333 F.R.D. 66 (D.N.J. 2019), C. A. 16-2805, Roofer’s Pension Fund v. Papa

Docket Nº:Civil Action 16-2805
Citation:333 F.R.D. 66, 105 Fed.R.Serv.3d 419
Opinion Judge:ARLEO, United States District Judge
Party Name:ROOFER’S PENSION FUND, et al., Plaintiffs, v. PAPA, et al., Defendants.
Attorney:Daniel S. Sommers, Cohen, Milstein, Sellers & Toll, PLLC, Washington, DC, Michael B. Himmel, Michael Thomas Gray Long, Lowenstein Sandler LLP, Roseland, NJ, for Plaintiffs. Alan S. Naar, Greenbaum, Rowe, Smith & Davis, LLP, Iselin, NJ, Jane J. Felton, Jonathan W. Wolfe, Skoloff & Wolfe, P.C., Liv...
Case Date:November 14, 2019
Court:United States District Courts, 3th Circuit, District of New Jersey

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333 F.R.D. 66 (D.N.J. 2019)

105 Fed.R.Serv.3d 419

ROOFER’S PENSION FUND, et al., Plaintiffs,

v.

PAPA, et al., Defendants.

Civil Action No. 16-2805

United States District Court, D. New Jersey

November 14, 2019

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Daniel S. Sommers, Cohen, Milstein, Sellers & Toll, PLLC, Washington, DC, Michael B. Himmel, Michael Thomas Gray Long, Lowenstein Sandler LLP, Roseland, NJ, for Plaintiffs.

Alan S. Naar, Greenbaum, Rowe, Smith & Davis, LLP, Iselin, NJ, Jane J. Felton, Jonathan W. Wolfe, Skoloff & Wolfe, P.C., Livingston, NJ, Kenneth Andrew Brady, Steven William Shuldman, Wilmer Cutler Pickering Hale and Dorr LLP, Goutam Umesh Jois, Marshall R. King, Gibson Dunn & Crutcher LLP, Brian Thomas Frawley, Sulivan & Cromwell, New York, NY, for Defendants.

OPINION

ARLEO, United States District Judge

THIS MATTER comes before the Court by way of Lead Plaintiff Perrigo Institutional Investor Group’s ("Lead Plaintiff") Motion for Class Certification. ECF No. 163. Defendants Perrigo Company plc ("Perrigo" or the "Company"), Joseph C. Papa, and Judy Brown (collectively, "Defendants") oppose the Motion. ECF No. 189. For the reasons set forth herein, Lead Plaintiff’s Motion is GRANTED.

I. BACKGROUND1

Lead Plaintiff filed this putative securities class action on behalf of investors who purchased Perrigo common stock between April 21, 2015 and May 3, 2017, both dates inclusive (the "Class Period"). The claims arise from alleged misrepresentations Defendants made to investors to falsely inflate Perrigo’s stock value in the face of a hostile tender offer from a competitor. Plaintiff seeks to certify the following three classes: (1) investors who purchased Perrigo stock during the Class Period on the New York Stock Exchange ("NYSE"); (2) investors who purchased Perrigo stock during the Class Period on the Tel Aviv Stock Exchange ("TASE"); and (3) investors who owned Perrigo stock as of November 12, 2015 until the time a tender offer expired.

Defendant Perrigo is a publicly-traded pharmaceutical company. Am. Compl. ¶ 30. Perrigo’s common stock is dual listed on the NYSE and the TASE. Id. ¶ 31. Joseph Papa and Judy Brown (collectively, the "Individual Defendants")2 were corporate executives at Perrigo when the relevant misrepresentations occurred. See

id. ¶¶ 32, 34.

Lead Plaintiff Perrigo Institutional Investor Group is a group of investors comprised of the following corporate entities: Migdal Insurance Company Ltd. ("Migdal Insurance"), Migdal Makefet Pension and Provident Fund Ltd. ("Migdal Makefet" and, with Migdal Insurance, "Migdal"), Clal Insurance Company Ltd. ("Clal Insurance"), Clal Pension and Provident Ltd. ("Clal Pension"), Atudot Pension Fund for Employees and Independent Workers Ltd. ("Atudot" and, with Clal Insurance and Clal Pension, "Canaf-Clal"), and Meitav DS Provident Funds and Pension Ltd. ("Meitav"). ECF No. 64. Migdal is one of the largest insurance and pension managers in Israel, and each of the Migdal entities purchased Perrigo stock during the Class Period, including on the TASE. Id. ¶ 27. Canaf-Clal comprises Israeli investment entities, each of which purchased Perrigo shares during the Class Period, including on the TASE. Id. ¶ 28. Meitav is an affiliate of a leading Israel investment firm and purchased

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Perrigo shares during the Class Period, including on the TASE. Id. ¶ 29.

