Friedman v. Quest Energy Partners LP

261 F.R.D. 607, 2009 U.S. Dist. LEXIS 87881, 2009 WL 3049361
CourtDistrict Court, W.D. Oklahoma
DecidedSeptember 24, 2009
DocketNos. CIV-08-936-M, CIV-08-968-M, CIV-08-978-M, CIV-08-1066-M
StatusPublished
Cited by2 cases

This text of 261 F.R.D. 607 (Friedman v. Quest Energy Partners LP) is published on Counsel Stack Legal Research, covering District Court, W.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Friedman v. Quest Energy Partners LP, 261 F.R.D. 607, 2009 U.S. Dist. LEXIS 87881, 2009 WL 3049361 (W.D. Okla. 2009).

Opinion

ORDER

VICKI MILES-LaGRANGE, Chief Judge.

Before the Court are the Ord Group’s1 Motion to be Appointed Lead Plaintiffs and to Approve Proposed Lead Plaintiffs’ Selection of Counsel, Bernard Rubin’s (“Rubin”) Motion for Appointment as Lead Plaintiff and for Approval of Selection of Lead and Liaison Counsel, the Barretti Group’s2 Mo[609]*609tion to be Appointed Lead Plaintiff and to Approve Proposed Lead Plaintiffs Selection of Counsel, Bard Associates, Inc.’s (“Bard”) Motion to be Appointed Lead Plaintiff and for Their Counsel to be Appointed as Lead Counsel and Liaison Counsel, and Robert Hayden and Jose Alvarado’s (“Hayden and Alvarado”) Motion for Appointment of Lead Plaintiff and Approval of Selection of Lead and Liaison Counsel. These motions have been fully briefed and are ripe for adjudication. Based upon the parties’ submissions, the Court makes its determination.

I. Background

Defendant Quest Resource Corporation (“Quest Resource”) is engaged in the exploration, development, production and transportation of natural gas. Quest Resource divides its operations into two reportable business segments: (1) gas and oil production, and (2) natural gas pipelines — transporting, selling, gathering, treating and processing natural gas. Defendant Quest Energy Partners, L.P. (“QELP”) is the oil and gas production operation arm of its parent, Quest Resource. On August 25, 2008, the companies announced that defendant Jerry Cash (“Cash”), their CEO, had resigned following an inquiry by the Oklahoma Department of Securities in connection with questionable transfers of funds by Cash to an entity controlled by Cash. These questionable transfers totaled at least $10 million. As a result, the companies had announced that they constituted a special committee to conduct an internal investigation. This announcement shocked the market and caused QELP stock and Quest Resource stock to fall substantially.

On September 5, 2008, a class action lawsuit was brought on behalf of the purchasers of the partnership units of QELP, which were sold in an initial public offering commencing on November 7, 2007 through August 25, 2008 (the “QELP Class”), seeking to recover damages caused by alleged violations of federal securities laws and to pursue remedies under the Securities Act of 1933. On September 12, 2008, a second class action lawsuit was brought on behalf of the purchasers of Quest Resource stock from May 2, 2005 through August 25, 2008 (the “Quest Resource Class”), seeking to recover damages caused by alleged violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 20(a) of the Exchange Act. Two additional related actions brought on behalf of both QELP and Quest Resource securities purchasers were then filed. These four actions have since been consolidated.

II. Discussion

A. Appointment of Lead Plaintiff

1. Procedural requirements

The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) sets forth a detailed procedure for the selection of a lead plaintiff to oversee securities class actions brought pursuant to the Federal Rules of CM Procedure. See 15 U.S.C. § 77z-1(a)(3); 15 U.S.C. § 78u-4(a)(3). First, the plaintiff who files the initial action must, within 20 days of filing the action, publish a notice to the class informing class members of their right to file a motion for appointment as lead plaintiff. 15 U.S.C. § 77z1 (a)(3)(A)(i); 15 U.S.C. § 78u-4(a)(3)(A)(i). Plaintiff in the first-filed QELP action published an early notice on Market Wire3 on September 5, 2008. Plaintiff in the first-filed Quest Resource action published an early notice on Market Wire on September 12, 2008. Within 60 days after publication of the required notice, any member of the proposed class may file a motion with the court seeking to be appointed as lead plaintiff, whether or not they have previously filed a complaint in the action. 15 U.S.C. § 77z-1(a)(3)(A), (B); 15 U.S.C. § 78u-4(a)(3)(A), (B).

Next, under the PSLRA, the Court shall appoint as lead plaintiff the movant that the court determines to be the most capable of adequately representing the interests of class members. 15 U.S.C. § 77z-1(a)(3)(B)(i); 15 U.S.C. § 78u-4(a)(3)(B)(i). In determining [610]*610who is the “most adequate plaintiff,” the act provides that:

[T]he court shall adopt a presumption that the most adequate plaintiff in any private action arising under this chapter is the person or group of persons that—
(aa) has either filed the complaint or made a motion in response to a notice ...;
(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and
(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

15 U.S.C. § 77z-1(a)(3)(B)(iii)(I); 15 U.S.C. § 78u—4(a)(3)(B)(iii)(I). That presumption may only be rebutted in very limited circumstances by proof by a member of the purported class that the presumptively most adequate plaintiff:

(aa) will not fairly and adequately protect the interests of the class; or
(bb) is subject to unique defenses that render such plaintiff incapable of adequately representing the class.

15 U.S.C. § 77z-1(a)(3)(B)(iii)(II); 15 U.S.C. § 78u-4(a) (3) (B )(iii) (II).

2. One lead plaintiff for both classes vs. separate lead plaintiffs for each class

Hayden and Alvarado and Bard seek appointment as lead plaintiff for both classes; the Ord Group, the Barretti Group, and Rubin, however, seek appointment as lead plaintiff for only one of the classes. Additionally, in his motion, Rubin moves the Court to select a separate lead plaintiff for the QELP Class and the Quest Resource Class.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
261 F.R.D. 607, 2009 U.S. Dist. LEXIS 87881, 2009 WL 3049361, Counsel Stack Legal Research, https://law.counselstack.com/opinion/friedman-v-quest-energy-partners-lp-okwd-2009.