OPINION & ORDER
In fall 2014, the above two putative class actions were filed, under the federal securities laws, on behalf of all purchasers of Millennial Media, Inc. (“MM”) securities between March 28, 2012 and May 7, 2014. In each, plaintiffs claim that MM and the individual defendants (directors, officers, and executives of MM) made false and misleading statements about the company’s technologiсal capacities and outlook, which artificially inflated the prices of MM stock. They further allege that, when the stock’s price later dropped sharply over a series of dates, harming shareholders, it did so in response to disclosures as to MM’s disappointing earnings and its deteriorating outlook, which operated as corrective disclosurеs of MM’s earlier false and misleading statements.
Pending before the Court are two sets of motions. One, which is unopposed, is to consolidate these related actions. The other consists of motions from five investors, each seeking appointment as lead plaintiff (or co-lead plaintiff) and appointment of their respective attorneys as lеad counsel (or co-lead counsel). These five movants are: (1) the Public Employees’ Retirement System of Mississippi (“Mississippi”), a pension plan; (2) the “Selz Funds,” four separate investment vehicles overseen by Bernard Selz (he is settlor, director, or managing member of each); (3) Marvin Christensen and Michelle Dayan (“Christensen”); (4) Chu-Ying Tou and Jien-Ning Kang (“Kang”); and (5) Travis Ostroviak (“Ostroviak”).
For the reasons that follow, the Court (1) consolidates these two actions, (2) appoints Mississippi and the Selz Funds as co-lead plaintiffs, and (3) appoints as co-lead counsel the respective attorneys for Mississippi and for the Selz Funds: Bernstein Litowitz Berger & Grossman LLP, Labaton Sucharow LLP, and Gold Bennett Cera & Sidener LLP.
1. Background
Defendant MM is a digital advertising company that provides services to developers and advertisers. Mississippi Compl. ¶¶ 5-6; Ostroviak Compl. ¶¶ 4-5. Its advertising services focus on the mobile computing segment. These include smart-phones that run the operating systems for the iPhone and the Android. Mississippi Compl. ¶ 5; Ostroviak Compl. ¶ 4.
Central to MM’s business model has been the promise that its technology “provides an easy and effective way for developers of applications for mobile devices to
Plaintiffs allege that MM’s statements in its public filings, and public statements by its executives, were materially false. They allege that, contrary to MM’s representations, MYDAS and its technological features “were either not yet functional or were not sufficiently functional to comport with them descriptions” as set forth in public filings. Mississippi Compl. ¶ 59; see also Ostroviak Compl. ¶ 90. As a result, MM’s products performed poorly; “the Company had little meaningful ability to track and report end-user clicks, leading to significant over-billing, which in turn led the Company’s core customers to abandon Millennial Media.” Mississippi Compl. ¶ 8(b); Ostroviak Compl. ¶ 7(b).
Thе class period spans from March 28, 2012 through May 7, 2014. Mississippi Compl. ¶ 1; Ostroviak Compl. ¶ 1. Several dates are significant to these motions.
On or about March 28, 2012, MM held its initial public offering (the “IPO”), through which it sold 11.7 million shares, yielding gross proceeds of $152 million. Mississippi Compl. ¶ 2; Ostroviak Compl. ¶ 2. On or about October 24, 2012, MM commenced a second stock offering (the “Secondary Offering”), through which it sold an additional 11.5 million shares, yielding gross proceeds of $162 million. Mississippi Compl. ¶ 2; Ostroviak Compl. ¶ 2. In connection with both of these offerings, MM filed a registration statement and a prospectus with the U.S. Securities and Exchange Commission (the “SEC”), in which it touted MYDAS’s capabilities. Mississippi Compl. ¶¶ 56-58; Ostroviak Compl. ¶¶ 29-81;- 45-47.
On February 19 and August 13, 2018, MM issued press releases announcing MM’s acquisitions of Metaresolver, Inc. and Jumptap, Inc., respectively. These announcements prompted MM’s share price to drop, because the need for these acquisitions was taken to reveal shortcomings with MM’s existing platform. Mississippi Compl. ¶¶ 9-10; Ostroviak Compl. ¶¶ 8-9.
On May 7, 2014 — the final day of the class period — after the markets closed, MM issued a press release reporting disapрointing revenue for the first quarter of 2014 and projecting “dour revenue guidance for the coming quarter.... Additionally, the Company revealed that its Chief Financial Officer,” Michael Avon, would step down later that year. Mississippi Compl. ¶ 13; Ostroviak Compl. ¶ 12. The following day, MM’s stock price fell more than 37%. Mississippi Compl. ¶ 13; Os-troviak Compl. ¶ 12. In total, the stock price fell more thаn 86% during the class period. Mississippi Compl. ¶ 14; Ostrov-iak Compl. ¶ 13.
