Defense counsel retained Cornerstone Research and Dr. John Gould, a senior vice president of Cornerstone Research, to provide consulting analysis and expert testimony in this 10b-5 securities matter.
Retained by Wilmer Cutler Pickering Hale and Dorr
United States District Court Judge Joseph L. Tauro declined to certify a class in the Organogenesis 10b-5 securities matter, finding that neither of the two named plaintiffs could represent the class: one because he did not have standing to assert claims against all of the defendants, and the other because his trades, when properly analyzed, did not result in a loss. The latter’s trading appeared to have resulted in a loss when the first-in, first-out (FIFO) accounting method proposed by plaintiffs was used to evaluate his trading records. However, as demonstrated by Cornerstone Research’s analysis, the plaintiff actually realized a gain on his class period purchases under the last-in, first-out (LIFO) method of matching purchases to sales. Judge Tauro noted:
Traditionally, individual questions regarding damages would not hinder class certification where a common question exists regarding liability. But the Supreme Court recently made clear that a securities fraud plaintiff must properly allege actual monetary loss—not merely harm related to purchasing at an increased price—in order to state a claim for securities fraud.
Judge Joseph L. Tauro declined to certify a class, finding that neither of the two named plaintiffs could represent the class.</blockquote >
Defense counsel retained Cornerstone Research to provide consulting analysis and expert testimony. Dr. John Gould, a senior vice president of Cornerstone Research, filed an expert affidavit explaining the strengths and weaknesses of alternative methods for calculating the losses (or gains) realized on class period purchases. Dr. Gould argued that the LIFO method was the most appropriate approach for capturing the potential harm realized by the named plaintiff during the class period. The court concurred with defendants’ argument that “[u]sing the preferred accounting method, [the named plaintiff] did not suffer actual loss.” The court went on to state that using the results from the LIFO accounting method to analyze the plaintiff’s trading records “actually proved fatal” to his ability to represent the class.