Plaintiff’s Amended Complaint alleges violations of Section 10(b) of the Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5(b), and Section 14(e) of the Exchange Act, 15 U.S.C. § 78n(e), against all Defendants, and violations of Section 20(a) of the Exchange Act, id. § 78t(a), against the Individual Defendants. The TASE Investors further allege violations of the Israel Securities Law, 1968 against all Defendants.

The Class Period begins on April 21, 2015, approximately two weeks after pharmaceutical conglomerate Mylan— a Perrigo competitor— made an unsolicited bid to purchase Perrigo for approximately $205 per share. Am. Compl. ¶¶ 1, 92. Perrigo’s Board of Directors rejected Mylan’s offer and announced that the bid "substantially undervalue[d] the Company and its future growth prospects." See

id. ¶ 96. Mylan twice increased its bid proposal to Perrigo, but the Board rejected both revised offers. Id. ¶¶ 103-04. Mylan thereafter proceeded with a formal tender offer to Perrigo’s shareholders. Id. ¶ 107.

Perrigo’s shareholders ultimately rejected Mylan’s tender offer on November 13, 2015. See id. ¶¶ 107, 111. Approximately two months after the tender offer failed, Defendants announced Perrigo’s fourth quarter and 2015 calendar year financial results, which were lower than projected. See id. ¶¶ 9, 225-26. Perrigo stock continued to fall over the course of the next few months. See id. ¶¶ 10-11, 227-29. By December 2016, Perrigo stock values declined significantly to $81.94 per share. Id. ¶¶ 17, 238.

The class action claims stem from alleged material misrepresentations and omissions that Defendants made to overvalue Perrigo and prevent its shareholders from accepting Mylan’s offer. Defendants filed a Motion to Dismiss, which this Court granted in part and denied in part in a written opinion issued on July 27, 2018. ECF Nos. 114, 136-37. The surviving claims are premised upon misrepresentations and omissions relating to two key areas: (1) collusive pricing for generic drugs; and (2) the integration of Omega Pharma, N.V. ("Omega").3

First, Lead Plaintiff alleges that Perrigo engaged in a price-fixing scheme with other generic drug manufacturers and that Defendants made material misrepresentations that omitted their price-collusion practices. The second set of misstatements relates to the integration of an acquired company. Shortly before the Class Period commenced in 2015, Perrigo acquired Omega— one of the largest over-the-counter healthcare companies in Europe. Am. Compl. ¶ 53. Plaintiff alleges that Defendants misrepresented the success of Omega’s integration and inflated Omega’s growth prospects while omitting numerous known impediments. The Court dismissed certain Omega claims predicated upon alleged misrepresentations that included puffery and forward-looking statements but sustained the claims based upon misrepresentations relating to the past and present success of the integration. ECF No. 136.

Plaintiff filed this action on May 18, 2016. ECF No. 1. The Court appointed Lead Plaintiff and its counsel on April 27, 2017. ECF No. 85. Plaintiff filed an Amended Complaint on June 21, 2017. ECF No. 89. On July 27, 2018, this Court issued an Opinion and Order granting in part and denying in part Defendants’ Motion to Dismiss the Amended Complaint, as set forth above. ECF Nos. 136, 137. Plaintiff now seeks to certify three separate classes of Perrigo investors under Federal Rule of Civil Procedure 23(b)(3): (1) investors who suffered damages resulting from the purchase of Perrigo stock on the NYSE during the Class Period; (2) investors who suffered damages resulting from the purchase of Perrigo stock on the TASE during the Class Period; and (3) investors who held Perrigo stock as of November 12, 2015 until Mylan’s tender offer expired.

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II. LEGAL STANDARD

A. Class Certification Requirements

A plaintiff seeking class certification must show that the class meets the requirements of Federal Rule of Civil Procedure 23. Rule 23(a) sets forth four basic prerequisites for class certification: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy. See Fed.R.Civ.P. 23(a); In re Constar Int’l Inc. Sec. Litig., 585 F.3d 774, 780 (3d Cir. 2009). If the plaintiff meets those requirements, the Court must then decide whether the class action is maintainable under Rule 23(b). Rule 23(b)(3) authorizes certification when "questions of law or fact common to class members predominate over any questions affecting only individual members," and "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." See Fed.R.Civ.P. 23(b). The predominance requirement is generally the most crucial requirement in class actions involving securities violations. See Halliburton Co. v. Erica P. John Fund, Inc. (Halliburton II), 573 U.S. 258, 276, 134 S.Ct. 2398, 189 L.Ed.2d 339 (2014).

