You're viewing Docket Item 244 from the case Pennsylvania Public School Employees' Retirement System v. Bank of America Corporation et al. View the full docket and case details.

Download this document:




Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 1 of 31



UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK


__________________________________________
PENNSYLVANIA PUBLIC SCHOOL
:
:
EMPLOYEES’ RETIREMENT SYSTEM,
:
individually and on behalf of all others
:
similarly situated,
:


:
:

:

:

BANK OF AMERICA CORPORATION, et al.,
:
:

:


:






Plaintiff,





Defendants.





v.




















































CIVIL ACTION NO
11-CV-00733-WHP

CLASS ACTION

MEMORANDUM OF LAW OF LEAD PLAINTIFF PENNSYLVANIA

PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM

IN SUPPORT OF MOTION TO CERTIFY CLASS



BARRACK, RODOS & BACINE


Leonard Barrack

Mark R. Rosen

Jeffrey A. Barrack

Jeffrey B. Gittleman

Chad A. Carder
Julie B. Palley

3300 Two Commerce Square






































BARRACK, RODOS & BACINE

A. Arnold Gershon
William J. Ban
Michael A. Toomey
425 Park Avenue, 31st Floor
New York, NY 10022
Telephone: (212) 688-0782
Facsimile: (212) 688-0783

2001 Market Street
Philadelphia, PA 19103
Telephone: (215) 963-0600
Fax: (215) 963-0838




Attorneys for Lead Plaintiff Pennsylvania

Public School Employees’ Retirement
System and Lead Counsel for the Class

231011


Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 2 of 31



TABLE OF CONTENTS



Page

TABLE OF AUTHORITIES .......................................................................................................... ii

I.

II. ARGUMENT ......................................................................................................................... 4


PRELIMINARY STATEMENT ........................................................................................... 1

A. Rule 23(a) is Satisfied ................................................................................................... 6

















1.


The Members of the Class Are So Numerous That Joinder
of All Members Is Impracticable ......................................................................... 6

2.

There Are Questions of Law and Fact Common to the Members of the Class ... 8

3.

Plaintiffs’ Claims Are Typical of the Claims of the Class................................. 10

4.


Plaintiffs Will Fairly and Adequately Protect the Interests
of the Class ......................................................................................................... 12

B. Rule 23(b)(3) Is Satisfied ............................................................................................ 14

1.


Issues Common to the Class Predominate Over Issues That
Are Not Common To the Class .......................................................................... 15

i. Trading Volume ......................................................................................... 19

ii. Analyst Coverage ....................................................................................... 19

iii. Market Makers ........................................................................................... 20

iv. S-3 Registration Eligibility ......................................................................... 21

v. Price Reaction To Unexpected, Material Disclosures ................................ 21


2. A Class Action Is the Best Method of Trying This Case ................................... 22

C. Lead Counsel Should be Appointed Class Counsel .................................................... 24


III. CONCLUSION .................................................................................................................... 25



i

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 3 of 31

TABLE OF AUTHORITIES



Page(s)



Cases

Affiliated Ute Citizens of Utah v. United States,
406 U.S. 128, 153 (1972) .......................................................................................................... 16

Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 625 (1997) .......................................................................................... 5, 12, 14, 15

Basic v. Levinson,
485 U.S. 224, 247 (1988) .......................................................................................................... 17

Blackie v. Barrack,
524 F.2d 891, 902 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976) ............................. 8, 9, 15

Cammer v. Bloom,
711 F. Supp. 1264 (D.N.J. 1989) ....................................................................................... passim

Consol. Rail Corp. v. Town of Hyde Park,
47 F.3d 473, 483 (2d Cir. 1995).................................................................................................. 6

Cromer Fin. Ltd. v. Berger,
205 F.R.D. 113, 133 (S.D.N.Y. 2001) ...................................................................................... 24

Darquea v. Jaden Corp.,
06 Civ. 722 (DLB), 2008 U.S. Dist. LEXIS 17747 (S.D.N.Y. Mar. 6, 2008) .................... 13, 23

Escott v. Barchris Constr. Corp.,
340 F.2d 731, 733 (2d Cir. 1965)................................................................................................ 4

Ferrari v. Impath, Inc.,
03 Civ. 5667 (DAB), 2004 U.S. Dist. LEXIS 13898 (S.D.N.Y. July 20, 2004) ...................... 20

Fogarazzo v. Lehman Bros., Inc.,
232 F.R.D. 176, 180 (S.D.N.Y. 2005) ....................................................................................... 9

Fogarazzo v. Lehman Bros.,
263 F.R.D. 90, 96 (S.D.N.Y. 2009) ...................................................................................... 6, 12

Gen. Tel. Co. of Southwest v. Falcon,
457 U.S. 147, 157-58 n. 13 (1982) ............................................................................................. 8

Green v. Wolf Corp.,
406 F.2d 291, 298, 301 (2d Cir. 1968), cert. denied, 395 U.S. 977 (1969) ..................... 8, 9, 16

In re Bank of America Corp. Sec., Derivative and
Emp. Ret. Income Security Act (ERISA) Litigation,

281 F.R.D. 134 (S.D.N.Y. 2012) ....................................................................................... passim


In re Deutsche Telekom AG Sec. Litig.,
229 F. Supp. 2d 277, 280 (S.D.N.Y. 2002)................................................................. 7, 8, 14, 23




ii

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 4 of 31



In re Drexel Burnham Lambert Group,
960 F.2d 285, 291 (2d Cir. 1992).............................................................................................. 10

In re DVI Inc. Sec. Litig.,
639 F.3d 623, 634 (3d Cir. 2011).............................................................................................. 18

In re DVI, Inc. Sec. Litig.,
249 F.R.D. 196, 209 (E.D. Pa. 2008), aff’d, 639 F.3d 623 (3d Cir. 2011) ......................... 19, 20

In re Dynex Capital, Inc. Sec. Litig.,
05 Civ. 1897 (HB), 2011 U.S. Dist. LEXIS 22484 (S.D.N.Y. Mar. 7, 2011) ................... passim

