United States District Court, W.D. Pennsylvania
BISSOON UNITED STATES DISTRICT JUDGE
before the Court are two motions: Plaintiffs' Motion for
Class Certification (“Pl. Class Cert. Mt., ” Doc.
182) and Defendants' Motion to Strike the Expert Rebuttal
Report of Michael L. Hartzmark, Ph.D (“Def. MTS,
” Doc. 207). For reasons that follow, the Court will
grant the Motion for Class Certification and grant in part
and deny in part the Motion to Strike.
the complicated history and nature of this case, the Court
will address only the background relevant to the current
posture of the case.
August 16, 2017, this Court issued an order consolidating
this case, as well as any other subsequently-filed related
actions, appointing Mr. Christakis Vrakas to serve as Lead
Plaintiff in the consolidated action and approving Mr.
Vrakas's choice of counsel. Order, Doc. 47. In October
2017, Mr. Vrakas, along with Plaintiffs Leann Reed and Robert
Myer, filed an Amended Complaint against United States Steel
Corporation (“U.S. Steel” or the
“Company”), individuals Mario Longhi, David
Burritt and Dan Lesnak, and many entities that served as
underwriters for U.S. Steel's secondary public offering
on August 15, 2016.
September 29, 2018, the Court dismissed all but one of
Plaintiffs' claims against all Defendants. Since then,
Mr. Myer has withdrawn from the Action (Doc. 173), and Ms.
Reed voluntarily dismissed her claims, with prejudice,
against the underwriter defendants. Doc. 176. In January
2019, the parties filed their Rule 26(f) Joint Report of the
Parties Pursuant to Appendix LCvR 23.E (Class Action)
(“Rule 26(f) Report, ” Doc. 160) and the Court
issued its Case Management Order (“CMO, ” Doc.
165) shortly thereafter.
April 2019, Plaintiffs Mr. Vrakas and Ms. Reed
(“Plaintiffs”) filed a Motion for Class
Certification, accompanied by a Memorandum in Support of
Motion for Class Certification (“Pl. Class Cert. Mem.,
” Doc. 183) and Declaration (“Pl. Class Cert.
Dec., ” Doc. 184) in support of their Motion.
Plaintiffs moved, pursuant to Fed. R. Civ. Pro. 23(a), (b)(3)
and (g), to: (1) certify this action as a class
action; (2) appoint Plaintiffs as Class
representatives; (3) appoint Levi & Korsinsky, LLP as
Class counsel, and (4) grant any other relief the Court deems
just and proper. Pl. Class Cert. Mt. at ¶1. Plaintiffs
posit that the Court should certify the proposed Class
because they contend that it meets the following requirements
of Fed.R.Civ.P. 23(a) and 23(b)(3):
• Numerosity - During the Class Period, U.S.
Steel had 146.3 million and 174.7 million shares outstanding
as of January 27, 2016 and April 24, 2017, respectively, with
an average of 17.3 million shares trading daily. According to
Plaintiffs, this supports their contention that the class is
• Commonality and typicality - Both are met
where each proposed class member asserts the same claims
under Section 10(b) and 20(a) of the Securities Exchange Act
of 1934, 15. U.S.C. §§ 78j(b) and 78t(a), based on
the same alleged misconduct against the same Defendants and
seeks damages for the same type of harm.
• Adequacy - Plaintiffs have retained Levi
& Korsinsky, highly qualified counsel with substantial
experience successfully prosecuting securities class actions
such as this, who have zealously represented the interests of
the Class. Plaintiffs also have no known conflicts with the
• Predominance and Superiority of a Class
Action - Individualized issues concerning reliance will
not predominate because (i) Plaintiffs' expert has opined
that the market for U.S. Steel common stock and options was
efficient during the Class Period and thus the “fraud
on the market” presumption of reliance, established by
the Supreme Court in Basic Inc. v. Levinson, 485
U.S. 224 (1988) applies; and (ii) the other elements of a
securities fraud claim involve class wide proof and are
highly suitable to litigation on a class basis. Class action
is the superior method for dealing with securities class
actions involving hundreds or thousands of potential class
filed an Opposition to Plaintiffs' Motion for Class
Certification (“Def. Class Cert. Opp., ” Doc.
203) along with a Declaration (“Def. Class Cert. Dec.,
” Doc. 204) in support of their
Opposition. Specifically, Defendants argue that
Plaintiffs have failed to meet the following requirements:
• Predominance - Plaintiffs have not proven
that common questions predominate because they have not
supplied a damages model that fits their liability theory and
failed to provide a workable methodology to address damages
on a class-wide basis.
• Numerosity - Plaintiffs have not provided
sufficient proof that the proposed class would be so numerous
that joinder of all parties would be impracticable.
• Adequacy - Plaintiffs have not shown that Ms.
