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Pope v. Navient Corp.

United States District Court, D. New Jersey

February 2, 2018

Eli POPE, individually and on behalf of all others similarly situated, Plaintiff,
v.
NAVIENT CORPORATION, et al. Defendant. Melvin GROSS, individually and on behalf of all others similarly situated, Plaintiff,
v.
NAVIENT CORPORATION, et al. Defendant.

          OPINION

          ROBERT B. KUGLER United States District Judge.

         This securities litigation class action comes before the Court on Yuri Marakhovsky's Motion for Consolidation, Appointment as Lead Plaintiff, and Approval of Counsel (Doc. No. 5) and Navient Investor Group's (the “Group”) Motion for Consolidation, Appointment as Lead Plaintiff, and Approval of Counsel. (Doc. No. 6.) In a parallel proceeding to be consolidated, Yuri Marakhovsky has also brought a Motion for Consolidation, Appointment as Lead Plaintiff, and Approval of Counsel. (Doc. No. 2.) For the reasons stated herein, Marakhovsky and the Group's motions to consolidate are GRANTED, Marakhovsky's Motions for Appointment as Lead Plaintiff are DENIED and the Navient Investor Group's Motion for Appointment as Lead Plaintiff and Approval as Lead Counsel is GRANTED.

         I. THE FACTS

         This is a federal securities class action brought on behalf of a class consisting of all persons and entities who purchased or otherwise acquired the publicly-traded securities of Navient Corporation (“Navient”) from February 25, 2016 through October 4, 2017. Plaintiffs seek to recover compensable damages caused by Defendants' alleged violations of federal securities laws and bring this action under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaints alleges that Defendants made materially false and misleading statements regarding Navient's business, causing losses and damages among the holders of Navient securities.

         A class-action complaint was first filed with this Court on October 16, 2017 on behalf of one Eli Pope, who had bought three shares of Navient on September 15, 2017 for $13.73. A subsequent class-action complaint, concerning essentially the same subject matter, class, and allegations was filed on behalf of one Melvin Gross on November 3, 2017, a putative class member who had 12 shares of Navient.

         On December 15, 2017, Yuri Marakhovsky moved to appoint lead plaintiff in both the Pope and Gross actions, and also moved to consolidate the actions. Marakhovsky had bought 150 shares of Navient on January 19, 2017 at $15.57. Also on December 15, 2017, Navient Investor Group also moved to appoint lead plaintiff and consolidate the actions. The Group consists of at least two individuals who purchased Navient shares: Jesse Wayne Pritchard, who bought 700 shares on July 19, 2017 at $15.559, and Jay Montblanc, who bought 450 shares on August 9, 2016 at $14.39.

         Shortly after Navient Investor Group moved to be lead plaintiff, Marakhovsky submitted notice that he was not opposing its appointment because the Group had taken greater losses than Marakhovsky. (Doc. No. 7.) The Group claims losses totaling $3, 114.58, much larger than Marakhovsky's losses of $479.00, and we are unaware of any losses greater than those claimed by the Group.

         II. CONSOLIDATION

         If actions before a court involve a common question of law or fact, the court may consolidate the actions. See Fed. R. Civ. P. 42(a). Rule 42 “confers upon a district court broad power, whether at the request of a party or upon its own initiative, to consolidate causes for trial as may facilitate the administration of justice.” Ellerman Lines, Ltd. v. Atl. & Gulf Stevedores, Inc., 339 F.2d 673, 675 (3d Cir. 1964). In like manner, the Private Securities Litigation Reform Act (“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.'” In Re Lucent Techs. Sec. Litig., 221 F.Supp.2d 472, 480 (D.N.J. 2001) (quoting 15 U.S.C. § 78u-4(a)(3)(B)(ii)). Where there are multiple class actions filed under the PSLTRA, a court shall not appoint lead plaintiff until after it decides the motion for consolidation. § 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), it must be considered

whether the specific risks of prejudice and possible confusion [are] overborne by the risk of inconsistent adjudications of common factual and legal issues, the burden on the parties, witnesses, lawsuits, 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, multiple-trial alternatives.

In re Lucent Techs. Inc. Sec. Litig., 221 F.Supp.2d 472, 480 (D.N.J. 2001) (citing In re Consolidated Parlodel Litig., 182 F.R.D. 441, 444 (D.N.J. 1998) (citations omitted).

         The Pope and Gross actions before this Court are essentially the same action, with the same class, concerning the same events. Pope alleges a class who had purchased Navient securities between February 25, 2016 and October 4, 2017 and was injured by alleged material misrepresentations; so does the Gross action. The Pope action alleges violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5, and violations of Section 20(a), 15 U.S.C. § 78t; so does the Gross action. The Court thus finds that consolidation is appropriate and would facilitate the administration of justice, and grants Marakhovsky's motion for consolidation of the Pope and Gross actions.

         III. APPOINTMENT OF LEAD PLAINTIFF

         Both Marakhovsky and Navient Investor Group both seek to be appointed lead plaintiff in this action, although Marakhovsky does not oppose the Group's motion because its losses are significantly higher than Marakhovsky's. But while the Group's motion is effectively unopposed, “[a] preliminary, fact-specific inquiry is nonetheless necessary under Rule 23 to determine whether the presumptively most adequate plaintiff ...


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