In re Globalstar Sec. Litig.,
01 Civ. 1748 (PKC), 2004 U.S. Dist. LEXIS 24164 (S.D.N.Y. Dec. 1, 2004) ........................ 11

In re Juniper Networks Sec. Litig.,

264 F.R.D. 584, 591 n.8 (N.D. Cal. 2009) ................................................................................ 18


In re Oxford Health Plans, Inc. Sec. Litig.,
182 F.R.D. 42, 46 (S.D.N.Y. 1998) .......................................................................................... 20

In re Pfizer Sec. Litig.,

282 F.R.D. 38, 53 n.9 (S.D.N.Y. 2012) .................................................................................... 18


In re Priceline.com Inc. Sec. Litig.,
236 F.R.D. 89, 101-02 (D. Conn. 2006) ................................................................................... 14

In re SLM Corp. Sec. Litig.,
08 Civ. 1029 (WHP), 2012 U.S. Dist. LEXIS 8158 (S.D.N.Y. Jan. 24, 2012) .......................... 4

In re Smith Barney Transfer Agent Litig.,

05 Civ. 7583 (WHP), 2006 U.S. Dist. LEXIS 19728 (S.D.N.Y. Apr. 17, 2006) ....................... 3


In re Smith Barney Transfer Agent Litig.,
290 F.R.D. 42, 45 (S.D.N.Y. 2013) ................................................................................... passim

In re Vivendi Universal, S.A. Sec. Litig.

242 F.R.D. 76, 91 (S.D.N.Y. 2007) ............................................................................................ 6


In re WorldCom, Inc. Sec. Litig.,
219 F.R.D 267, 280 (S.D.N.Y. 2003) ....................................................................................... 11

Kelleher v. ADVO, Inc.,
2:06CV01422(AVC), 2009 U.S. Dist. LEXIS 68914 (D. Conn. Mar. 30, 2009) ....................... 6

Lapin v. Goldman Sachs & Co.,
254 F.R.D. 168, 175 (S.D.N.Y. 2008) ...................................................................... 6, 14, 17, 18

Marisol A. By Forbes v. Giuliani,
126 F.3d 372, 375-76 (2d Cir. 1997) ................................................................................. passim

Maywalt v. Parker & Parsley Petroleum Co.,
147 F.R.D. 51, 54 (S.D.N.Y. 1993) ............................................................................................ 4




iii

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 5 of 31



Moore v. PaineWebber, Inc.,
306 F.3d 1247, 1252 (2d Cir. 2002).......................................................................................... 15

Robidoux v. Celani,
987 F.2d 931, 935 (2d Cir. 1993).................................................................................... 6, 10, 11

Saddle Rock Partners Ltd. v. Hiatt,
96 Civ. 9474 (SHS), 2000 U.S. Dist. LEXIS 11931 (S.D.N.Y. Aug. 21, 2000) ...................... 13

Teamsters Local 445 v. Bombardier,

546 F.3d 196, 204 n.11, 210-11 (2d Cir. 2008) ........................................................................ 18


Wagner v. Barrick Gold Corp.,
251 F.R.D. 112, 115 (S.D.N.Y. 2008) ............................................................................ 5, 12, 17

Wal-Mart Stores, Inc. v. Dukes,
131 S.Ct. 2541, 2551 n. 5 (2011) ................................................................................................ 8

Wilkof v. Caraco Pharm. Labs., Ltd.,

280 F.R.D. 332, 342-43 (E.D. Mich. 2012) .............................................................................. 18



Rules

Fed. R. Civ. P. 23 .................................................................................................................. 4, 6, 15
Fed. R. Civ. P. 23 (a) ...................................................................................................................... 5
Fed. R. Civ. P. 23(a)(1) ............................................................................................................... 6, 8
Fed. R. Civ. P. 23(a)(2) ................................................................................................................... 8
Fed. R. Civ. P. 23(a)(3) ................................................................................................................. 10
Fed. R. Civ. P. 23(a)(4) ................................................................................................................. 12
Fed. R. Civ. P. 23(b)(3)................................................................................................. 5, 14, 22, 23
Fed. R. Civ. P. 23(g)(1)(A)(i)-(iv) ................................................................................................ 24


Other Authorities

Securities Exchange Act of 1934,

15 U.S.C. § 78j ............................................................................................................................ 1


Securities & Exchange Commission

Rule 10b-5, 17 C.F.R. 240.10b-5 ................................................................................................ 1


H.R. Conf. Rep. No. 104-369,


at 33, 34 (1995), reprinted in 1995 U.S.C.C.A.N. 730, 733 .....................................................20



iv

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 6 of 31





Lead Plaintiff, the Commonwealth of Pennsylvania, Public School Employees’

Retirement System (hereafter referred to as “Lead Plaintiff” or “PSERS”), pursuant to this

Court’s Order of July 30, 2013 (Docket No. 233), respectfully submits this memorandum of law

in support of its accompanying motion for class certification.

I.


PRELIMINARY STATEMENT

This is an action brought under Section 10(b) of the Securities Exchange Act of 1934, 15

U.S.C. § 78j, and Securities & Exchange Commission (“SEC”) Rule 10b-5, 17 C.F.R. 240.10b-5.

Lead Plaintiff seeks certification of a plaintiff class (the “Class”), pursuant to Rules 23(a) and

23(b)(3) of the Federal Rules of Civil Procedure, consisting of all persons or entities who

purchased or otherwise acquired Bank of America Corporation (“BofA” or the “Company”)

common stock or Common Equivalent Securities (“CES”) from February 27, 2009 through

October 19, 2010 (the “Class Period”), and suffered damages as a result. Excluded from the

Class are: (a) Defendants;1 (b) members of the immediate family of each of the Executive

Defendants; (c) any person who was an executive officer and/or director of BofA during the

Class Period; (d) any entity that served as an underwriter for BofA’s CES offering; (e) any

person, firm, trust, corporation, officer, director, or any other individual or entity in which any

Defendant has a controlling interest; and (f) the legal representatives, agents, affiliates, heirs,

successors-in-interest or assigns of any such excluded party.

