“Willing Pawn” Not Appropriate to Represent Class
- United States
- 07/24/2008
On July 14, 2008, a New York federal judge declined to grant class representative status to a named plaintiff in a securities class action based on its lack of knowledge about the case. In In re Monster Worldwide, Inc., Securities Litigation, two named plaintiffs, the Middlesex County Retirement System (“Middlesex”) and the Steamship Trade Association-International Longshoremen’s Association Pension Fund (“STA-ILA”), on behalf of a putative class of investors, brought a private securities fraud action against Monster Worldwide, Inc. (“Monster”) and two of its officers alleging that defendants violated sections 10(b), 20(a) and 20A of the Securities and Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and 78t-1. —-F.R.D. —-, 2008 WL 2721806, at *1 (S.D.N.Y. July 14, 2008).
In deciding that STA-ILA is not adequate to represent the class, the court relied, in large part, on the deposition testimony of the pension fund’s co-chairman who claimed to be the person at STA-ILA with the most knowledge about the case. However, the court recognized that the co-chairman 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,” and knew nothing about the basic aspects of the litigation.
STA-ILA’s obvious lack of “genuine knowledge of, and/or meaningful involvement in this case” led the court to characterize the pension fund as merely “the willing pawn of counsel.” The court refused to be “a party to this sham,” and even questioned whether plaintiffs’ counsel had “fulfilled their professional responsibility in proposing STA-ILA as a class representative.” The court noted that while the threshold for being a class representative is modest . . . it “is not so low as to be meaningless.” The class representative “must be aware of the basic facts underlying the lawsuit and not likely to abdicate his obligations to fellow class members.”
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