Alan G. HEVESI, Comptroller of the State of New York, as Administrative Head of the New York State and Local Retirement Systems and as Trustee of the New York State Common
Retirement Fund, The Fresno County Employees' Retirement Association, The County of Fresno, and HGK Asset Management, Inc., on behalf of purchasers and acquirers of all WorldCom, Inc. publicly traded securities during the period beginning April 29, 1999 through and including June 25, 2002, Plaintiffs-Respondents,
v.
CITIGROUP INC., Citigroup Global Markets Inc. f/k/a/ Salomon Smith Barney Inc., and Jack Grubman, Defendants-Petitioners,
ABN Amro, Inc., Banc of America Securities LLC, Blaylock & Partners, L.P., BNP Paribas Securities Corp., Caboto Sim S.P.A. (f/k/a/ Caboto Holding Sim S.P.A.), Chase Securities Inc. LLC (n/k/a/ J.P. Morgan Securities Inc.), Credit Suisse First Boston LLC (f/k/a/ Credit Suisse First Boston Corporation), Deutsche Banc Alex. Brown, Inc. (n/k/a/ Deutsche Bank Securities, Inc.), Fleet Securities, Inc., Goldman, Sachs & Co., J.P. Morgan Chase & Co., Lehman Brothers Inc., Mizuho International PLC, Tokyo-Mitsubishi International PLC, UBS Warburg LLC, Utendahl Capital Partners, L.P., and WestLB AG (f/k/a/ Westdeutsche Landesbank Girozentrale), Underwriter-Related Defendants-Petitioners,
Bernard Ebbers, Scott Sullivan, David Myers, Buford Yates, Jr., James C. Allen, Judith Areen, Carl J. Aycock, Max E. Bobbitt, Francesco Galesi, Clifford Alexander, Stiles A. Kellett, Jr., Gordon S. Macklin, John A. Porter, Bert C. Roberts, Jr., John W. Sidgmore, Lawrence C. Tucker, Arthur Andersen LLP, Defendants.
No. 03-8044.
No. 03-8045.
United States Court of Appeals, Second Circuit.
Submitted: December 5, 2003.
Order Filed: December 31, 2003.
Opinion Filed: May 7, 2004.
COPYRIGHT MATERIAL OMITTED Jay B. Kasner (Susan L. Saltzstein, Cyrus Amir-Mokri, Steven J. Kolleeny, of counsel), Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Underwriter-Related Defendants-Petitioners.
Martin London (Richard A. Rosen, Brad S. Karp, Eric S. Goldstein, Walter Rieman, Marc Falcone, Joyce S. Huang, of counsel), Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, N.Y. (Louis R. Cohen, Robert B. McCaw, Seth P. Waxman, Peter K. Vigeland, of counsel, Wilmer, Cutler & Pickering, New York, NY), for Defendants-Petitioners Citigroup Inc., Citigroup Global Markets Inc. f/k/a Salomon Smith Barney Inc., and Jack Grubman.
Leonard Barrack (Gerald J. Rodos, Jeffrey W. Golan, Mark R. Rosen, Jeffrey A. Barrack, Pearlette V. Toussant, of counsel), Barrack, Rodos & Bacine, Philadelphia, PA, (Max W. Berger, John P. Coffee, Steven B. Singer, C. Chad Johnson, Beata Gocyk-Farber, Jennifer L. Edlind, John Browne, of counsel, Bernstein Litowitz Berger & Grossman LLP, New York, NY) for Plaintiffs-Respondents.
Before: OAKES, CABRANES, and SACK, Circuit Judges.
JOSÉ A. CABRANES, Circuit Judge.
These petitions ask us to decide whether two groups of defendants should be permitted, pursuant to Federal Rule of Civil Procedure 23(f), to file an interlocutory appeal from an order of the United States District Court for the Southern District of New York (Denise Cote, Judge) certifying a plaintiff class. One group of defendants — Citigroup, its affiliate Salomon Smith Barney ("SSB"), and SSB research analyst Jack Grubman (collectively, "Citigroup Defendants") — argue that an interlocutory appeal should be permitted because the District Court, for the first time in the class certification context, extended the fraud-on-the-market doctrine of Basic Inc. v. Levinson,
On December 31, 2003, we entered an order granting the Citigroup Defendants' petition and denying the Underwriters' petition. This opinion explains that ruling.
