Free Reply to Response to Motion - District Court of California - California

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 1 of 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy (#134180) Andy Sohrn (#241388) 1801 Avenue of the Stars, Suite 311 Los Angeles, CA 90067 Telephone: (310) 201-9150 Facsimile: (310) 201-9160 E- mail: [email protected] Proposed Liaison Counsel SCHOENGOLD SPORN LAITMAN & LOMETTI, P.C. Christopher Lometti (CL-9124) Jay P. Saltzman (JS-7335) Ashley Kim (AK-0105) Daniel B. Rehns (DR-5506) 19 Fulton Street, Suite 406 New York, New York 10038 Telephone: (212) 964-0046 Proposed Lead Counsel for the Class and Attorneys for the New Jersey Carpenters Pension and Benefit Fund UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA SAN DIEGO DIVISION _______________________________________ ) ECF CASE HCL PARTNERS LIMITED PARTNERSHIP, ) On Behalf of Itself and All Others Similarly ) No. 07-CV-2245-BTM-NLS Situated, ) Plaintiff, ) Date: March 28, 2008, 2008 ) Time: 11:00 A.M. v. ) Courtroom: 15 (5th Floor) ) LEAP WIRELESS INTERNATIONAL, INC., ) Per Chambers No Oral Argument S. DOUGLAS HUTCHESON, DEAN M. ) Unless Requested by the Court LUVISA, AMIN I. KHALIFA and ) PRICEWATERHOUSECOOPERS, LLP, ) ) Defendants. ) )

THE NEW JERSEY CARPENTERS PENSION AND BENEFIT FUNDS' REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF THEIR MOTION FOR CONSOLIDATION, APPOINTMENT OF LEAD PLAINTIFF AND APPROVAL OF LEAD COUNSEL

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 2 of 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

INTRODUCTION The New Jersey Carpenters Pension and Benefit Funds (the "Carpenters Funds") respectfully submit this reply memorandum of law in further support of their motion for consolidation, appointment of the Carpenters Funds as lead plaintiff and approval of Schoengold Sporn Laitman & Lometti, P.C. ("SSLL") as lead counsel and Glancy Binkow & Goldberg LLP ("GBG") as liaison counsel. The competing movants, Westchester Capital Management, Inc. ("Westchester") and Green & Smith Investment Management, LLC ("Green & Smith") (collectively, the "Investment Advisors"), do not dispute that the Carpenters Funds are qualified to serve in this case as lead plaintiff, nor do they raise any issues with respect to the Carpenters Funds' choice of counsel. Instead, the Investment Advisors oppose the Carpenters Funds' lead plaintiff motion on a single, solitary ground: that the Investment Advisors' purported financial interest in the relief sought by the putative class herein is greater than that of the Carpenters Funds. However, in so doing, the Investment Advisors attempt to improperly supplement their original motion with extraneous information that should have been included therein and mislead the Court about their role in Kaplan v. Gelfond, 240 F.R.D. 88 (S.D.N.Y 2007) ("IMAX"). As explained below, these two tactics should be rejected out of hand. ARGUMENT POINT I THE INVESTMENT ADVISORS ARE NOT PERMITTED TO SUPPLEMENT THEIR INITIAL MOTION FOR LEAD PLAINTIFF The Investment Advisors' opposition papers consist in part of the Declaration of Karen E.

22 Fisch, dated March 14, 2008 (the "F isch Declaration"). Attached as Exhibit A to the Fisch 23 Declaration is a revised schedule of the Investment Advisors' transactions in securities of Leap 24
Reply Memorandum In Further Support

-2-

07-CV-2245-BTM-NLS

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 3 of 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Wireless International, Inc. ("Leap") (the "Revised Transaction Schedule"). Attached as Exhibit B is a revised chart purporting to re-calculate the Investment Advisors' financial interest in the relief sought herein (the "Revised Loss Chart"). However, the Revised Transaction Schedule seeks to correct a deficiency in the Investment Advisors' initial filling. 1 Similarly, the Revised Loss Chart seeks to supplement information previously filed with the Court and enlarge the Investment Advisors' purported financial interest. These untimely filings violate the strict, sixty-day deadline imposed by the PSLRA, which requires that the information set forth in Exhibits A and B to the Fisch Declaration be included in a movant's initial motion papers. See e.g., In re Telxon Corp. Sec. Litig., 67 F. Supp. 2d 803, 818 (N.D.Ohio 1999) ("The PSLRA is unequivocal and allows for no exceptions. All motions for lead plaintiff must be filed within sixty (60) days of the published notice for the first- filed action. The plain language of the statute precludes consideration of a financial loss asserted for the first time in a complaint, or any other pleading ... filed after the sixty (60) day window has closed.") (emphasis added); Singer v. Nicor, Inc., Civ. No. 02-5168, Slip Op. at 6 (N.D. Ill. Oct, 16, 2002) (a copy of this decision was annexed to the Declaration of Andy Sohrn, dated March 14, 2008, as Exhibit 9 (rejecting any attempt to recalculate a ) movant's alleged financia l interest in the relief sought after the 60-day deadline has expired). As a result, Exhibits A and B to the Fisch Declaration should not be considered on this motion, and instead, they sho uld be stricken from the record.

