In re Miller Industries, Inc. Securities Litigation

186 F.R.D. 680, 1999 U.S. Dist. LEXIS 14362, 1999 WL 355430
CourtDistrict Court, N.D. Georgia
DecidedMay 27, 1999
DocketCiv.A. No. 1:97-CV-2811-TWT
StatusPublished
Cited by11 cases

This text of 186 F.R.D. 680 (In re Miller Industries, Inc. Securities Litigation) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Miller Industries, Inc. Securities Litigation, 186 F.R.D. 680, 1999 U.S. Dist. LEXIS 14362, 1999 WL 355430 (N.D. Ga. 1999).

Opinion

ORDER

THRASH, District Judge.

This is a complex securities fraud case. It is before the Court on the Plaintiffs’ Motion for Class Certification [Doc. 45]. On May 10, 1999, the Court heard oral argument as to the class certification motion. For the reasons set forth below, the motion should be granted. The Defendants’ arguments concerning intra-class conflict are interesting intellectually, but are insufficient to defeat class certification given the overwhelming weight of pertinent and persuasive authority in this area.

I. BACKGROUND

The Plaintiffs filed this consolidated shareholder action asserting various securities fraud claims against (1) Miller Industries, Inc.; (2) William G. Miller, Chairman of the Board of Directors and Co-Chief Executive Officer of Miller Industries; (3) Jeffrey I. Badgley, President, Co-Chief Executive Officer, and a member of the Board; (4) Frank Madonia, Vice-President, Secretary and General Counsel; (5) H. Patrick Mullen, Director; (6) L. Stanley Neely, Vice-President, President of Miller Industries’ Financial Services Group; (7) Daniel N. Sebastian, Director; and (8) Richard H. Roberts, Director. The Plaintiffs consist of members of a potential class who purchased Miller Industries’ common stock during the class period between November 6,1996, through September 11,1997.

Miller Industries is a Tennessee corporation with its principal place of business being located in Norcross, Georgia. It is in the business of providing vehicle towing and recovery equipment systems and services. Since 1990, Miller Industries has grown principally by acquiring towing equipment manufacturers, distributors and towing services companies. Miller Industries markets its towing services under the RoadOne brand name. It manufactures and distributes towing and recovery equipment under various brand names.

This securities fraud case is based primarily upon Defendants’ alleged misrepresentations and omissions made in various public statements during the class period. The alleged misrepresentations and omissions related, directly or indirectly, to the rate of expected earnings growth at Miller Industries. The Plaintiffs purchased Miller Industries common stock during the class period. They allege that the price of Miller Industries’ common stock was inflated during this period because of these alleged misrepresentations and omissions, and that they purchased their shares at these inflated prices. The Plaintiffs allege that on September 12, 1997, the Defendants disclosed the results of operations for the quarterly period ending July 31, 1997. These quarterly results revealed that the rate of growth in earnings had slowed significantly to only sevén per[683]*683cent, much lower than the securities markets were expecting. The Plaintiffs allege that the price of Miller Industries’ common stock fell more than 30 percent on September 12, 1997, causing them to incur significant financial losses. Based on these allegations, Plaintiffs assert that each Defendant knowingly and recklessly violated Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated by the Securities Exchange Commission pursuant to Section 10(b). The Plaintiffs further assert that the individual Defendants are liable under section 20(a) of the Securities Exchange Act as control persons by virtue of their executive positions and knowledge of Miller Industries’ businesses and operations.

Pursuant to Rule 23 of the Federal Rules of Civil Procedure, the Plaintiffs seek an order certifying this action as a class action with respect to the following class:

[A]ll persons who purchased the common stock of Miller [Industries’] during the period of November 6, 1996 through September 11,1997, inclusive. Excluded from the Class are [Defendants herein, members of their immediate families, officers and directors of Miller [Industries], any entity in which any [Defendant has a controlling interest, and the legal affiliates, representatives, heirs, controlling persons, successors, and predecessors in interest or assigns of any such excluded party.

(Doc. 19, Amended Complaint at 1121). During the Class Period, more than 42.5 million shares of Miller Industries stock were issued and outstanding. The exact number of potential class members is not known to Plaintiffs at this time, but it is estimated to be several thousand. The Plaintiffs claim to be similarly situated with the class they propose to represent in that they claim they have purchased Miller Industries stock at prices inflated as a result of misrepresentations made by the Defendants in the company’s public filings, public statements and press releases.

In a previous order, the Court granted in part and denied in part the Defendants’ Motion to Dismiss the Amended Complaint [Doc. 37], The Court appointed the following five Plaintiffs to serve as lead Plaintiffs in this case: (1) Manuel Vela; (2) Stephen Clark; (3) Erich R. Swett; (4) Ray Schreiber; and (5) Hollis Richie. Each Plaintiff purchased shares of Miller Industries common stock during the Class Period. The lead Plaintiffs have suffered losses ranging from approximately $627 to over $226,000 for collective losses of approximately $230,000. They seek to represent a class of thousands of investors who they claim have been damaged to the extent of millions of dollars by the Defendants’ fraudulent conduct. In their Motion for Class Certification [Doc. 45], the Plaintiffs contend that the proposed class in this securities fraud case satisfies both the requirements of Rule 23(a) (numerosity, commonality, typicality and adequacy) and Rule 23(b)(3) (predominance and superiority).

II. DISCUSSION

A. STANDARDS FOR CLASS CERTIFICATION UNDER RULE 23

To maintain this case as a class action, the Plaintiffs must satisfy the four prerequisites of Rule 23(a) and at least one of the provisions of Rule 23(b). See In re Domestic Air Transp. Antitrust Litig., 137 F.R.D. 677, 683 (N.D.Ga.1991). Rule 23(a) sets forth the four prerequisites to maintain any claim as a class action:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed.R.Civ.P. 23(a). Under Rule 23(b), the Plaintiffs must also convince the Court that:

[T]he questions of law or fact common to the members of the class predominate over [684]*684any questions affecting only individual members, and that a class action is superi- or to other available methods for the fair and efficient adjudication of the controversy.

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Bluebook (online)
186 F.R.D. 680, 1999 U.S. Dist. LEXIS 14362, 1999 WL 355430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-miller-industries-inc-securities-litigation-gand-1999.