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A.F.I.K. Holding Sprl v. Fass

September 5, 2003

A.F.I.K. HOLDING SPRL, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SIM FASS, CHRISTOPHER G. CLEMENT, YEHUDA STERNLICHT, AND BIO-TECHNOLOGY GENERAL CORP., DEFENDANTS.
CONGREGATION KEREN YOEL INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SIM FASS, CHRISTOPHER G. CLEMENT, YEHUDA STERNLICHT, AND BIO-TECHNOLOGY GENERAL CORP., DEFENDANTS.
GAIL WEST, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
CHRISTOPHER G. CLEMENT, JOHN A. BOND, YEHUDA STERNLICHT, SIM FASS, AND BIO-TECHNOLOGY GENERAL CORP., DEFENDANTS.
THOMAS COLLINS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
BIO-TECHNOLOGY GENERAL CORP., SIM FASS, CHRISTOPHER G. CLEMENT, JOHN A. BOND, AND YEHUDA STERNLICHT, DEFENDANTS.
BETTY S. WILEY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
BIO-TECHNOLOGY GENERAL CORP., SIM FASS, JOHN BOND, AND YEHUDA STERNLICHT, DEFENDANTS.
PAUL D. DAGGETT, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
CHRISTOPHER G. CLEMENT, JOHN A. BOND, YEHUDA STERNLICHT, SIM FASS, AND BIO-TECHNOLOGY GENERAL CORP., DEFENDANTS.
LILLA YORRA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SIM FASS, CHRISTOPHER G. CLEMENT, YEHUDA STERNLICHT, AND BIO-TECHNOLOGY GENERAL CORP., DEFENDANTS.



The opinion of the court was delivered by: Ackerman, Senior District Judge

FOR PUBLICATION

OPINION

This matter comes before the Court upon motions of the Louisiana Sheriffs' Pension and Relief Fund, ("Louisiana Sheriffs'" or "LS"), Joseph Rago and Poalim Mutual Funds ("The PKN Group"), Anthony J. Caggiano ("Caggiano"), and Steven Guerra, Howard Weissberg *fn1 , and Rebecca Detsch (collectively, "The Guerra Group"), to consolidate the captioned actions, to be appointed lead plaintiff, and for approval of the selected lead plaintiff's choice of lead counsel. For the reasons outlined below, the PKN Group's unopposed motion for consolidation is hereby GRANTED, its motion to be appointed lead plaintiff is GRANTED, its motion for approval of its choice of Glancy and Binkow and the Dekel-Sabo Law Firm to be appointed Lead Counsel is also GRANTED, and all other similar motions are correspondingly DENIED. Hereinafter, this consolidated case shall be captioned In re Bio-Technology General Corp. Securities Litigation, Civil Action No. 2:02cv6048.

I. Introduction

Presently pending before this Court are six related securities class action lawsuits (the "Actions") brought on behalf of public investors who purchased the common stock of Bio-Technology General Corp. ("BTG" or the "Company") from April 19, 1999 to August 2, 2002, inclusive (the "Class Period"). The related actions allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995 ("PSLRA") (15 U.S.C. § 78(j)(b) and 78(t)) and Rule 10b-5 promulgated thereunder (17 C.F.R. § 240.10b-5). BTG is a Delaware corporation with its principal place of business in Iselin, New Jersey. BTG is engaged in the research, development, manufacture, and marketing of biopharmaceutical products. Through a combination of internal research and development, acquisitions, collaborative relationships and licensing arrangements, the Company has a portfolio of therapeutic products, including nine products that have received regulatory approval for sale and are currently being marketed. Additionally, the Company has four products in registration or clinical trials and several products in pre-clinical development. The Company distributes its products through a direct sales force in the United States and through third-party license and distribution relationships in international markets. BTG is listed on the NASDAQ National Market.

The Complaint alleges that BTG and certain of its executive officers violated federal securities laws by disseminating materially false and misleading statements concerning BTG's revenue and earnings, which caused the stock price to become artificially inflated, damaging investors. Specifically, the Complaint alleges that, in order to inflate the price of the stock, Defendants caused the Company to falsely report its earnings during 1999, 2000, and 2001 through inappropriate revenue recognition practices, including recognizing revenue where significant uncertainties existed relating to realization of the invoiced amounts. On August 2, 2002 BTG announced that it would have to restate its publicly reported financial results for 1999, 2000, and 2001, thereby allegedly admitting that it violated generally accepted accounting principles ("GAAP") and that its financial statements for the period were false and misleading. On October 4, 2002, BTG's outside auditors announced that they were resigning and that they believed that the Company's internal controls were deficient and needed to be significantly strengthened. As a result of these revelations, BTG's common stock dropped from a Class Period high of $20.44 per share to a low of $2.10 per share on October 7, 2002.

