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Goldberger v. PXRE Group

March 30, 2007

STEPHEN GOLDBERGER, PLAINTIFF,
v.
PXRE GROUP, LTD ET AL., DEFENDANTS.
STEVE KLEIN, PLAINTIFF,
v.
PXRE GROUP, LTD ET AL., DEFENDANTS.
RALPH LOWRY, PLAINTIFF,
v.
PXRE GROUP, LTD ET AL., DEFENDANTS.
ELDON H. VOSS, PLAINTIFF,
v.
PXRE GROUP, LTD ET AL., DEFENDANTS.



The opinion of the court was delivered by: Kenneth M. Karas, District Judge

OPINION AND ORDER

On May 3, 2006, Plaintiff Stephen Goldberger filed a class action complaint against Defendants PXRE Group, Ltd. ("PXRE"), Jeffrey L. Radke, and John M. Modin, alleging 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 Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder. Thereafter, three additional class action cases were filed, all of which contain nearly identical claims against the same Defendants. (See cases captioned above.) The Court shall refer to these four class-action cases as the "Class Actions."

Proposed lead plaintiffs the Campfield Group and Chad S. Condra ("Condra") have respectively filed motions under 15 U.S.C. § 78u-4 seeking to consolidate the Class Actions, to be appointed lead plaintiff, and to have their counsel appointed lead counsel. For the reasons stated herein, Plaintiffs' motions for consolidation are GRANTED. Plaintiff Condra's motion to be appointed lead plaintiff and to have his counsel appointed lead counsel is GRANTED. Plaintiff the Campfield Group's motion to be appointed lead plaintiff and to have its counsel appointed lead counsel is DENIED.

I. Background

Each of the Class Action Complaints involves similar allegations against the three Defendants. Briefly stated, the Complaints allege that between July 28, 2005 and February 16, 2006 (the "Class Period"), Defendants made materially false and misleading statements which understated the losses incurred by PXRE, an insurance holding company, during the 2005 hurricane season. According to putative Class Plaintiffs, the true impact of the 2005 hurricane season was not revealed by PXRE until February 16, 2006, when PXRE increased the estimate of its losses by approximately $300 million. As a result of PXRE's allegedly false statements, putative Class Plaintiffs, who purchased shares of PXRE during the Class Period, suffered losses.

Plaintiff Condra is an individual investor. During the Class Period, Condra purchased 48,105 shares of publicly traded PXRE securities and sold 32,985 shares. This constituted a net purchase of 15,120 shares at a net expenditure of $199,001. (Mem. of Law in Supp. of Chad S. Condra's Mot. for Consolidation of Related Class Action Compls., Appointment of Lead Pl. and Approval of Lead Counsel ("Condra's Mem. in Supp."), Ex. B.) Condra's alleged approximate loss due to these holdings was $135,156. (Id.)

The Campfield Group is a collection of seven individual investors, consisting of Michael Campfield, Vickie Campfield, Richard E. Grant, Joyce A. Grant, Ronald A. Bogusky, Elwood E. Juckem, and Peter Buza. (Decl. of James E. Lahm in Supp. of the Mot. of the Campfield Group for Consolidation, Appointment as Lead Pl. and Approval of Selection of Lead Counsel ("Lahm Aff."), Ex. B.) Michael and Vickie Campfield, and Richard and Joyce Grant, are married couples. This familial relation aside, however, there is no evidence that any member of the Campfield Group has any relation to any other member of the group other than the fact that all allegedly suffered losses from their purchases of PXRE securities. During the Class Period, the Campfield Group purchased a total of 20,000 shares of PXRE securities at a cost of $262,250. (Id. Ex C.) No member of the Campfield Group sold any shares during that period. Although there is some dispute as to the Campfield Group's total financial loss, both Movants agree that the Campfield Group lost in excess of $190,000 due to its purchases of PXRE securities during the Class Period. (Mem. of Law in Further Supp. of Chad S. Condra's Mot. for Consolidation of Related Class Action Compls., Appointment of Lead Pl. and Approval of Lead Counsel 3 ("Condra's Mem. in Further Supp.").)

Both Movants are represented by law firms capable of serving as lead counsel. Condra is represented by Pomerantz Haudek Block Grossman & Gross LLP, which has extensive experience in class and shareholder derivative actions. (Condra's Mem. in Supp. Ex. C.) The Campfield Group is represented Stull, Stull & Brody. It, too, has extensive relevant experience. (Lahm Aff. Ex. D.)

II. Discussion

A. Consolidation

Federal Rule of Civil Procedure 42(a) provides that when "actions involving common questions of law or fact are pending before the court, . . . it may order all the actions consolidated . . . ." Fed. R. Civ. P. 42(a). "In determining the propriety of consolidation, district courts have broad discretion, and generally favor the view that considerations of judicial economy favor consolidation." Barnet v. Elan Corp., 236 F.R.D. 158, 160 (S.D.N.Y. 2005) (internal quotations omitted). "In securities actions where the complaints are based on the same public statements and reports, consolidation is appropriate if there are common questions of law and fact and the defendants will not be prejudiced." Weltz v. Lee, 199 F.R.D. 129, 131 (S.D.N.Y. 2001) (internal quotations omitted).

Here, each Class Action Complaint names the same Defendants and involves essentially the same public statements, securities, and legal issues. Furthermore, all Parties, including Defendants, agree that Defendants will not be prejudiced by consolidation. (See Def. PXRE Group Ltd.'s Mem. of Law in Resp. to Mots. by the Campfield Group and Chad S. Condra for Consolidation, Appointment as Lead Pl. and Approval of Selection of Lead Counsel 3.) Accordingly, in the interests of judicial economy, the above-captioned cases will be consolidated.

B. Lead Plaintiff

Having consolidated the Class Actions, the Court must next appoint a person or group of persons to serve as lead plaintiff. Because the claims at issue are brought under the Exchange Act, this process is governed by the Private Securities Litigation Reform Act ("PSLRA"). See 15 U.S.C. ยง 78u-4. The PSLRA requires that the Court adopt a ...


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