On September 8, 2021, United States District Court Judge Colleen McMahon of the Southern District of New York certified a class action against Allergan PLC, approved lead plaintiff DeKalb County Pension Fund (“DeKalb”) as class representative, and Faruqi & Faruqi, LLP as Class Counsel.
This is the court’s second visit on the issue of class certification. In September 2020, the court denied a class certification motion filed by the former lead plaintiff on adequacy grounds. In December 2020, DeKalb was appointed as the new lead plaintiff and Faruqi & Faruqi was appointed lead counsel.
The court, in making its decision to certify the class, noted that no such adequacy issues exist for DeKalb as class representative and that the action against Allergan is the “type of action particularly well suited to class treatment.”
In a securities class action, plaintiffs are entitled to a presumption of reliance on the allegedly fraudulent statements. See Basic v. Levinson, 458 U.S. 224 (1988). This presumption of reliance is what allows a securities fraud action to be litigated on behalf of a class of similarly situated plaintiffs. Defendants attempted to rebut this presumption—and block the class action—by arguing that Allergan’s allegedly fraudulent statements did not impact the company’s stock price. However, following guidance from the Supreme Court’s recent decision in Goldman Sachs Grp., Inc v. Arkansas Teacher Retirement Sys., 141 S. Ct. 1951 (2021), Judge McMahon found that Defendants failed to meet their burden demonstrating a lack of price impact.
After finding a presumption of reliance, the Court went through the traditional factors used to certify a securities class action and found that “they weigh heavily in favor of the class.”
Accordingly, the Court certified the following class:
All individuals and entities that purchased or otherwise acquired Allergan preferred stock or common stock between January 30, 2017 and December 19, 2018, inclusive (the “Class Period”), and who were damaged thereby. Excluded from the Class are the Defendants; the officers, directors, and affiliates of Allergan, at all relevant times; Allergan’s employee retirement or benefit plan(s) and their participants or beneficiaries to the extent they purchased or acquired Allergan common stock through any such plan(s); any entity in which Defendants have or had controlling interest; immediate family members of any excluded person; and the legal representatives, heirs, successors, or assigns of any excluded person or entity.
The class action is captioned as In re Allergan PLC Securities Litigation, No. 18 Civ. 12089 (CM)(GWG).