How Not to Choose a Lead Plaintiff
After more than a year of legal wrangling, attorneys representing the plaintiffs in a would-be securities class action couldn’t come up with a lead plaintiff candidate who was acceptable to the trial judge.
Hence, the judge refused to certify the class, and the plaintiff lawyers went to the 7th U.S. Circuit Court of Appeals, seeking a ruling on, as Judge Frank Easterbook puts it in the appellate panel’s opinion, whether “when all potential lead plaintiffs have shortcomings, the district judge must choose the least bad of a mediocre lot.”
Unfortunately, during all the infighting over who was to be lead plaintiff, none of the lawyers noticed that a window of opportunity for filing an interlocutory appeal of the judge’s class certification ruling had long since closed. Under Rule 23 of the Federal Rules of Civil Procedure, there was a 10-day opportunity to do so–and concerning only the first class certification ruling, too, not two subsequent judicial decisions on the issue, Easterbrook writes.
There still remains, he points out for the benefit of the undoubtedly crestfallen plaintiff lawyers, the option of appealing the class certification issue after a final decision has been reached on the merits of their securities case. However, “(w)ithout a certified class, the case has lower settlement value, and if counsel litigates to final decision on the merits (the defendant) may well prevail, and then there would be no point in arguing for class certification.”
(Hat tip: Wall Street Journal Law Blog.)
