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RICHARD MEDOFF, Individually and On
Behalf Of All Others Similarly Situated,

Plaintiff,

vs.

CVS CAREMARK CORPORATION,
THOMAS M. RYAN, DAVID RICKARD and
HOWARD McCLURE,

Defendants.







Case 1:09-cv-00554-S-DLM Document 11 Filed 01/19/2010 Page 1 of 14

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND


Civil Action No. 1:09-cv-00554-S-DLM

MEMORANDUM IN SUPPORT OF THE
MOTION OF THE MASSACHUSETTS
RETIREMENT SYSTEMS FOR
APPOINTMENT AS LEAD PLAINTIFF
AND APPROVAL OF SELECTION OF
LEAD AND LIAISON COUNSEL



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Case 1:09-cv-00554-S-DLM Document 11 Filed 01/19/2010 Page 2 of 14

I.

PRELIMINARY STATEMENT

Presently pending before this Court is a securities class action lawsuit (the “Action”)

brought on behalf of all purchasers of the common stock of CVS Caremark Corporation (“CVS

Caremark” or the “Company”) between May 5, 2009 and November 4, 2009, inclusive (the

“Class Period”). The Action alleges violations of Sections 10(b) and 20(a) of the Securities

Exchange Act of 1934 (the “Exchange Act”), as amended by the Private Securities Litigation

Reform Act of 1995 (“PSLRA”) (15 U.S.C. §78) and the Securities and Exchange Commission

(“SEC”) Rule 10b-5 promulgated thereunder (17 C.F.R. §240.10b-5).

Institutional investors City of Brockton Retirement System (“Brockton”), Plymouth

County Retirement System (“Plymouth”), and Norfolk County Retirement System (“Norfolk”)

(collectively, the “Massachusetts Retirement Systems”) hereby move this Court for an Order to:

(i) appoint the Massachusetts Retirement Systems as Lead Plaintiff in the Action under Section

21D(a)(3)(B) of the Exchange Act; and (ii) approve the Massachusetts Retirement Systems’s

selection of the law firms of Coughlin Stoia Geller Rudman & Robbins LLP (“Coughlin Stoia”)

and Labaton Sucharow LLP (“Labaton Sucharow”) to serve as Lead Counsel and the law firm of

Boisseau & Dean LLP (“Boisseau & Dean”) to serve as Liaison Counsel.

This motion is made on the grounds that the members of the Massachusetts Retirement

Systems are the most adequate plaintiffs, as defined by the PSLRA. The members of the

Massachusetts Retirement Systems are precisely the types of institutional investors that Congress

sought to summon and empower when it enacted the PSLRA. See Ferrari v. Impath, Inc., No.

03 Civ. 5667 (DAB), 2004 U.S. Dist. LEXIS 13898, at *10 (S.D.N.Y. July 20, 2004) (holding

that the purpose behind the PSLRA is best achieved by encouraging institutional investors to

serve as lead plaintiffs). Moreover, as institutional investors, the members of the Massachusetts

Case 1:09-cv-00554-S-DLM Document 11 Filed 01/19/2010 Page 3 of 14



Retirement Systems are accustomed to acting as fiduciaries and their experience in legal and

financial matters will substantially benefit the Class.

During the Class Period, the Massachusetts Retirement Systems incurred a substantial

loss on their transactions in CVS Caremark common stock - $318,729.29 under the first-in-first-

out (“FIFO”) loss calculation methodology and $309,034.17 under the last-in-first-out (“LIFO”)

loss calculation methodology. See Kusinitz Decl., Ex. B.1 To the best of their knowledge, this is

the greatest loss sustained by any moving Class member or Class member group who has

brought suit or filed an application to serve as Lead Plaintiff in this Action. In addition, the

Massachusetts Retirement Systems, for the purposes of this motion, adequately satisfy the

requirements of Rule 23 of the Federal Rules of Civil Procedure in that their claims are typical of

the claims of the putative Class and that they will fairly and adequately represent the interests of

the Class.

II.

FACTUAL BACKGROUND2

Since its March 2007 $22 billion acquisition of pharmacy benefits manager Caremark Rx

Inc. (“Caremark”), CVS Caremark is a fully-integrated pharmacy services company and operates

in two business segments: pharmacy services and retail pharmacy. The pharmacy services

business includes the Company’s pharmacy benefit management business, commonly known as

the PBM business, which was acquired in the Caremark acquisition in 2007. The PBM business

is the principal component of the pharmacy services business segment.



