The opinion of the court was delivered by: Marian W. Payson United States Magistrate Judge
By Order of Hon. Michael A. Telesca, United States District Judge, dated July 18, 2006, this consolidated securities class action litigation has been referred to this Court for the supervision of pretrial discovery and the hearing and disposition of all non-dispositive motions, pursuant to 28 U.S.C. §§ 636(b)(A) and (B). (Docket # 39).
Currently before the Court are two competing motions for appointment as lead plaintiff and for approval of lead counsel. (Docket # 35-16; # 36-9). One has been filed by the Police and Fire Retirement System of the City of Detroit ("the Detroit Police & Fire Group") (Docket # 35-16), and the other has been filed by the Ironworkers St. Louis District Council Pension Fund and Structural Ironworkers Local # 1 Annuity, Pension and Welfare Funds (collectively, "the Pension & Welfare Group") (Docket # 36-9). Since the motions were argued, the Pension & Welfare Group filed a supplemental memorandum seeking to withdraw the joint application of both Ironworkers pension funds for appointment as lead plaintiff and seeking instead to appoint only Structural Ironworkers Location #1 Annuity, Pension and Welfare Fund (the "Structural Ironworkers Fund") as lead plaintiff. (Docket # 68).*fn1
Defendants take no position on the pending motions.
To date, four separate class action complaints have been filed by various individuals and institutional investors against Bausch & Lomb, Inc. alleging securities fraud violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a) (the "Securities Exchange Act"), and Rule 10b-5 promulgated thereunder.*fn2
These actions have been consolidated by stipulation and order, and the parties have further agreed that a consolidated complaint will be filed by the lead plaintiff following determination of the pending motions. The actions, which are brought by investors who purchased Bausch & Lomb securities during the period January 27, 2005 through May 3, 2006 ("the Class Period"), allege that Bausch & Lomb and certain of its officers and directors violated the Securities Exchange Act by making false and misleading statements about the company's financial condition and operations, as well as the safety and efficacy of its contact lens solutions, while at the same time concealing or recklessly disregarding adverse material information about the same.
Plaintiffs also maintain that as a result of the allegedly false and misleading statements, Bausch & Lomb's stock traded at an artificially inflated level, and during that time various Bausch & Lomb officers and directors knowingly sold their own Bausch & Lomb securities for substantial profit. In December 2005, Bausch & Lomb announced its intention to restate its financial statements for the preceding five-year period and later disclosed that a rare eye infection had been reported among users of its ReNu brand contact lens solution. Following those disclosures, the price of Bausch & Lomb securities dropped significantly, allegedly causing plaintiffs economic injury.
The pending motions for appointment of lead plaintiff and approval of lead counsel are governed by the Private Securities Litigation Reform Act (hereinafter "the PSLRA"), which applies to "each private action arising under the [Securities Exchange Act] that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure." 15 U.S.C. § 78u-4(a)(1). Prior to the enactment of the PSLRA, lead plaintiff status in securities class actions was generally determined by which party first filed suit. This rule invariably resulted in a "race to the courthouse" in an effort by counsel to gain lead plaintiff status for their client. See H.R. Rep. No. 104-369 (1995), as reprinted in 1996 U.S.C.C.A.N. 730; S. Rep. No. 104-98 (1995), as reprinted in 1996 U.S.C.C.A.N. 679; see also In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 294 (E.D.N.Y. 1998) (citing Fischler v. AMSouth Bancorporation, 1997 WL 118429, *1 (M.D. Fla. 1997)). Recognizing that the selection of the lead representative party should rest on considerations other than speed, Congress enacted the PSLRA in order to "increase the likelihood that parties with significant holdings in issuers, whose interests are more strongly aligned with the class of shareholders, will participate in the litigation and exercise control over the selection and actions of plaintiff's counsel." H.R. Rep. No. 104-369; see In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d at 294.
Under the PSLRA, the court is required 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). The Act provides that a statutory, rebuttable presumption arises that the "most adequate plaintiff" is the "person or group of persons" that:
(aa) has either filed the complaint or made a motion [for appointment as lead counsel]; (bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rule of Civil Procedure. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I); see, e.g., Constance Sczesny Trust v. KPMG LLP, 223 F.R.D. 319, 323 (S.D.N.Y. 2004); In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d at 294. That presumption may be rebutted by another member of the purported class "only upon proof . . . that the presumptively most adequate plaintiff -- (i) will not fairly and adequately protect the interests of the class; or (ii) is subject to unique defenses that render such plaintiff incapable of adequately representing the class." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II); see, e.g., Constance Sczesny Trust v. KPMG LLP, 223 F.R.D. at 323; In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d at 295-95.
In the case at bar, the Detroit Police & Fire Group and the Structural Ironworkers Fund have timely moved pursuant to the PSLRA to be appointed as lead plaintiff.*fn3 See 15 U.S.C. § 78u-4(a)(3)(A)(i)(I-II). Each pension fund asserts that it has the greatest financial interest in this litigation and is ...