Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Baughman v. Pall Corp.

May 28, 2008

ROBERT BAUGHMAN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
PALL CORPORATION, ERIC KRASNOFF, AND LISA MCDERMOTT, DEFENDANTS.
JOHN ARTIS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
PALL CORPORATION, ERIC KRASNOFF, LISA MCDERMOTT, AND FRANCIS B. MOSCHELLA, DEFENDANTS.
RICHARD J. KOOP, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
PALL CORPORATION, ERIC KRASNOFF, LISA MCDERMOTT, AND FRANCIS B. MOSCHELLA, DEFENDANTS.
THE EDWARD J. GOODMAN LIFE INCOME TRUST AND THE EDWARD J. GOODMAN GENERATION SKIPPING TRUSTS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
PALL CORPORATION, ERIC KRASNOFF, LISA MCDERMOTT, AND FRANCIS B. MOSCHELLA, DEFENDANTS.
RHODE ISLAND LABORERS PENSION FUND, PLAINTIFF,
v.
ERIC KRASNOFF, DANIEL CARROLL, JR., JOHN HASKELL, JR., ULRIC HAYNES, JR., DENNIS N. LONGSTREET, EDWIN MARTIN, JR., KATHARINE PLOURDE, HEYWOOD SHELLEY, EDWARD SNYDER, EDWARD TRAVAGLIANTI, AND PALL CORPORATION, A NEW YORK CORPORATION, NOMINAL DEFENDANT, DEFENDANTS.



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

MEMORANDUM & ORDER

Before the Court are four securities fraud class action suits brought against Pall Corporation ("Pall") and three of its officers and directors, Eric Krasnoff, Lisa McDermott, and Francis B. Moschella (collectively the "Defendants").*fn1 Additionally, one of Pall's shareholders, Rhode Island Laborers Pension Fund ("Rhode Island Fund"), filed a derivative action on behalf of Pall on January 10, 2008. (Docket No. 08-CV-144.) On October 15, 2007, five class action plaintiffs moved for consolidation of the four class action suits, as well as for appointment as Lead Plaintiff and appointment of their respective chosen counsel as Lead Counsel. Subsequently, on December 17, 2007, one of the plaintiffs, Rhode Island Fund, withdrew its motion to consolidate and appointment of Lead Plaintiff and Lead Counsel. Accordingly, presently pending before the Court are four motions by the following class action plaintiffs: Laborers' Pension Fund and Health and Welfare Department of the Construction and General Laborers' District Counsel of Chicago and Vicinity ("Chicago Fund"), Macomb County Employees' Retirement System ("Macomb County"), Anchorage Police and Fire Retirement System ("Anchorage"), and The Edward J. Goodman Life Income Trust and the Edward J. Goodman Generation Skipping Trust ("The Goodman Trusts"). For the reasons set forth herein, the Court GRANTS the motions for consolidation, GRANTS Macomb County's motion for appointment as Lead Plaintiff, and appoints its chosen counsel, Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia"), as Lead Counsel in the consolidated actions. Additionally, the Court DENIES Chicago Fund's, Anchorage's, and The Goodman Trusts' remaining motions.

BACKGROUND

The Complaints in all of the actions allege essentially the same facts. Plaintiffs allege that they purchased shares of Pall Corporation, a New York corporation, which manufactures and markets filtration, purification, and separation products and integrated systems solutions. The individual Defendants, Krasnoff, McDermott, and Moschella, are officers of Pall Corporation.

Plaintiffs' claims stem from purportedly false and misleading statements contained in both press releases made by and SEC filings submitted by Defendants. The alleged misstatements concern an understatement of income tax liability, which, plaintiffs allege, was known to Defendants and should have been disclosed. Plaintiffs allege that after numerous public filings over the years, Pall issued a press release on July 19, 2007, announcing that its Audit Committee had commenced an inquiry into a possible material understatement of U.S. income tax payments and of its provision for income taxes in certain prior periods beginning with fiscal year ended July 31, 1999. On August 2, 2007, Pall issued another press release announcing that its financial statements for fiscal years 1999 through 2006 and for each of the fiscal quarters ended October 31, 2006, January 31, 2007, and April 30, 2007 should no longer be relied upon and that a restatement of some or all of such financial statements were required. Pall also reported that it could owe up to $130 million in back taxes, not including interest and penalties. Plaintiffs allege that both disclosures caused significant declines in Pall's stock price.

DISCUSSION

I. Consolidation Of The Actions

Pursuant to Federal Rule of Civil Procedure 42(a), a Court may, among other things, consolidate actions that "involve a common question of law or fact." Fed. R. Civ. P. 42(a). District courts have broad discretion to consolidate actions under Rule 42(a). Furthermore, "consolidation is particularly appropriate in the context of securities class actions if the complaints are based on the same public statements and reports." Glauser v. EVCI Career Colleges Holding Corp., 236 F.R.D. 184, 186 (S.D.N.Y. 2006). Additionally, consolidation is not rendered inappropriate merely because the identical defendants are not named in all the complaints. See In re Fuwei Films Sec. Litig., 247 F.R.D. 432, 435 (S.D.N.Y. 2008).

Having reviewed the four Complaints filed in each of the class action suits, the Court finds there are "common issues of law and fact" and, therefore, that consolidation is appropriate. Each of the four Complaints alleges, inter alia, that Defendants made false and misleading statements regarding Pall's financial results by materially understating its income tax liability and misstating its effective tax rate and the factors affecting Pall's effective tax rate, all in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Accordingly, the Court consolidates the four actions for all purposes.

The shareholder derivative suit, No. 08-CV-144, also arises out of Defendants' alleged false and misleading statements concerning Pall's understated income tax liability and, therefore, is consolidated with the class actions for purposes of discovery. The Court will consider at a later date, upon motion or sua sponte, whether the derivative suit should be consolidated for trial as well.

Accordingly, the caption of the consolidated actions shall be "In re Pall Corp." From the date of this Order forward, all filings shall be made under docket number 07-CV-3359. Any other actions now pending or later filed in this district that arise out of or are related to the facts alleged in the consolidated class actions, shall be consolidated with these actions for all purposes under docket number 07-CV-3359.

II. Appointing A Lead Plaintiff

The Private Securities Litigation Reform Act ("PSLRA"), enacted in December 1995, provides the appropriate standard for designating a lead plaintiff in securities class actions. See 15 U.S.C. § 78u-4(a)(3)(B)(iii). Within 20 days of filing a complaint, plaintiffs must publish a notice in a "widely circulated business-oriented publication or wire service" informing class members of their right to move the Court, within 60 days of publication of such notice, for appointment as lead plaintiff. Id. § 78u-4(a)(3)(A).

In determining the appropriate lead plaintiff, the PSLRA provides, in pertinent part: the court shall adopt a presumption that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that (aa) has either filed the complaint or made a motion [to be designated as lead plaintiff]; (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 Rules of Civil Procedure. [] The presumption . . . may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff (aa) ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.