BACKGROUND
The following basic facts are drawn principally from the District Court's Opinion and Order of October 24, 2003. See In re Worldcom, Inc. Sec. Litig.,
On June 25, 2002, WorldCom issued the first of several announcements that its certified financial results had to be restated. By late July 2002, WorldCom had filed the largest bankruptcy in United States history. Id. at 273-74.
On April 30, 2002, even before the restatement announcements, the first securities class action against WorldCom and numerous other defendants had been filed in the United States District Court for the Southern District of New York. Subsequent securities actions related to WorldCom's collapse were assigned to the Southern District of New York by the Judicial Panel on Multi-District Litigation, and transferred to that District for pre-trial proceedings.1 By order dated August 15, 2002, the securities class actions in the Southern District were consolidated under the caption In re Worldcom, Inc. Securities Litigation ("Securities Litigation"). See Albert Fadem Trust v. Worldcom, Inc., No. 02 Civ. 3288,
In the Complaint, the plaintiffs asserted claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 ("1933 Act"), 15 U.S.C. § 77a et seq., on behalf of purchasers of WorldCom bonds who relied on registration statements for the 2000 and 2001 Offerings. The plaintiffs also asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("1934 Act"), 15 U.S.C. § 78a et seq., on behalf of purchasers of publicly traded securities of WorldCom from April 29, 1999 to June 25, 2002 (the "Class Period"). The Complaint named numerous defendants, including former WorldCom executive officers, WorldCom's former directors, the Underwriters, WorldCom's former accountants, and the Citigroup Defendants.
The Complaint alleges that the Underwriters failed to conduct proper due diligence in connection with the 2000 and 2001 Offerings. The Complaint alleges further that the Citigroup Defendants had a close and self-serving relationship with WorldCom and its executives from which both sides derived substantial benefit. Specifically, plaintiffs allege that WorldCom benefitted from Jack Grubman's relentlessly positive, but materially false, research reports about the company while SSB and Grubman were well remunerated for their support of WorldCom with investment banking business. By Opinion and Order dated May 19, 2003, the defendants' motions to dismiss the claims in the Complaint were largely denied. See In re WorldCom, Inc. Sec. Litig.,
On June 4, 2003, NYSCRF and the three additional named plaintiffs moved for certification of a plaintiff class consisting of all persons and entities who purchased or otherwise acquired publicly traded debt or equity securities of WorldCom during the Class Period and who were injured thereby. On October 24, 2003, the District Court granted the class motion, and certified NYSCRF, HGK, Fresno, and FCERA as class representatives.
On November 12, 2003, the Citigroup Defendants and the Underwriters petitioned this Court for permission to appeal the District Court's order granting class certification. The Citigroup Defendants argued that the District Court erred in applying the "fraud-on-the-market" doctrine of Basic Inc. v. Levinson,
The Underwriters offered three separate arguments in support of their petition: First, they contended that the District Court erred when it certified a class that includes bondholders even though NYSCRF, the sole lead plaintiff under the PSLRA, did not purchase any bonds in the 2000 or 2001 Offerings. Second, they asserted that the three additional named plaintiffs are inadequate class representatives because their fee arrangements with counsel do not require them to pay their pro rata share of the total litigation costs. Third, they argued that because some of the bondholders asserting claims against the Underwriters with respect to the 2000 Offering purchased their securities more than one year after that offering, these bondholders will bear the burden of proving reliance on the registration statement that accompanied the offering,3 and class issues do not predominate.
On December 31, 2003, we entered the following order granting the Citigroup Defendants' petition and denying the Underwriters' petition:
The petition of Citigroup Inc., Citgroup Global Markets Inc. F/K/A/ Salomon Smith Barney Inc., and Jack Grubman for permission to appeal pursuant [to] Federal Rule of Civil Procedure 23(f) is hereby granted. The petition of the underwriter-related defendants for permission to appeal pursuant to Federal Rule of Civil Procedure 23(f) is hereby denied. An opinion explaining this Court's ruling will follow. The Clerk is directed to schedule this appeal on an expedited basis and assign it to a merits panel in the normal course.