A plaintiff "must affirmatively demonstrate" that the Rule 23’s requirements are satisfied, Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011), by a preponderance of the evidence, In re Blood Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015). In deciding whether to grant a class certification motion, the Court’s analysis frequently overlaps with "the merits of the plaintiff’s underlying claim," Dukes, 564 U.S. at 351, 131 S.Ct. 2541, but the Court may consider the merits "only to the extent ... that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied," Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466, 133 S.Ct. 1184, 185 L.Ed.2d 308 (2013).

B. Elements of Substantive Claims

The Amended Complaint alleges violations of Sections 10(b), 14(e), and 20(a) of the Exchange Act, 15 U.S.C. § 78a et seq. Section 14(e) is modeled after Section 10(b), Schreiber v. Burlington N., Inc., 472 U.S. 1, 10, 105 S.Ct. 2458, 86 L.Ed.2d 1 (1985), and Section 20(a) is a derivative claim predicated on finding Section 10(b) liability, see

Rahman v. Kid Brands, Inc., 736 F.3d 237, 247 (3d Cir. 2013). Thus, an analysis of Lead Plaintiffs Section 10(b) claims will...

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3 practice notes
  • 2019 Year In Review: Securities Litigation And Enforcement
    • United States
    • Mondaq United States
    • February 14, 2020
    ...406 U.S. 128, 153-154 (1972)). 88 Basic, 485 U.S. at 248. 89 Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 269 (2014). 90 333 F.R.D. 66 (D.N.J. 2019), appeal filed, No. 19-8047 (3d Cir. Nov. 29, 2019). 91 Id. at *80. 92 Id. at *80-81. 93 Id. at *84-85. 94 Id. at 82, *83-84 (cit......
  • Lord Abbett Affiliated Fund, Inc. v. Navient Corp., 082520 DEDC, Civ. 16-112 (MN)
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • August 25, 2020
    ...is efficient and they are, therefore, entitled to invoke the fraud-on-the market presumption. Roofer's Pension Fund v. Papa, 333 F.R.D. 66, 73 (D.N.J. 2019). Plaintiffs, however, have not carried their burden here, because they failed to set out in their opening bri......
  • In re Advance Auto Parts, Inc., Securities Litigation, 110620 DEDC, Civ. 18-212-RGA
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • November 6, 2020
    ...130:17-131:15, 152:25-153:4, 157:3-158:24). This more than satisfies the requirements for adequacy. Roofer's Pension, 333 F.R.D. at 77 (“It is well-settled that ‘a class representative need only possess a minimal degree of knowledge necessary to meet the adequacy st......
2 cases
  • Lord Abbett Affiliated Fund, Inc. v. Navient Corp., 082520 DEDC, Civ. 16-112 (MN)
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • August 25, 2020
    ...is efficient and they are, therefore, entitled to invoke the fraud-on-the market presumption. Roofer's Pension Fund v. Papa, 333 F.R.D. 66, 73 (D.N.J. 2019). Plaintiffs, however, have not carried their burden here, because they failed to set out in their opening bri......
  • In re Advance Auto Parts, Inc., Securities Litigation, 110620 DEDC, Civ. 18-212-RGA
    • United States
    • Federal Cases United States District Courts 3th Circuit District of Delaware
    • November 6, 2020
    ...130:17-131:15, 152:25-153:4, 157:3-158:24). This more than satisfies the requirements for adequacy. Roofer's Pension, 333 F.R.D. at 77 (“It is well-settled that ‘a class representative need only possess a minimal degree of knowledge necessary to meet the adequacy st......
1 firm's commentaries
  • 2019 Year In Review: Securities Litigation And Enforcement
    • United States
    • Mondaq United States
    • February 14, 2020
    ...406 U.S. 128, 153-154 (1972)). 88 Basic, 485 U.S. at 248. 89 Halliburton Co. v. Erica P. John Fund, Inc., 573 U.S. 258, 269 (2014). 90 333 F.R.D. 66 (D.N.J. 2019), appeal filed, No. 19-8047 (3d Cir. Nov. 29, 2019). 91 Id. at *80. 92 Id. at *80-81. 93 Id. at *84-85. 94 Id. at 82, *83-84 (cit......