1
References to the “Kusinitz Decl., Ex. __” are to the exhibits attached to the
accompanying Declaration of Barry J. Kusinitz, dated January 19, 2010 and submitted herewith.

2

These facts are drawn from the allegations in the complaint, filed on November 17, 2009.

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The complaint charges CVS Caremark and certain of its officers and directors with

violations of the Exchange Act. The complaint alleges that, throughout the Class Period,

defendants made numerous positive statements regarding the Company’s financial condition,

business and prospects. The complaint further alleges that CVS Caremark failed to disclose

operating problems in the PBM business, the more than $6 billion in contractual losses for 2010,

and the adverse impact this would have on its 2010 financial results. According to the

complaint, CVS Caremark belatedly disclosed that the Federal Trade Commission (“FTC”) had

begun a “nonpublic investigation” in August 2009 into whether CVS Caremark’s business

practices and service offerings violated antitrust laws. Among the business practices of CVS

Caremark that the FTC is reportedly investigating is the improper use of pricing and patient data

from its retail pharmacy operations to steer its PBM members to CVS Caremark stores.

On November 5, 2009, CVS Caremark announced the disclosures of the adverse material

facts concerning the PBM business and their adverse impact on CVS Caremark’s financial

results for 2010, and the FTC investigation. In response to this announcement, the price of CVS

Caremark common stock fell 20 percent to close at $28.87 per share.

III. ARGUMENT

A.

The Massachusetts Retirement Systems Should Be Appointed Lead
Plaintiff

1.

The Procedure Required by the PSLRA

The PSLRA has established a procedure that governs the appointment of a lead plaintiff

in “each private action arising under the [Exchange Act] that is brought as a plaintiff class action

pursuant to the Federal Rules of Civil Procedure.” 15 U.S.C. §78u-4(a)(1) and (a)(3)(B)(i).

First, the plaintiff who files the initial action must publish a notice to the class, within 20

days of filing the action, informing class members of their right to file a motion for appointment

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as lead plaintiff. 15 U.S.C. §78u-4(a)(3)(A)(i). Plaintiff in the Action caused notice regarding

the pendency of the Action to be published on Business Wire, a national, business oriented

newswire service, on November 17, 2009. See Kusinitz Decl., Ex. A. Within 60 days after

publication of the notice, any person or group of persons who are members of the proposed class

may apply to the Court to be appointed as lead plaintiff, whether or not they have previously

filed a complaint in the action. 15 U.S.C. §§ 78u-4(a)(3)(A) and (B).

Second, the PSLRA provides that, within 90 days after publication of the notice, the

Court shall consider any motion made by a class member and shall appoint as lead plaintiff the

member or members of the class who the Court determines to be most capable of adequately

representing the interests of class members. See 15 U.S.C. §78u-4(a)(3)(B). In determining the

“most adequate plaintiff,” the PSLRA provides that:

[T]he court shall adopt a presumption that the most adequate plaintiff in any
private action arising under this Act 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. §78u-4(a)(3)(B)(iii). See generally City of Roseville Employees’ Ret. Sys. v. Textron

Inc., C.A. No. 09-00367-ML, 2009 WL 4545161, at *1 (D.R.I. Dec. 4, 2009); Greebel v. FTP

Software, 939 F. Supp. 57, 64 (D. Mass. 1996).

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2.

The Massachusetts Retirement Systems Satisfy the “Lead
Plaintiff” Requirements of the Exchange Act

a.

The Massachusetts Retirement Systems Have Complied
with the Exchange Act and Should Be Appointed Lead
Plaintiff

The time period in which Class members may move to be appointed Lead Plaintiff herein

under 15 U.S.C. §78u-4(a)(3)(A) and (B) expires on January 19, 2010. Pursuant to the

provisions of the PSLRA and within the requisite time frame after publication of the required

notice on November 17, 2009, the Massachusetts Retirement Systems timely move this Court to

be appointed Lead Plaintiff on behalf of all members of the Class.

The members of the Massachusetts Retirement Systems have duly signed and filed

certifications stating that they are willing to serve as representative parties on behalf of the Class.

See Kusinitz Decl., Ex. C. In addition, the Massachusetts Retirement Systems have selected and

retained competent counsel to represent themselves and the Class. See Kusinitz Decl., Exs. D-E.