This is the opinion to follow.
DISCUSSION
A. Rule 23(f)
Federal Rule of Civil Procedure 23(f) provides that: [a] court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders.
Fed.R.Civ.P. 23(f). In applying Rule 23(f), courts of appeals enjoy "unfettered discretion" to grant or deny permission to appeal based on "any consideration that the court of appeals finds persuasive." Fed.R.Civ.P. 23(f), advisory committee's notes.
In In re Sumitomo Copper Litigation,
[P]etitioners seeking leave to appeal pursuant to Rule 23(f) must demonstrate either (1) that the certification order will effectively terminate the litigation and there has been a substantial showing that the district court's decision is questionable, or (2) that the certification order implicates a legal question about which there is a compelling need for immediate resolution.4
Id. at 139 (emphases added).
Sumitomo involved a class action alleging that various defendants conspired to manipulate the prices of copper futures contracts in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., the Commodity Exchange Act ("CEA"), 7 U.S.C. § 13(a)(2), and New York law. Id. at 136. En route to certifying a class consisting of copper futures contract traders injured by the defendants' alleged conspiracy, the district court concluded that the "fraud-on-the-market" doctrine could be used to satisfy the reliance requirement of a common-law fraud claim under New York law. Id. at 142. We denied the defendants' petition to appeal that ruling under Rule 23(f). We determined first that, for reasons not relevant here, the petitioners had not made "a substantial showing that the district court's decision to grant certification is questionable." Id. at 140. We then determined that the petitioners had not raised a significant legal question that required immediate resolution. Id. at 142. Although we recognized that the "uncertainty of the [fraud-on-the-market issue] tips in favor of a grant of interlocutory review," id. at 143, we nevertheless denied the petition on the grounds that (1) the defendants had not shown that the district court's ruling could not be fully reviewed after final judgment, id. at 142, and (2) "the [fraud-on-the-market] issue [was] insufficiently connected to the district court's certification order," id. at 143. The connection between the fraud-on-the-market issue and the certification order was lacking because "[e]ven if the ... defendants were to prevail on the issue, it would not alter the district court's grant of certification with respect to the plaintiffs' RICO and CEA claims, and arguably would not [even] alter the district court's grant of certification with respect to the common-law fraud claim." Id. (emphasis added and citation omitted).
There are just two published decisions of this Court applying the standard set forth in Sumitomo, see In re Visa Check/MasterMoney Antitrust Litig.,
B. The Citigroup Petition
In our view, the Citigroup Defendants' petition falls within the second category of appealable decisions identified in Sumitomo, because the certification order "implicates a legal question about which there is a compelling need for immediate resolution." Sumitomo,
"[A] novel legal question will not compel immediate review unless it is of fundamental importance to the development of the law of class actions and it is likely to escape effective review after entry of final judgment." Sumitomo,
The application of the fraud-on-the-market doctrine in a novel context can have a significant effect on the law of class actions because the presumption of reliance created by the doctrine is often essential to class certification in securities suits. Reliance is an element of securities fraud claims under the 1934 Act. See, e.g., Harsco Corp. v. Segui,
Based on the close connection between the Basic presumption and the requirement that "questions of law or fact common to the members of the class predominate over any questions affecting only individual members," Fed.R.Civ.P. 23(b)(3), the Seventh Circuit in West reversed a district court's order certifying a class consisting of all purchasers of Jefferson Savings Bancorp stock during the period when a stockbroker was falsely telling his clients that Jefferson would be acquired. West,
Here, in certifying a class over the Citigroup Defendants' objections, Judge Cote applied the fraud-on-the-market doctrine to an analyst's expression of opinion as opposed to an issuer's statement of fact. In so doing, Judge Cote declined to "wade into th[e] battle of the experts" as to the existence of a causal link between Grubman's analyst reports and movements in the price of WorldCom securities; instead, Judge Cote credited the plaintiffs' allegation that Grubman's statements of opinion changed the prices of WorldCom securities during the Class Period.5 Class Opinion,
The Citigroup Defendants contend that the Basic presumption may not be extended to analyst research reports without a specific finding by the District Court that the analysts' misrepresentations actually affected the price of securities traded in the open market. In support of this contention, the Citigroup Defendants point out that Federal Rules of Civil Procedure 23(b)(3) requires "findings" by the District Court. See Fed.R.Civ.P. 23(b)(3) (allowing an action to be maintained "as a class action" only if "the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members" (emphasis added)). They argue that by extending the Basic presumption to opinions expressed by an analyst without any "finding" that the analyst's statements affected market prices, the District Court ignored a crucial distinction between, on the one hand, the uniquely authoritative statements of issuers and, on the other hand, expressions of opinion by analysts. According to the Citigroup Defendants, in light of the direct connection between the Basic presumption and the certification criteria in Rule 23(b)(3), the mere allegation that an analyst's statement affected the price of securities traded in the market must be thoroughly tested at the certification stage.