As alleged by Lead Plaintiff in the Complaint, which includes the allegations this Court

sustained against Defendant BofA by Memorandum & Order of July 11, 2012 (Docket No. 148),

as well as the allegations this Court sustained against the Executive Defendants by Memorandum


1
As identified more specifically in Lead Plaintiff’s Amended Consolidated Class Action
Complaint (“Complaint”), Defendants include BofA as well as Kenneth D. Lewis, Joseph Lee
Price, II, Brian T. Moynihan, Charles H. Noski, and Neil Cotty (the individuals collectively
referred to herein as the “Executive Defendants”).






Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 7 of 31



& Order of April 17, 2013 (Docket No. 183), this case concerns, among other things,

Defendants’ actions in concealing and misrepresenting to investors (1) the extent of BofA’s risk

arising from and vulnerability to repurchase claims related to residential mortgage-backed

securities issued by BofA or its legacy entities; (2) the risk and legal obstacles associated with

BofA’s reliance on MERS; (3) that BofA maintained effective disclosure controls and

procedures and effective controls over financial reporting, which it did not; and (4) that BofA

complied with Generally Accepted Accounting Principles (“GAAP”) and SEC regulations,

which it did not, thereby rendering BofA’s SEC filings false and misleading. ¶¶1-14, 19-27, 56-

126, 132-292.2 In the Complaint, Lead Plaintiff asserts claims grounded in fraud based on

materially false and misleading statements made with scienter against the Company and the

Executive Defendants for violations of Sections 10(b) and 20(a) of the Securities Exchange Act

of 1934 (the “Exchange Act”).

This action is ideally suited for class certification. Lead Plaintiff and thousands of

members of the putative Class suffered substantial damages as a result of the material

misrepresentations and omissions contained in SEC filings, press releases and other public

statements disseminated by Defendants throughout the Class Period. Therefore, this action is

similar to the numerous securities cases that have been certified as class actions in this and every

other circuit in the country. Indeed, another court in this District recently certified a class of

BofA stock purchasers in a separate securities fraud action with a class period ending only weeks

before the Class Period in this action begins. See In re Bank of America Corp. Sec., Derivative

and Emp. Ret. Income Security Act (ERISA) Litigation, 281 F.R.D. 134 (S.D.N.Y. 2012) (Castel,


2


References to allegations in the Complaint shall appear as “¶__.”



2

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 8 of 31



J.) (certifying a class of BofA stock purchasers from September 18, 2008 through January 21,

2009).

Given these facts, Defendants do not dispute that this action and the proposed Class

satisfy various elements of Rule 23, including numerosity, commonality, predominance

(including the efficiency of the market for BofA’s common stock and its CES), and superiority.

See Joint Status Report Concerning Class Certification and Document Discovery, filed October

31, 2013, at ¶3(b), (d) (Docket No. 239). For now, Defendants have reserved the right to

challenge typicality and adequacy under Rule 23, but have agreed to notify the Court and Lead

Plaintiff no later than December 13, 2013, if they intend to mount a challenge to certification of

the Class on either of these bases. Id. at ¶3(d). Should they decide not to challenge either

typicality of adequacy, Lead Plaintiff’s instant motion would be entirely uncontested.

Even though Defendants have conceded that most of the requirements of Rule 23 are

satisfied in this action, Lead Plaintiff believes it is appropriate to set forth herein the grounds

supporting its contention that all of the requirements for class certification under Rule 23 have

been fully satisfied, including typicality and adequacy. In addition to the fact that this action is

ideally suited for class certification, Lead Plaintiff PSERS is exactly the type of plaintiff the

Private Securities Litigation Reform Act of 1995 (the “PSLRA”) seeks to encourage to lead

cases such as this. See In re Smith Barney Transfer Agent Litig., 05 Civ. 7583 (WHP), 2006 U.S.

Dist. LEXIS 19728, at *7 (S.D.N.Y. Apr. 17, 2006). PSERS is a public pension fund with fund

assets totaling nearly $50 billion for the benefit of working and retired Pennsylvania public

school employees and their beneficiaries. As of June 30, 2012, PSERS had nearly 600,000 total

active members, retirees, beneficiaries and vested/inactive members, or approximately one out of

every 21 Pennsylvania citizens, and is the 18th largest state-sponsored defined benefit pension



3

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 9 of 31



fund in the country. During the Class Period, PSERS purchased significant amounts of BofA

common stock as well as BofA’s CES, and suffered a substantial loss as a result of the securities

law violations alleged in this action. See Declaration of Mark R. Rosen in Support of Lead

Plaintiff’s Motion for Class Certification (“Rosen Decl.”), Ex. A (PSERS’s transactions in

BofA’s common stock and its CES). As such, PSERS is a demonstrably adequate representative

of the entire Class and its claims are typical of those of the Class. Further, PSERS has selected

competent and experienced counsel to pursue the claims on behalf of all Class members.

Because Lead Plaintiff meets all of the requirements of Rules 23(a) and 23(b)(3) of the

Federal Rules of Civil Procedure, Lead Plaintiff’s motion for class certification should be

granted.

II.

ARGUMENT

Rule 23 of the Federal Rules of Civil Procedure (“Rule 23”) governs the certification of a

class in federal court. Fed. R. Civ. P. 23. The Court of Appeals for the Second Circuit and

district courts within the Circuit, including this one, have admonished that the class certification

requirements of Rule 23 are to be construed liberally. See, e.g., Marisol A. by Forbes v.

Giuliani, 126 F.3d 372, 377 (2d Cir. 1997); In re Smith Barney Transfer Agent Litig., 290 F.R.D.

42, 45 (S.D.N.Y. 2013); In re SLM Corp. Sec. Litig., 08 Civ. 1029 (WHP), 2012 U.S. Dist.