Accordingly, the Massachusetts Retirement Systems have satisfied the individual requirements

of 15 U.S.C. §78u4(a)(3)(B) and are entitled to have their application for appointment as Lead

Plaintiff and approval of selection of Lead and Liaison Counsel as set forth herein, considered

and approved by the Court.

b.

The Massachusetts Retirement Systems Have the
Requisite Financial Interest in the Relief Sought by the
Class

During the Class Period, as evidenced by, among other things, the accompanying signed

certifications, see Kusinitz Decl., Ex. C, the Massachusetts Retirement Systems incurred a

substantial loss on their transactions in CVS Caremark common stock - $318,729.29 under the

FIFO methodology and $309,034.17 under the LIFO methodology. See Kusinitz Decl., Ex. B.

The Massachusetts Retirement Systems thus have a significant financial interest in this case.

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c.

The Massachusetts Retirement Systems Otherwise
Satisfy Rule 23

According to 15 U.S.C. § 78u-4(a)(3)(B), in addition to possessing the largest financial

interest in the outcome of the litigation, the lead plaintiff must also “otherwise satisf[y] the

requirements of Rule 23 of the Federal Rules of Civil Procedure.” Rule 23(a) provides that a

party may serve as a class representative only if the following four requirements are satisfied: (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.

Of the four prerequisites to class certification, only two – typicality and adequacy –

directly address the personal characteristics of the class representative. Consequently, in

deciding a motion to serve as lead plaintiff, the Court should limit its inquiry to the typicality and

adequacy prongs of Rule 23(a), and defer examination of the remaining requirements until the

lead plaintiff moves for class certification. See In re Lernout & Hauspie Sec. Litig., 138 F. Supp.

2d 39, 46 (D. Mass. 2001). The members of the Massachusetts Retirement Systems satisfy both

the typicality and adequacy requirements of Rule 23, thereby justifying their appointment as

Lead Plaintiffs.

Under Rule 23(a)(3), the claims or defenses of the representative parties must be typical

of those of the class. Typicality exists where 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. See In re Bank of Boston Corp. Sec. Litig., 762 F. Supp. 1525, 1532 (D. Mass. 1991).

Typicality does not require that there be no factual differences between the class representatives

and the class members because it is the generalized nature of the claims asserted which

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determines whether the class representatives are typical. See Sofran v. LaBranche & Co., 220

F.R.D. 398, 402 (S.D.N.Y. 2004) (“The possibility of factual distinctions between the claims of

the named plaintiffs and those of other class members does not destroy typicality, as similarity of

legal theory may control even in the face of differences of fact.”)(citation omitted). The

requirement that the proposed class representatives’ claims be typical of the claims of the class

does not mean, however, that the claims must be identical. See Ferrari, 2004 U.S. Dist. LEXIS

13898, at *18.

The members of the Massachusetts Retirement Systems satisfy this requirement because,

just like all other Class members, they: (1) purchased CVS Caremark common stock during the

Class Period; (2) were adversely affected by defendants’ false and misleading statements; and (3)

suffered damages as a result thereof. Thus, the Massachusetts Retirement Systems’s claims are

typical of those of other Class members since their claims and the claims of other Class members

arise out of the same course of events.

Under Rule 23(a)(4), the representative parties must also “fairly and adequately protect

the interests of the class.” In order to meet the adequacy requirement: (1) there should be no

conflict between the interests of the class and the named plaintiff nor should there be collusion

among the litigants; and (2) the parties’ attorney must be qualified, experienced, and generally

able to conduct the proposed litigation. See Andrews v. Bechtel Power Corp., 780 F.2d 124, 130

(1st Cir. 1985); Lernout & Hauspie, 138 F. Supp. at 46; Modell v. Eliot Sav. Bank, 139 F.R.D.

17, 23 (D. Mass. 1991).

Here, the members of the Massachusetts Retirement Systems are adequate representatives

of the Class. As evidenced by the injuries suffered by the Massachusetts Retirement Systems

and the Class, the interests of the Massachusetts Retirement Systems are clearly aligned with the

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members of the Class, and there is no evidence of any antagonism between the Massachusetts

Retirement Systems’s interests and those of the other members of the Class. Further, the

Massachusetts Retirement Systems have taken significant steps which demonstrate they will

protect the interests of the Class: they have retained competent and experienced counsel to

prosecute these claims. Thus, the Massachusetts Retirement Systems prima facie satisfy the

typicality and adequacy requirements of Rule 23 for the purposes of this motion.

d.