Reed will adequately represent the proposed class because of
her lack of involvement in the strategy and dismissal of the
Securities Act claims, because she did not expect to be
involved in or attend the mediation and because she would
rely on legal counsel with respect to resolving the case.
also filed a Motion to Strike the Expert Rebuttal Report of
Michael L. Hartzmark, Ph.D accompanied by a Memorandum of Law
in support (“Def. MTS Mem., ” Doc. 208).
Plaintiffs filed a Response in Opposition to Motion to Strike
the Hartzmark Rebuttal Report (“Pl. MTS Opp., ”
Doc. 209) along with a Declaration in support (“Pl. MTS
Dec., ” Doc. 210). Defendants' Motion for Leave to
File Reply in Support of Defendants' Motion to Strike was
denied. Doc. 212. The Court will first address the Motion for
Class Certification before proceeding to the Motion to
Motion for Class Certification
obtain class certification under Rule 23(b), Plaintiffs must
“satisfy Rule 23(a)'s … prerequisites of
numerosity, commonality, typicality, and adequacy of
representation … and must also establish that the
questions of law or fact common to class members predominate
over any questions affecting only individual members, and
that a class action is superior to other available methods
for fairly and efficiently adjudicating the
controversy.” Amgen Inc., v. Conn. Ret. Plans and
Trust Funds, 568 U.S. 455, 460 (2013).
Court must engage in a “rigorous analysis” and
find that “each Rule 23 requirement is met.”
Ferreras v. Am. Airlines, Inc., 2019 WL 7161214, at
*3 (3d Cir. Dec. 24, 2019) (internal quotations and citations
omitted). To do so, the Court “must resolve every
dispute that is relevant to class certification.”
Id. Plaintiffs' “[f]actual determinations
supporting Rule 23 findings must be made by a preponderance
of the evidence.” In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d 305, 307 (3d Cir. 2008), as
amended (Jan. 16, 2009). Defendants oppose class
certification on the following grounds: (1) failure to prove
numerosity; (2) failure to prove that Ms. Reed is an adequate
class representative; and (3) failure to prove predominance
of common questions. Def. Class Cert. Opp.
Rule 23(a) Requirements
argue that while no minimum number of plaintiffs is required
to determine whether a class is sufficiently numerous as to
justify proceeding as a class action, there “is a
presumption that the numerosity requirement is satisfied when
a class action involves a nationally traded security.”
Pl. Class Cert. Mem. at 8, citing In re CIGNA Corp. Sec.
Litig., 2006 WL 2433779, at *2 (E.D. Pa. Aug. 18, 2006).
See also City of Sterling Heights Gen. Employees'
Ret. System v. Prudential Fin. Inc., 2015 WL 5097883, at
*8 (D.N.J. Aug. 31, 2015) (holding that the
“[numerosity] requirement is readily met in securities
cases involving an issuer whose stock trades publicly on the
NYSE, ” where the stock in question “trades on
the NYSE with significant daily volume”). According to
Plaintiffs, U.S. Steel had approximately 146.3 million and
174.7 million shares outstanding as of January 27, 2016 and
April 25, 2017, respectively, with an average of 17.3 million
shares trading daily on the New York Stock Exchange. Pl.
Class Cert. Mem. at 8.
focus on Plaintiffs' citations of several older cases
stating that courts “may accept common sense
assumptions in order to support a finding numerosity,
” criticizing this “common
sense” approach as no longer being good law. Def. Class
Cert. Opp. at 20. Defendants further argue that subsequent
Supreme Court and Third Circuit cases also abrogate the
presumption that in securities class actions, plaintiffs can
show numerosity by showing significant daily trading volume
on a nationally traded exchange. The Court disagrees.
Defendants cite no securities class action that has taken a
different approach after their cited Supreme Court and Third
Circuit cases. On the other hand, Plaintiffs have cited
Roofer's Pension Fund v. Papa, 2019 WL 6015392
(D.N.J. Nov. 14, 2019) as an example of a peer court that has
more recently found numerosity under similar circumstances.
Pl. Notice of Supp. Auth. at ¶7.
argue that Roofer's Pension Fund does not apply
because the defendants in that case did not challenge
numerosity. Def. Response to Supp. Auth. at ¶5.
Defendants further argue that the facts here indicate that
stockholders could exist who would have “derived
substantial benefit” rather than injury. Def. Class
Cert. Opp. at 22. However, the Court does not see how this
allegation is any less speculative than Plaintiffs'.
Thus, the Court finds that the facts alleged by Plaintiffs
about the number of shares and trades are sufficient to meet
the numerosity requirement of Rule 23(a)(1).
under Rule 23(a)(2) is satisfied where class representatives
share “at least one question of fact or law with the
grievances of the prospective class.” Reyes v.
Netdeposit, LLC, 802 F.3d 469, 486 (3d Cir. 2015). The
“court's focus must be on whether the
defendant's conduct is common as to all of the class
members” and the “bar is not a high one.”
