Searching over 5,500,000 cases.

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.

In re New Oriental Education & Technology Group Securities Litigation

United States District Court, Second Circuit

May 6, 2013



JOHN G. KOELTL, District Judge.

The plaintiff, Julio Tardio, has moved pursuant to Rule 60(b) of the Federal Rules of Civil Procedure for relief from this Court's Order of October 25, 2012, that appointed Mineworkers' Pension Scheme ("MPS") as lead plaintiff and Grant & Eisenhofer, P.A. ("G&E") as lead counsel in this consolidated securities class action against New Oriental Education & Technology Group, Inc., Michael Minhong Yu, and Louis T. Hsieh (collectively "EDU"). Tardio seeks to be appointed as co-lead plaintiff, to have Faruqi & Faruqi, LLP, appointed as co-lead counsel, and to amend the Consolidated Amended Complaint ("CAC"). In the alternative, Tardio asks the Court to sever his action and allow it to proceed separately because lead counsel in this consolidated action has determined not to pursue claims of purchasers or sellers of options such as Mr. Tardio.


This consolidated securities class action began with three separate class action complaints against EDU. In July and August 2012, two different plaintiffs, Jennifer Sax and Matthew Gabel, filed separate class action complaints based on the same alleged facts asserting federal securities claims against EDU on behalf of all purchasers of EDU's American Depositary Shares ("ADSs"). See Compl. § 1, Gabel v. EDU, (12 Civ. 5963) (S.D.N.Y. Aug. 3, 2012); Compl. § 1, Sax v. EDU, (12 Civ. 5724) (S.D.N.Y. July 25, 2012). On August 29, 2012, Tardio filed a similar class action complaint alleging federal securities claims against EDU on behalf of all purchasers and sellers of EDU option contracts and/or purchasers of EDU ADSs. See Compl. § 1, Tardio v. EDU, (12 Civ. 6619) (S.D.N.Y. Aug. 29, 2012).

On September 21, 2012, Tardio, MPS, and several other parties, moved for appointment as lead plaintiff pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The motions for appointment revealed that MPS had the largest financial stake in the litigation-making it the likely lead plaintiff-and thereafter the parties worked together toward formulating an order stipulating that MPS would be the lead plaintiff, G&E would be lead counsel, and the three actions would be consolidated (the "Stipulation"). (Gonnello Decl. §§ 3-6; see Gonnello Decl. Ex. B.)

On October 2, 2012, counsel for MPS emailed a draft of the Stipulation to Tardio's counsel. (Gonnello Decl. Ex. A.) The draft Stipulation provided that the three class actions were on behalf of "purchasers" of EDU securities. (Gonnello Decl. Ex. A, Draft Stip. at 2.) Tardio alleges that his counsel requested that the draft Stipulation be revised to cover both purchasers and sellers of EDU securities because Tardio had been a seller of options. (Gonnello Decl. § 5.) On October 4, 2012, counsel for MPS emailed a revised draft Stipulation to Tardio's counsel and explained that the Stipulation had been revised "to cover both purchasers and sellers in the class...." (Gonnello Decl. Ex. B, at 1.) The revised draft Stipulation provided that the three actions were "on behalf of purchasers and sellers of [EDU] securities." (Gonnello Decl. Ex. B, Draft Stip. at 2.) On October 25, 2012, this Court entered the Stipulation Order, which consolidated the three actions, appointed MPS as lead plaintiff, and appointed G&E as lead counsel.[1]

On December 10, 2012, MPS filed the CAC. The CAC only asserts claims on behalf of purchasers of EDU ADSs. (CAC § 1.) The CAC does not assert claims on behalf of purchasers or sellers of EDU option contracts or sellers of EDU ADSs. (See Gonnello Decl. § 8.) On January 25, 2013, the defendants filed a motion to dismiss the CAC.

On February 1, 2013, counsel for MPS indicated that it would "not amend the [CAC] at this time" and would instead oppose the motion to dismiss. (Gonnello Decl. Ex. C.) On February 6, 2013, counsel for Tardio wrote a letter to MPS asserting that Tardio had agreed to the Stipulation because he believed that options contract sellers would be included in the class definition, and requested an explanation for the decision not to amend the Consolidated Complaint. (Gonnello Decl. Ex. D.) Tardio alleges that during subsequent telephonic conversations with MPS, counsel for MPS explained that the decision to exclude purchasers and sellers of option contracts from the class definition was intentional. (Gonnello Decl. § 9.) On March 8, 2013, Tardio filed this motion currently before the Court.

