The opinion of the court was delivered by: Spatt, District Judge.
MEMORANDUM OF DECISION AND ORDER
The present case is a consolidated securities fraud class action on behalf of all persons who purchased the publicly traded common stock of Gentiva Health Services during the relevant class period. Pursuant to an Order issued on November 2, 2011, presently before the Court are four motions by five putative class members to be appointed lead plaintiff in this action in accordance with the Private Securities Litigation Reform Act, 15 U.S.C. §78u-4 et seq., ("PSLRA").
On November 2, 2010, former named plaintiff Steve Endress filed a securities fraud class action on behalf of all persons who purchased the publicly traded common stock of Gentiva Health Services ("Gentiva") between July 31, 2008 and July 20, 2010. The action was filed against the Defendant Gentiva and three of its executives, the Defendants Ronald A. Malone, Anthony H. Strange, and John R. Potapchuk. Endress alleged that Gentiva, which is a publicly traded health care provider, artificially inflated its stock price through a scheme that involved ordering unnecessary medical care for clients, and then billing the federal government for these illegitimate expenses. Endress further alleged that when the scheme came to light, Gentiva's stock price dropped precipitously, and, as a person who had purchased Gentiva stock while its price was artificially inflated, he was harmed. Endress sought relief on behalf of himself and all persons who purchased Gentiva stock during the period of the alleged fraud, which he identified as being from July 31, 2008 to July 20, 2010.
On January 21, 2011, the Minneapolis Police Relief Association ("MPRA") filed a motion to intervene as a plaintiff in the Endress action pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 24(b)(1)(B). MPRA also requested to be lead plaintiff pursuant to the PSLRA. MPRA is a public pension fund that purchased an undisclosed amount of Gentiva stock during from July 31, 2008 to July 20, 2010.
The Defendants did not oppose MPRA's motion to intervene. However, they did oppose MPRA's motion to be named as lead plaintiff, on the ground that MPRA had not satisfied certain prerequisites for this designation that are set forth in the PSLRA. On July 19, 2011, the Court ordered that MPRA's motion to intervene was granted, but that its motion to be appointed lead plaintiff was denied without prejudice.
On July 25, 2011, Endress sought to withdraw as a named plaintiff and MPRA renewed its motion to be appointed lead plaintiff, pursuant to the PSLRA. However, while this motion was pending before the Court, four other almost identical federal class actions were subsequently filed by Cement Masons & Plasterers Joint Pension Trust ("Cement Masons") on September 14, 2011; International Union of Operating Engineers Pension Fund of Eastern Pennsylvania and Delaware ("International Union") on October 11, 2011; Arkansas Teacher Retirement System ("Arkansas Teacher") on October 20, 2011; and Douglas Dahlgard ("Dahlgard") on October 25, 2011. All five actions were on behalf of the same class of investors who purchased Gentiva publicly traded securities during a similar class period, and based upon the same facts alleging violations of the same laws. Following the filing of all five actions, the Plaintiffs in each case wrote a letter to the Court articulating their support for consolidation. In addition, all five parties requested the Court to consider them as a suitable lead plaintiff in the proposed consolidated action.
On November 2, 2011, the Court granted the motion by the Plaintiff Steve Endress to withdraw as named plaintiff. In addition, the Court ordered that the five Gentiva actions should be consolidated to economize both judicial resources and the resources of the parties. However, due to the unique circumstances in the case with regard to the procedure of appointing a lead plaintiff under the PSLRA, the Court reopened the lead plaintiff process and allowed any plaintiff to move to be appointed lead plaintiff within 60 days of the Court's Order, which was the date of the withdrawal of the only eligible lead plaintiff. See Endress v. Gentiva Health Services, Inc., --- F.R.D. ---, 2011 WL 5220475, at *5 (E.D.N.Y. Nov. 2, 2011) (Spatt, J.).
Thereafter, four motions were filed by five putative class members to be appointed lead plaintiff in this action in accordance with the PSLRA: Indiana Laborers Pension Fund ("Indiana Laborers"); Los Angeles City Employees' Retirement System ("LACERS"); Arkansas Teacher and the Metropolitan Water Reclamation District Retirement Fund ("Metropolitan Water") (collectively, the "Arkansas Group"); and International Union.
The naming of a lead plaintiff generally takes place early in the life of a putative securities class action, and begins with the publication of a notice by the plaintiff, within twenty days of filing, that identifies the claims asserted in the case and the proposed class period. 15 U.S.C. § 78u--4(a)(3)(A)(i). Upon the publication of this notice, any putative class member may move the court, within sixty days, to be named lead plaintiff. Id. Following this sixty day period, but not more than ninety days after the original notice is published, the court may appoint a lead plaintiff. 15 U.S.C. § 78u--4(a)(3)(B)(i). The Court must consider all motions made by purported class members seeking to be appointed lead plaintiff and determine the "member or members of the purported plaintiff class that . . . [is] most capable of adequately representing the interests of the class members." Id.; see Metro Servs. Inc. v. Wiggins, 158 F.3d 162, 164 (2d Cir. 1998).
