United States District Court, D. Massachusetts
DAVID HACKEL, individually and on behalf of all others similarly situated, Plaintiffs,
AVEO PHARMACEUTICALS, INC. et al., Defendants.
MEMORANDUM AND ORDER ON MOTIONS TO APPOINT LEAD
PLAINTIFF AND COUNSEL
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
a federal securities class action lawsuit concerning alleged
violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, 15 U.S.C. §§ 78j, 78t, and
Rule 10b-5, 17 C.F.R § 240.10b-5, by Defendant AVEO
Pharmaceuticals (“AVEO”) and certain of its
current and former executives. [ECF No. 1
(“Compl.”)]. Plaintiffs claim that AVEO made
misleading statements in connection with its efforts to
demonstrate the effectiveness of a candidate drug for
treating renal cell carcinoma. Compl. ¶ 3-6. AVEO's
share price fell more than 60 percent following the January
31, 2019 publication of an article asserting that the FDA was
requesting more testing results and that AVEO would not be
applying for approval of its drug. Compl. ¶¶ 7-8.
Currently before the Court are two motions to appoint lead
plaintiff(s) and to approve the movants' respective
selections of lead counsel pursuant to the Private Securities
Litigation Reform Act of 1995 (“PSLRA”), 15
U.S.C. § 78u-4(a)(3)(B). [ECF Nos. 23, 29]. For the
reasons stated herein, Andrej Hornak's
(“Hornak”) motion for his appointment as lead
plaintiff, [ECF No. 29], and for approval of his selection of
Pomerantz LLP as Lead Counsel and Andrews DeValerio LLP as
Liaison Counsel [ECF No. 29] is GRANTED, and the
competing motion filed by Andrew P. Walsh and Daniel Van
Meerbeeck [ECF No. 23] is DENIED.
the PSLRA, the Court must “appoint as lead plaintiff
the member . . . of the purported plaintiff class that the
court determines to be most capable of adequately
representing the interests of class members.” 15 U.S.C.
§ 78u-4(a)(3)(B)(i). This person is known as the
“most adequate plaintiff.” Id. A
rebuttable presumption exists that the “most adequate
plaintiff is the movant who “has the largest financial
interest in the relief sought by the class, ” while
also satisfying the requirements of Federal Rule of Civil
Procedure 23. Id. at § 78u-4(a)(3)(B)(iii)(I).
One may only rebut this presumption with “proof that
the presumptively most adequate plaintiff “will not
fairly and adequately protect the interests of the
class” or is subject to unique defenses. Id.
at § 78u-4(a)(3)(B)(iii)(II). The statute's language
suggests that “the threshold determination of whether
the movant with the largest financial losses satisfies the
typicality and adequacy requirements should be a product of
the court's independent judgment, and that arguments by
members of the purported plaintiff class as to why it does
not should be considered only in the context of
assessing whether the presumption has been rebutted.”
In re Cendant Corp. Litig., 264 F.3d 201, 263-64 (3d
Cir. 2001); State Univs. Ret. Sys. of Ill. v. Sonus
Networks, Inc., No. 06-10040-MLW, 2006 WL 3827441, at *2
(D. Mass. Dec. 27, 2006) (same).
determine the largest financial interest, courts may consider
several factors, including “(1) the number of shares
purchased during the class period; (2) the number of net
shares purchased during the class period; (3) the total net
funds expended during the class period; and (4) the
approximate losses suffered during the class period.”
Ark. Teacher Ret. Sys. v. Insulet Corp.,
177 F.Supp.3d 618, 622 (D. Mass. 2016) (quoting In re
Olsten Corp. Sec. Litig., 3 F.Supp.2d 286, 295 (E.D.N.Y.
1998)). Most courts appoint whichever potential lead
plaintiff has suffered the largest total loss. Takara Tr.
v. Molex Inc., 229 F.R.D. 577, 579 (N.D.Ill. 2005)
(citing In re Bally Total Fitness Sec. Litig., No.
04C4697, 2005 WL 627960, at *4 (N.D.Ill. Mar. 15, 2005)).
Hornak claims to have suffered a loss of $527, 918 as a
result of purchasing 282, 000 AVEO shares at a cost of $750,
917 and retaining 250, 000 shares. [ECF No. 30 at 5].
