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Chilton v. Smith Barney Fund Management LLC
Citation: 365 F. App'x 298Docket: No. 07-5257-cv
Court: Court of Appeals for the Second Circuit; February 15, 2010; Federal Appellate Court
Appellants, collectively known as the Chiumento Group, appealed an order from the United States District Court for the Southern District of New York that appointed Appellees, referred to as Local 649, as lead plaintiffs in a securities class action and designated their counsel, Bernstein Liebhard Lifshitz, LLP, as lead counsel. The District Court's decision was based on the Private Securities Litigation Reform Act of 1995 (PSLRA), which requires the court to select lead plaintiffs that are most capable of representing the interests of the class members. The court determined that Local 649 had a "significantly greater" financial interest in the relief sought compared to the Chiumento Group, rendering them presumptively the most adequate plaintiff under the PSLRA. Additionally, Local 649 met the requirements of Federal Rule of Civil Procedure 23(a), which includes having claims typical of the class and the capability to fairly and adequately protect the class's interests. The appellate review of the District Court’s appointment is conducted for abuse of discretion, following the precedent established in Hevesi v. Citigroup, Inc. The PSLRA stipulates that the lead plaintiff should have the largest financial interest in the litigation and satisfy Rule 23's requirements. The court found that Local 649 fulfilled both the financial interest and the typicality and adequacy requirements. Consequently, the appellate court affirmed the District Court’s order, finding no abuse of discretion in the selection of Local 649 as lead plaintiff and the appointment of lead counsel.