Healthways Inc. - Conference Presentation Calls

Healthways Inc. - Conference Presentation Calls

The U.S. Circuit Court for the Middle District of Tennessee denied a motion to certify a class in a securities fraud action brought against Healthways Inc. by shareholders alleging misstatements relating to the company's stock. Shareholders in Healthways Inc. sued the company and certain of its senior executives alleging violations of securities laws arising from misstatements concerning the company's stock. The case came before the district court on lead plaintiff West Palm Beach Firefighters' Pension Fund's motion for class certification. The defendants opposed the Fund's motion on the ground that the Fund faced unique circumstances and the availability of unique defenses to the Fund's claims put it in direct conflict with other proposed class members. In particular, the defendants contend that the Fund would not be able to invoke the presumption of fraud-on-the-market reliance, while other investors would be able to do so. The record indicated that Neil Kaufman, an employee of Baron Capital Management Inc, the Fund's investment manager, utilizing his discretionary authority and without first consulting with the Fund, made the decision to purchase stock in Healthways. The district court concluded the fact that the Fund relied on an investment manager to purchase the stock, without more, was not sufficient to find the Fund to be atypical. The district court concluded as a result that the Fund's claims were atypical, rendering its ability to protect the interests of the class inadequate. Because the Fund as a result failed to carry its burden of establishing typicality and adequacy as required for a class to be certified under Rule 23 of the Federal Rules of Civil Procedure, the Fund's motion for class certification was denied.