In the Able Labs litigation, eight different groups or individuals filed timely lead plaintiff motions. Of the original movants, an individual had the largest alleged losses. Subsequent to the expiration of the sixty day period, two institutional investors that had separately and timely moved for appointment sought to combine as a group. When combined, those two entities, the Denver Employees Retirement Plan and Deka International (Ireland) Ltd. , had slightly larger losses than the individual.
Judge Greenaway in addressing the objections of the individual to allowing the after-formed group looked to the Third Circuit's decision in In re Cendant Corp. Litig., 264 F.3d 201 (3d Cir. 2001). Judge Greenaway noted that the Court (as directed by Cendant) is to examine "the way in which a group seeking to become lead plaintiff was formed or the manner in which it is constituted would preclude it from fulfilling the tasks assigned to a lead plaintiff." Id. at 266. He went on to note:
Essentially, the Third Circuit disapproves of groups that are created by counsel in an effort to satisfy the largest financial loss requirement. If the court concludes that the group was created by counsel rather than class members, then 'the court should disqualify that movant on the grounds that it will not fairly and adequately represent the interests of the class.'Finding that there was ample evidence in the record that the formation of the Deka / DERP group was not driven by counsel, and that the individual had not rebutted the presumption afforded to the newly-formed group, Judge Greenaway appointed the two institutions as lead plaintiff and approved their choice of counsel.
The Able Labs opinion is available here (ECF registration required, but no charge for viewing opinions)