The Members of the Massachusetts Retirement Systems
Are Precisely the Type of Lead Plaintiffs Congress
Envisioned When it Passed the PSLRA

The Congressional objective in enacting the lead plaintiff provisions of the PSLRA was

to encourage large, organized institutional investors to play a more prominent role in securities

class actions. See H.R. Conf. Rep. No. 104-369, at 34 (1995), reprinted in 1995 U.S.C.C.A.N.

679, 733 (“The Conference Committee believes that increasing the role of institutional investors

in class actions will ultimately benefit shareholders and assist courts by improving the quality of

representation in securities class actions.”).

Congress reasoned that increasing the role of institutional investors, which typically have

a large financial stake in the outcome of the litigation, would be beneficial because institutional

investors with a large financial stake are more apt to effectively manage complex securities

litigation. Brockton manages more than $390 million in assets for more than 1,889 active and

1,300 retired members throughout the City of Brockton, Massachusetts. Plymouth represents

more than 9,700 active and retired public employees of Plymouth County, Massachusetts, and

manages approximately $636 million in assets. Norfolk has over 9,500 active and retired

members from 40 governmental units throughout the County of Norfolk, Massachusetts, and has

approximately $500 million in assets. In addition, Brockton, Plymouth, and Norfolk enjoy a

long-standing, pre-existing working relationship and share joint membership in Massachusetts-

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based retirement system organizations. Moreover, because each of the Massachusetts

Retirement Systems has served as lead plaintiff in other securities actions, see Kusinitz Decl.,

Ex. C, their experience overseeing securities litigation will be a great benefit to the Class. Thus,

the Massachusetts Retirement Systems have the requisite experience and expertise to vigorously

represent the Class in leading this action. Brockton, Plymouth, and Norfolk are sophisticated

institutional investors with vast resources sufficient to adequately litigate this action and

supervise Class counsel. See In re Cendant Corp. Litig., 264 F.3d 201, 264 (3d Cir. 2001)

(noting that the legislative intent behind enacting the PSLRA was to encourage large institutional

investors to serve as lead plaintiff); see also Weiss v. Friedman, Billings, Ramsey Group, Inc.,

No. 05-cv-04617 (RJH), 2006 WL 197036, at *1 (S.D.N.Y Jan. 25, 2006) (same). Thus, as

demonstrated above, the Massachusetts Retirement Systems are the prototypical Lead Plaintiff

under the PSLRA.

B.

The Court Should Approve the Massachusetts Retirement Systems’s
Choice of Counsel

Pursuant to 15 U.S.C. §78u-4(a)(3)(B)(v), the proposed lead plaintiff shall, subject to

Court approval, select and retain counsel to represent the class it seeks to represent. In that

regard, the Massachusetts Retirement Systems has selected the law firms of Coughlin Stoia and

Labaton Sucharow as Lead Counsel, firms which have substantial experience in the prosecution

of shareholder and securities class actions.

Coughlin Stoia has substantial experience in the prosecution of shareholder and securities

class actions, including serving as lead counsel in In re Enron Corp. Securities Litigation, No. H-

01-3624 (S.D. Tex.), in which Coughlin Stoia has obtained recoveries which represent the largest

recovery ever obtained in a shareholder class action. See Kusinitz Decl., Ex. D. Specifically, the

court in Enron stated:

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The firm is comprised of probably the most prominent securities class action
attorneys in the country. It is not surprising that Defendants have not argued that
counsel is not adequate. Counsel’s conduct in zealously and efficiently
prosecuting this litigation with commitment of substantial resources to that goal
evidences those qualities is evident throughout this suit.

In re Enron Corp. Sec. Derivative & “ERISA” Litig., No. H-01-3624, 529 F.Supp. 2d 644, 675

(S.D. Tex. 2006).

Labaton Sucharow has had a leading role in numerous important actions on behalf of

defrauded investors. Labaton Sucharow served as lead counsel in the Waste Management

securities litigation, which resulted in a settlement of $457 million, one of the largest common-

fund securities class action settlements ever achieved at that time. See In re Waste Mgmt., Inc.