LEXIS 8158, at *9 (S.D.N.Y. Jan. 24, 2012). The Second Circuit has also explicitly noted its

preference for class certification in securities cases. See Maywalt v. Parker & Parsley Petroleum

Co., 147 F.R.D. 51, 54 (S.D.N.Y. 1993) (citing Escott v. Barchris Constr. Corp., 340 F.2d 731,

733 (2d Cir.), cert. denied, 382 U.S. 816 (1965)).

For a class to be certified, the court must determine that the following four requirements

contained in Rule 23(a) are satisfied: (1) the class must be so numerous that joinder of all



4

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 10 of 31



members is impracticable (“numerosity”); (2) there must be questions of law or fact common to

class (“commonality”); (3) the claims or defenses of the representative parties must be typical of

the claims or defenses of the class (“typicality”); and (4) the representative parties must fairly

and adequately protect the interests of the class (“adequacy of representation”). Fed. R. Civ. P.

23(a); see also Marisol, 126 F.3d at 375-76; Smith Barney, 290 F.R.D. at 45; Wagner v. Barrick

Gold Corp., 251 F.R.D. 112, 115-118 (S.D.N.Y. 2008). The requirements of commonality and

typicality “tend to merge into one another, so that similar considerations animate analysis of

Rules 23(a)(2) and (3).” Marisol, 126 F.3d at 376.

In addition to these requirements, one of the alternative requirements of Rule 23(b) must

also be met. Marisol, 126 F.3d at 376; Smith Barney, 290 F.R.D. at 45; SLM, 2012 U.S. Dist.

LEXIS 8158, at *8. Here, Lead Plaintiff is seeking class certification under Rule 23(b)(3), which

requires that “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.” Fed. R. Civ. P. 23 (b)(3); see also Smith

Barney, 290 F.R.D. at 45; SLM, 2012 U.S. Dist. LEXIS 8158, at *8; Bank of America, 281

F.R.D. at 138. These two requirements are often described as “predominance” and “superiority.”

See SLM, 2012 U.S. Dist. LEXIS 8158, at *8.

This case has all the hallmarks of a Rule 23(b)(3) class action. The proposed Class

consists of a large group of geographically dispersed purchasers of BofA securities over a period

of one and a half years who sustained damages as a result of a common set of material facts that

were misrepresented or omitted by Defendants. Indeed, courts in this Circuit and elsewhere have

long recognized that class actions are a particularly appropriate means for resolving claims for

violations of the securities laws. See, e.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625



5

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 11 of 31



(1997) (“Predominance is a test readily met in certain cases alleging consumer or securities fraud

or violations of the antitrust laws”); see also Kelleher v. ADVO, Inc., Civil No.

3:06CV01422(AVC), 2009 U.S. Dist. LEXIS 68914, at *17 (D. Conn. Mar. 30, 2009) (“The

Second Circuit has repeatedly affirmed that class actions are particularly appropriate for

resolving securities fraud actions such as the instant case”); In re Vivendi Universal, S.A. Sec.

Litig., 242 F.R.D. 76, 91 (S.D.N.Y. 2007) (same); Fed. R. Civ. P. 23, Advisory Committee Notes

(1966) (“a fraud perpetrated on numerous persons by the use of similar misrepresentations may

be an appealing situation for a class action”).

As further set forth below, Lead Plaintiff has satisfied each of the Rule 23 requirements

and its motion for class certification should be granted.

A.

Rule 23(a) is Satisfied





1.


The Members of the Class Are So Numerous That Joinder of All
Members Is Impracticable

The first subdivision of Rule 23(a) requires that the class be “so numerous that joinder of

all members is impracticable.” Fed. R. Civ. P. 23(a)(1); Fogarazzo v. Lehman Bros., Inc., 263

F.R.D. 90, 96 (S.D.N.Y. 2009). “Impracticable,” however, does not mean “impossible,” as

“joinder may merely be difficult or inconvenient, rendering use of a class action the most

efficient method to resolve plaintiffs’ claims.” Fogarazzo, 263 F.R.D. at 96; see also Robidoux

v. Celani, 987 F.2d 931, 935 (2d Cir. 1993)). The Second Circuit and courts within it have

repeatedly held that numerosity is generally presumed when the proposed class would have at

least 40 members. See In re Dynex Capital, Inc. Sec. Litig., 05 Civ. 1897 (HB), 2011 U.S. Dist.

LEXIS 22484, at *4 (S.D.N.Y. March 7, 2011) (noting holding of Consol. Rail Corp. v. Town of

Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995)); see also Bank of America, 281 F.R.D. at 138;

Lapin v. Goldman Sachs & Co., 254 F.R.D. 168, 175 (S.D.N.Y. 2008).



6

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 12 of 31



Moreover, in securities fraud cases relating to publicly owned and nationally listed

corporations, the numerosity requirement may be satisfied by a showing that a large number of

shares were outstanding and traded during the relevant period. See, e.g., Bank of America, 281

F.R.D. at 138; see also In re Deutsche Telekom AG Sec. Litig., 229 F. Supp. 2d 277, 280

(S.D.N.Y. 2002) (“Class certification is frequently appropriate in securities fraud cases involving

a large number of shares traded publicly in an established market.”). Because securities cases

usually involve a large number of publicly-traded shares and/or other securities, with hundreds if

not thousands of potential class members dispersed throughout the country, the numerosity

requirement is often, as it is here, undisputed in such cases. See SLM, 2012 U.S. Dist. LEXIS

8158, at *9.

