Kux-Kardos v. VimpelCom, Ltd.
151 F. Supp. 3d 471
S.D.N.Y.2016Background
- Two securities-fraud putative class actions were filed against VimpelCom and certain officers: Kux-Kardos (No. 15 Civ. 8672) and Westway Alliance (No. 15 Civ. 9492).
- Plaintiffs allege false/misleading statements and failures to disclose material facts about VimpelCom’s business, causing stock-price declines after corrective disclosures.
- Multiple movants sought consolidation and appointment as lead plaintiff; no party opposed consolidation.
- Westway moved to be lead plaintiff and proposed Gainey McKenna & Eggleston as lead counsel; other movants either withdrew or conceded larger losses by others.
- Westway claimed the largest recoverable loss (~$679,339); rivals argued Westway sold before final corrective disclosures and thus lacks recoverable loss.
- Court found the complaints substantially identical for consolidation and that March 2014 partial disclosures could support Westway’s loss causation for lead-plaintiff purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Consolidation of the two actions | Cases involve same defendants, same statutory claims, nearly identical facts — consolidation promotes judicial economy | No objection to consolidation | Consolidation granted: common questions of law/fact and judicial economy outweigh differences (e.g., class-period start dates) |
| Which movant has the largest recoverable financial interest / loss causation | Westway: suffered largest recoverable loss and relied on partial disclosures (March 2014) that put market on notice | Rivals (Lvov/McColloch): Westway sold before final corrective disclosures; therefore its losses are not recoverable | Westway has largest recoverable loss for lead-plaintiff presumption because March 2014 disclosures qualify as partial disclosures supporting loss causation |
| Rule 23 typicality and adequacy (lead plaintiff) | Westway: claims arise from same course of events, will pursue similar legal theories, retained experienced counsel, and has sufficient stake to litigate vigorously | Opponents: Westway’s PSLRA certification was signed by an attorney and may lack proof of signer’s authority, risking a unique defense | Westway made a preliminary showing of typicality and adequacy; supplemental declaration established signer’s authority, so presumption not rebutted; Westway appointed lead plaintiff |
| Approval of lead counsel | Westway selected experienced securities class counsel (Gainey McKenna & Eggleston) | No substantive opposition | Court approves Westway’s choice of counsel based on qualifications and strong presumption in favor of lead plaintiff’s selection |
Key Cases Cited
- Reitan v. China Mobile Games & Entm’t Grp., 68 F. Supp. 3d 390 (S.D.N.Y. 2014) (consolidation need not require identical actions)
- Johnson v. Celotex Corp., 899 F.2d 1281 (2d Cir. 1990) (district court has broad discretion to order consolidation)
- Kaplan v. Gelfond, 240 F.R.D. 88 (S.D.N.Y. 2007) (consolidation appropriate despite differing class periods when common questions predominate)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (plaintiff must prove misrepresentation proximately caused economic loss)
- In re Take-Two Interactive Sec. Litig., 551 F. Supp. 2d 247 (S.D.N.Y. 2008) (partial disclosures can support loss causation)
- Topping v. Deloitte Touche Tohmatsu CPA, 95 F. Supp. 3d 607 (S.D.N.Y. 2015) (only recoverable losses attributable to disclosures/defendants’ misconduct are counted for lead-plaintiff financial-interest calculus)