Big news in the long-running Coca-Cola securities class action. As previously posted in The 10b-5 Daily, the defendants have sought the denial of class certification based on alleged misconduct by lead counsel for the plaintiffs. In a report issued this week, the special master considering the issue agreed with the defendants. The report found that lead counsel engaged in improper conduct when it paid a former Coca-Cola employee to provide the plaintiffs with stolen company documents. The special master’s recommendation that lead counsel be barred from serving as class counsel is subject to approval by the district court judge. Legal Pad has an extensive post on the decision, including a link to the report.
Quote of note (Special Master’s Report and Recommendation): “Ordinarily, in the absence of any reason to suspect class counsel of inappropriate conduct, courts must assume that class counsel will properly and candidly discharge these duties. Here, however, the Court is faced with a very unusual situation in which Class Counsel engaged in extremely troubling conduct by paying for documents stolen from Coke, and then exacerbated the conclusions to be drawn from that initial conduct by refusing to accept responsibility for that conduct and by continuing, to this day, to defend that conduct through the use of arguments that appear to be pretextual. The administration of justice would be prejudiced should the court turn a blind eye to these circumstances.”