City of Birmingham Firemen's and Policemen's Supplemental Pension System v. Plains All American Pipeline, L.P.
4:15-cv-02404
S.D. Tex.Dec 7, 2015Background
- May 19, 2015: Plains All American Pipeline Line 901 ruptured off Santa Barbara, releasing crude oil; Plaintiffs allege Plains misrepresented preventive measures pre-spill and minimized the release post-spill, causing stock declines.
- Putative class includes investors in Plains and Plains Holdings; defendants include Plains, Plains Holdings, officers/directors, and underwriters.
- Multiple movants sought appointment as lead plaintiff (Inter‑Marketing Group, IAM National Pension Fund, Pennsylvania State Employees’ Retirement System, others).
- The PSLRA procedure and Lax factors govern lead‑plaintiff selection; courts consider largest financial interest and Rule 23 typicality/adequacy.
- Court found IAM had the largest financial interest (largest shares purchased, net funds expended, and losses) and preliminarily satisfied Rule 23 typicality and adequacy.
- Court appointed IAM as lead plaintiff, approved Robbins Geller Rudman & Dowd LLP as lead counsel, and denied competing motions; directed schedule for amended complaint and motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who has the largest financial interest under the PSLRA? | IAM: largest number of shares, net purchases, funds expended, and losses. | Pennsylvania System & others: argued their holdings (e.g., Plains Holdings, debt) support co‑lead or larger interest. | IAM has the largest financial interest; combined losses in Plains and Plains Holdings are appropriate to compare. |
| Whether lead plaintiff must have standing on every claim (typicality) | Pennsylvania: IAM lacked purchases in some offerings, so not typical for all claims. | IAM: lead plaintiff need not have standing on every claim; typicality focuses on common legal/remedial theories. | IAM satisfies Rule 23 typicality; lead plaintiff need not have standing on every claim. |
| Whether IAM’s later purchases create conflicts or inadequacy | Pennsylvania: IAM bought only in final 8 months, may not vigorously represent earlier‑period claimants. | IAM: no evidence of antagonism or conflict; fiduciary duty and counsel competence ensure representation. | No apparent conflicts; IAM is adequate and typical. |
| Whether co‑lead plaintiffs or subclasses are required due to separate entities (Plains vs. Plains Holdings) | Pennsylvania: differences between Plains and Plains Holdings justify co‑lead or subclasses. | IAM: invested in both entities; differences do not require separate lead plaintiffs at this stage. | Differences are not material now; single lead plaintiff (IAM) is appropriate; subclasses can be pursued at certification if needed. |
Key Cases Cited
- In re Waste Management, Inc. Sec. Litig., 128 F. Supp. 2d 401 (S.D. Tex. 2000) (discusses Lax factors and lead‑plaintiff selection under PSLRA)
- In re Enron Corp. Sec. Litig., 206 F.R.D. 427 (S.D. Tex. 2002) (approach to co‑lead plaintiffs, typicality, and adequacy at lead‑plaintiff stage)
- Bertulli v. Indep. Ass'n of Cont'l Pilots, 242 F.3d 290 (5th Cir. 2001) (typicality standard and focus on similarity of legal/remedial theories)
- Hevesi v. Citigroup, Inc., 366 F.3d 70 (2d Cir. 2004) (lead plaintiff need not have standing on every available claim)
- In re BP Sec. Litig., 758 F. Supp. 2d 428 (S.D. Tex. 2010) (contrast where movants’ interests diverged across class periods, affecting typicality)
- In re Deepwater Horizon, 785 F.3d 1003 (5th Cir. 2015) (adequacy inquiry and conflict‑of‑interest considerations in class representation)
- In re Cavanaugh, 306 F.3d 726 (9th Cir. 2002) (largest‑loss plaintiff satisfying Rule 23 is entitled to lead‑plaintiff presumption)