Foley v. Transocean Ltd.
2011 U.S. Dist. LEXIS 1541
S.D.N.Y.2011Background
- Danica Pension A/S is appointed as lead plaintiff in a PSLRA class action against Transocean Ltd. and current/former CEOs; three movants sought lead plaintiff status: Johnson Investment Counsel, Danica, and Virgin Islands; court prefers Danica based on largest financial interest.
- PSLRA framework governs lead plaintiff appointment, requiring notice, motions within deadlines, and a presumption that the presumptive lead plaintiff has the largest financial interest and satisfies Rule 23.
- Largest financial interest is determined via the Lax four-factor test (shares purchased, net shares, net funds expended, approximate losses) with emphasis on losses.
- Loss calculations use the 90-day lookback under 15 U.S.C. § 78u-4(e) and the LIFO method for class-period losses.
- Court finds Danica had greater approximate losses than Johnson under original calculations and weighs other Lax factors but still concludes Danica has the greatest financial interest and satisfies Rule 23.
- Court approves Danica’s lead counsel (Barroway Topaz) and liaison counsel (Bernstein Litowitz) and directs a scheduling order after appointment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Largest financial interest under PSLRA (Lax factors) | Danica has greatest losses and overall greater financial stake | Johnson claims larger funds/shares, contests losses | Danica has greatest financial interest; presumption in Danica's favor stands |
| Loss calculation methodology (LIFO, 90-day lookback) | Losses should use standard 90-day lookback and LIFO | Johnson proposed alternative date-based losses | Court applies original loss calculations (90-day lookback, LIFO); Danica’s losses exceed Johnson’s |
| Rule 23 adequacy and typicality | Danica's claims arise from same misconduct; typical and adequate | Potential conflicts/standing issues with Danica | Danica satisfies typicality and adequacy at this stage; appoint lead plaintiff |
| Standing and conflicts rebutting presumption | Johnson challenges Danica's standing and alleges conflicts | Conflicts speculative; standing concerns not proven | Rebuttal evidence insufficient to overcome presumption; Danica remains presumptive lead plaintiff |
| Foreign lead plaintiff status and monitoring ability | Danica is foreign but can monitor and litigate from abroad | Foreign status raises res judicata/monitoring concerns | Foreign status not a bar; harms mitigated; lead plaintiff appropriate |
| Appointment of lead and liaison counsel | Danica’s selected firms are capable | No adverse arguments raised | Lead and liaison counsel approved; scheduling order to follow |
Key Cases Cited
- Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust v. LaBranche & Co., 229 F.R.D. 395 (S.D.N.Y. 2004) (adopts four-factor Lax test for largest financial interest)
- In re eSpeed, Inc. Sec. Litig., 232 F.R.D. 95 (S.D.N.Y. 2005) (emphasizes remaining factors; loss is most significant element)
- Kaplan v. Gelfond, 240 F.R.D. 88 (S.D.N.Y. 2007) (notes weighting of Lax factors and lead-plaintiff considerations)