At oral argument on this motion, the defendant requested the opportunity to file a supplemental memorandum in support of its position that the PSLRA prohibited severance of Tardio's claims from the consolidated action. Leave was granted to all parties to file supplemental memoranda in support of their positions, to address any new issues that were first raised during oral argument, and to respond to each other's supplemental memoranda. The supplemental memoranda have been received and reviewed.



Tardio seeks relief from the Stipulation Order pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure. Rule 60(b)(6) provides that a court "may relieve a party or its legal representative from... [an] order... for... any other reason that justifies relief." Fed.R.Civ.P. 60(b). The Rule "confers broad discretion on the trial court to grant relief when appropriate to accomplish justice and it constitutes a grand reservoir of equitable power to do justice in a particular case." Marrero Pichardo v. Ashcroft , 374 F.3d 46, 55 (2d Cir. 2004) (citation omitted). "Relief [under Rule 60(b)(6)] is warranted where there are extraordinary circumstances, or where the judgment may work an extreme and undue hardship, and should be liberally construed when substantial justice will thus be served." United Airlines, Inc. v. Brien , 588 F.3d 158, 176 (2d Cir. 2009) (internal quotation marks and citation omitted).

Tardio has not provided persuasive reasons to merit relief from the portion of the Stipulation Order appointing MPS lead plaintiff and Tardio will not be appointed as co-lead plaintiff for the consolidated class action. Where a lead plaintiff has omitted certain claims from the class definition, a party may not assert those claims and seek to become co-lead plaintiff on that basis. See In re Bank of Am. Corp. Sec. Derivative & Emp. Ret. Income Sec. Act (ERISA) Litig. ("BoA I"), No. 09 MDL 2058, 2010 WL 1438980, at *1-2 (S.D.N.Y. Apr. 9, 2010). In BoA I, several securities actions were consolidated and lead plaintiffs and lead counsel were appointed. 2010 WL 1438980, at *1. The lead plaintiffs brought claims on behalf of common stockholders and preferred securities holders, but not purchasers of options or debt securities. Id . Subsequently, several additional plaintiffs brought separate class actions arising out of the same events on behalf of options holders. Id . The additional plaintiffs moved to consolidate their actions together, but not with the existing consolidated action, and each moved for appointment as lead plaintiff. Id. at *2. The Court consolidated the cases with the existing consolidated action and declined to appoint any of the options plaintiffs as co-lead plaintiff because the "lead plaintiff is empowered to control the management of the litigation, " and "[p]ermitting other plaintiffs to bring additional class actions now, with additional lead plaintiffs and additional lead counsel, would interfere with Lead Plaintiffs' ability and authority to manage the Consolidated Securities Actions." Id . (citing Hevesi v. Citigroup Inc. , 366 F.3d 70, 82 n.13 (2d Cir. 2004) ("[A]ny requirement that a different lead plaintiff be appointed to bring every single available claim would contravene the main purpose of having a lead plaintiff-namely, to empower one or several investors with a major stake in the litigation to exercise control over the litigation as a whole.")).

Tardio will not be appointed co-lead plaintiff. MPS was appointed lead plaintiff and Tardio has not raised any issues regarding MPS's adequacy to represent the class in the consolidated securities action. MPS is not required to have standing to represent all possible claims in order to be appointed lead plaintiff, and Tardio does not have a right to become co-lead plaintiff simply by asserting claims not asserted by the lead plaintiff. See Hevesi , 366 F.3d at 82. Although Tardio relies on a case that appointed a co-lead plaintiff under circumstances similar to this case, that authority is from the Fifth Circuit, and the court in that case relied on a real conflict between classes of securities holders, as well as on Fifth Circuit law on standing that is different from the law in the Second Circuit. See Harold Roucher Trust U/A DTD 09/21/72 v. Franklin Bank Corp., No. 08 Civ. 1810, 2009 WL 1941864, at *2-3 (S.D. Tex. July 6, 2009) (appointing a separate lead ...

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.