Here, the Class is so numerous that joinder of all members is impracticable. Around the

beginning of the Class Period, BofA had over 6.4 billion shares of common stock issued and

outstanding, and thereafter, on December 4, 2009, issued 1.286 billion shares of CES with a total

market value of $19.29 billion. ¶¶127-131; see also Declaration of Jeffrey W. Golan in Support

of Lead Plaintiff’s Motion for Class Certification (“Golan Decl.”), attached as Exhibit B to the

Rosen Decl., at ¶10. Those CES converted to BofA common stock on a 1-for-1 basis on

February 24, 2010, see Golan Decl. at ¶10, and, by the end of the Class Period, BofA had over

10 billion shares of common stock issued and outstanding. Moreover, BofA’s market

capitalization totaled nearly $140 billion in September, 2010, just before the events that Lead

Plaintiff alleges revealed the extent and nature of the risks facing BofA that had been concealed

from investors. Also, for the entirety of the Class Period, BofA was one of the 30 constituents of

the vaunted Dow Jones Industrial Average, and over the course of the Class Period an average of

258.9 million BofA common shares were traded each day. See Golan Decl. at ¶16. All of these



7

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 13 of 31



facts conclusively demonstrate that numerosity is satisfied. See Bank of America, 281 F.R.D. at

139 (finding numerosity satisfied because “BofA had between 4.6 billion and 6.4 billion

outstanding shares of common stock during the class period, with an average daily trading

volume of 133,640,000 shares”).

For the reasons above, and because Defendants do not contest that joining the thousands

of Class members who reside in a geographically disbursed area would be burdensome and

expensive, and thus impracticable, Lead Plaintiff has satisfied the numerosity requirement of

Rule 23(a)(1).

2.


There Are Questions of Law and Fact Common to the Members of
the Class



Rule 23(a)(2) requires that there be a question of law or fact common to the class. See

Marisol, 126 F.3d at 376 (commonality requirement is met “if plaintiffs’ grievances share a

common question of law or of fact”). Commonality (as well as the typicality requirement of

Rule 23(a)(3)) “‘serve as guideposts for determining whether under the particular circumstances

maintenance of a class action is economical and whether the named plaintiff’s claim and the

class claims are so interrelated that the interests of the class members will be fairly and

adequately protected.’” Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 n.5 (2011)

(quoting Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 157-58 n. 13 (1982)). As such,

commonality is “not defeated by slight differences in class members’ positions,” Blackie v.

Barrack, 524 F.2d 891, 902 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976), or because all of

the allegations of the class do not fit together “like pieces in a jigsaw puzzle.” Green v. Wolf

Corp., 406 F.2d 291, 300 (2d Cir. 1968), cert. denied, 395 U.S. 977 (1969); see also In re Dynex,

2011 U.S. Dist. LEXIS 22484, at *5 (“Class certification will not necessarily be precluded by

differing individual circumstances of class members”); In re Deutsche Telekom, 229 F. Supp. 2d



8

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 14 of 31



at 281 (“Commonality does not mandate that all class members make identical claims and

arguments, only that common issues of fact or law affect all class members”). Indeed, the

commonality requirement has been applied permissively by the courts in securities fraud actions

because, in such actions, it is the defendants’ acts and omissions that are at the center of the case.

See Bank of America, 281 F.R.D. at 139 (quoting Fogarazzo v. Lehman Bros., Inc., 232 F.R.D.

176, 180 (S.D.N.Y. 2005)).

The “commonality” requirement, uncontested by Defendants, is easily satisfied here. The

Complaint alleges material misrepresentations in, and omissions from, SEC filings and other

public statements that constitute a common course of wrongful conduct by Defendants in

violation of the federal securities laws. Courts have consistently found that such allegations of a

common and consistent course of conduct to be the hallmark of securities actions certified under

Rule 23. See, e.g., Green, 406 F.2d at 300; Blackie, 524 F.2d at 901-02. Indeed, the claims

against Defendants are based upon common operative facts and the following common legal

issues: (a) whether Defendants violated the federal securities laws; (b) whether the Company’s

SEC filings, press releases and other public statements made by Defendants during the Class

Period contained misstatements of material fact or omitted to state material facts necessary to

make the statements made, in light of the circumstances under which they were made, not

misleading; (c) whether the market prices of BofA securities during the Class Period were

artificially inflated due to the material misrepresentation and/or non-disclosures alleged in the

Complaint; (d) with respect to Plaintiffs’ claims under Section 10(b) of the Exchange Act,

whether those Defendants acted with the requisite state of mind in omitting and/or

misrepresenting material facts in the documents filed with the SEC, press releases and other

public statements; (e) with respect to Plaintiffs’ claims pursuant to Section 20(a) of the Exchange



9

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 15 of 31



Act, whether the Executive Defendants are controlling persons of the Company; and (f) the

extent of damage sustained by Class members and the appropriate measure of damages. ¶47.

Because this case presents common questions of law and fact, the commonality

requirement is satisfied. Bank of America, 281 F.R.D. at 139; In re Vivendi, 242 F.R.D. at 84.



3.

Lead Plaintiff’s Claims Are Typical of the Claims of the Class

Rule 23(a)(3) requires that the claims of the class representatives be typical of those of

the class and “is satisfied when each class member’s claim arises from the same course of events,

and each class member makes similar legal arguments to prove the defendant’s liability.”

Marisol, 126 F.3d at 376 (quoting In re Drexel Burnham Lambert Group, 960 F.2d 285, 291 (2d

Cir. 1992)); Smith Barney, 290 F.R.D. at 45. Typicality involves an analysis of the nature of the

claims of the representative rather than the individual characteristics of the plaintiff, and when

the same unlawful conduct was directed at or affected both the named plaintiff and the

prospective class, typicality is usually met. Smith Barney, 290 F.R.D. at 45-46 (quoting

Robidoux, 987 F.2d at 936-37); see also In re Vivendi, 242 F.R.D. at 85 (“In prosecuting their

case, plaintiffs will necessarily seek to develop facts relating to the … dissemination of allegedly

false or misleading statements underlying their claims. Such allegations are generally considered

sufficient to satisfy the typicality requirement”). As with the commonality requirement, the

typicality requirement is not demanding. In re Dynex, 2011 U.S. Dist. LEXIS 22484, at *8.