The PSLRA sets forth express considerations that a trial court must consider when appointing a lead plaintiff. In determining the appropriate lead plaintiff, the Court adopts a rebuttable presumption that the most adequate plaintiff in any private action . . . is the person or group of persons that-" (aa) has either filed the complaint or made a motion in response to a notice . . . ; (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.
15 U.S.C. § 78u--4(a)(3)(B)(iii)(I)(aa)-(cc). This presumption "may be rebutted only upon proof offered by another member of the purported class that the presumptively most adequate plaintiff-(aa) will not fairly and adequately protect the interests of the class; or (bb) 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)(aa)-(bb).
In the present case, 15 U.S.C. § 78u--4(a)(3)(B)(iii)(I)(aa) is not applicable as every proposed lead plaintiff has timely complied with the procedure described in the Court's November 2, 2011 Order and thus, at this juncture, all movants have equal standing. Therefore, the Court must determine which movant has the largest financial interest in the relief sought by the class and otherwise satisfies the requirements of Fed. R. Civ. P. 23, while remaining cognizant of the goals and values underlying the PSLRA.
1.Largest Financial Interest Requirement
The language of the PSLRA itself is not explicit as to the proper methodology for courts to use in determining which plaintiff has the largest financial interest in the relief sought by the Class. The Second Circuit has also not definitively ruled on the proper method. See City of Monroe Employee's Ret. Sys. v. Hartford Fin., 269 F.R.D. 291, 293 (S.D.N.Y. 2010). One clear method utilized by courts in this Circuit is a four factor test, as initially set forth by the Northern District of Illinois in Lax v. First Merchants Acceptance Corp., Nos. 97 Civ. 2715 et al., 1997 WL 461036, at *5 (N.D. Ill. Aug.11, 1997) and adopted in In re Olsten Corp. Sec. Litig., 3 F. Supp. 2d 286, 295 (E.D.N.Y. 1998), now known as the "Olsten factors" or "Lax test". See In re Orion Securities Litig., No. 08 Civ. 1328, 2008 WL 2811358, at *5 (S.D.N.Y. July 8, 2008) (adopting the four Olsen factors); Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. LaBranche & Co., 229 F.R.D. 395, 404 (S.D.N.Y. 2004) (same); In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95, 100 (S.D.N.Y. 2005) (same).
The four relevant factors are: "(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." City of Monroe Employee's Ret. Sys., 269 F.R.D. at 293. However, most courts "place the most emphasis on the last of the four factors: the approximate loss suffered by the movant." Baughman v. Pall Corp., 250 F.R.D. 121, 125 (E.D.N.Y. 2008).
Under the PSLRA, the presumed most adequate plaintiff also must satisfy the requirements of Fed. R. Civ. P. 23. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). Under Rule 23, there are four prerequisites to be considered in evaluating class certification: numerosity, commonality, typicality, and adequacy. See Fed. R. Civ. P. 23(a). In selecting a lead plaintiff, Courts will typically focus on the typicality and adequacy requirements. See Baughman, 250 F.R.D. at 126; In re Symbol Techs., Inc. Secs. Litig., No. 05 Civ 3923, 2006 WL 1120619, at *2 (E.D.N.Y. Apr. 26, 2006) ("Only the typicality and adequacy criterions are relevant to the selection of lead plaintiff.") (citations omitted). At this stage of the litigation, the moving party "need only make a preliminary showing that it satisfies the typicality and adequacy requirements of Rule 23." In re Olsten Corp. Secs. Litig., 3 F. Supp. at 296 (citations omitted); Martingano v. Am. Intern. Group, Inc., No. 06 Civ. 1625, 2006 WL 1912724 at *4 (E.D.N.Y. July 11, 2006) ("wide-ranging analysis under Rule 23 is not appropriate [at this initial stage of the litigation] and should be left for consideration of a motion for class certification") (citations omitted).
Rule 23(a)'s "typicality" requirement is satisfied "where the claims arise from the same course of events and each class member makes similar legal arguments to prove the defendant's liability." In re Symbol Techs., Inc. Secs. Litig., 2006 WL 1120619, at *3 (citing Robinson v. Metro--North Commuter R.R. Co., 267 F.3d 147, 155 (2d Cir. 2001)).
The "adequacy" requirement of Rule 23 is satisfied where "(1) class counsel is qualified, experienced, and generally able to conduct the litigation; (2) the class members' interests are not antagonistic to one another; and (3) the class has a sufficient interest in the outcome of the case to ensure vigorous advocacy." In re Symbol Techs., Inc. Secs. Litig., 2006 WL 1120619, at *3 (citing In re eSpeed, Inc. Sec. Litig., 232 ...