We need not decide what evidentiary showing, if any, the plaintiffs must make at the class certification stage in order to benefit from the Basic presumption in an action against research analysts and their employers. For the purposes of this petition, we simply observe that the Citigroup Defendants have offered a substantial legal argument in support of their position.7 We also note that, like in West but unlike in Sumitomo, the District Court's extension of the fraud-on-the-market doctrine in the instant case is closely connected to its certification decision, because, in order to recover from the Citigroup Defendants, each class member will have to prove reliance on one or more of Grubman's statements of opinion — either individually or with the benefit of the Basic presumption.8 Finally, it is our view that the issue presented in this case is not only novel but also significant, because the application of the fraud-on-the-market doctrine to opinions expressed by research analysts would extend the potentially coercive effect of securities class actions to a new group of corporate and individual defendants — namely, to research analysts and their employers.9 Based on these considerations, we conclude that the Citigroup Defendants have presented an issue that is "of fundamental importance to the development of the law of class actions," Sumitomo,
We also conclude that, in the circumstances presented, the District Court's decision to apply the Basic presumption at the certification stage "is likely to escape effective review after entry of final judgment." Id. As the Seventh Circuit noted in West, "very few securities class actions are litigated to conclusion, so review of [a] novel and important legal issue [concerning the scope of the Basic presumption] may be possible only through the Rule 23(f) device." West,
These concerns about the effect of class certification weigh heavily in the instant case, which "arises from the largest corporate fraud and accounting scandal in United States history." (Compl.¶ 1) This is not the run-of-the-mill class action, or even the run-of-the-mill securities class action. As the District Court noted, "WorldCom issued billions of shares and billions of dollars of debt securities during the Class Period, and it is uncontested that tens of thousands of investors are putative class members." Class Opinion,
C. The Underwriters' Petition
In contrast to the Citigroup Defendants' petition, the Underwriters' petition does not present legal questions that meet the criteria for interlocutory review laid out in Sumitomo. Accordingly, the Underwriters will have to wait until there is an appealable final judgment before they can challenge the certification order.
The Underwriters' first argument is that the class cannot be certified because the additional named plaintiffs have not been subjected to lead plaintiff scrutiny under the PSLRA. That statute requires a district court to appoint a person or persons to serve as lead plaintiff before proceeding with the adjudication of a private suit under the federal securities laws. Two objective factors inform the district court's appointment decision: the plaintiffs' respective financial stakes in the relief sought by the class, and their ability to satisfy the requirements of Rule 23. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I).11 According to the Underwriters, NYSCRF does not meet the typicality requirement of Rule 23(a)12 because it did not purchase bonds in either the 2000 or the 2001 offering and therefore lacks standing to sue the petitioners under Sections 11 and 12 of the 1933 Act on behalf of WorldCom bondholders. Moreover, in the Underwriters' view, NYSCRF's deficiencies as a lead plaintiff cannot be cured through the appointment of three named plaintiffs who have not satisfied the rigors of the PSLRA's lead plaintiff scrutiny.