Further, when it is alleged that the same unlawful conduct was directed at or affected

both the named plaintiff and the class sought to be represented, the typicality requirement is met

irrespective of minor variations in the fact patterns underlying individual claims. As this Court

has explained:

The same material omissions that purportedly defrauded the named plaintiffs
operated as a fraud on all shareholders. To the extent that these incomplete
disclosures injured the named plaintiffs, they injured all members of the proposed



10

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 16 of 31



class. And the burden of demonstrating typicality is fairly easily met so long as
other class members have claims similar to the named plaintiff.


Smith Barney, 290 F.R.D. at 46 (internal quotes omitted); see also, e.g., In re WorldCom, Inc.

Sec. Litig., 219 F.R.D 267, 280 (S.D.N.Y. 2003) (citing Robidoux, 987 F.2d at 936-37). Indeed,

typicality does not require that the situations of the named representatives and the class members

be identical. See In re Globalstar Sec. Litig., 01 Civ. 1748 (PKC), 2004 U.S. Dist. LEXIS

24164, at *11 (S.D.N.Y. Dec. 1, 2004).



Here, the typicality requirement is satisfied, as the claims asserted by Lead Plaintiff are

based upon the same allegedly false and misleading statements contained in, or material facts

omitted from, the SEC filings, press releases, and other public statements that form the basis of

the claims of all Class members. Lead Plaintiff, like other putative Class members, seeks to

recover damages for losses from the same false and misleading representations and omissions

made by Defendants throughout the Class Period in violation of the securities laws. Lead

Plaintiff purchased substantial amounts of various BofA securities during the Class Period, and it

suffered losses like all other members of the Class, either as a result of sales made after

dissemination of certain partial corrective disclosures and/or through retention of such securities

until the end of the Class Period. See Ex. A to the Rosen Decl. The impact of the Defendants’

material misrepresentations and omissions affected all members of the Class in the same manner.

Since the losses of Lead Plaintiff and the class members arise out of the same wrongful course of

conduct, Lead Plaintiff’s claims are typical of the claims of the Class. See Bank of America, 281

F.R.D. at 139 (typicality satisfied where, “[a]s with the proposed class members, the class

plaintiffs assert that they acquired BofA securities at prices allegedly inflated by defendants’

misstatements and/or omissions, and have an interest in maximizing their recovery”).



11

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 17 of 31



4.

Lead Plaintiff Will Fairly and Adequately Protect the Interests of the
Class


Rule 23(a)(4) allows class certification if “the representative parties will fairly and

adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4); Fogarazzo, 263 F.R.D. at

97. This requirement is satisfied if (1) the named plaintiff has interests common with, and not

antagonistic to, the Class’ interests, and (2) the plaintiff’s attorney is qualified, experienced and

generally able to conduct the litigation. Wagner, 251 F.R.D. at 118; In re WorldCom, 219

F.R.D. at 282. The requirement of adequacy “is motivated by concerns similar to those driving

the commonality and typicality requirements, namely, the efficiency and fairness of class

certification.” Marisol, 126 F.3d at 378.

This Court has repeatedly admonished that, in the context of complex securities litigation,

attacks on the adequacy of the class representative based on the representative’s ignorance or

credibility are rarely appropriate. Smith Barney, 290 F.R.D. at 46; SLM, 2012 U.S. Dist. LEXIS

8158, at *23. And this Court has also rejected various challenges to a proposed representative’s

adequacy where defendants’ criticisms did not relate to the representative’s claims or threaten to

become the focus of the litigation. SLM, 2012 U.S. Dist. LEXIS 8158, at *23-*30.

Here, Lead Plaintiff clearly satisfies both prongs of Rule 23(a)(4)’s adequacy test. The

first requirement, which overlaps with the commonality and typicality prerequisites, asks

whether the class representatives “possess the same interest and [have] suffer[ed] the same injury

as the class members.” Amchem Prods., 521 U.S. at 625-26; see also In re Vivendi, 242 F.R.D.

at 85 (recognizing that “the issues of typicality and adequacy tend to merge”). Lead Plaintiff has

no interests that are antagonistic to those of the Class. Indeed, as a purchaser of BofA securities

who suffered losses as a result of such investments, Lead Plaintiff’s interests are directly aligned

with the interests of all Class members. Lead Plaintiff and the absent Class members have



12

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 18 of 31



precisely the same interest in proving that Defendants violated the securities laws and in

achieving the maximum recovery possible. See Bank of America, 281 F.R.D. at 140 (adequacy

satisfied where the interests of the proposed class representatives were not antagonistic to those

of the proposed class members); Darquea v. Jaden Corp., 06 Civ. 722 (CLB), 2008 U.S. Dist.

LEXIS 17747, at *9 (S.D.N.Y. Mar. 6, 2008) (finding adequacy requirement satisfied where

“[a]ll claims alleged arise from the same wrongful conduct” and plaintiffs’ interests in a recovery

were “similar to the [interests of] the proposed class”).

Indeed, given the host of legal and factual issues that are common to the Class, there can

be no doubt that the claims asserted by the Lead Plaintiff and those asserted by the Class are so

interrelated that the interests of the Class will be fairly and adequately protected by the Lead

Plaintiff. PSERS, for example, made purchases of BofA common stock that spanned virtually

the entire Class Period, from beginning to end, and also purchased BofA’s CES in that offering.

See Exhibit A to Rosen Decl. As a result, notwithstanding any changes in market conditions or

BofA disclosures that may have occurred over the course of the Class Period, PSERS is ideally

suited to pursue claims on behalf of the entire Class, and its interests in pursuing those claims are

aligned with the interests of Class members generally.

As to the second prong of the adequacy requirement, Lead Plaintiff has retained counsel

highly experienced in securities class action litigation to prosecute its claims and the claims of

the Class. Barrack, Rodos & Bacine has extensive experience litigating securities law class

actions on behalf of injured investors and has obtained some of the most significant recoveries in

this area of the law. See Rosen Decl., Ex. C (firm resume of Barrack, Rodos & Bacine). There

should be no legitimate dispute that Lead Counsel is qualified, experienced, and capable of

prosecuting this litigation on behalf of the Class. See Saddle Rock Partners Ltd. v. Hiatt, 96 Civ.



