In Haverhill Retirement System v. Catalyst Health Solutions, Inc., C.A. No. 7506-VCN, (May 25, 2012) (and related actions), the Court addressed the issue of who should be designated as lead plaintiff, lead counsel, and liaison counsel in a class action contesting the acquisition of Catalyst Health Solutions, Inc. by SXC Health Solutions Corp. The two leading slates were: Haverhill Retirement System (Lead Plaintiff), Rigrodsky & Long, P.A. (Liaison Counsel) Wolf Popper LLP (Lead Counsel) and Ira Lindell (Lead Plaintiff), O’Kelly Ernst Bielli & Wallen, LLC (Liaison Counsel), and Levi & Korsinsky, LLP (Lead Counsel).
There are six factors that the Court looks to in selecting lead plaintiff and lead counsel which were set forth in Hirt v. U.S. Timberland Service Company, LLC, 2002 WL 1558342, at *2 (Del. Ch. July 3, 2002). Those factors include:
-The quality of the pleading that appears best able to represent the interests of the shareholder class and derivative plaintiffs;
-The relative economic stakes of the competing litigants in the outcome of the lawsuit (to be accorded great weight);
-The willingness and ability of all the contestants to litigate vigorously on behalf of an entire class of shareholders;
-The absence of any conflict between larger, often institutional, stockholders and smaller stockholders;
-The enthusiasm or vigor with which the various contestants have prosecuted the lawsuit; and
-Competence of counsel and their access to the resources necessary to prosecute the claims at issue.
In its analysis, the Court noted that while several of these factors afforded no differentiation between either side, Haverhill’s amended pleadings were marginally better than the pleadings submitted by Lindell, and that Haverhill’s argument with respect to Catalyst’s failure to disclose was more developed than the similar argument which was presented by Lindell. The Court also noted that Haverhill, an institutional stockholder, had a larger financial interest in the case than Lindell, an individual stockholder. The Court concluded that while this was a close call, two factors (quality of pleading and relative economic stakes) marginally supported Haverhill.
The Court then turned to which law firm would best serve the interest of the plaintiffs as lead counsel and liaison counsel. While acknowledging there is probably no “right” answer, after analyzing the Hirt factors, the Court concluded, only narrowly, that the Rigrodsky & Long — Wolf Popper arrangement would likely provide the most benefit to the potential class members. As a result, the Court selected Haverhill Retirement System as lead plaintiff, Rigrodsky & Long, P.A. as liaison counsel, and Wolf Popper LLC as lead counsel.