ORDER
The present motions involve issues of consolidation and appointment of lead plaintiff and lead counsel with regard to four separate actions — Weichman v. Olsten Corp., et al. (97-CV-1946 (DRH)), Goldman v. Olsten Corp., et al. (97-CV-4501 (DRH)), Waldman v. Olsten Corp., et al. (97-CV-5056 (DRH)), and Cannold v. Olsten Corp., et al. (97-CV-5408 (DRH)). Pending before the court are the motions of plaintiffs Weichman, Goldman, Waldman and Cannold, as well as defendant Olsten, to consolidate, and the motions of Weichman, Goldman and Waldman for appointment of lead plaintiff and lead counsel in any consolidated actions. For the reasons stated below, the four actions are hereby consolidated, the Waldman Plaintiffs Group is appointed lead plaintiff for the consolidated action, and the law firms of Wechsler Harwood Halebian & Feffer and Faruqi & Faruqi are approved as co-lead counsel.
I. BACKGROUND
The four within actions involve claims that are brought under the Securities Exchange Act of 1934 against defendant Olsten Corporation (“Olsten”), as well as against several officers and directors of Olsten. The plaintiffs in the four actions are individuals who purchased Olsten - common stock during the class periods as set forth in their complaints. The defendant Olsten is a Delaware Corporation with its principal executive offices in Melville, New York. See Weichman Cplt ¶ 11(a). Olsten provides home health care and related services, as well as staffing services to business, industry and government, see id., and is the largest provider of home healthcare and staffing services in North America. See Waldman Cplt. ¶ 25.
A. The Weichman Action
Plaintiff Gail Weichman filed an action against Olsten Corporation, Miriam Olsten, William Olsten, Anthony J. Puglisi and Frank Ligouri on April 17, 1997 (“Weichman Action”). This is the earliest filing of the four actions, before the court. On June 26, 1997, Judge Hurley appointed Weichman as lead plaintiff, and the Milberg Weiss Bershad Hynes & Lerach (“Milberg Weiss”) and Sehiffrin & Craig firms were approved as lead counsel under the Private Securities Lit
The Weichman Action asserts violations of federal securities law on behalf of the purchasers of Olsten common stock issued during the period from May 31, 1996 through November 21, 1996 under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. Weichman Cplt. ¶¶ 1, 68, 77, 82, 92. On June 1, 1996, plaintiff Weichman received 116 Olsten shares in exchange for 200 shares of Quantum Health Resources, Inc., which she held prior to the merger of the two companies. On September 4, 1996, plaintiff Gail Weichman purchased .2796 shares of Olsten Corporation. Plaintiff alleges that the value of Olsten shares has declined substantially as a result of the defendants violations. See id. at ¶ 65.
Weichman alleges that on November 21, 1996, Olsten announced for the first time that it was “the victim of ongoing margin pressures in its home healthcare business, staffing business and Medicare business which had eroded its earnings and income.” Id. at ¶ 2. Weichman asserts that “the very margin pressures that [Olsten] publicly revealed for the first time on November 21, 1996 had been in existence and severely negatively impacting Olsten’s business at all prior times during the class period.” Id.
The Weichman complaint asserts that the defendants failed to disclose problems with the contract between Olsten and CIGNA Healthcare (“CIGNA”), pursuant to which Olsten was to provide home healthcare to CIGNA members. Id. at ¶ 5. Specifically, Weichman claims that Olsten’s bid for the CIGNA contract was extremely low and that Olsten “was required to invest certain upfront costs to develop the infrastructure necessary to perform under the CIGNA contract.” Id. As a result, Weichman alleges that “by the first day of the Class Period, defendants knew, or recklessly disregarded,” the fact that “the CIGNA contract would materially negatively impact [Olsten’s] revenues, earnings and income for the foreseeable future.” Id. Weichman alleges that the CIGNA contract and its implementation eroded the Company’s margins and caused the Company to expend capital, which decreased earnings and income. Id. at 49.
