Securities — PSLRA — One of Two Proposed Lead Plaintiffs Rejected as “Pawn of Counsel”

From In re Monster Worldwide, Inc. Secs. Litig., 2008 U.S. Dist. LEXIS 53466 (S.D.N.Y. July 14, 2008):

Here, as part of class certification discovery, defendants deposed STA-ILA [Steamship Trade Association-International Longshoremen's Association Pension Fund] witness Horace Alston, Co-Chairman of the fund, who testified that he was the person at STA-ILA most knowledgeable about the lawsuit. See Zeiss Decl., Exhibit 5 at 10. However, Mr. Alston then testified that he did not know the name of the stock at issue in this case, did not know the name of either individual defendant, did not know whether STA-ILA ever owned Monster stock, did not know if an amended complaint had been filed, did not know whether he had ever seen any complaint in the action, did not know that defendant McKelvey had moved to dismiss the complaint, and did not know that STA-ILA had moved for pre-discovery summary judgment.... He also testified that STA-ILA had hired the [A] Law Firm to represent it in this litigation, that he would "guess" that [the A Law Firm] then hired [the B Law Firm] as Lead Counsel, that STA-ILA had granted counsel at [A] permission to file "any complaint for any reason they deemed necessary," and that STA-ILA did not review the complaint in this case before it was filed....

Confronted with this appalling testimony, plaintiffs' counsel sought to mitigate the damage by designating for deposition a second STA-ILA witness, Stephen Lukiewski, a trustee of the fund. But even though Mr. Lukiewski seemingly knew substantially more about the case than Mr. Alston, he admitted that he had mostly learned about the substance of the litigation only in the week before his deposition, and had devoted almost no time to the case before then....

The Court will not be a party to this sham. The foregoing events establish beyond a doubt that STA-ILA has no interest in, genuine knowledge of, and/or meaningful involvement in this case and is simply the willing pawn of counsel. STA-ILA cannot remotely be relied upon to protect the interests of the class against the possibly competing interests of the attorneys. Indeed, the entire set of events discussed above leaves the Court with the distinct impression that plaintiffs' counsel may not have fulfilled their professional responsibilities in proposing STA-ILA as a class representative. In any event, the Court concludes that STA-ILA cannot qualify as a class representative.

Class certified with the other proposed lead plaintiff appointed by the Court.

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