On September 30, 2014, Mississippi filed a Complaint, see 14 Civ. 7923, Dkt. 1, and published a notice of this action on Globe Newswire, a “widely circulated national business-oriented wire service,” Dkt. 45, Ex. A, at 4 (citing 15 U.S.C. § 78u-4(a)(3)(A)®). On October 17, 2014, Os-troviak filed a Complaint, as well. 14 Civ. 8330, Dkt. 1.
A. Legal Standards
Federal Rule of Civil Procedure 42(a) provides that, “[i]f actions before the court involve a common question of law or fact, the court mаy: (1) join for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid unnecessary cost or delay.”
Rule 42(a) “empowers a trial judge to consolidate actions for trial when there are common questions of law or fact,” and where consolidation will avoid needless costs or delаy. Johnson v. Celotex Corp.,
In the securities context, the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., provides that consolidation should occur where multiple actions assert “substantially the same claim.” Id. § 78u-4(a) (3) (B) (ii).
B. Analysis
In this case, all parties seek consolidation, and consolidation clearly is merited. See 14 Civ. 7923, Dkt. 24, 27, 30, 31; 14 Civ. 8330, Dkt. 5. Both Complaints sue MM under the Exchange Act “on behalf of all persons оr entities” who acquired MM securities between March 28, 2012 (the IPO) and May 7, 2014. Mississippi Compl. ¶ 1; Ostroviak Compl. ¶ 1. Both center on the same facts: MM’s allegedly false and misleading statements about MYDAS, MM’s allegedly false and misleading statements in connection with its equity financ-ings in 2012, and MM’s acquisitions of Metaresolver and Jumptap in 2013. The defendants in the two suits are also common: They include MM executives such as Paul J. Palmieri, MM’s President and CEO until January 2014; Michael Barrett, MM’s President and CEO after that point; and Michael Avon and Andrew J. Jeanner-et,' MM’s chief financial officer and chief accounting officer, respectively, during the class period. Mississippi Compl. ¶¶ 31-34, 111; Ostroviak Compl. ¶¶ 20-23. Although the Mississippi Complaint names other defendants and includes additional claims (see Mississipрi Compl. ¶¶ 34-46), the lawsuits are, overwhelmingly, similar.
Courts routinely consolidate securities class actions arising from the same allegedly actionable statements. See, e.g., Simmons v. Spencer, No. 13 Civ. 8216(RWS),
III. Selecting the Lead Plaintiff: The PSLRA Requirements.
Motions for appointment of lead plaintiff and approval of lead counsel in putative class actions brought under the securities
A. Notice
All five putative lead plaintiffs satisfy the first requirement, as each has either filed a complaint or submitted a timely motion for lead plaintiff status. See 15 U.S.C. § 78 — u4(a)(3)(B)(iii)(I); City of Monroe,
B. Financial Interest
In determining who has the largest financial stake in the litigation, courts in this circuit have traditionally applied a four-factor test, first set forth in Lax v. First Merchants Acceptance Corp., No. 97 Civ. 2715(DHC),
(1)the total number of shares purchased during the class period;
(2) the net shares purchased during the class period (in оther words, the difference between the number of shares purchased and the number of shares sold during the class period);
(3) the net funds expended during the class period (in other words, the difference between the amount spent to purchase shares and the amount received for the sale of shares during the class, period); and
(4) the approximate losses suffered.
City of Monroe,
Of these factors, courts havе consistently held that the fourth, the magnitude of the loss suffered, is most significant. See, e.g., Kaplan v. Gelfond,
Here, of the five lead plaintiff candidates, three allege losses under $200,000: Christensen lost $95,000, see 14 Civ. 7923, Dkt. 32; Kang lost $170,000, see id. Dkt. 28; and Ostroviak lost less than $40,000, see Ostroviak Compl., p. 47.
Both institutional investors’ losses are clearly substantial. The Selz Funds have the largest financial interest; their alleged losses double Mississippi’s. Were “financial interest” the sole measure of appointing a lead plaintiff, and were the Court limited to a single lead plaintiff, the Selz Funds would have a strong claim to appointment.
However, as Mississippi and the' Selz Funds recognize in a joint submission in which they recommend their appointment as co-lead plaintiffs, “Mississippi is the only movant to have purchased Millennial Media common stock pursuant and/or traceable to the Company’s initial, public offering of stock on March *28, 2012 and the Company’s secondary offering of stock on Oсtober 24, 2012.” 14 Civ. 7923, Dkt. 45, Ex. A, at 2. From the perspective of adequacy and typicality, this fact may prove significant. It may prove, for example, not to be in the best interests of the entire putative class to entrust its claims solely to a representative that did not own MM stock during the entire class period. Depending on how the facts develop, this could give rise to а challenge to the lead plaintiffs ability to represent the class, potentially resulting in non-certification or in shortening the class period.
