United States District Court, S.D. New York
In re VIRTUS INVESTMENT PARTNERS, INC. Securities Litigation
OPINION & ORDER
WILLIAM H. PAULEY III U.S.D.J.
Plaintiff the Arkansas Teacher Retirement System brings this
securities class action on behalf of itself and others who
purchased the publicly traded securities of Defendant Virtus
Investment Partners (“Virtus Partners”) between
January 25, 2013 and May 11, 2015. Lead Plaintiff moves to
certify a class. For the reasons that follow, Lead
Plaintiff's motion is granted.
allegations of the Amended Complaint
(“Complaint”) are accepted as true for the
purpose of this motion for class certification. In brief, Lead
Plaintiff alleges that, in 2009, Virtus Partners began
marketing a family of funds called “AlphaSector.”
(Compl. ¶¶ 4-5.) In marketing materials, Defendants
represented that the outsized performance of the AlphaSector
indices had been achieved through live trading with real
client assets beginning in 2001. (Compl. ¶ 6.) But, in
fact, the AlphaSector indices did not come into existence
until 2008. (Compl. ¶ 50.) Then, in a January 2013
conference call, President and Chief Executive Officer George
R. Aylward stated that “[o]ur portfolio managers
continued to deliver strong relative investment performance,
and this performance has been a key driver of our high level
sales and net flows.” (Compl. ¶ 165.) In his
remarks, Aylward neglected to state that at least a portion
of that performance was attributable to the misleading
statements in the AlphaSector indices.
Rule of Civil Procedure 23 governs class certification and
“does not set forth a mere pleading standard.”
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350
(2011). Rather, “[t]he party seeking class
certification must affirmatively demonstrate compliance with
the Rule, and a district court may only certify a class if it
is satisfied, after a rigorous analysis, that the
requirements of Rule 23 are met.” In re Am.
Int'l Grp., Inc. Sec. Litig., 689 F.3d 229, 237-38
(2d Cir. 2012) (internal quotation marks and alterations
moving party must first satisfy Rule 23(a), which
“requires that a proposed class action (1) be
sufficiently numerous, (2) involve questions of law or fact
common to the class, (3) involve class plaintiffs whose
claims are typical of the class, and (4) involve a class
representative or representatives who adequately represent
the interests of the class.” Myers v. Hertz
Corp., 624 F.3d 537, 547 (2d Cir. 2010) (citing
Fed.R.Civ.P. 23(a)). In addition, “the proposed class
must satisfy at least one of the three requirements listed in
Rule 23(b).” Wal-Mart, 131 S.Ct. at 2548.
Plaintiffs here rely on Rule 23(b)(3), which “requires
the party seeking certification to show that ‘questions
of law or fact common to class members predominate over any
questions affecting only individual members' and that
class treatment would be superior to individual
litigation.” Myers, 624 F.3d at 547 (quoting
claims alleging violations of Section[ ] 10(b) . . . of the
Exchange Act are especially amenable to class certification,
” In re Smith Barney Transfer Agent Litig.,
290 F.R.D. 42, 45 (S.D.N.Y. 2013) (internal quotation marks
omitted). And, “[i]n light of the importance of the
class action device in securities fraud suits, these factors
are to be construed liberally.” Gary Plastic
Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 903 F.2d 176, 179 (2d Cir. 1990).
Plaintiff moves to certify a class of investors in Virtus
Partners common stock harmed by Virtus's misstatements.
Specifically, the proposed class consists of:
all persons and entities that, during the period between
January 25, 2013 and May 11, 2015, inclusive (the
“Class Period”), who purchased or otherwise
acquired shares of the publicly traded common stock of Virtus
Investment Partners, Inc. and were damaged thereby (the
(Mem. In Support of Motion to Certify Class, ECF No. 80, at
oppose class certification and argue that (1) Lead Plaintiff
fails to allege that common questions predominate because it
does not allege class-wide reliance, (2)
Plaintiff's trading history makes it an unsuitable
representative, and (3) in any event, if certification is
granted the class period should be shortened.
Rule 23(a) Requirements
must show that the proposed “class is so numerous that
joinder of all members is impracticable.” Fed.R.Civ.P.
23(a)(1). “‘Impracticable' simply means
difficult or inconvenient, not impossible.” In re
Currency Conversion Fee Antitrust Litig., 230 F.R.D.
303, 307 (S.D.N.Y. 2004) (citing Robidoux v. Celani,
987 F.2d 931, 935 (2d Cir. 1993)). In the Second Circuit,
“numerosity is presumed at a level of 40
members.” Consol. Rail Corp. v. Town of Hyde
Park, 47 F.3d 473, 483 (2d Cir. 1995). Here, several
hundred million shares of Virtus stock were traded on the
NASDAQ during the class period, with daily trading volumes
averaging approximately sixty-five thousand shares.
(See Expert Report of Chad Coffman (“Coffman
Rep.”), ECF No. 81, Ex. D, ¶¶ 23-24.) Not
only is the proposed class likely comprised ...