Weichman also argues that in the stock for stock merger agreement with Quantum Health Resources, Inc. (“Quantum”), the defendant misrepresented the business, operations, and financial condition of Olsten, by failing to disclose in the agreement Olsten’s problems with CIGNA, and the margin pressures that it faced. Id. at ¶ 31.
Weichman further asserts claims regarding an undisclosed Medicare audit. Weich-man alleges that Olsten’s Form 10-K, for the period ending December 31, 1995, as well as its Form 10-Q, for the periods ending June 30, 1996 and September 29, 1996, failed to disclose the medicare audit. Id. at ¶¶ 35, 39, 41. Weichman argues that “[e]ven though Olsten had been notified by the federal government that it would be subjected to a Medicare audit for the years 1994 and 1995, ... defendants failed to disclose the impending audit, and instead publicly issued a Prospectus that falsely represented that [Olsten] (1) was not the subject of any pending or threatened governmental investigation or proceeding, and (2) was, to [Olsten’s] knowledge, in compliance in all material respects with all laws, regulations and governmental payor and/or program requirements.” See Weichman Brief in Supp. Mot. to Consol., at 6; see also Weichman Cplt. ¶¶ 32, 33. Moreover, while Olsten disclosed that it “would be taking an after-tax charge to its earnings of up to $45 million to cover merger, integration and related costs resulting from the Quantum acquisition and ‘certain allowances related to Olsten’s home healthcare business,’ ” it did not disclose that $18 million of the $45 million charge related to an assessment arising from the Medicare audit. Weichman Cplt. ¶ 38.
Weichman also claims that the individual defendants engaged in insider trading “by issuing false favorable statements about the Company’s business ... without disclosing the material adverse facts about [Olsten] to which they were privy.”
Id.
at ¶ 53. Weich-man alleges that the defendants engaged in a scheme in order to protect their executive
B. The Goldman Action 1
On August 5, 1997, plaintiff Esta Goldman, as co-trustee for the trust established by the will of Irwin Goldman, filed an action against Olsten Corporation, Miriam Olsten, William Olsten, Frank Liguori, and Anthony Puglisi (“Goldman Action”). The Goldman Action asserts that defendants violated of Sections 10(b) and 20 of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, on behalf of all persons and entities who purchased Olsten Common Stock between March 6, 1996 and July 16, 1997. Goldman Cplt. ¶ 17. Goldman purchased 300 shares of Olsten common stock on July 23, 1996, at $28 1/2 per share, and 100 shares of Olsten common stock on September 18,1996, at $22 per share. Goldman alleges that as a result of Olsten’s fraudulent practices, Ol-sten’s common stock, which closed on July 16, 1997, at $21 5/8 per share, fell to $20 5/8 per share on July 17, 1997, and continued to fall to $17 13/16 on July 30, 1997. Id. at 55.
Goldman alleges that the defendants deceived the investing public “concerning Ol-sten’s operations and controls, and the fact that significant and material portions of its income were derived [from] ... improper preparation and filing of materially inaccurate and inflated cost reports for reimbursement by Medicare and the improper structuring of transactions with healthcare providers to increase the amount of expenses reimbursable by the government.” Id. at ¶ 6. Goldman alleges that Olsten’s Form 10-K, for the period ending December 31, 1995, as well as its Form 10-Q, for the periods ending June 30, 1996 and September 29, 1996, failed to disclose material facts regarding Medicare fraud and improper Medicare reimbursement. Id. at ¶¶27,-28,29,33,34.
Specifically, Goldman alleges that Quantum — the company that Olsten acquired— was engaged in an ongoing fraudulent practice of providing inducements and gifts to its patients,' relatives and physicians to accept more product than required. Id. at ¶31. Goldman states that “[n]ot only did defen-dánts know about, and fail to disclose, the pervasiveness of these fraudulent practices at Quantum but they allowed them to continue unabated and left plaintiff, Class members and the- investing public in the dark as to these practices.” Id. at ¶ 32.