In rejecting these arguments, the District Court determined (1) that the participation of FCERA, Fresno, and HGK as named plaintiffs and proposed class representatives "ensures that the litigation will continue to focus on the claims raised by bondholders, and that there are representatives of the Class with claims typical of purchasers of both types of securities," and (2) that NYSCRF is a suitable lead plaintiff because its claims "are based on misrepresentations in the Registration Statements and on the same core course of conduct at issue in the Sections 11 and 12 claims." Class Opinion,
In an attempt to fit their arguments into one of the categories identified in Sumitomo, the Underwriters propose that we adopt a per se rule that a class may not be certified where a lead plaintiff does not have standing to bring every available claim and none of the named plaintiffs who have standing to bring the additional claims has been vetted under the PSLRA. This per se rule has little to recommend it. Nothing in the PSLRA indicates that district courts must choose a lead plaintiff with standing to sue on every available cause of action. Rather, because the PSLRA mandates that courts must choose a party who has, among other things, the largest financial stake in the outcome of the case, it is inevitable that, in some cases, the lead plaintiff will not have standing to sue on every claim. See In re Initial Pub. Offering Sec. Litig.,
Moreover, the PSLRA does not in any way prohibit the addition of named plaintiffs to aid the lead plaintiff in representing a class. See Class Opinion,
For all of these reasons, the Underwriters have not made a "substantial showing that the district court's decision" to name HGK, Fresno, and FCERA as class representatives "is questionable." Sumitomo,
The other determinations of the District Court challenged by the Underwriters also do not meet the criteria for an interlocutory appeal under Rule 23(f). The Underwriters argue that the three additional named plaintiffs are inadequate class representatives because they have not agreed to assume ultimate responsibility for a portion of the litigation costs incurred in prosecuting this class action, in alleged violation of Disciplinary Rule 5-103 of the New York Lawyer's Code of Professional Responsibility. That Rule provides that an attorney may only advance or guarantee the expenses of litigation "provided the client remains ultimately liable for such expenses." N.Y. Comp.Codes R. & Regs. tit. 22, § 1200.22(b)(1). In rejecting this argument, the District Court noted that, in managing class actions, "strong federal interests require that the repayment of expenses provision in DR 5-103 be disregarded" and that "the underlying goal of DR 5-103 — that litigation be controlled by the client, not the attorney — remains fully protected" by the procedures established by Rule 23. Class Opinion,
Finally, the Underwriters argue that, under the 1933 Act, some of the bondholders asserting claims with respect to WorldCom's 2000 Offering will have to show individualized reliance on the registration statement in question, because these plaintiffs purchased their securities "after the issuer ... made generally available to its security holders an earning statement covering a period of at least twelve months beginning after the effective date of the registration statement." 15 U.S.C. § 77k(a). According to the Underwriters, if some of the plaintiffs will have to prove individual reliance with respect to even one of the bond offerings, common questions do not predominate.
The District Court rejected this argument on several grounds: First, the Court explained that "any `earning statement' under Section 11 must comply with the governing SEC regulations. It must include, for instance, such `material information as is necessary to make the required statements, in the light of the circumstances under which they are made, not misleading,' and be prepared `in accordance with generally accepted accounting principles.'" Class Opinion,
As an alternative basis for rejecting the Underwriters' predominance argument, the District Court concluded that "even if an admittedly flawed WorldCom SEC filing were considered an `earning statement' for purposes of Section 11 ..., issues common to the class would continue to predominate." Id. The Court concluded first that "[t]he fraud on the market presumption should apply to the plaintiffs' Section 11 claims, just as it does to the Section 10(b) claims." Id. The Court then found that, regardless of whether the fraud-on-the-market presumption were applied to Section 11 claims, "common questions would [still] predominate." Id.
In light of Judge Cote's last determination — namely, that common issues would predominate even if some of the plaintiffs could not benefit from the Basic presumption with respect to one of the registrations statements at issue, Class Opinion,
CONCLUSION
For the reasons stated, we exercise our discretion to grant the Citigroup Defendants' petition for leave to appeal the certification order and to deny the Underwriters' petition.
