IN RE: Horsehead Holding Corp Securities Litigation
1:16-cv-00292
D. Del.Nov 9, 2017Background
- Consolidated securities class actions against Horsehead Holding Corp.; Magistrate Judge Burke appointed Dyson Capital Management Ltd. (Dyson) and Raymond Cook (Cook) as Lead Plaintiff and approved counsel.
- John and Mary Anacker (the Anackers) objected, arguing Dyson lacks standing and thus cannot serve as Lead Plaintiff.
- Under the PSLRA, the court uses a two-step process: identify the presumptive lead plaintiff (largest financial interest, timely motion, meets Rule 23) and allow rebuttal showing inadequacy or unique defenses.
- Judge Burke found Dyson and Cook timely, had the largest financial interest, and prima facie satisfied Rule 23; the Anackers failed to rebut adequacy or show a manifest conflict or that the pair were improperly "cobbled together."
- Judge Burke noted missing details about Dyson that could later matter for standing, but placed burden on the Anackers to present proof in the rebuttal stage; the district court adopted Judge Burke’s Opinion and overruled the Anackers’ objections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Dyson has standing to serve as Lead Plaintiff | Anackers: Dyson (an investment manager) cannot claim clients’ losses as its own; record shows no beneficial ownership or authority to sue | Dyson/Cook: Presumptive lead plaintiff standard applies; standing challenge is a rebuttal issue and Anackers must prove inadequacy | Court: Dyson may later have to affirmatively establish standing, but at PSLRA appointment stage burden is on objector; Anackers failed to rebut presumption; Dyson and Cook remain Lead Plaintiff |
| Whether Cook and Dyson are the presumptive Lead Plaintiff under PSLRA | Anackers: Object to appointment given Dyson’s alleged lack of standing | Dyson/Cook: Timely motion, largest financial interest, satisfy Rule 23 prima facie | Court: Judge Burke reasonably found they meet PSLRA criteria and are presumptive Lead Plaintiff |
| Whether Anackers rebutted the presumption of adequacy or showed unique defenses | Anackers: Point to bankruptcy statements and managerial status of Dyson as creating conflicts/unique defenses | Dyson/Cook: No manifest conflict; insufficient proof that they were assembled to control litigation; provided some evidence re: Dyson | Court: Anackers failed to present sufficient proof of conflict, cobbling, or unique defenses to rebut presumption |
| Request for limited discovery into Dyson’s standing | Anackers: Seek discovery to test Dyson’s standing | Dyson/Cook: Request untimely and unnecessary | Court: Request untimely and would not change outcome; denied as alternative relief |
Key Cases Cited
- Leader Techs., Inc. v. Facebook, Inc., 719 F. Supp. 2d 373 (D. Del.) (standard for review of magistrate judge rulings for clear error)
- OFI Risk Arbitrages v. Cooper Tire & Rubber Co., 63 F. Supp. 3d 394 (D. Del. 2014) (describing PSLRA two-step lead plaintiff selection framework)
- In re Initial Public Offering Sec. Litig., 214 F.R.D. 117 (S.D.N.Y. 2002) (purpose of PSLRA lead plaintiff and distinction from class representatives)
- In re Oxford Health Plans, Inc., 191 F.R.D. 369 (S.D.N.Y. 2000) (discussing lead plaintiff standing and role relative to class representatives)