Goldman also alleges that Olsten was engaged in undisclosed fraudulent practices regarding Columbia/HCA Healthcare Corporation, a company managed by an Olsten subsidiary, for shifting non-reimbursable hospital expenses to reimbursable home care expenditures. Id. at ¶¶ 53-54.
With regard to the scienter allegations, Goldman claims that the defendants (1) artificially inflated the market price of Olsten common stock during the Class Period, and (2) caused plaintiff and other members of the class to purchase Olsten common stock at inflated prices. Id. at ¶ 6. In addition, Goldman argues that the individual defendants generated huge insider trading profits — in excess of $10.25 million — during the Class period. Id. at ¶ 57.
C. The Waldman Action
Plaintiff Elliott Waldman, as trustee for the Elliott Waldman Pension Trust, filed an action against Olsten Corporation, Frank Liguori, Miriam . Olsten, William Olsten, Stuart Olsten and Anthony Puglisi on August 29,1997 (“Waldman Action”). The Waldman Action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, on behalf of a class of persons and entities who purchased Olsten stock between March 6, 1996 and August 25, 1997.
Wald-
Waldman claims that the defendants “failed to disclose that significant and material portions of its income were derived by engaging in a course of business operations based on the filing of materially inaccurate and inflated Medicare cost reports, the wrongful provision of inducements of gifts to patients, relatives and their physicians to accept more product than required, and the improper structuring of transactions from as early as 1994 with healthcare providers ... to improperly increase the expenses reimbursable by the government.” Id. at ¶28. Waldman alleges that Olsten’s Form 10-K, for the period ending December 31, 1995, as well as its Form 10-Q, for the periods ending June 30, 1996 and September 29, 1996, failed to disclose material facts regarding Medicare fraud and improper Medicare reimbursement. Id. at ¶¶ 27, 28, 29, 33, 34.
Waldman also alleges that Quantum — the company that Olsten acquired — was engaged in fraudulent practices, and that “[d]efen-dants knew or should have known of the pervasiveness of these fraudulent practices at Quantum but they allowed them to continue unabated and left plaintiff, Class members and the investing public in the dark as to these practices.” Id. at ¶¶ 31, 32.
In addition, Waldman alleges that Olsten was engaged in undisclosed fraudulent practices regarding Columbia/HCA Healthcare Corporation, a company managed by an Ol-sten subsidiary, for shifting non-reimbursable hospital expenses to reimbursable home care expenditures. Id. at ¶¶ 53-54.
Waldman further claims that the defendants engaged in a scheme of insider selling “in order to (i) protect and enhance their executive positions; and (ii) enhance the value of their personal Olsten securities and allow for profitable insider sales yielding proceeds in excess of $10.25 million, generating huge insider trading profits during the Class period.” Id. at ¶ 61.
Based upon the above-referenced non-disclosures and/or misrepresentations, Waldman asserts that the market price of Olsten common stock was artificially inflated, thereby damaging the members of the Waldman class. Id. at ¶¶ 39, 40.
D. The Cannold Action
On September 19, 1997, plaintiff Cannold filed an action against Olsten, Frank Liguori, Miriam Olsten, Stuart Olsten and Anthony Puglisi, on behalf of all persons who purchased Olsten Common stock during the period March 6, 1996 through July 16, 1997 (“Cannold Action”). Cannold Cplt. ¶ 1. Plaintiff Cannold asserts that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. On September 30, 1996, Cannold purchased 500 shares at $24 per share. Cannold alleges that as a result of Olsten’s fraudulent practices, Olsten’s common stock, which closed on July 16,1997, at $21 5/8 per share, fell to $20 5/8 per share on July 17, 1997, and continued to fall to $17 13/16 on July 30,1997. Id. at ¶ 52.
