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.

McIntire v. China MediaExpress Holdings, Inc.

United States District Court, S.D. New York

August 15, 2014

DANIEL McINTIRE, Plaintiff,
v.
CHINA MEDIAEXPRESS HOLDINGS, INC., et al., Defendants. IN RE CHINA MEDIAEXPRESS HOLDINGS, INC. SHAREHOLDER LITIGATION

Page 416

[Copyrighted Material Omitted]

Page 417

[Copyrighted Material Omitted]

Page 418

[Copyrighted Material Omitted]

Page 419

For Irrevocable Trust FBO Lansing Davis, Davis Partnership LP, Lead Plaintiffs: Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Jeniphr Breckenridge, PRO HAC VICE, Hagens, Berman, Sobol, Shapiro, LLP, Seattle, WA; Steve W. Berman, PRO HAC VICE, Hagens Berman Sobol Shapiro LLP (Seattle), Seattle, WA.

For Daniel McIntire, Individually and On Behalf of All others Similarly Situated, Plaintiff: Samuel Howard Rudman, LEAD ATTORNEY, Robbins Geller Rudman & Dowd LLP (LI), Melville, NY; Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Jeffrey A. Berens, LAW OFFICE OF JEFFREY A. BERENS, LLC, Denver, CO; Jeniphr Breckenridge, Steve W. Berman, PRO HAC VICE, Hagens, Berman, Sobol, Shapiro, LLP, Seattle, WA; Marshall Pierce Dees, Michael Ira Fistel, Jr., PRO HAC VICE, Holzer & Holzer, LLC, Atlanta, GA; Reed Richard Kathrein, Hagens Berman Sobol Shapiro LLP (B'kly), Berkeley, CA.

For Gary Mandel, Individually and on behalf of all others similarly situated, Consolidated Plaintiff: Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Jonathan Richard Horne, Laurence Matthew Rosen, Phillip C. Kim, The Rosen Law Firm, P.A., New York, NY; Reed Richard Kathrein, Hagens Berman Sobol Shapiro LLP (B'kly), Berkeley, CA.

For Walter Rubin, Consolidated Plaintiff: Howard G. Smith, Smith & Smith, Bensalem, PA; Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Jeremy Alan Lieberman, Pomerantz LLP, New York, NY; Lionel Z. Glancy, PRO HAC VICE, Glancy & Binkow Goldberg LLP, Los Angeles, CA; Marc Ian Gross, Pomerantz Haudek Block Grossman & Gross LLP, New York, NY; Michael Goldberg, PRO HAC VICE, Glancy Binkow & Goldberg, LLP (CA), Los Angeles, CA; Patrick Vincent Dahlstrom, Pomerantz LLP, Chicago, IL; Reed Richard Kathrein, Hagens Berman Sobol Shapiro LLP (B'kly), Berkeley, CA.

For Tuhin Chaudhuri, Individually and On Behalf of All Others Similarly Situated, Consolidated Plaintiff: Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Reed Richard Kathrein, Hagens Berman Sobol Shapiro LLP (B'kly), Berkeley, CA.

For CME Investor Group, Movant: Michael Benjamin Eisenkraft, LEAD ATTORNEY, Cohen Milstein Sellers & Toll P.L.L.C., New York, NY; Julie Goldsmith Reiser, Steven Jeffrey Toll, PRO HAC VICE, Stephen Douglas Bunch, Cohen Milstein Sellers & Toll PLLC (DC), Washington, DC.

For Davis Entities, Movant: David S. Nalven, Hagens Berman Sobol Shapiro LLP (MA), Cambridge, MA; Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Karl P. Barth, Hagens Berman Sobol Shapiro LLP, Seattle, WA; Reed Richard Kathrein, Hagens Berman Sobol Shapiro LLP (B'kly), Berkeley, CA.

For Daniel Coursey, Movant: Robert Craig Finkel, Wolf Popper LLP, New York, NY.

For Matthew Menges, Movant: David Avi Rosenfeld, Robbins Geller Rudman & Dowd LLP (LI), Melville, NY.

