Virginia Lawyers Weekly VA Lawyers Weekly
In plaintiff institutional investors’ suit against a wireless voice and data provider, the Alexandria U.S. District Court certifies a nationwide class of persons and entities that, from Feb. 25, 2010 through Feb. 27, 2014, acquired defendant’s publicly traded securities and were damaged thereby.
This action arises out of a strategic business shift undertaken by NII Holdings Inc. which is a telecommunications company headquartered in Virginia. NII offered wireless voice and data services through its Nextel-branded subsidiaries in Brazil, Mexico, Argentina, Chile and Peru. Beginning in 2009, NII started to transition to cellular networks in these countries from second-generation (2G) technology to third-generation (3G) technology.
Lead plaintiffs, all of which are large pension funds, brought this action against NII and three current and former NII officers – Steven Dussek, CEO until December 2012; Steven Shindler, CEO after December 2012; and Gokul Hemmady, CFO until October 2012 and CEO after June 2012, until the end of the class period.
On Sept. 15, 2014, NII filed for Chapter 11 bankruptcy in New York, and received court approval of its bankruptcy plan in June 2015. Due to the bankruptcy, all claims against NII have been extinguished, leaving only the individual NII officers as defendants in this civil action, which charges them in two counts with violations of § 10(b) of the Securities Exchange Act of 1934 (SEA) and Rule 10b-5 and with “control person” liability under § 20(a) of the SEA. These counts are premised on allegations that defendants engaged in a pattern of lies and half-truths concerning the progress and efficacy of NII’s 3G transition, the quality of its customer base, and the company’s ability to generate and maintain positive subscriber growth metrics.
The court grants plaintiffs’ motion for certification of a nationwide class.
Lead plaintiffs provide adequate detail regarding a method for calculating class wide damages measuring the artificial inflation of each share on a given day. The method offered by lead plaintiffs is widely accepted as the traditional measure of damages for Rule 10b-5. There is no convincing demonstration by defendants that this damages theory does not closely hew to lead plaintiffs’ theory of liability or that such a theory could not be applied class-wide.
Lead plaintiffs have demonstrated that they satisfy the requirements of Fed. R. Civ. P. 23(a) and (b) by a preponderance of the evidence and their motion for class certification and appointment of class representatives and class counsel is granted.
In re NII Holdings Inc. Securities Litigation (Brinkema) No. 1:14cv227, Nov. 17, 2015, USDC at Alexandria, Va. VLW 015-3-581, 22 pp.