Cannold alleges that “defendants knowingly or recklessly made materially false and misleading statements concerning Ol-sten’s operations and financial results when [Olsten] improperly prepared and filed materially inflated cost reports for Medicare reimbursement and when it structured transactions with healthcare providers to improperly increase Medicare reimbursements.” Id. at ¶ 2. Cannold alleges that Ol-sten’s Form 10-K, for the period ending December 31, 1995, as well as its Form 10-Q, for the periods ending June 30, 1996 and September 29, 1996, failed to disclose material facts regarding Medicare fraud and improper Medicare reimbursement. Id. at ¶¶ 27, 29, 3 1, 32, 33, 34. Cannold also alleges that the defendants knew of and failed to disclose Quantum’s fraudulent practice of providing gifts and inducements to patients, relatives, and physicians to accept more product than required. Id. at ¶¶ 29,-30.
II. MOTION TO CONSOLIDATE
A. The Parties’ Positions
All of the plaintiffs — Weichman, Goldman, Waldman and Cannold, as well as the defendant Olsten — agree that some form of consolidation is appropriate. What is disputed is exactly which actions should be consolidated.
1. Plaintiffs Weichman and Goldman— and Defendant Olsten — Support Consolidation of All Four Actions
Plaintiff Weichman argues that the Goldman, Waldman, and Cannold actions should be consolidated into the Weichman action for all purposes. Weichman argues that (1) the four actions involve common questions of law and fact; and (2) there are no differences between the actions which render consolidation impractical or inappropriate. See Weichman Brief in Supp. of Mot. to Consol., at 11-15.
The Goldman plaintiffs favor consolidating all four actions. Goldman argues that the four actions should be consolidated, as “[a]ll four complaints allege a course of conduct which inflated the price of Olsten stock and harmed purchasers of its stock. Significantly, the class allegations in all four complaints contain most of the same persons and purchase transactions.” See Goldman Brief in Supp. of Mot. to Consol., at 3. Goldman also contends that the interests of judicial economy will be furthered by consolidating the four cases. See id. As indicated by the Goldman plaintiffs, all of the purchasers of stock alleged to be injured in Weichman are also alleged to have been injured by related non-disclosures which form the basis of the Goldman, Cannold, and Waldman Actions. See Goldman Mem. in Supp. of Mot. to Consol. In fact, “probably more than half of the class consists of persons whose transactions in the security would qualify them to be members of each of the alleged classes.” Id.
Defendant Olsten supports the consolidation of the four actions “because they allege similar facts, raise common legal issues and arise from the same transactions and events.” See Olsten Mem. in Supp. of Mot. to Consol., at 3. Olsten also submits that consolidation is favored in order to promote the interests of judicial economy.
2. Waldman and Cannold Support Consolidation of the Waldman, Cannold and Goldman Actions
Waldman’s primary position is that the court should consolidate the Waldman Action with the Goldman and Cannold Actions. Alternatively, Waldman requests that in the event that the court consolidates all actions, the Waldman Plaintiffs Group be designated Lead Plaintiff of the consolidated action.
Waldman argues that the Waldman, Can-nold and Goldman actions assert similar claims which are based on Medicare and Medicaid fraud. See Waldman Mem. in Opp. to Weichman Mot. to Consol., at 3. Wald-man argues that the Weichman Action — by contrast — “concerns problems relating to ongoing margin pressures in the Company’s home healthcare, staffing, and medicare businesses which allegedly eroded its earning and business.” Waldman Mem. in Supp. of Waldman Mot. to Consol., at 3. Waldman further claims that the Weichman Action asserts a different cause of action, as it “is essentially a failure to meet earnings projections case.” Waldman Mem. in Opp. to Weichman Mot. to Consol., at 4.
Waldman also claims that the Weichman and Waldman Actions should not be consolidated because the interests of the two groups of plaintiffs conflict.
Id.
at 5. Waldman states that Weichman was a holder of Quantum shares prior to the Olsten-Quantum merger and obtained her 116 Olsten shares in exchange for her 200 Quantum shares. Waldman argues that “former shareholders of Quantum Health Resources, Inc. (whom Weichman now represents as lead plaintiff [of that action]) appear to have actually benefited from fraud committed against the
While Waldman primarily opposes consolidating the four actions, Waldman maintains that “it may be appropriate, in the interests of judicial economy, to coordinate (as opposed to consolidate) the Weiehman Action with Waldman and related actions.” See Aff. of Robert Harwood, at ¶ 11, dated Oct. 22, 1997.