For CME Investors Group, Movant: Kim Elaine Miller, LEAD ATTORNEY, Kahn Swick & Foti, LLC, New York, NY.

For McMinn Group, Movant: Phillip C. Kim, LEAD ATTORNEY, The Rosen Law Firm, P.A., New York, NY.

For A. J. Robbins, P.C., Defendant: Michael Edward Marr, PRO HAC VICE, Solo Practitioner, Baltimore, MD.

For Deloitte LLP, Defendant: Jesse James, Hughes Hubbard & Reed, New York, NY; Savvas Antonios Foukas, William R. Maguire, Hughes Hubbard & Reed LLP (NY), New York, NY.

For Deloitte Touche Tohmatsu Limited, Defendant: Miles Norman Ruthberg, LEAD ATTORNEY, Latham & Watkins LLP (NY), New York, NY.

For Deloitte Touche Tohmatsu, Defendant: Gary Frederick Bendinger, LEAD ATTORNEY, Gazeena Kaur Soni, Sidley Austin LLP (NY), New York, NY; David Andrew Gordon, PRO HAC VICE, Sidley Austin LLP, Chicago, IL; Elizabeth Leanne Howe, Michael Dana Warden, PRO HAC VICE, Sidley Austin LLP, Washington, DC.

For Malcolm Bird, Theodore Green, ADR Providers: Donald Howard Chase, Morrison Cohen Singer & Weinstein, LLP, New York, NY.

For Davis Entities, Interested Party: Jason Allen Zweig, Hagens Berman Sobol Shapiro LLP (NYC), New York, NY; Karl P. Barth, Hagens Berman Sobol Shapiro LLP, Seattle, WA.

Page 420

DECISION AND ORDER

VICTOR MARRERO, United States District Judge.

Lead Plaintiffs Irrevocable Trust FBO Lansing Davis and the Davis Partnership

Page 421

LP (collectively, " Plaintiffs" ) brought this action on behalf of a potential class (the " Proposed Class" ) of purchasers of common stock of China MediaExpress Holdings, Inc. (" CCME" ) between April 1, 2010 and March 11, 2011 (the " Class Period" ) against Defendants CCME, Deloitte Touche Tohmatsu in Hong Kong SAR (" DTT HK" ), and other individuals and entities no longer party to this action. Plaintiffs assert claims under section 10(b) of the Securities Exchange Act of 1934 (the " Exchange Act" ), 15 U.S.C. § 78j(b); Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5; and section 20(a) of the Exchange Act, 15 U.S.C. § 78t(a). Plaintiffs' allegations are detailed more fully in the Court's prior opinion in this action, see McIntire v. China MediaExpress Holdings, Inc., 927 F.Supp.2d 105 (S.D.N.Y. 2013), familiarity with which is presumed.

Pursuant to Federal Rule of Civil Procedure 23 (" Rule 23" ), Plaintiffs now move to certify the Proposed Class, which is comprised of all those who, during the Class Period, suffered losses resulting from (1) purchases of shares of CCME common stock, (2) purchases of CCME call options, and (3) sales of CCME put options. (Dkt. No. 177.) Plaintiffs also move for the Court to appoint them and three other individual class members (the " Proposed Class Representatives" ) as class representatives and to appoint Hagens Berman Sobol Shapiro LLP (" Hagens Berman" ) and Cohen Milstein Sellers & Toll PLLC (" Cohen Milstein" ) (together, the " Proposed Class Counsel" ) as lead counsel and co-counsel, respectively, for the Proposed Class. (Id.) DTT HK opposes the motion and also moves to strike the testimony of Plaintiffs' market efficiency expert. (Dkt. No. 204.)

For the reasons discussed below, the Court finds that the Proposed Class satisfies all of the requirements of Rule 23(a) and the pertinent requirements of Rule 23(b). The Court also finds that appointment of the Proposed Class Representatives and the Proposed Class Counsel is appropriate. Plaintiffs' motion is thus GRANTED, and DTT HK's motion is DENIED.

I. BACKGROUND[1]

The Court more fully detailed the background of this case in its previous Decision and Order. See McIntire, 927 F.Supp.2d at 112-19. The Court briefly restates here only those facts relevant to the pending motion for class certification.