On these facts, therefore, the Court concludes that it is in the class’s best interests to have co-lead plaintiffs, provided (the Court addresses this issue below) that the co-lead plaintiffs satisfy the relevant requirements of Federal Rule of Civil Procedure 23. A co-lead plaintiff structure best protects the interests of the class; affords the class the benefit of combined resources to defray what may prove to be significant up-front litigation costs; and gives the class the advantages of the combined knowledge, experience, and judgment of both lead plaintiffs.
Indeed, cоurts routinely adopt a co-lead plaintiff structure where it “best serve[s]” the interests of the proposed class given “the circumstances of th[e] particular case.” In re Oxford Health Plans, Inc. Sec. Litig.,
Accordingly, considering the particular facts of this case, the Court finds that the class’s interests will be best served by having Mississippi and the Sеlz Funds serve as co-lead plaintiffs.
C. Rule 23 Requirements
The PSLRA’s final requirement is that the proposed lead plaintiff (or co-lead plaintiffs) satisfy Rule 23’s requirements for class certification: numerosity, commonality, typicality, and adequacy. At this early stage of litigation, however, “only the last two factors — typicality and adequacy — are pertinent.” Bo Young Cha,
Lead plaintiffs’ claims are tyрical where “each class member’s claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant’s liability.” Sgalambo v. McKenzie,
Because the co-lead plaintiffs- — as of this early stage — thus' far satisfy all of the PSLRA requirements, the Court finds that they are, together, the most adequate plaintiffs. There has been no credible claim that they “will not fairly and adequately protect the interests of the class” or are subject to “unique defenses” that render them incapable of adequately representing the class. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II). The Court therefore appoints Mississippi аnd the Selz Funds co-lead plaintiffs.
IV. Appointing Lead Counsel
The most adequate plaintiffs may retain counsel to represent the class, subject to the Court’s approval. Id. § 78u-4(a)(3)(B)(v). Mississippi has selected the law firms of Bernstein Litowitz Berger & Grossman LLP and Labaton Sucharow LLP; the Selz Funds have selected the law firm of Gold Bennett Cera & Sidener LLP. Having reviewed each firm’s submissions as to its pertinent baсkground and experience, including its experience litigating securities class actions, the Court finds that each firm is qualified to serve as co-lead counsel. Accordingly, the Court appoints Bernstein Litowitz Berger & Gross-man LLP, Labaton Sucharow LLP, and Gold Bennett Cera & Sidener LLP as co-lead counsel.
As similarly situated courts have noted, this joint appointment “is done with the understanding that there shall be no duplication of attorney’s services,” and that counsel “will work together to maximize recovery for the proposed class.” Oxford Health Plans,
CONCLUSION
To summarize, these two cases (14 Civ. 7923 and 14 Civ. 8330) are now consolidated for all purposes, and shall proceed un-. der the name, In re Millennial Media, Inc. Securities Litigation, and under the case number, 14 Civ. 7923. Mississippi and the Selz Funds’ motion seeking appointment as co-lead plaintiffs is granted. Christensen’s, Kang’s, and Ostroviak’s respective bids tо serve as lead plaintiff are denied. The Court appoints Bernstein Li-towitz Berger & Grossman LLP, Labaton Sucharow LLP, and Gold Bennett Cera & Sidener LLP as co-lead counsel.
The Clerk of the Court is directed to terminate the motions pending at 14 Civ. 7923, Dkt. 24, 27, 30, 31; and 14 Civ. 8330, Dkt. 5. In light of the consolidation, the Clerk of Court is also directed to close the Ostroviak case, 14 Civ. 8330.
Per the parties’ joint letter, see Dkt. 36, the parties are directed to submit to the Court, by February 17, 2015, a proposed, and expeditious, schedule for (1) thе filing of a consolidated complaint; (2) the filing of defendants’ response; and (3) in the expectation that that response may take the form of a motion to dismiss, the filing of opposition and reply briefs.
SO ORDERED.
Notes
. Although Ostroviak did not file a formal motion to serve as lead plaintiff, the Court considers him as a potential lead plaintiff because he filed a Complaint. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I); City of Monroe Emps. Ret. Sys. v. Hartford Fin. Servs. Group, Inc.,
. The following facts are drawn from Mississippi’s Complaint ("Mississippi Compl.”) (14 Civ. 7923, Dkt. 1), Ostroviak’s Complaint ("Ostroviak Compl.”) (14 Civ. 8330, Dkt. 1), and the parties’ submissions on the lead-plaintiff motions, as cited herein. The Court takes these facts as true solely for the purpose of resolving these motions.
. Id. § 78u-4(a)(3)(B)(iii)(I)(aa).
. Id. § 78u-4(a)(3)(B)(iii)(I)(bb).
.Id. § 78u-4(a)(3)(B)(iii)(I)(cc).
. Although Ostroviak did not specify his losses in his Complaint, see Ostroviak Compl., p. 47, his allegations make clear that he lost less than $40,000, see id.