Mariconda v. Farmland Partners Inc.

          ORDER ON APPOINTMENT OF LEAD PLAINTIFF AND COUNSEL

          Nina Y. Wang United States Magistrate Judge.

         This matter comes before the court on two related motions: (1) The Turner Insurance Agency, Inc. and Cecilia Turner's (collectively, the “Turner Family”) Motion for Appointment as Lead Plaintiff and for Approval of Counsel (“the Turner Motion”) [#30, filed November 15, 2018];^[1] and (2) Albert G. Driver Jr., Annette Driver Forry, and Douglas Barber's (collectively “the Farmland Investor Group”) Motion of the Farmland Investor Group to Consolidate Cases, and for Appointment Of Lead Plaintiff and Lead and Liaisson [sic] Counsel (“the Farmland Investor Group Motion”) [#33, filed November 27, 2018]^[2].

         The undersigned Magistrate Judge considers the motions pursuant to 28 U.S.C. § 636(b), the Order of Reference dated November 14, 2018 [#29], and the Memoranda dated November 16 [#31] and November 27 [#36]. This court concludes that oral argument would not materially assist in the resolution of these matters. Upon careful review of the motions and associated briefing, the applicable case law, and the entire case file, this court GRANTS the Turner Family Motion in part, appointing the Turner Family as Lead Plaintiff and their counsel, Bernstein Liebhard LLP, as Lead Counsel with Berens Law LLC serving as Liaison Counsel. The Turner Motion is DENIED AS MOOT to the extent it seeks consolidation with the now-dismissed Kachmar Action, and the Farmland Investor Group Motion is DENIED.^[3]

         BACKGROUND

         This is a class action alleging violations of Sections 10(b) and 20(a) the 1934 Securities Exchange Act and Rule 10b-5, codified at 17 C.F.R. § 240.10b-5, brought pursuant to the Private Securities Litigation Reform Act (“PSLRA”), codified at 15 U.S.C. § 78u-4. See [#1]. The present case, styled Mariconda v. Farmland Partners Inc. et al., 18-cv-2104-DME-NYW, was filed on August 17, 2018, shortly after a related case, Kachmar v. Farmland Partners et al., 18-cv-01771-CMA-KLM (“the Kachmar Action”), was filed on July 11, 2018. Following the November 13, 2018 voluntary dismissal of the Kachmar Action, this action proceeds as a stand-alone case and the parties seeking appointment as Lead Plaintiff have refiled their motions in this court.^[4]

         This action alleges that the Defendants, Farmland Partners Inc. (“Farmland Partners”), Paul A. Pittman (“Mr. Pittman”), and Luca Fabbri (“Mr. Fabbri”), made materially false and misleading statements regarding the extent and nature of Farmland Partners's related party transactions in making quarterly and yearly filings with the Securities and Exchange Commission. [#1 at ¶¶ 14- 28]. The first alleged violation occurred with Farmland Partner's 2015 10-K, filed during aftermarket hours on March 15, 2016, and continued until July 11, 2018 when analyst Rota Fortunae published an exposé alleging that Mr. Pittman and Farmland Partners were systematically inflating Farmland Partners's revenue by “making loans to related-party tenants who roundtrip the cash back to [Farmland Partners] as rent and interest revenue.” [Id. at ¶¶ 14- 15, 26]. This caused a precipitous drop in the stock price. [Id. at ¶ 27]. This action and the Kachmar Action followed shortly thereafter.

         LEGAL STANDARD

         The PSLRA sets forth “a procedure that governs the appointment of Lead Plaintiffs in ‘each private action arising under [the Exchange Act] that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure.'” In re Ribozyme Pharm., Inc. Sec. Litig., 192 F.R.D. 656, 657 (D. Colo. 2000) (quoting 15 U.S.C. § 78u-4(a)(1)). Any member of the purported class may move the court to serve as Lead Plaintiff, but must do so within sixty (60) days of the published notice of the potential class action. 15 U.S.C. § 78u-4(3)(A)(i)(II). The court must then appoint Lead Plaintiff no later than ninety (90) days after the date the notice is published, or as soon as practicable after the court has ruled on a motion to consolidate related actions. Id. § 78u-4(3)(B)(i)-(ii).