Plaintiff Cannold also argues that consolidation with respect to all four actions is inappropriate, as the four actions do not contain common issues of law and fact. Rather, Cannold argues that the Cannold, Waldman and Goldman actions should be consolidated. In support of its argument, Cannold claims that Weiehman seeks to “require the plaintiffs in the Medicare Fraud Actions to assert claims based on facts that neither they nor plaintiff Weiehman for that matter had knowledge of at the time the Weiehman action was commenced.” See Cannold Mem. Law in Opp. to Motions to Consol, the Four Actions, at 4.
B. Discussion
1. The Applicable Standard
Rule 42(a) of the Federal Rules of Civil Procedure provides:
When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all of the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary cost or delay.
See Fed.R.Civ.P. 42(a).
The decision to consolidate for trial lies within the discretion of the trial judge. In determining whether consolidation is appropriate, the court must consider whether “judicial economy favor[s] consolidation.”
Johnson v. Celotex Corp.,
whether the specific risks of prejudice and possible confusion [are] overborne by the risk of inconsistent adjudications of com-' mon factual and legal issues, the burden on the parties, witnesses, and available judicial resources posed by multiple lawsuits, the length of time required to conclude multiple suits as against a single one, and the relative expense to all concerned of the single-trial, multiple-trial alternatives.
Johnson,
Moreover, “[i]n securities actions where the complaints are based on the same ‘public statements and reports’ consolidation is appropriate if there are common questions of law and fact and the defendants will not be prejudiced.”
Werner v. Satterlee, Stephens, Burke & Burke,
2. Consolidation of the Four Actions
The court finds that consolidation of the four actions is appropriate. Each complaint involves claims asserted under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. More importantly, each action alleges that Olsten concealed information regarding its business practices, which involved Medicare billing. Essentially, all four actions can be characterized as failure to disclose to shareholders actions—whether
Although the class period in Weichman begins before and ends during the class periods alleged in the other three actions, the allegations in the later three actions are based upon disclosures that concern facts common to all four actions.
See Lax v. First Merchants Acceptance Corp.,
In addition, all actions rely upon Olsten’s Report Form 8-K, filed on November 21, 1996, which explained that the “ongoing margin pressures affecting its two primary businesses — staffing services and home health care services — and reduced revenues from medicare operations” would result in lower than expected net income.
See Weichman Cplt
¶ 42;
Goldman Cplt.
IF 35;
Waldman Cplt.
¶ 35;
Cannold Cplt.
¶ 33. While the Weichman Action alleges that the CIGNA contract, Olsten’s focus on national staffing contracts and the decrease in Medicare business were responsible for Olsten’s earnings shortfall and narrowed margins,
see Weich-man Cplt.
¶ 45, and the Goldman, Waldman, and Cannold Actions focus on Quantum’s fraudulent billing practices,
see Goldman Cplt.
¶ 36;
Waldman Cplt.
¶ 36;
Cannold
Furthermore, the allegations of scienter are virtually identical in each of the four cases. All four actions allege that the individual defendants engaged in a scheme to inflate Olsten stock and profited from such scheme.
See Weichman Cplt.
¶¶ 51-53;
Goldman Cplt.
¶¶ 56-58;
Waldman Cplt.
¶¶ 60-62;
Cannold Cplt.
¶ 53. Accordingly, “[t]he resolution in one litigation of such common questions, relating to the existence, character and materiality of defendants’ alleged misrepresentations is both a logical and appropriate way to proceed.”
See Waldman v. Electrospace Corp.,
The court’s conclusion is further reinforced by the fact that defendants favor consolidation and do not claim that they will be prejudiced by the consolidation of all four actions. Moreover, “[i]t is well recognized that consolidation of stockholders’ suits often benefits both the courts and the parties by expediting pretrial proceedings, avoiding duplication of discovery, and minimizing costs.”