1

This deficiency is alluded to in Footnote 2 of the Investment Advisors' memorandum of law in opposition.

Reply Memorandum In Further Support

-3-

07-CV-2245-BTM-NLS

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 4 of 6

1 2 3

POINT II WHAT HAPPENED IN THE IMAX CASE CONFIRMS THAT THE INVESTMENT ADVISORS ARE UNSUITABLE LEAD PLAINTIFFS On page 6 of their memorandum of law in opposition, the Investment Advisors argue that

4 they "have the experience to direct and ensure adequate representation of a class of investors." 5 In support of this contention, they cite to IMAX, 240 F.R.D. at 88. 2 6 What the Investment Advisors conveniently fail to point out, however, is that in IMAX, 7 once Westchester was appointed sole lead plaintiff, it immediately turned around and fled a i 8 consolidated amended class action complaint that inexplicably included the Steelworkers 9 Pension Trust ("Steelworkers Trust") as an additional named plaintiff. See Sohrn Decl. Exhibit 2, 10 ¶ 7. 11 whatsoever as to why it was necessary or how it benefited the class. 12 First, the allegation in paragraph 5 of the IMAX complaint that Westchester is "the 13 investment advisor for GS Master Trust" is directly at odds with the Behren certification filed 14 herein, which claims that Green & Smith "is the advisor to...GS Master Trust." See Behren 15 Cert., ¶ 1. 16 Second, if the Investment Advisors had the requisite authority to sue from their h edge 17 fund clients and there were no legal or factual issues surroundings their bona fides, there would 18 have been no reason in the world why Westchester would feel compelled to include the 19 Steelworkers Trust in its consolidated complaint in IMAX. After all, the Steelworkers Trust was 20 a competing movant, represented by opposing counsel, which sought appointment in lieu of 21
2

This apparently was done without leave of the court and without any explanation

22 23 24

In IMAX, Westchester moved to be appointed sole lead plaintiff. IMAX, 240 F.R.D. at 90. In support of its motion, Westchester relied on a certification signed by Roy Behren "on behalf of Westchester Capital Management, Inc., GS Master Trust, MSS Merger Arbitrage Fund, The Merger Fund, The Merger Fund VL and Sphinx Merger Arbitrage Fund." (A copy of this certification is annexed to the accompanying Declaration of Andy Sohrn ("Sohrn Decl."), dated March 21, 2008, as Exhibit 1). No mention was made in the certification of Green & Smith, whom Behren in this case claims is the investment advisor to GS Master Trust. As noted in the Carpenters Funds' memorandum of law in opposition, in IMAX, Judge Buchwald appointed Westchester as sole lead plaintiff.

Reply Memorandum In Further Support

-4-

07-CV-2245-BTM-NLS

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 5 of 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Westchester. See IMAX, 240 F.R.D. at 90. The Steelworkers Trust was rejected by the Court in IMAX in favor of Westchester, which was then appointed sole lead plaintiff. Id., at 95-96. Nevertheless, Westchester included the Steelworks Trust in its amended pleading, and even included the Steelworks Trust's counsel on the signatory line of the complaint. (Sohrn Decl. Ex. 1, at 114). The only conclusion to be drawn from this conduct is that the Investment Advisors themselves recognize that they are incapable of serving as sole lead plaintiff and class representative in a securities class action. As such, they should not be appointed herein. CONCLUSION For the forgoing reasons, and for the reasons set forth in the Carpenters Funds' memorandum of law in opposition (i.e., the Invest Advisors lack standing to sue; the Investment Advisors are not authorized by their hedge fund clients to sue on their behalf; as merger arbitrageurs who purchased all of their Leap stock in just five trading days during a two-week period approximately two months before the end of the putative class period, the Investment Advisors are atypical and subject to unique defenses; the Investment Advisors' financial interest in the relief sought by the class is overstated; and the certification filed by the Investment Advisors is deficient on its face), it is respectfully submitted that the New Jersey Carpenters

Reply Memorandum In Further Support

-5-

07-CV-2245-BTM-NLS

Case 3:07-cv-02245-BTM-NLS

Document 33

Filed 03/21/2008

Page 6 of 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Pension and Benefit Funds should be appointed lead plaintiff, and their choice of counsel should be approved. Dated: March 21, 2008 GLANCY BINKOW & GOLDBERG LLP By: __s/Andy Sohrn___ Andy Sohrn (241388) Lionel Z. Glancy (#134180) 1801 Avenue of the Stars, Suite 311 Los Angeles, CA 90067 Telephone: (310) 201-9150 SCHOENGOLD SPORN LAITMAN & LOMETTI, P.C. Christopher Lometti (CL-9124) Jay P. Saltzman (JS-7335) Ashley Kim (AK-0105) Daniel B. Rehns (DR-5506) 19 Fulton Street, Suite 406 New York, NY 10038 Telephone: (212) 964-0046 Proposed Lead Counsel for the Class and Attorneys for the New Jersey Carpenters Pension and Benefit Funds

Reply Memorandum In Further Support

-6-

07-CV-2245-BTM-NLS