         In assigning a Lead Plaintiff, the PSLRA establishes “a rebuttable presumption that the ‘most adequate plaintiff' is a person or group of persons that (1) either filed the complaint or made a motion in response to a notice, (2) has the largest financial interest in the relief sought, and (3) otherwise satisfies the requirements of Fed.R.Civ.P. 23.” Medina v. Clovis Oncology, Inc., No. 15-CV-2546-RM-MEH, 2016 WL 660133, at *3 (D. Colo. Feb. 18, 2016) (citing 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(aa)-(cc)). “As for the requirement that the Lead Plaintiff otherwise satisfy the requirements of Rule 23, only two of the four requirements of Rule 23(a)-typicality and adequacy-impact the analysis of the Lead Plaintiff issue.” Wolfe v. AspenBio Pharma, Inc., 275 F.R.D. 625, 627-28 (D. Colo. 2011). The PSLRA also provides that the Lead Plaintiff “shall, subject to the approval of the court, select and retain counsel to represent the class.” Id. § 78u-4(3)(B)(v). Accordingly, it is within the court's discretion to approve appropriate Lead Counsel. See In re Oppenheimer Rochester Funds Grp. Sec. Litig., No. 09-MD-02063JLKKMT, 2009 WL 4016635, at *2-3 (D. Colo. Nov. 18, 2009).

         ANALYSIS

         I. Appointment of the Lead Plaintiff

         The court begins by examining which party satisfies the three requirements in § 78u-4(a)(3)(B)(iii)(I)(aa)-(cc) and is entitled to presumptive Lead Plaintiff status. Those requirements are: (1) filing timely a motion for such appointment, (2) having the largest financial interest in the relief sought, and (3) otherwise satisfying the two relevant prongs of Rule 23. The court then considers whether the opposing party has adequately rebutted that presumption. The court finds that the Turner Family is entitled to presumption of Lead Plaintiff status and that the Farmland Investor Group has not adequately rebutted that presumption. Accordingly, the Turner Family is appointed Lead Plaintiff.

         Early Notice.

         The PSLRA requires that within twenty days of filing a complaint, the plaintiff(s) must circulate a notice advising members of the purported plaintiff class “of the pendency of the action, the claims asserted therein, and the purported class period; and that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as Lead Plaintiff of the purported class.” § 78u-4(a)(3)(A)(i). This early notice must be published in “a widely circulated national business-oriented publication or wire service.” Id. The PSLRA also provides that when, as here, there are multiple actions filed asserting the same or substantially the same claims, then “only the plaintiff or plaintiffs in the first filed action shall be required to cause notice to be published in accordance with [the preceding] clause.” § 78u-4(a)(3)(A)(ii). The Kachmar Action was filed on July 11, 2018, and therefore the Kachmar plaintiff had until July 31 to circulate an Early Notice. Pomerantz LLP, Mr. Kachmar's counsel, published an Early Notice [#30-1 at 21] on July 11, 2018 in the Globe Newswire, “a widely circulated national business-oriented wire service.” In re Spectranetics Corp. Sec. Litig., No. 08-cv-02048-REB-KLM, 2009 WL 1663953, at *3 (D. Colo. June 15, 2009). Mr. Mariconda filed this action approximately a month later, and moved to consolidate this action with the Kachmar Action. No. separate Early Notice was published or required in light of the Kachmar Action. 15 U.S.C. § 78u-4(a)(3)(A)(ii).

         The court agrees that the Globe Newswire is an adequate “widely circulated national business-oriented publication or wire service” under the PSLRA early notice provision. Additionally, upon review of the Notice, the court finds that it meets the requirements of § 78u-4(a)(3)(A)(i). Therefore, potential Lead Plaintiffs had sixty days from July 11, until September 10, to file their Motions for Appointment. Both the Turner Motion and the Farmland Investor Motion were filed on September 10, within the sixty-day limit triggered by the Early Notice. Thus, both Motions are properly before the court and both parties have satisfied the initial requirement of filing a timely motion for appointment under § 78u-4(a)(3)(B)(iii)(I)(aa).

         Largest Financial Interest. Neither the Turner Family nor Farmland Investor Group dispute the generally accepted proposition that a group of persons may aggregate their losses in calculating a plaintiff's financial interest in the litigation, subject to certain practical limitations not implicated here. In re Ribozyme Pharm., Inc. Sec. Litig., 192 F.R.D. 656, 659 (D. Colo. 2000); see also Id. (analyzing caselaw rejecting aggregation among too large or too legally ...