Hornak's asserted loss is larger than the other movants,
Andrew P. Walsh and Daniel Van Meerbeeck, who claim to have
suffered a $341, 506.42 loss as a result of purchasing 155,
000 AVEO shares. [ECF No. 26 at 7]. The Court finds
Hornak's purchase and continued ownership of AVEO shares
through the class period adequately documented and further
finds that he has a larger financial interest in this
litigation than Messrs. Walsh and Van Meerbeeck.
also meets the typicality and adequacy requirements of
Federal Rule of Civil Procedure 23. At this stage, he
“need only make a prima facie showing of
typicality and adequacy, ” Ark. Teacher Ret.
Sys., 177 F.Supp.3d at 622, and the Court's findings
on these requirements need only be “preliminary,
” City of Bristol Pension Fund v. Vertex
Pharms., No. 12-cv-11654-FDS, 2012 WL 6681907, at *4 (D.
Mass. Dec. 21, 2012) (quoting In re Tronox, Inc. Sec.
Litig., 262 F.R.D. 338, 343-44 (S.D.N.Y. 2009)); see
Emerson v. Genocea Biosciences, Inc., No. 17-12137-PBS,
2018 WL 839382, at *3 n.2 (D. Mass. Feb. 12, 2018) (party
seeking appointment as most adequate plaintiff bears a
“relatively low burden of proof”). The
“burden in proving typicality requires that the named
[plaintiff's] claims arise from the ‘same events or
course of conduct' and involve the same legal theory as
do the claims of the rest of the class.” In re
Lernout & Hauspie Sec. Litig., 138 F.Supp.2d 39, 46
(D. Mass. 2001) (quoting In re Bank of Boston Corp. Sec.
Litig., 762 F.Supp. 1525, 1532 (D. Mass. 1991)).
Hornak's claims are typical because, like the other
putative class members, he owned AVEO shares when the company
allegedly made misleading statements of material facts or
omitted facts that made its assertions misleading, and he
claims to have suffered damages as a result of the decline in
value of his securities when AVEO's misrepresentations
and omissions were revealed. [ECF No. 30 at 7].
meet the adequacy requirement, plaintiffs must demonstrate
that they have common interests and an absence of conflict
with the class members and that the plaintiffs' attorneys
are qualified, experienced and vigorously able to conduct the
litigation.” In re Lernout, 138 F.Supp.2d at
46. Hornak has selected as Pomerantz LLP as Lead Counsel and
Andrews DeValerio LLP as Liaison Counsel. He adequately sets
forth the firm's experience litigating complex class
actions, and no party has disputed the adequacy of his
proposed counsel. [ECF No. 30 at 8-9; ECF No. 31-4; ECF No.
31-5]. Moreover, Hornak is an adequate lead plaintiff given
his attestations that he is willing to serve as a class
representative and be deposed and testify at trial, if
necessary. [ECF No. 31-2]. He further attests that he
“did not purchase or acquire AVEO securities at the
direction of plaintiffs' counsel or in order to
participate in any private action arising under the
Securities Act or Exchange Act.” Id. Hornak
therefore satisfies the requirements of Fed.R.Civ.P. 23 at
Hornak holds the largest financial interest and satisfies the
requirements of Rule 23, he “must be appointed lead
plaintiff, ” unless the presumption of his adequacy is
rebutted. Sonus Networks, Inc., 2006 WL 3827441, at
*3. On May 2, 2019, the Court ordered any party intending to
oppose Hornak's appointment as Lead Plaintiff to file a
notice of intent to oppose by 12:00 PM on May 3, 2019. [ECF
No. 33]. No. such notice has been filed, and the presumption
that Hornak is the most adequate plaintiff is thus
unrebutted. The Court therefore appoints Hornak as Lead
Plaintiff and approves his selection of Lead and Liaison
motion to be appointed lead plaintiff and for approval of his
selection of counsel, [ECF No. 29], is GRANTED.
Hornak is appointed Lead Plaintiff, and the Court approves
his selection of Pomerantz LLP as Lead Counsel and Andrews
DeValerio LLP as Liaison Counsel. The competing motion [ECF
No. 23] is DENIED.
parties shall meet and confer and submit a proposed schedule
for an amended complaint and AVEO's response thereto
within 14 days of this order.