Hands down, the two most successful shareholder class action firms in the U.S. are Bernstein Litowitz Berger & Grossmann and Robbins Geller Rudman & Dowd. In the annual rankings from ISS Securities Class Action Service, it’s sometimes one, sometimes the other on top. But aside from 2018, when Pomerantz settled the $2.95 billion Petrobras case, Robbins Geller and Bernstein Litowitz are always atop the list.
They are both brawling litigators – and, based on a four-month slugfest in a securities class action against the cybersecurity company Symantec, never more so than when they are fighting each other.
Last December, Robbins Geller informed U.S. District Judge William Alsup of San Francisco that Bernstein Litowitz, which is lead counsel in the Symantec case, had just hired a former executive from the Swedish investment fund SEB Investment Management, which is serving as the lead plaintiff against Symantec. The executive, Hans Ek, had been in charge of the Symantec case while he was at SEB and had picked Bernstein Litowitz as lead counsel in the class action.
Robbins Geller, which had competed unsuccessfully against Bernstein Litowitz to lead the Symantec case, styled its filing as a “notice of a potential conflict of interest,” knowing full well that Alsup is especially vigilant about pay-to-play allegations. The judge ordered a limited investigation, informing Bernstein Litowitz at a hearing in January that its hiring of Ek “smells bad.”
Bernstein Litowitz, in turn, claimed Robbins Geller was trumping up claims merely to put its rival at a competitive disadvantage. Over the ensuing four months of depositions and increasingly hostile briefings, neither firm spared any opportunity to tar the other.
The mud-slinging came to an end on Tuesday. Alsup issued an order briefly recapping what Robbins Geller had uncovered about the relationship between Bernstein Litowitz, Ek and SEB. The judge said the evidence fell short of establishing a clear pay-to-play relationship but that he was “unable to determine whether the move of Mr. Ek to BLBG was coincidental versus culpable.”
Alsup said Bernstein Litowitz nevertheless should have known better than to hire Ek while the Symantec case was being litigated, knowing how sensitive he is about lead counsel conflicts.
“The appearance alone raises eyebrows, arched eyebrows,” Alsup said. “BLBG should have avoided this spectacle.”
He also said that Bernstein Litowitz had been “misleading” in its initial account of its hiring of Ek. The firm first said it did not have any discussions with its former client until he announced he was leaving SEB, more than a year after Ek retained Bernstein Litowitz in the Symantec case. It turned out that the shareholder firm had actually exchanged exploratory emails with Ek before he left SEB, though they hadn’t come to anything close to an agreement.
“This shifting-sands set of explanations is concerning,” Alsup said.
The judge said it was too late in the litigation to replace either Bernstein Litowitz or its client as leads.
The class was certified last May and Symantec’s summary judgment motion has been fully briefed. (Symantec, which is now part of NortonLifeLock, argued that even though its share price dropped in 2018 when it announced an internal investigation of accounting irregularity claims by a former employee, the investigation ended up finding that the company hadn’t done anything wrong, let along fraudulent.)
But Alsup said Bernstein Litowitz would have to pay for a notice campaign to class members, informing them that the firm now employs the one-time client who hired Bernstein to lead the case. Class members, he said, deserve a chance to opt out based on the information. Alsup also ruled that Bernstein Litowitz must submit his order to every judge considering a lead counsel bid by the firm over the next three years.
And what about Robbins Geller? For all of Bernstein Litowitz’s fulminations, it emerged unscathed. Last week, in its final filing to Alsup in the conflict dust-up, Bernstein Litowitz argued that Robbins Geller also employs former pension fund clients to pitch the firm’s services to other institutional investors. Bernstein accused Robbins Geller of attempting to hide those relationships from Alsup. But the judge, who had previously ordered some disclosures from Robbins Geller in response to Bernstein Litowitz assertions, made no mention of those accusations in Tuesday’s order.
Bernstein Litowitz partner Salvatore Graziano declined to comment on the Alsup order, as did Robbins Geller partner Mark Solomon. Symantec counsel Caz Hashemi of Wilson Sonsini Goodrich & Rosati did not respond to a request for comment on the lead counsel order or the underlying case.
It remains a very good bet that when ISS publishes its next couple of annual reports on the most successful shareholder firms, the firms occupying the top two slots will still be Robbins Geller and Bernstein Litowitz. We’ll just have to wait and see whether Robbins Geller’s efforts in Symantec will help it come out ahead of its chief rival.
(This story has been corrected. An earlier version incorrectly reported that Symantec is now part of Broadcom.)
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