Federal Court Appoints Metzler Group as Lead Plaintiff Under the PSLRA And Fed R. Civ. Pro. 23
In re Molson Coors Brewing Company Securities Litig., 233 F.R.D. 147 (D.Del. Dec. 2, 2005). This Memorandum Order deals with the appointment of lead counsel in three purported class claims for alleged violations of federal securities laws. The actions were consolidated by the Court. The class claims ensued from the 2005 merger and agreement between Molson, Inc., ("Molson"), the third largest brewer in Canada and Adolph Coors Company ("Coors"), the third largest brewer in the U.S., creating the Molson Coors Brewing Company ("Molson Coors"). The Court held that the Metzler Group would act as lead plaintiff and its counsel would be lead counsel.
This suit emerges from allegations involving pre-merger and post-merger misrepresentations that Molson's shareholders allegedly relied upon. Plaintiffs Molson alleged that a 2004 proxy statement filed with the SEC contained misrepresentations related to the nature and effect of the merger and Coor's financial performance, inducing the Molson shareholders to agree to the merger. A combination of poor first quarter 2005 results, resignation of Molson Coors's key director and his cashing in of $ 33 mil in stock options was received negatively by the market, causing its shares to drop by 20% on the NYSE. The plaintiffs' attributed the stock fall to a series of misrepresentations of the performance of Coors before and after the merger. The plaintiffs' were Metzler Investment GmbH ("Metzler") and Drywall Acoustic Lathing and Insulation Local 675 Pension Fund ("Local 675"), collectively "Metzler Group" and Plumbers & Pipefitters National Pension Fund ("Plumbers") a German investment advisor. Metzler claimed losses of over $2.75 million while the latter came a far second at losses of $1.0 million. The Court held that the selection of lead plaintiff and counsel was a matter left to its discretion. To select the lead plaintiff and counsel, the Court: (1) applied the Private Securities Litigation Reform Act (the "PSLRA") procedures under 15 U.S.C. Section 78u-4(a)(3)(B)(i)&(iii)(I); and (2) the typical and adequacy prongs of Rule 23 of the Federal Rules Of Civil Procedure. The Court presumed that Metzler, as the plaintiff with the largest financial interest in the relief sought, would be the lead plaintiff, unless that presumption was rebutted by demonstrating that the presumed lead plaintiff could not adequately protect the interests of the class or was vulnerable to unique defenses that would render it incapable of adequately representing the class. The Court concluded that the Metzler Group had fulfilled the typical and adequacy prongs of Rule 23 and had met the three criteria mandated by 15 U.S.C. Section 78u-4(a)(3)(B) namely: (1) it had filed a complaint or made a motion to act as lead plaintiff; (2) it had the largest financial interest in the relief requested by the class; and (3) it satisfied Rule 23. Additionally, Plumbers had failed to rebut the presumption. The Court also ruled that Metzler's counsel was adequately qualified to act as lead counsel.