13

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 19 of 31



9474 (SHS), 2000 U.S. Dist. LEXIS 11931, at *17 (S.D.N.Y. Aug. 21, 2000) (adequacy satisfied

where plaintiff’s counsel has significant experience in complex securities actions). Thus, Rule

23(a)(4)’s adequacy requirement is satisfied.

B.

Rule 23(b)(3) Is Satisfied



In addition to satisfying the prerequisites of Rule 23(a), to qualify for class certification,

an action must satisfy at least one of the requirements of Rule 23(b). See Lapin, 254 F.R.D. at

180; In re Vivendi, 242 F.R.D. at 83. Lead Plaintiff seeks certification under Rule 23(b)(3),

which provides that a class action may be certified if:

(3) the court finds 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.


Fed. R. Civ. P. 23(b)(3).

Thus, the Rule 23(b)(3) inquiry into predominance and superiority “trains on the legal or

factual questions that qualify each class member’s case as a genuine controversy ... [and] tests

whether proposed classes are sufficiently cohesive to warrant adjudication by representation.”

Amchem Prods., 521 U.S. at 623; Bank of America, 281 F.R.D. at 140. Rule 23(b)(3) is satisfied

by “quintessential securities fraud class action[s]” such as this one because there exists “[a]n

enormous group of potential plaintiffs” seeking to recover damages and the focus of this

litigation is upon the defendants’ conduct and defendants’ potential liability. In re Priceline.com

Inc. Sec. Litig., 236 F.R.D. 89, 101-02 (D. Conn. 2006); see also In re Deutsche Telekom, 229 F.

Supp. 2d at 282 (“Courts have recognized that class actions are generally appropriate when

plaintiffs seek redress for violations of the securities laws”).

Defendants do not contest Lead Plaintiff’s assertion that the requirements of Rule 23(b)(3)

are satisfied here.



14

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 20 of 31





1.


Issues Common to the Class Predominate Over Issues That Are Not
Common to the Class

Predominance is met “if resolution of some of the legal or factual questions that qualify

each class member’s case as a genuine controversy can be achieved through generalized proof,

and if these particular issues are more substantial than the issues subject to only individualized

proof.” In re Vivendi, 242 F.R.D. at 90 (quoting Moore v. PaineWebber, Inc., 306 F.3d 1247,

1252 (2d Cir. 2002)). As the Supreme Court noted in Amchem Prods., “[p]redominance is a test

readily met in certain cases alleging ... securities fraud.” 521 U.S. at 625 (citing Fed. R. Civ. P.

23, Advisory Committee Notes (1966)); see also In re Vivendi, 242 F.R.D. at 90.

Applying these standards, it is clear that common questions of fact and law predominate

over individual questions because the central questions relating to Defendants’ liability are

common to the Class, e.g., whether Defendants made material misrepresentations and/or

omissions with the requisite scienter, thereby injuring Plaintiffs and the Class members who

purchased BofA securities during the Class Period; and whether the Executive Defendants are

controlling persons with respect to the Section 10(b) claims asserted against BofA. The alleged

misrepresentations and misleading statements and omissions in this case were contained in SEC

filings, press releases, and other public statements disseminated into the public market by

Defendants, which statements and omissions were not fully corrected until the end of the Class

Period. Thus, the common questions of law and fact relating to the Defendants’ liability impact

all members of the Class and predominate over questions affecting solely individual members.

Any slight difference among the claims of putative class members do not predominate over the

common issues. As the Ninth Circuit commented in Blackie v. Barrack:

The overwhelming weight of authority holds that repeated misrepresentations of
the sort alleged here satisfy the “common question” requirement. Confronted
with a class of purchasers allegedly defrauded over a period of time by similar
misrepresentations, courts have taken the common sense approach that the class is
united by a common interest in determining whether a defendant’s course of



15

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 21 of 31



conduct is in its broad outlines actionable, which is not defeated by slight
differences in class members’ positions, and that the issue may profitably be tried
in one suit.…

The availability of the class action to redress such frauds has been consistently
upheld … in large part because the substantial role that the deterrent effect of
class actions plays in accomplishing the objectives of the securities laws.


524 F.2d at 902-03 (citations omitted); see also Green, 406 F.2d at 294.

While reliance is an essential element of a Rule 10b-5 claim, to the extent Lead Plaintiff

relies on allegations of material omissions or half-truths to support its claims, reliance on those

omissions or half-truths is presumed. See In re Dynex, 2011 U.S. Dist. LEXIS 22484, at *19-21

(citing Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 153 (1972)). As it relates

to securities fraud claims based on omissions or half-truths, “[a]ll that is necessary is that the

facts withheld be material in the sense that a reasonable investor might have considered them

important in the making of this decision.” Affiliated Ute, 406 U.S. at 153-54. As this Court has

explained, this is so because, where a defendant’s fraud consists primarily of omissions,

requiring a plaintiff to show a speculative set of facts to prove reliance (i.e., plaintiff’s behavior

if omitted material information had been disclosed) places an unrealistic evidentiary burden on

that plaintiff. Smith Barney, 290 F.R.D. at 47-48.

Here, Lead Plaintiff has alleged, among other things, that Defendants made numerous

representations that were highly misleading, in part because they failed to disclose the full set of

risks associated with BofA’s use of MERS and exposure to repurchase demands. See generally

¶¶1-27, 49-292, 300-20. As such, to the extent that Defendants’ alleged omissions and half-

truths as detailed in the Complaint played a significant and interdependent role in the alleged

fraud, the Affiliated Ute presumption would apply. See In re Dynex, 2011 U.S. Dist. LEXIS

22484, at *19-21.