Id. (internal quotations, alterations and citations
omitted). Plaintiffs suggest a number of questions of law and
fact in common for all Class members, such as whether (1)
Defendants' statements and omissions were materially
false or misleading; (2) Defendants made their
misrepresentations and omissions with scienter; (3) the price
of U.S. Steel securities was artificially inflated (or
deflated for the put options on U.S. Steel common stock)
during the Class Period; (4) Defendants'
misrepresentations and omissions caused economic harm to
Class members; and (5) Defendants Longhi, Burritt and Lesnak
were control persons. Defendants do not contest that these
questions are common to the Class, and the Court finds that
the examples cited by Plaintiffs meet the standard for
Third Circuit generally considers these three factors when
determining typicality under Rule 23(a)(3):
1. The claims of the class representatives must be generally
the same as those of the class in terms of both (a) the legal
theory advanced, and (b) the factual circumstances underlying
2. The class representative must not be subject to a defense
that is both inapplicable to many class members and likely to
become a major focus of the litigation; and
3. The interests and incentives of the class representative
must be sufficiently aligned with those of the class.
re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 599
(3d Cir. 2009). According to Plaintiffs, all of these factors
have been met. In particular, Mr. Vrakas and Ms. Reed
purchased U.S. Steel securities during the Class Period; they
suffered damages because of Defendants' alleged Exchange
Act Section 10(b) and 20(a) violations; their claims arise
from the same legal theories and alleged misrepresentations
and omissions as those of all Class members, and they were
damaged when the shares of U.S. Steel shares declined after
those alleged misrepresentations and omissions were disclosed
or became apparent to the market. Pl. Class Cert. Mem. at 11.
Plaintiffs maintain that they do not have any unique
defenses, interests or incentives that differ from those of
the proposed Class. Defendants do not contest Plaintiffs'
claims in this context, and the Court finds that the
typicality requirement is satisfied.
represent that they and their counsel meet the adequacy
requirement of Rule 23(a)(4). They provide declarations
outlining their respective experiences in investing, their
understanding of the litigation and their responsibilities as
class representatives, as well as some documents they have
reviewed thus far in the litigation. Pl. Class Cert. Dec. at
Ex. 3-4 (Doc. 184-5 and 184-6). Plaintiffs state that they
have suffered the same injury as the proposed Class members,
are “willing and able to prosecute this action on
behalf of the Class to a successful conclusion” and
that no conflicts exist. Pl. Class Cert. Mem. at 12-13.
have not challenged the adequacy of Mr. Vrakas. They contend,
however, that Ms. Reed is an inadequate class representative
because she allegedly was “not consulted in advance
about the dismissal with prejudice of her [Securities Act]
claims” and that “she did not expect her opinion
to be sought in connection with the mediation, did not plan
to attend [or actually attend] the mediation, and did not
expect to weigh in on any potential resolution of the
case.” Def. Class Cert Opp. at 25-26.
contest this. In their Reply, Plaintiffs state that Ms. Reed
is “more than adequately versed about the facts and her
responsibilities in this case.” Pl. Class Cert. Reply
at 10. As shown by Ms. Reed's deposition transcript, she
can articulate the claims, identify Defendants and describe
her involvement and her responsibilities. Pl. Class Cert.
Reply Dec. at Ex. 4, Doc. 206-4. Plaintiffs further contend
that Ms. Reed's deposition testimony shows that she
learned of the dismissal of the Securities Act claims
beforehand, and that she understood why they were dismissed.
Id. After reviewing the transcript, as well as Ms.
Reed's declaration, the Court cannot agree with
Defendants that Ms. Reed lacked knowledge of the dismissal of
her Securities Act claims and that she could not serve as an
adequate class representative.
Defendants claim that “[t]he list of materials Reed
says she reviewed in this matter conspicuously omits the
stipulation by which her Securities Act claims were
dismissed, as well as the order approving the
stipulation.” Def. Class Cert. Opp. at 25. The
Declaration clearly states that she reviewed documents
“including” a list of examples-it never
represented that the list was exhaustive. Pl. Class. Cert.
Dec. at Ex. 4. This omission is not evidence. Second,
claiming that Ms. Reed “was merely ‘informed'
that the Securities Act claims had been dismissed, rather
than ‘consulted' beforehand” (Def. Class
Cert. Opp. at 25) is more wordsmithing than a substantive
also argue that Ms. Reed's lack of attendance at the
mediation and her expectation that she would not provide an
opinion on the mediation makes her an inadequate class
representative. The Court does not see Ms. Reed's
statements in her deposition as a “total
abdication” to counsel. Rather, the context of the
question reflects Ms. Reed's understanding that her
opinion would not be sought on legal matters. Alone, such a
remark is insufficient to show that Ms. Reed cannot act as a