United States District Court, S.D. New York
DANIEL AUDE, Individually and On Behalf of All Others Similarly Situated, Plaintiff,
KOBE STEEL, LTD., HIROYA KAWASAKI YOSHINORI ONOE, AKIRA KANEKO, AND NAOTO UMEHARA, Defendants.
C. Finkel Wolf Popper LLP New York, New York Counsel for
Plaintiff and Movant Daniel Aude
Douglas H. Flaum Kevin P. Broughel Paul Hastings LLP New
York, New York Counsel for Defendant Kobe Steel, Ltd.
OPINION & ORDER
S. BRODERICK, United States District Judge
me is the unopposed motion of Plaintiff Daniel Aude, pursuant
to Section 21D(a)(3) of the Securities and Exchange Act of
1934 (the “Exchange Act”), 15 U.S.C. § 78u-
4(a)(3), as amended by the Private Securities Litigation
Reform Act of 1995 (the “PSLRA”) for and order
(1) appointing Aude as Lead Plaintiff on behalf of a putative
class of all persons or entities who purchased or otherwise
acquired American Depositary Receipts (“ADRs”) of
Defendant Kobe Steel, Ltd. (“Kobe Steel”) in the
U.S. market between May 29, 2013 and October 12, 2017 (the
“Class Period”), and (2) approving the selection
of Wolf Popper LLP (“Wolf Popper”) as Lead
Counsel for the putative class. Because Aude's motion is
unopposed, and he meets all requirements set out by the
PSLRA, Aude's motion requesting appointment as Lead
Plaintiff and approval of Wolf Popper as Lead Counsel is
Background and Procedural
Steel is one of Japan's largest steel manufacturers and a
major supplier of aluminum and copper products. (Compl.
¶ 2.) On May 29, 2013, at the beginning of the
Class Period, Kobe Steel launched a new business plan that
purported to reduce, among other things, “quality error
costs.” (Id. ¶ 37.) During the Class
Period, Kobe Steel continually made statements emphasizing
its compliance with corporate laws and rules, its focus on
maintaining a culture of high ethical standards and corporate
governance, and its commitment to product safety. (See,
e.g., Id. ¶ 72.)
on October 8, 2017, the public became aware of information
regarding Kobe Steel's products and safety practices that
caused its ADR price to tumble, including that: (i) certain
Kobe Steel products did not comply with product
specifications and data in inspection certificates had been
improperly written, (id. ¶¶ 6, 80); (ii)
Kobe Steel had fabricated data on components used in a
variety of products that were used by major manufacturers,
(id. ¶¶ 8, 82); (iii) the data fabrication
scandal extended to Kobe Steel's core business of selling
steel to numerous international companies, (id.
¶ 10); and (iv) there was an investigation into Kobe
Steel's wrongdoing and that the number of impacted
customers exceeded 400, (id. ¶¶ 11,
87-88). The price of Kobe Steel ADRs fell from $5.92 on
October 8, 2017 to $3.55 on October 13, 2017, resulting in
significant losses for investors, including Aude.
(Id. ¶¶ 7, 12, 14.) On December 26, 2017,
Plaintiff commenced the instant action by filing a complaint
against Kobe Steel alleging that Kobe Steel's statements
during the Class Period were materially false and misleading
because Kobe Steel had falsified data on many of its products
and sold products that failed quality control tests.
(Id. ¶ 5.)
same day that Plaintiff filed his Complaint, counsel for
Plaintiff published a notice in Global Newswire announcing
the initiation of this securities class action (the
“Notice”). (Finkel Decl. Ex. A.) The Notice
informed shareholders that if they had purchased or acquired
Kobe Steel ADRs during the Class Period, they would have
until February 26, 2018 to file a motion to be appointed lead
plaintiff. (Id.) On February 26, 2018, the date
specified on the Notice, Aude file his motion requesting
appointment of Lead Plaintiff and Lead Counsel, (Doc. 5),
with a supporting memorandum and declaration, (Docs. 6-7).
Aude filed a response in further support of his motion on
March 12, 2018. (Doc. 8.) No other member of the putative
class filed a motion to be appointed lead plaintiff.
Appointment of Lead Plaintiff
procedures set forth in the PSLRA, 15 U.S.C. § 78u-4,
govern the appointment of lead plaintiff in securities class
actions. The PSLRA was enacted with the goal of
“preventing] lawyer-driven litigation” and
“ensur[ing] that parties with significant holdings in
issuers, whose interests are more strongly aligned with the
class of shareholders, will participate in the litigation and
exercise control over the selection and actions of
plaintiffs' counsel.” Peters v. Jinkosolar
Holding Co., No. 11 Civ. 7133(JPO), 2012 WL 946875,
at *4 (S.D.N.Y. Mar. 19, 2012) (quoting Weltz v.
Lee, 199 F.R.D. 129, 131 (S.D.N.Y. 2001)); see also
In re Oxford Health Plans, Inc., Sec. Litig., 182 F.R.D.
42, 43-44 (S.D.N.Y. 1998); H.R. Conf. Rep. No. 104-369.
Before its enactment, “professional plaintiffs”
overwhelmingly and disproportionately profited,
“irrespective of the culpability of the
defendants” and “at the expense of shareholders
with larger stakes.” Schulman v. Lumenis,
Ltd., No. 02 Civ.1989(DAB), 2003 WL 21415287, at *2
(S.D.N.Y. June 18, 2003) (quoting In re Party City Sec.
Litig., 189 F.R.D. 91, 103 (D.N.J. 1999)).
with this intent, under the PSLRA, courts are to appoint as
lead plaintiff “the member or members of the purported
plaintiff class that the court determines to be most capable
of adequately representing the interests of class
members.” 15 U.S.C. § 78u-4(a)(3)(B)(i). There is
a rebuttable presumption that the adequate plaintiff is the
person or group of persons that (1) filed the original
complaint or filed a motion in response to the notice, (2)
has the largest financial interest in the relief being
requested, and (3) meets the requirements of Rule 23 of the
Federal Rules of Civil Procedure. See Id. §
78u-4(a)(3)(B)(iii)(I). Other class members may rebut this
presumption by providing evidence that the presumptively
adequate plaintiff “will not fairly and adequately
protect the interests of the class” or “is
subject to unique defenses that render such plaintiff
incapable of adequately representing the class.”
Id. § 78u- 4(a)(3)(B)(iii)(II).
because Aude filed a timely motion, has the largest financial
interest, and otherwise meets the requirements of Rule 23 of
the Federal Rules of Civil Procedure, as further detailed
below, I appoint him as Lead Plaintiff.