16

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 22 of 31



But as this Court has correctly noted, “[t]he distinction between misstatements and

omissions is often illusory” because “[a] statement is misleading when it omits the truth.” Smith

Barney, 290 F.R.D. at 47. “Thus, in most securities fraud cases, an affirmative misstatement can

be cast as an omission and vice versa,” and as such “[d]ifferentiating misstatements from

omissions is a futile logomachical exercise.” Id. In this case, to the extent the claims asserted

under Section 10(b) and Rule 10b-5 are based on Defendants’ material misstatements rather than

omissions, Lead Plaintiff is entitled to rely on the fraud-on-the-market theory, where reliance is

also presumed. Lead Plaintiff accordingly is not required to plead any particular plaintiff’s or

class member’s awareness of or reliance on any particular misstatement. Basic v. Levinson, 485

U.S. 224, 247 (1988) (“where materially misleading statements have been disseminated into an

impersonal, well-developed market for securities, the reliance of individual plaintiffs on the

integrity of the market price may be presumed”); see also In re WorldCom, 219 F.R.D. at 291-

92. A claim of fraud on the market rests on the assumption that market prices of efficiently

traded securities reflect all publicly available information, and that reliance on that market price

is reasonable. Id.; see also Lapin, 254 F.R.D. at 182.

Here, Defendants do not contest that the market for BofA’s common stock and CES was

efficient throughout the Class Period. This is not surprising, given that (1) there were anywhere

from approximately 6.4 billion to over 10 billion shares of BofA common stock issued and

outstanding during the Class Period; (2) BofA was one of the 30 constituents of the Dow Jones

Industrial Average; and (3) BofA stock traded on the New York Stock Exchange (“NYSE”).

The fact that BofA common stock, along with BofA CES, traded on the NYSE is important

because courts in this Circuit and elsewhere have held that the market for such a security is

presumed to be efficient. See Wagner, 251 F.R.D. at 119 (“if a security is listed on the NYSE …



17

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 23 of 31



or a similar national market, the market for that security is presumed to be efficient”) (internal

quotation omitted); see also Lapin, 254 F.R.D. at 183 (“no argument could be made that the New

York Stock Exchange is not an efficient market”); In re DVI Inc. Sec. Litig., 639 F.3d 623, 634

(3d Cir. 2011) (“[T]he listing of a security on a major exchange such as the NYSE or the

NASDAQ weighs in favor of a finding of market efficiency”).

Additionally, Lead Plaintiff has submitted the Golan Decl., which analyzes BofA’s

common stock and CES under the requisite five factors for determining whether a particular

market is efficient as set forth in Cammer v. Bloom, 711 F. Supp. 1264 (D.N.J. 1989), including:

(1) trading volume; (2) coverage by securities analysts; (3) number of market makers; (4)

eligibility for S-3 registration; and (5) empirical evidence that the security price reacts to material

information. 711 F. Supp. at 1285-91. These Cammer factors are widely recognized and have

been followed by courts in the Southern District of New York and elsewhere. See Golan Decl. at

¶8 n.13; In re Dynex, 2011 U.S. Dist. LEXIS 22484, at *11 (citing Teamsters Local 445 v.

Bombardier, 546 F.3d 196, 204 n.11, 210-11 (2d Cir. 2008)); In re Pfizer Sec. Litig., 282 F.R.D.

38, 53 n.9 (S.D.N.Y. 2012); Wilkof v. Caraco Pharm. Labs., Ltd., 280 F.R.D. 332, 342-43 (E.D.

Mich. 2012); In re Juniper Networks Sec. Litig., 264 F.R.D. 584, 591 n.8 (N.D. Cal. 2009). Lead

Plaintiff need only show these factors by a preponderance of the evidence. Bombardier, 546

F.3d at 202-04.

As shown below, each of these five relevant factors used in assessing market efficiency

confirm that the market for BofA’s common stock and CES was efficient throughout the Class

Period. As such, Lead Plaintiff is entitled to the fraud-on-the-market presumption of reliance.



18

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 24 of 31



i.

Trading Volume

In evaluating this factor, there is a strong presumption of market efficiency when at least

2% of a company’s outstanding stock shares are traded on a weekly basis, and there is a

substantial presumption of market efficiency where 1% of a company’s outstanding shares are

traded on a weekly basis. Cammer, 711 F. Supp. at 1286, 1293; see also In re Dynex, 2011 U.S.

Dist. LEXIS 22484, at *12; Golan Decl. at ¶14. During the Class Period, BofA’s common stock

traded regularly and actively, averaging 258.9 million shares traded daily, which constituted an

average weekly turnover of 15.94%. Golan Decl. at ¶¶14-16. Likewise, BofA’s CES traded

regularly and actively, averaging 18.7 million shares traded daily, which constituted an average

weekly turnover of 7.17% of BofA’s CES outstanding. Id. at ¶¶14-15, 17.

This factor thus presents a strong indicator that BofA’s common stock and CES traded

efficiently during the Class Period.

ii.

Analyst Coverage

“Extensive coverage by securities analysts likewise indicates market efficiency, since the

price of a company’s security is often affected by analysts’ reports of information learned

through their own investigation and analysis.” In re DVI, Inc. Sec. Litig., 249 F.R.D. 196, 209

(E.D. Pa. 2008), aff’d, 639 F.3d 623 (3d Cir. 2011); see also Golan Decl. at ¶19 (citing Cammer,

711 F. Supp. at 1286). During the Class Period there was an abundance of analyst coverage of

BofA, by at least 19 separate equity analysts with at least 238 published analyst reports

throughout the Class Period. Golan Decl. at ¶21 and Exhibit 3. In addition to this extensive

analyst coverage, there was also significant news coverage of BofA throughout the Class Period,

with thousands of articles published about the Company during that time in addition to 153 BofA

SEC filings available online at EDGAR at no out-of-pocket cost, ensuring that information about



19

Case 1:11-cv-00733-WHP Document 244 Filed 11/15/13 Page 25 of 31



BofA was readily available to market participants. Id. at ¶22. Finally, a review of public sources

reveals that institutional investors held, on average, 63.2% of the outstanding shares of BofA

common stock during the Class Period, or well over a majority of those shares. Id. at ¶23 and

Exhibit 4.3 These undisputed facts provide further support that BofA’s common stock and CES

traded efficiently during