Sec. Litig., 128 F. Supp. 2d 401, 432 (S.D. Tex. 2000) (stating that Labaton Sucharow “ha[s]

been shown to be knowledgeable about and experienced in federal securities fraud class

actions”). Moreover, in In re Monster Worldwide, Inc. Securities Litigation, No. 07-cv-2237

(S.D.N.Y. filed Mar. 15, 2007), Judge Jed Rakoff appointed Labaton Sucharow as lead counsel,

stating that “the Labaton firm is very well known to . . . courts for the excellence of its

representation.” (Id., Hr’g Tr. 24:25-25:1, June 14, 2007).

The Massachusetts Retirement Systems’s choice of liaison counsel, Boisseau & Dean,

has substantial experience in the prosecution of complex litigation in this District. Accordingly,

the Court should approve the Massachusetts Retirement Systems’s selection of Lead and Liaison

Counsel.

IV. CONCLUSION

For all the foregoing reasons, the Massachusetts Retirement Systems respectfully request

that the Court: (i) appoint the Massachusetts Retirement Systems as Lead Plaintiff in the Action;

(ii) approve their selection of Lead and Liaison Counsel as set forth herein; and (iii) grant such

other relief as the Court may deem just and proper.
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DATED: January 19, 2010

BOISSEAU & DEAN LLP
BARRY J. KUSINITZ (NO. 1404)

/s/ Barry J. Kusinitz
BARRY J. KUSINITZ

155 South Main Street, Suite 405
Providence, Rhode Island 02903
Telephone: 401/831-4200
401/831-7053 (fax)

[Proposed] Liaison Counsel

COUGHLIN STOIA GELLER
RUDMAN & ROBBINS LLP
SAMUEL H. RUDMAN
DAVID A. ROSENFELD
MARIO ALBA JR.
58 South Service Road, Suite 200
Melville, NY 11747
Telephone: 631/367-7100
631/367-1173 (fax)

LABATON SUCHAROW LLP
CHRISTOPHER J. KELLER
ALAN I. ELLMAN
STEFANIE J. SUNDEL
140 Broadway
New York, NY 10005
Telephone: 212/907-0700
212/818-0477 (fax)

[Proposed] Lead Counsel

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Case 1:09-cv-00554-S-DLM Document 11 Filed 01/19/2010 Page 13 of 14

CERTIFICATE OF SERVICE

I, Barry J. Kusinitz, hereby certify that on January 19, 2010, I caused a true and

correct copy of the attached:

Notice of Motion for Appointment as Lead Plaintiff and Approval of Selection of
Lead and Liaison Counsel;

Memorandum in Support of the Motion of the Massachusetts Retirement Systems
for Appointment as Lead Plaintiff and Approval of Selection of Lead and Liaison
Counsel; and

Declaration of Barry J. Kusinitz in Support of the Motion of the Massachusetts
Retirement Systems for Appointment as Lead Plaintiff and Approval of Selection
of Lead and Liaison Counsel,


to be served: (i) electronically on all counsel registered for electronic service for this

case; and (ii) by first-class mail to any additional counsel.








/s/ Barry J. Kusinitz
Barry J. Kusinitz

Case 1:09-cv-00554-S-DLM Document 11 Filed 01/19/2010 Page 14 of 14

CVS CAREMARK
Service List - 1/19/2010
Page 1 of 1

(09-0213)

Counsel For Defendant(s)
William R. Grimm
Hinckley, Allen & Snyder, LLP
50 Kennedy Plaza, Suite 1500
Providence, RI 02903

401/274-2000
401/277-9600(Fax)

Counsel For Plaintiff(s)
Barry J. Kusinitz
Attorney at Law
155 South Main Street, Suite 405
Providence, RI 02903

401/831-4200
401/831-7053(Fax)

Christopher J. Keller
Labaton Sucharow LLP
140 Broadway, 34th Floor
New York, NY 10005

212/907-0700
212/818-0477(Fax)

Samuel H. Rudman
David A. Rosenfeld
Mario Alba Jr.
Coughlin Stoia Geller Rudman & Robbins LLP
58 South Service Road, Suite 200
Melville, NY 11747

631/367-7100
631/367-1173(Fax)

Deborah R. Gross
Robert P. Frutkin
Law Offices Bernard M. Gross, P.C.
100 Penn Square East, Suite 450
Wanamaker Bldg.
Philadelphia, PA 19107

215/561-3600
215/561-3000(Fax)