Plaintiff A.F.I.K. Holding SPRL ("A.F.I.K.") filed the first related action in this case (02-cv-6048) on December 20, 2002. In accordance with the statutory requirement, A.F.I.K. published a notice of pendency of its action on January 10, 2003, within 20 days of filing the action. 15 U.S.C. §§ 78u-4(a)(3)(A)(i). The notice informed class members that they may move the Court no later than March 11, 2003 to serve as Lead Plaintiff, within 60 days after publication of the notice pursuant to 15 U.S.C. §§ 78u-4(a)(3)(A) and (B). On March 11, 2003, four different individuals or entities moved this Court to consolidate the actions, to be appointed Lead Plaintiff and for this Court's approval of the selected Lead Plaintiff's choice of Lead Counsel. Those four entities or individuals are the aforementioned Louisiana Sheriffs, Caggiano, the Guerra Group, and the PKN Plaintiffs' Group. The Court is now faced with the task of appointing as lead plaintiff the member or members of the class which it determines to be most capable of adequately representing the interests of the class. 15 U.S.C. §78u-4(a)(3)(B). This appointment process is highly regulated both by statute and by the seminal opinion in this circuit, In re Cendant Corporation Litigation, 264 F.3d 201 (3d Cir. 2001). First, though, the Court will pause to address the issue of consolidation.

II. Consolidation

Fed. R. Civ. P. 42(a) states that "[w]hen actions involving a common question of law or fact are pending before the court, it may...order all the actions consolidated." See also Nanavati v. Burdette Tomlin Memorial Hosp., 857 F.2d 96, 103 n. 3 (3d Cir. 1988) (consolidation is appropriate where there are actions involving common questions of law or fact); Fields v. Biomatrix, Inc., 198 F.R.D. 451, 454 (D.N.J. 2000) (same) (citations omitted); Liberty Lincoln Mercury, Inc. v. Ford Marketing Corp., 149 F.R.D. 65, 80 (D.N.J. 1993) ("Rule 42(a) gives the [d]istrict [c]court 'broad powers to consolidate actions involving common questions of law or fact if, in its discretion, such consolidation would facilitate the administration of justice,' " quoting Waste Distillation Tech., Inc. v. Pan American Resources, Inc., 775 F.Supp. 759, 761 (D.Del.1991)). Moreover, the PSLRA directs that cases should be consolidated where there is "more than one action on behalf of a class asserting substantially the same claim or claims." 15 U.S.C. § 78u-4(a)(3)(B)(ii).

Neither the PSLRA nor Rule 42 requires that pending suits be identical before they can be consolidated. Rather, in deciding whether to consolidate actions under Rule 42(a), the court must balance the risk of prejudice and possible confusion against the risk of inconsistent adjudications of common factual and legal issues, the burden on the parties and witnesses, the length of time required to conclude multiple lawsuits as against a single one, and the relative expense to all concerned of the single-trial and multiple-trial alternatives. In re Consolidated Parlodel Litig., 182 F.R.D. 441, 444 (D.N.J. 1998) (citations omitted); Chill v. Green Tree Financial Corp., 181 F.R.D. 398, 405 (D.Minn. 1998) (citations omitted); see also Takeda v. Turbodyne Technologies, Inc., 67 F. Supp. 2d 1129, 1133 (C.D.Ca. 1999) ("[A] court must balance the savings of time and effort consolidation will produce against any inconvenience, delay, confusion, or prejudice that may result."). In the absence of an articulated basis to assert confusion or prejudice, consolidation is generally appropriate. In re Lucent Technologies Inc. Securities Litigation, 221 F. Supp. 2d 472, 480 (D.N.J. 2001).

In the instant case, as was mentioned above, all of the related actions allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as amended by the PSLRA. In fact, all of the actions make the same claims against the same defendant for the same actions during the same period of time. There appears to be no reason to believe that consolidation would cause inconvenience, delay, confusion, or prejudice, nor has any objector stepped forward to articulate any basis for such a belief. As consolidation of class action securities fraud actions is generally the norm, this Court will exercise its authority under Fed. R. Civ. P. 42(a) and consolidate these actions, which henceforth shall be captioned In re Bio-Technology General Corp. Securities Litigation.

III. Identifying the Most Adequate Plaintiff

A. Rule 23 and the Cendant Standard

In determining the "most adequate plaintiff," the Court must adopt ...


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