Waldman,
Lastly, it should be noted that if the discovery process uncovers evidence that the actions should not be consolidated for trial purposes, this decision to consolidate does not preclude the plaintiffs from making a motion for severance prior to trial.
III. APPOINTMENT OF LEAD PLAINTIFF AND APPROVAL OF LEAD COUNSEL
This motion for appointment of lead plaintiff and approval of lead counsel arises under the provisions Private Securities Litigation Reform Act of 1995 (“PSLRA”), which amended the Securities Exchange Act of 1934, 15 U.S.C. § 78u-4(a). The PSLRA, according to its legislative history, was enacted in response to perceived abuses of the class action procedure.
See Fischler v. AmSouth Bancorporation,
With respect to the appointment of lead plaintiff, the PSLRA requires that the court “shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be the most capable of adequately representing the interests of class members.”
See
15 U.S.C. § 78u-1(a)(3)(B)®. In making this determination, the court is guided by the “rebuttable presumption ... that the most adequate plaintiff ... is the person or group of persons that— (aa) has either filed the complaint or made a motion in response to a notice [that is published no later than twenty days after the complaint is filed] ...; (bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and (cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.”
See
15 U.S.C. § 78u-l(a)(3)(B)(iii)(I). The presumption may be rebutted “only upon proof by a member of the purported plaintiff class that the presumptively most
As for the selection of lead counsel, the PSLRA states that “[t]he most adequate plaintiff shall, subject to the approval of the court, select and retain counsel to represent the class.” 15 U.S.C. § 78u-4(a)(3)(B)(v).
A. Lead Plaintiff
1. Timely Filed Motion
It is undisputed that Weiehman, Waldman and Cannold each timely provided notice, within 20 days of the filing of the complaint identifying the claims alleged in each action and the class period, and informed potential class members that, within 60 days, they may move to serve as the lead plaintiff. 15 U.S.C. § 78u-4(a)(3)(A)(i); 15 U.S.C. § 78u-4(a)(3)(B)(i). By filing the complaint and moving to serve as lead plaintiff within 60 days, the three movants have satisfied the first requirement for determining the “most adequate plaintiff.” 15 U.S.C. § 78u-4(a) (3) (B) (iii) (I). This provision, therefore, does not assist the court in making its determination of whom should be appointed lead plaintiff for the consolidated class.
2. Largest Financial Interest In Relief
The second requirement is that plaintiff or plaintiffs must be the “person or group of persons” that have the largest financial interest. The language of the statute, “person or group of persons” indicates that a plaintiffs group — not merely the individual plaintiff — is considered. 15 U.S.C. § 78u-4(a) (3) (B) (iii) (I);
see also Gluck v. Cellstar Corp.,
While the PSLRA does not explain how a court should determine the largest financial interest, one court has recognized four factors: (1) the number of shares purchased during the class period; (2) the number of net shares purchased during the class period; (3) the total net funds expended during the class period; and (4) the approximate losses suffered during the class period.
See Lax v. First Merchants Acceptance Corp.,
Although the statute mandates that the lead plaintiff has the “largest financial interest,” only the Waldman Plaintiffs Group and Cannold — not Weiehman — argue that they satisfy this requirement. Weiehman, while she moves to be appointed as lead plaintiff of the consolidated action, offers no information with respect to the magnitude of her financial interest, other than stating that she obtained her 116 Olsten shares in exchange for her 200 Quantum shares. Even though Cannold argues that he has the largest financial interest in the outcome of the litigation, he does not present any facts to support this assertion. See Mem. of Law in Supp. of Cannold Mot. to be Appointed Lead Plaintiff, at 5-6.
