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Ruckel v. Ford Motor Co.

United States District Court, E.D. Michigan, Southern Division

February 7, 2018

PAUL RUCKEL, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
FORD MOTOR COMPANY, JAMES PATRICK HACKETT, ALAN MULALLY, MARK FIELDS, and ROBERT L. SHANKS, Defendants.

          ORDER GRANTING MOTION OF THE FORD INVESTOR GROUP TO:(1) APPOINT LEAD PLAINTIFFS; AND (2) APPROVE LEAD PLAINTIFFS’ SELECTION OF COUNSEL

          Linda V. Parker U.S. District Court Judge

         This putative class action lawsuit is filed under the Private Securities Litigation Reform Act of 1995 (“PSLRA”). The lawsuit asserts violations of federal law based on alleged false and misleading statements and omissions concerning Ford Motor Company’s business, operations, and prospects. The plaintiffs claim the statements and/or omissions concerned flaws in the manufacturing process, supply chain and/or quality control that resulted in at least 841,000 Ford vehicles being unsafe to drive. The following movants filed a motion seeking appointment as lead plaintiffs and appointment of their choice of lead counsel: (1) James Emerson; (2) the William T. Higgs Trust; (3) Power Holding Corporation; and (4) the November Family Trust DD 5/5/1983 (collectively “the Ford Investor Group”).

         When enacting the PSLRA, Congress “envisioned that courts still would play an independent, gate keeping role to implement the [statute].” In re Baan Co. Sec. Litig., 186 F.R.D. 214, 215 (D.D.C. 1999). Thus, although the motion for appointment as lead plaintiffs and lead counsel is unopposed, this Court must evaluate the information before it and assess whether they and their chosen counsel should serve in those capacities.

         The PSLRA requires a court to consider any motion filed by a class member seeking to be appointed as lead plaintiff and to “appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of the class members.” 15 U.S.C. § 78u-4(a)(3)(B)(i). The statute creates a rebuttable presumption that the most adequate plaintiff is the person who:

(aa) has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i);
(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.

15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). This presumption “may be rebutted only upon proof by a member of the purported plaintiff class that the presumptively most adequate plaintiff-- (aa) will not fairly and adequately protect the interest of the class; or (bb) is subject to unique defenses that render such plaintiff incapable of adequately representing the class.” Id. The PSLRA further provides that once the most adequate plaintiff is selected, the “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).

         The PSLRA does not provide a methodology for determining which person has “the largest financial interest” in the litigation. In making this determination, however, courts have adopted the four factors outlined by the District Court for the Northern District of Illinois in Lax v. First Merchants Acceptance Corp., No. 97-cv-02715, 1997 WL 461036, at *5 (Aug. 11, 1997). See, e.g., In re Olsten Corp. Sec. Litig., 3 F.Supp.2d 286, 295 (E.D.N.Y. 1998) (citing Lax); In re The Goodyear Tire & Rubber Co. Sec. Litig., No. 5:03-cv-2166, 2004 WL 3314943, at *3 (N.D. Ohio May 12, 2004) (citing cases recognizing the four-factor inquiry outlined in Lax). The Lax factors are: (1) the number of shares purchased during the class period; (2) the number of net shares purchased during the class period (i.e., shares purchased during and retained at the end of the class period); (3) the total net funds expended during the class period; and (4) the approximate losses suffered during the class period. Lax, 1997 WL 461036, at *5.

         Finally, as indicated, the class member seeking lead plaintiff status must also satisfy the requirements of Rule 23 of the Federal Rules of Civil Procedure. Rule 23 provides:

One or more members of a class may sue or be sued as representative parties on behalf of all members 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 ...

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