Bricklayers & Trowel Trades International Pension Fund v. Credit Suisse First Boston
853 F. Supp. 2d 181
D. Mass.2012Background
- consolidated securities class action over AOL-Time Warner stock during 2001–2002 class period
- Bricklayers International Pension Fund leads suit on behalf of the class
- defendants include CSFB entities and four CSFB employees; named individuals Kiggen and Martin
- counts: 10b-5 misstatements/omissions (Count I) and 20(a) control person liability (Count II)
- plaintiffs invoke fraud-on-the-market theory; alleged inflated stock price followed by decline after truth
- court-related posture: previous denial of dismissals and class certification; Daubert motions; Hakala event study excluded; summary judgment ruling
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Daubert admissibility of Hakala study | Hakala’s event study is reliable and should be admitted | Hakala study is unreliable and should be excluded under Rule 702/Daubert | Hakala study excluded; unreliable for loss causation |
| Event-day selection methodology | Event days properly identified as inflationary/corrective | Dr. Hakala cherry-picked volatile days outside proper event-day criteria | Selection deemed improper; study unreliable |
| Use of dummy variables | Dummy variables are standard in event studies | Hakala overuses dummy variables, undermining reliability | Overuse deemed unreliable; exclusion appropriate |
| Confounding factors / disaggregation | Expert isolates fraud impact from confounding news | Study fails to disaggregate confounding factors | Study not capable of isolating the fraud's effect; loss causation not proven |
| Impact on loss causation and summary judgment | Without Hakala, there remains triable issue on loss causation | Loss causation cannot be established without the event study | Summary judgment granted for defendants; Counts I and II dismissed |
Key Cases Cited
- In re PolyMedica Corp. Sec. Litig., 432 F.3d 1 (1st Cir. 2005) (fraud-on-the-market framework and loss causation foundations)
- Omnicom Grp., Inc. Sec. Litig., 541 F.Supp.2d 546 (S.D.N.Y. 2008) (requirement to disaggregate confounding factors for loss causation)
- Scientific Atlanta, Inc. Sec. Litig., 754 F.Supp.2d 1339 (N.D. Ga. 2010) (disaggregation failure bars loss causation evidence)
- Williams Sec. Litig., 558 F.3d 1130 (10th Cir. 2009) (loss causation requires disaggregated market reactions)
- Oracle Corp. Sec. Litig., 627 F.3d 376 (9th Cir. 2010) (market reaction must relate to the disclosed information and be new)
- FindWhat Investor Grp. v. FindWhat.com, 658 F.3d 1282 (11th Cir. 2011) (corrective disclosures require new information; not mere confirmation)