By contrast, Waldman states that the Waldman Plaintiffs Group “has the strongest financial interest of any putative lead plaintiff in the outcome of this action based upon the substantial damages incurred as a result of its ownership of’ 11,700 shares of Olsten common stock during the Class Period. See Mem. of Law in Supp. of Appointment of the Waldman Plaintiff’s Group as Lead Plaintiff, at 7; Mem. of Law in Opp. to Weiehman Mot. to Consol., at 1.
I find that the Waldman Plaintiffs Group, as a result of its ownership of 11,700 shares of Olsten common stock during the class period, has the largest financial interest.
3.The Waldman Plaintiffs Group Satisfies the Requirements of Rule 23
Rule 23(a) of the Federal Rules of Civil Procedure states:
One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 28(a).
At this stage in the litigation, the party moving for lead plaintiff of the consolidated action need only make a preliminary showing that it satisfies the typicality and adequacy requirements of Rule 23.
See Gluck,
A claim will meet the typicality requirement if “each class member’s claim arises from the same course of conduct, and each class member makes similar legal arguments to prove the defendants’ liability.”
In re Drexel Burnham Lambert Group, Inc.,
The adequacy requirement will be satisfied where (1) class counsel is “qualified, experienced and generally able to conduct the litigation;” (2) the class members do not “have interests that are antagonistic to one another,”
In re Drexel,
The Waldman Plaintiffs Group satisfies the adequacy requirement. The Waldman Plaintiffs Group has a significant interest in the outcome of the litigation and its counsel is well qualified to pursue the litigation. Since antagonistic interests within the consolidated class could preclude a finding of adequacy here, it is somewhat ironic that Waldman argued with regard to consolidation that the interests of the Weichman class and the Waldman class are in conflict. As noted
supra
at II.A.2, Waldman claims that since Weichman acquired its interest in Olsten as a result of the merger with Quantum, Weich-man — as a former Quantum shareholder— may have benefited from the inflated price of the Quantum stock at the time of the merger in June 1996. Weichman correctly notes, however, that this argument generally relates to the measure of damages and is otherwise insufficient to defeat consolidation.
See Weichman Brief in Supp. of Mot. to Consol.,
at 17-18;
Weichman Reply Brief,
at 5-7.
See also Blackie v. Barrack,
4. Presumption Has Not Been Rebutted
The final issue is whether any party has shown that the Waldman Plaintiffs Group
Weichman premises its motion to be appointed as lead plaintiff on the “first to file” practice which existed prior to the PSLRA. While the court certainly recognizes that the lead plaintiff should be appointed as soon as practicable, the PSLRA provisions were designed to address abuses arising from the race to the courthouse which existed prior to the statute. Moreover, Judge Hurley’s order merely appointed Weichman lead plaintiff with respect to that class action. Thus, there is nothing inconsistent in the appointment of the Waldman Plaintiffs Group as lead plaintiff of the consolidated action. The designation of the Waldman Plaintiffs Group as lead plaintiff of the consolidated action will not undermine or supersede the designation made by Judge Hurley with respect to the Weichman class.
See Primavera Familienstiftung,
B: Lead Counsel
Pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v), the Waldman Plaintiffs Group has moved for the approval of Wechsler Harwood Halebian & Feffer and Faruqi & Faruqi as co-lead counsel. The court has reviewed the resumes of the two firms and approves the Waldman Plaintiffs Group’s choice of counsel. Both firms appear to be well-qualified to represent the Waldman Plaintiffs Group in the consolidated securities fraud action.
CONCLUSION
For the reasons stated above, the Wald-man Plaintiffs Group is.appointed lead plaintiff and Wechsler Harwood Halebian & Fef-fer and Faruqi & Faruqi are approved as co-lead counsel. Pursuant to the Stipulation and [Proposed] Order, signed by all parties and “so-ordered” by the undersigned on January 8, 1998, the Waldman Plaintiffs Group shall have twenty-one (21) days from the entry of this order in which to serve a consolidated amended complaint. See Stipulation and [Proposed] Order, dated January 8, 1998.
SO ORDERED.
Notes
. The allegations set forth in the Waldman, Gold man, and Canold actions are virtually identical.