Notes:
Notes
WorldCom sought Chapter 11 protection in the Southern District of New York on July 21, 2002. Once WorldCom filed for bankruptcy, the automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362, took effect, preventing litigation against WorldCom from going forward. Thus, the actions have proceeded against the numerous defendants besides WorldCom
Federal Rule of Civil Procedure 23(b)(3) provides:
An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
Fed.R.Civ.P. 23(b)(3) (emphasis added).
The Securities Act of 1933 requires purchasers to show reliance on a registration statement if they "acquired the security after the issuer has made generally available to its security holders an earning statement covering a period of at least twelve months beginning after the effective date of the registration statement." 15 U.S.C. § 77k(a)
Despite laying out this two-part test, we emphasized inSumitomo that the Rule 23(f) standard is a flexible one that should not be reduced to any bright-line rules. See In re Sumitomo Copper Litig.,
It would not be precisely accurate to say that Judge Cote simplyaccepted the allegations in the Complaint as true for the purposes of the class certification motion. Rather, she stated that "SSB Defendants have not sufficiently shown that [their expert's] analysis will succeed in rebutting the presumption of reliance such that it is appropriate to conclude that there will be no such presumption at trial and that individual issues will come to predominate over common ones."
Although the fraud-on-the-market doctrine has been invoked to reject motions to dismiss complaints brought against research analysts,see Demarco v. Lebman Bros.,
We note that at least one prominent scholar of federal securities law, Professor Coffee of Columbia Law School, has opined that analyst opinions should be treated differently from issuer statementsSee John C. Coffee, Jr., Security Analyst Litigation, N.Y.L.J. Sept. 20, 2001, at 5 ("Only in a case where the publication of the [analyst] report clearly moved the market in a measurable fashion would the `fraud on the market' doctrine seem fairly applicable.").
Count IX of the Complaint asserts that SSB and Grubman violated Section 10(b) of the 1934 Act in connection with the material misstatements and omissions contained in the 2000 and 2001 Registration Statements and by conspiring with WorldCom and its CEO Bernard Ebbers to misrepresent WorldCom's financial condition in connection with the 2000 and 2001 Offerings. Count X alleges that SSB and Grubman also violated Section 10(b) in connection with Grubman's analyst reports and his adoption of Ebbers's material misstatements. Finally, Count XI of the Complaint pleads claims under Section 20(a) of the 1934 Act against Citigroup and SSB as controlling persons of Grubman, and Citigroup as a controlling person of SSB and its employees, managers, and directorsSee Class Opinion,
Although it is not central to our decision to grant the petition, we note that several courts in the Southern District of New York are currently grappling with the application of the fraud-on-the-market doctrine to analyst reportsSee Demarco v. Lehman Bros.,
NYSCRF's reliance on the majority's statement inIn re Visa Check/MasterMoney Antitrust Litigation,
That provision provides in relevant part that "[t]he court shall adopt a presumption that the most adequate [lead] plaintiff in any private action arising under this chapter is the person or group of persons that ... in the determination of the court, has the largest financial interest in the relief sought by the class; and otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure." 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)
That section provides in relevant part that "[o]ne or more members of a class may sue or be sued as representative parties on behalf of all only if ... (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class...." Fed.R.Civ.P. 23(a)(3)
Also, considering that the role of the lead plaintiff is "to empower investors so that they — not their lawyers — exercise primary control over private securities litigation," S.Rep. No. 104-98, at 4 (1995),reprinted in 1995 U.S.C.C.A.N. 679, 683, any requirement that a different lead plaintiff be appointed to bring every single available claim would contravene the main purpose of having a lead plaintiff — namely, to empower one or several investors with a major stake in the litigation to exercise control over the litigation as a whole. See In re Initial Pub. Offering Sec. Litig.,
Because the District Court found that common issues would predominate even if some plaintiffs would not benefit from theBasic presumption, we need not address the Underwriters' argument that any earnings statement covering a period of at least twelve months, no matter how inadequate or misleading, is sufficient to shift the burden to prove reliance to the plaintiffs. By the same token, we need not review the District Court's determination that the Basic presumption applies to Section 11 claims.