Defendant DTT HK is a Hong Kong entity that is a member firm of Deloitte Touche Tohmatsu Limited. It provides audit, accounting, and other financial consulting services to its clients. DTT HK served as CCME's independent auditor from December 4, 2009 to March 11, 2011. On March 31, 2010, CCME filed its Form 10-K annual report for the 2009 fiscal year with the SEC, which included an audit report from DTT HK certifying the financial statements contained in the Form 10-K report.

The integrity of CCME's financial condition was first called into doubt on January 31, 2011, when Citron Research (" Citron" ) published an analyst report (the " Citron Report" ) questioning multiple aspects of CCME's business operations and accounting practices. Citron stated that it had uncovered information suggesting that CCME was committing fraud. Shortly

Page 422

thereafter, on February 3, 2011, Muddy Waters Research (" Muddy Waters" ) published an analyst report (the " Muddy Waters Report" ) on CCME, which questioned CCME's business model and accounting practices and highlighted multiple signs of fraud. Muddy Waters concluded that CCME was engaged in a massive fraud to artificially inflate the value of its stock. CCME's share price declined 14 percent following the Citron Report and an additional 33 percent following the Muddy Waters Report. CCME denied the allegations in the Citron Report and the Muddy Waters Report, and noted that its financial statements had been audited by, among others, DTT HK.

DTT HK subsequently sent CCME a letter dated March 3, 2011, which outlined enormous signs of fraud that DTT HK had encountered during its audit of CCME's 2010 financial statements. One week later, on March 11, 2011, DTT HK resigned as CCME's auditor because no progress had been made with respect to the issues raised in the March 3 letter. DTT HK informed CCME that it could no longer rely on management's representations of CCME's financial condition. DTT HK also withdrew its previous audit report.

After DTT HK's resignation, CCME requested that trading in its shares be suspended. When trading resumed about two months later, CCME's share price immediately declined 81.8 percent.

Plaintiffs had purchased shares of CCME during the putative Class Period. They allege a common course of wrongful conduct by DTT HK during the Class Period, through which DTT HK artificially inflated the share price of CCME by issuing false and misleading statements in its audit report certifying CCME's 2009 financial statements and by stating that CCME's financials complied with generally accepted accounting principles (" GAAP" ). Plaintiffs assert that CCME's share price had declined substantially from the Class Period high as a result of the market's recognition of CCME's fraud.

Plaintiffs commenced the first suit affiliated with this action on February 4, 2011. (Dkt. No. 1.) By Orders dated April 4, 2011 (Dkt. No. 4) and April 15, 2011 (Dkt. No. 28), the Court consolidated four separate actions under this docket. By Order dated June 7, 2011, the Court appointed Irrevocable Trust FBO Lansing Davis and the Davis Partnership LP as Lead Plaintiffs and approved the selection of Hagens Berman Sobol Shapiro LLP as Lead Counsel. (Dkt. No. 50.) Plaintiffs filed an amended and consolidated complaint on October 25, 2011. (Dkt. No. 63.)

All defendants in this action moved to dismiss Plaintiffs' claims under Federal Rules of Civil Procedure 12(b)(6) and 9(b) and the Private Securities Litigation Reform Act of 1995 (" PSLRA" ), Pub. L. No. 104-67, 109 Stat. 737, asserting that the amended complaint failed to state a claim upon which relief may be granted and to plead fraud with sufficient particularity. By Order dated February 28, 2013, the Court denied the motions to dismiss the case against CCME and DTT HK, but granted the motion as to the remaining defendants. McIntire, 927 F.Supp.2d at 138-39. On January 17, 2014, the Court entered a default judgment against CCME (Dkt. No. 193), leaving DTT HK as the sole remaining defendant in this action.

II. LEGAL STANDARD

To certify the Proposed Class, Plaintiffs must satisfy all four of the requirements of Rule 23(a) and one of the categories of Rule 23(b). See In re Livent, Inc. Noteholders Sec. Litig., 210 F.R.D. 512, 514 (S.D.N.Y. 2002) (" Livent" ). To meet Rule ...


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.