoint lead plaintiff in a timely fashion after the consolidation decision has been rendered. See 15 U.S.C. § 78u-4(a)(3)(B)(ii); The Constance Sczesny Trust v. KPMG LLP, 223 F.R.D. 319, 322 (S.D.N.Y. 2004).

  Purisma Andrada filed the initial complaint in this series of actions and caused a notice to be published in the web site, Yahoo! Finance, on January 5, 2005. That notice set forth the pendency of the action, the claims asserted therein, the purported class action period and the right of any class member to seek appointment as lead plaintiff. Accordingly, the notice satisfied the requirements of the ...


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